Alaska - Solidifying its Dominance in SEA

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Glenn Quagmire

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Apr 30, 2012
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"Alaska Air has consistently chosen to confront this threat head-on. On Monday, Alaska Air furthered this commitment by ordering 10 more Boeing 737-900ER aircraft. This new aircraft order will allow Alaska to counter the threat from Delta by growing while also reducing its unit costs.

Solidifying its dominance

As Delta has started to grow in Seattle, Alaska has made a strategic choice to ramp up its own growth in order to ensure that it continues to offer by far the best domestic network in Seattle. By doing so, it hopes to remain the preferred carrier for Seattle-based business travelers.

In May, Alaska announced a commitment to add 27 new daily departures from Seattle by the spring of 2015. Alaska has already added nonstops to five new cities from Seattle: New Orleans, Tampa, Baltimore, Detroit, and Albuquerque; and it will begin nonstop flights to Cancun next month. The rest of the increase will consist of extra frequencies on key routes to cities including Boston, Chicago, Denver, Los Angeles, and Portland."

"..,In other words, swapping out a 737-400 in favor of a 737-900ER essentially allows Alaska Air to boost its seating capacity by more than 25% at no additional cost. Naturally, this represents a nice margin tailwind.

It will also make Alaska a more formidable competitor in Seattle going forward. By the end of 2017, virtually the entire Alaska Air fleet will consist of state-of-the-art Boeing 737-800s and Boeing 737-900ERs. These are some of the most cost-efficient planes available today.

Looking further out, Alaska has orders for 37 Boeing 737 MAX aircraft -- planes that will offer a 13% improvement in fuel efficiency over the 737-800 and 737-900ER models. Thus, Alaska will have the ability to be more aggressive on pricing -- if necessary -- without endangering its double-digit pre-tax margin.

Alaska Air is making the right moves

One of Alaska Air's biggest strengths today is its balance sheet, which is superior to that of any other major U.S. airline. The company is using this financial muscle to upgrade and grow its fleet at an accelerated pace, thereby reducing its unit costs."

Entire article here:

http://www.fool.com/investing/general/2014/10/11/air-war-deltas-rival-isnt-backing-down-in-seattle.aspx
 
if solidifying their dominance comes despite the fact that DL has grown its seats in SEA at a rate 4X higher than AS and DL now has 1/4 the total number of seats that AS has and is seeing higher than average system RASM growth, then sure, AS is increasing its dominance.

Further, DL, not AS, has been the on-time leader between the two in SEA for the last two months according to the DOT.

AS' addition of 739ERs certainly helps but the trend is not at all moving in the direction of increased dominance but rather the opposite direction.

As the author notes, AS is increasing capacity at very little marginal cost but RASM will go down as fares fall due to increased competition.

IN major AS markets such as SEA to LAX and SFO, DL has about half the number of seats that AS has in the market and in some cases at fairly comparable numbers of flights.

In ANC even during the fall, DL has just about 40% of the number of seats that AS has - and SEA is not DL's only gateway to ANC.

AS is a great airline but whether anyone likes it or not, DL is well on track to having a solid 20-25% of the market including int'l flights on its own metal that AS simply will not operate.


besides, there are some WN fanboys that think that WN will buy AS, ending AS' dominance of anything.

I'm skeptical but if it happens it would certainly help DL.
 
Kev being from PDX why didn't you have an interest joining AS instead of NW? Seems like the kind of company right up your alley.

Josh
 
737823 said:
Kev being from PDX why didn't you have an interest joining AS instead of NW? Seems like the kind of company right up your alley.
Josh
Flamebait
 
Kev being from PDX why didn't you have an interest joining AS instead of NW? Seems like the kind of company right up your alley.

Josh
if Kev wants to stay on the ramp, he wouldn't have a job with AS except in a few remote places on the planet.

Kev is an asset to DL and I am glad he does work for DL. The fact that I disagree with him on some key but relatively small things in life doesn't mean that I don't respect him and recognize the value he adds to DL.

I have a lot of respect for Kev.

And I agree with him that AS is a great company and I wish them the best. DL is a tough competitor but AS is fully capable of holding their own. SEA is a market that is big enough for two major carriers, esp. since DL is not focused on doing with SEA what AS does.
 
WorldTraveler said:
if Kev wants to stay on the ramp, he wouldn't have a job with AS except in a few remote places on the planet.

Kev is an asset to DL and I am glad he does work for DL. The fact that I disagree with him on some key but relatively small things in life doesn't mean that I don't respect him and recognize the value he adds to DL.

I have a lot of respect for Kev.

And I agree with him that AS is a great company and I wish them the best. DL is a tough competitor but AS is fully capable of holding their own. SEA is a market that is big enough for two major carriers, esp. since DL is not focused on doing with SEA what AS does.
I completely forgot about that point. Well I guess Kev could work in the state of Alaska. I'm sure the AS rampers in SEA enjoyed the "orderly, clear and transparent" RIF process as they were replaced by Menzies in summer 2005.

Josh
 
the article is about SEA, not AS in its namesake state, even if its headquarters aren't there.

all the indications are the both AS and DL will achieve what they want and consumers will benefit from the increased competition.

open markets are a great thing.
 
737823 said:
Kev being from PDX why didn't you have an interest joining AS instead of NW? Seems like the kind of company right up your alley.

Josh
......the amount of stupid here hurts so bad its not funny. 
 
 
Kev3188 said:
F**k off, shadow man...
 
 

Yep.

Now back to the show...
couldn't have said it better my self. 
 
reflecting the changing airline market in SEA, UA will close its SEA FA base after cancelling its long haul flight (NRT recently).

Despite the mindset that DL is out to take out AS, DL is really filling a role that UA had as the largest network carrier (besides AS) at SEA for years and taking over much of the non-hub and spoke routes that other network carriers besides AS have offered for years.

DL hasn't announced its growth plan for 2015 for SEA but DL has previously stated that it will add new cities to SEA; DL's overall percentage of domestic capacity from SEA is not much higher than the non-spoke routes that were operated by other legacy carriers.

However, DL pilots have been told by mgmt. that DL has acquired 4 more gates at SEA.
 

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I think this tread is about SEA and AS growing there

In case someone folks have math issues here is the increase in seats comparing July 2010 to july 2014

AS increased seats by 117,000 seats
DL increased seats by 141,000 seats

Knowing that AS is 4 times larger in SEA than DL they are doing great

Saying DL grew much faster in SEA by % is misleading as (everyone sit down for this revelation) when you have a smaller denominator it's easier to get higher growth percentages on a smaller base
 
it's worth noting that AS was the only major airline in the US that saw its RASM decrease in the 3rd quarter due to both lower yields and less full planes.

they made up for it by lower costs across the board and by flying more capacity but they got less revenue per seat mile than they did in the past.

AS' answer to DL has been to flood the market with capacity to keep DL from gaining a foothold and yet AS is having to work harder to get more revenue by carrying a growing number of passengers who are paying less.
 
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