Alaska Airlines plans to introduce a basic economy fare,
though the carrier has not determined what restrictions would come with it,
executives said in an earnings call.
Basic economy fares are just one of several "upsell and
segmentation" issues Alaska plans to address once it and Virgin America merge
into a single reservations system in late April, chief commercial officer
and EVP Andrew Harrison said. Others could include fare families and ancillary
bundles, he said.
Alaska Airlines SVP of revenue and e-commerce Shane Tackett
expected a basic economy rollout at Alaska would take less time than the
year-plus larger carriers take. Even so, Alaska executives "haven't
decided what this would look like," he said, adding that Alaska tends to
avoid copying competitors. "Whatever approach we take, we are committed to
tapping into the opportunity before us to increase upsell and ancillary
revenue," Harrison said.
While Alaska has launched 44 new routes in 2017, not
counting the 38 it gained via the Virgin America acquisition, that growth will
stabilize this year and continue to slow in subsequent years, CEO Brad Tilden
said.
In the fourth quarter, Alaska’s capacity in the fourth
quarter was 10.4 percent higher than the fourth-quarter-2016 combined capacity
of Virgin America and Alaska combined. Traffic increased 9.8 percent. Load
factor dropped 0.5 percentage points to 83.4 percent. Operating revenue
increased 6 percent to $1.96 billion, including a 7 percent increase in
passenger revenue.
Alaska reported a net income of $367 million for the
quarter, up from $114 million in the fourth quarter of 2016; the merger took
place toward the end of that quarter. Alaska's 2017 net income was $1.03
billion.
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