BTN's annual answer book for business travel managers.
Loews Santa Monica Beach Hotel - March 21, 2019
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Alaska Airlines SVP external relations Joseph Sprague talks:
It's been six months since Alaska Airlines merged with
Virgin America, and "all the big milestones are tracking the way they
should be," SVP of external relations Joseph Sprague said. The carrier
expects to have a single operating certificate early next year and is speeding
up integration of Virgin America into Alaska's passenger services system.
Sprague spoke with BTN transportation editor Michael B. Baker about how
corporate business, up 12 percent year over year in the second quarter, is
growing after the merger and Alaska's plans once the heavy lifting of the
merger is complete.
BTN: What's the
latest on route growth?
new markets either have been announced or started this year so far. There were
a couple of Virgin markets they had previously announced, but we've announced over
30 markets since Dec. 14, when the deal closed. A lot of those are new markets
coming out of the [San Francisco] Bay Area, so a lot of California growth.
BTN: What has
this meant for your corporate business?
Sprague: We have
a better chance of courting their business. The first thing you have to offer
to corporate travelers is utility. We have 17 new markets just in the Bay Area
since the start of 2017, and we're now flying to over 40 destinations out of
the Bay Area. Obviously, Virgin was already flying to some of the bigger East
Coast destinations like New York and Washington out of San Francisco. We've
added San Jose to Newark, for instance, and now we're starting to add some of
the midcontinent destinations that are popular, as well. From a corporate
traveler standpoint, what we're offering out of the Bay Area is almost second to
none. We know there's another airline that has a big hub at SFO, but having the
balance of SFO and San Jose, especially with the very vibrant tech sector in
Silicon Valley, is powerful.
BTN: How about
the rollout of your premium economy cabins?
Sprague: It's not
100 percent of our fleet, but it's getting there. We're intending to take that
to the Airbus fleet at Virgin America starting next year. It's doing great.
It's early boarding, it's a free beverage, a little unique snack box and it's
greater seat pitch. The upgrade price is pretty modest for transcontinental
flights, and people are finding that attractive. Because of still having first class
[and] having this greater number of seats in premium class, our elite level
mileage plan members are getting upgraded to one or the other 75 percent of the
BTN: We've seen a
lot of movement in bundling of products and services for specific fare types.
Are you working on anything in that regard?
haven't done too much in that realm yet. We've put a lot of focus on keeping
our regular, base fares low, so while some of the other airlines that have a
broader range of published fares available are doing some things so they can
offer discounted fares with fewer amenities, we're trying to focus on value to
the customers and not excluding customers from too many of the benefits. It
should just be a low fare.
We know there's another airline that has a big hub at SFO, but having the balance of SFO and San Jose, especially with the very vibrant tech sector in Silicon Valley, is powerful."
BTN: How have you
been adapting your alliance strategy?
are important to us. We're largely a domestic carrier. We do fly to five
countries now, thanks to our added service to Havana, Cuba, earlier this year,
but even those five countries are basically North America: Mexico, Canada,
Costa Rica and Cuba and the United States, of course. For us to serve the
international travel needs that customers have, we know alliances need to be a
part of that mix. Earlier this year, we added two new alliance partners—Condor
out of Germany and Finnair—so great new access for Europe along with our
existing partnerships with British Airways and Icelandair. The domestic
alliances are evolving a bit right now. We're no longer affiliated with Delta,
American relationship, which is still very important to us, is changing a
little bit to reflect our growing domestic network.
BTN: How is
moving toward a single brand progressing?
Sprague: Some of
it will really start to trigger after we get to the combined [passenger services
system, which Alaska has pushed
forward from the end of 2018 to the second quarter of that year] because
then we can really combine all of the flights. The single operating certificate
is the first milestone, but you have to actually be able to sell combined
flights. When we get to that point, we can go more fully into the integration
of the actual brand and product features. Some things we're already rolling out.
Mood lighting is a small thing, but in the customer research, we found out it
is not so small. It won't be the purple mood lighting that's on the Virgin
fleets but a vibrant shade of blue will be across the new combined fleet. We've
already started rolling that out on some of the 737 aircraft. We announced in
January we were going to offer free movies, and [in August], we will extend
that to all of the Virgin flights, as well. Some of the more "hard
product" items that have more lead time we'll start in the second half of
2018 and continue into 2019.
BTN: What else
are you doing to improve the onboard experience?
doing some upgrades to our onboard music. We're still the only airline out
there that has not only seat power but 110-volt and USB ports at every single
seat in the main cabin. The big news, and it's a significant investment on our
part, is that we're going to go to satellite Wi-Fi across the entire fleet.
That will start next year. It's something customers increasingly are not just
demanding but expecting: that they'll have a positive Wi-Fi experience.
BTN: How has this
year been operationally?
had challenges this past winter. We had winter weather in the Pacific Northwest
we haven't seen in 20 or 30 years. We have a lot of tight processes around
on-time performance, which is why we've been the most on-time airline for seven
years in a row, and we're tracking better here as we're wrapping the summer
months. Airport congestion and some of these challenging weather situations
have stretched us, but we're working hard and the team is very focused on
making the very best possible operational experience. With all the growth, not
just at Alaska but a lot of other airlines, airspace congestion is getting to
be a real issue. There's plenty of airspace out there. It's how we use it that
needs to evolve. Our air traffic control has not modernized at all in the last
40 or 50 years. We think [the proposed nonprofit] structure would be a way to accomplish a more modernized air traffic
control system with safety enhancements and big-time efficiency enhancements.
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