Alaska Air plans to remain independent, even as it faces challenges from its codeshare partner Delta Air Lines.
“We’re independent and that’s something that’s important to us,” says Brad Tilden, president and chief executive of the Seattle-based carrier, at a Wings Club luncheon in New York on 27 March. “We want to stay independent and we understand that to stay independent we have to stay performing.”
The comments come after some speculation among analysts over whether Alaska can remain independent and beat an aggressive expansion by Delta in its home base of Seattle, while remaining a fraction of the size of the Atlanta-based airline.
Delta plans to add nonstops to 10 new cities from Seattle in 2014, including Portland, San Diego and San Francisco. This follows the addition of flights to Anchorage, Las Vegas and Los Angeles, as well as a number of international destinations, in 2013.
“Can a $5 billion airline make it in a world where there’s $30 billion and $40 billion airlines? We think so,” says Tilden, who did not mention Delta by name but repeatedly alluded to them during the luncheon.
Alaska has long maintained what numerous executives describe as a “Switzerland approach” to partnerships, opting for a large number of partners over one or two deep relationships.
“Sooner or later, if you’re in bed with just one [domestic] airline, your customers say: ‘You know, I love Alaska but I don’t need to have your credit card because I can basically fly Alaska and get all the benefits of Alaska by having the credit card of another airline. I don’t need to be in your mileage plan because I think my treatment is a little bit better if I’m in this other airline’s plan but I’ll still fly you guys’,” says Tilden.
He continues: “Sooner or later – and I think it might be sooner rather than later – you lose your identity.”
Alaska’s relationship with Delta has expanded over time to where it is “operating way upside from where the strict contractual terms are”, said Andrew Harrison, vice-president of planning and revenue management at Alaska, during an investors day in November 2013. The amount of cooperation between the two will shrink, he said then and again in January.
The Delta codeshare contributed about $235 million to Alaska’s bottom line, compared to about $165 from its partnership with American Airlines, in 2013, according to Harrison’s investors day presentation.
Alaska has announced a significant expansion in Salt Lake City, which is a hub for Delta, since the mainline carrier began its Seattle build up. The airline plans to operate 13 daily flights from the city by June, which is up from two when it began service in April 2013.
Flights from Salt Lake City are “doing well already” prompting the expansion, said Brandon Pedersen, chief financial officer of Alaska, earlier in March.
Source: Cirium Dashboard
