Analyst amazed by Alaska Airlines's ability to fight off Delta, not 'just roll over and die'
- Thread starter 700UW
- Start date
WorldTraveler
Corn Field
- Dec 5, 2003
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- 10,721
Alaska has accelerated replacement of older aircraft with 737-900ERs which are very low CASM domestic aircraft.
AS has noted those aircraft add 40-50 seats for about the same trip costs. They are a win-win for bean counters which is why UA has been so aggressive with using them to replace 757s.
But AS' RASM has gone down indicating it is seeing revenue pressures. Given that DL is adding even more capacity to SEA this year and AS is adding capacity as much capacity as DL including in some of the same markets, AS' RASM will continue to decline.
Fuel is helping everyone - it helps carriers fund expansion and it also helps those who are fighting other carriers' expansion.
but ultimately, AS' fundamentals will suffer because that is what you get when another competitor adds more capacity than AS has seen in SEA.
UA is pulling down some capacity just as they are doing in LAX but SEA as a whole is growing far more overall.
AS enjoyed a near monopoly hub for years and that appears to be ending.
It doesn't mean that AS can't continue to be a very strong airline; they likely will. It just means that they had a market pretty much all to themselves which is capable of supporting much for capacity than AS flew which is part of why SEA fares were fairly high, why they are falling now, and why AS and DL are both succeeding in SEA.
AS has noted those aircraft add 40-50 seats for about the same trip costs. They are a win-win for bean counters which is why UA has been so aggressive with using them to replace 757s.
But AS' RASM has gone down indicating it is seeing revenue pressures. Given that DL is adding even more capacity to SEA this year and AS is adding capacity as much capacity as DL including in some of the same markets, AS' RASM will continue to decline.
Fuel is helping everyone - it helps carriers fund expansion and it also helps those who are fighting other carriers' expansion.
but ultimately, AS' fundamentals will suffer because that is what you get when another competitor adds more capacity than AS has seen in SEA.
UA is pulling down some capacity just as they are doing in LAX but SEA as a whole is growing far more overall.
AS enjoyed a near monopoly hub for years and that appears to be ending.
It doesn't mean that AS can't continue to be a very strong airline; they likely will. It just means that they had a market pretty much all to themselves which is capable of supporting much for capacity than AS flew which is part of why SEA fares were fairly high, why they are falling now, and why AS and DL are both succeeding in SEA.
Loved this companion piece...Seems Alaska is objecting to their passengers paying most of the cost of the International terminal which will benefit Delta predominantly. Only 8% of Alaska passengers are international, but the user facility fees to fund the new terminal are being assessed on all passengers through Sea-Tac.
Duh!
http://www.bizjournals.com/seattle/news/2015/01/26/alaska-airlines-we-dont-want-to-pay-for-new-sea.html
Duh!
http://www.bizjournals.com/seattle/news/2015/01/26/alaska-airlines-we-dont-want-to-pay-for-new-sea.html
WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,721
the topic has been out for quite some time.
SEA itself noted that the funds that have been used to renovate the domestic facility for years came from int'l passengers while the int'l facility hasn't been renovated in decades.
SEA itself noted that the funds that have been used to renovate the domestic facility for years came from int'l passengers while the int'l facility hasn't been renovated in decades.
WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,721
btw, one analyst believes that DL actually has the edge because of its global portfolio which not only allows DL to offer a single FF program to all destinations (which AS tries to duplicate via its FF partnerships) but more significantly with single pricing and inventory control- which AS cannot duplicate because it doesn't have antitrust immunity to coordinate pricing with foreign partners.
http://www.bizjournals.com/seattle/news/2015/03/17/delta-has-an-edge-over-alaska-in-fight-for-seattle.html?ana=yahoo&page=all
AS will be fine but they are facing real competition for the first time in a long time.
http://www.bizjournals.com/seattle/news/2015/03/17/delta-has-an-edge-over-alaska-in-fight-for-seattle.html?ana=yahoo&page=all
AS will be fine but they are facing real competition for the first time in a long time.
