Alaska Sees Corporate
Business Growth as Network
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 Virgin America’s integration
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, as well as Alaska’s plans
once the heavy lifting of the merger is complete.
WHAT’S THE LATEST ON ROUTE GROWTH?
Forty-six 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.
WHAT HAS THIS MEANT FOR YOUR CORPORATE BUSINESS?
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.
HOW ABOUT THE ROLLOUT OF YOUR PREMIUM ECONOMY CABINS?
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 time.
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: Mexi-
co, Canada, Costa Rica and Cuba
and the United States, of course.
For us to serve the internation-
al 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 Ger-
many and Finnair—so great new
access for Europe along with our
existing partnerships with Brit-
ish Airways and Icelandair. The
domestic alliances are evolving
a bit right now. We’re no lon-
ger affiliated with Delta, and the
American relationship, which
is still very important to us, is
changing a little bit to reflect our
growing domestic network.
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?
We 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.
HOW IS ALASKA AND VIRGIN
AMERICA’S MOVE TOWARD A
SINGLE BRAND PROGRESSING?
Some of it will really start to
trigger after we get to the combined PSS [which Alaska has
pushed forward from the end of
2018 to the second quarter of
next 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
“Having the balance of SFO and San Jose, especially with
the very vibrant tech sector in Silicon Valley, is powerful.”
Alaska Airlines SVP external
relations Joseph Sprague talks:
• Bay Area network
• Alliance strategy
• Why Alaska isn’t
interested in basic