Alaska Air Group’s warnings of a tough 2Q2013 come to fruition; unit revenues come under pressure

After rationalising its own capacity in markets from the US mainland to Hawaii and seeing relief from competitors shrinking their supply, Alaska Airlines is facing pressure on long-haul markets to the state of Alaska alongside the build-up of new US transcontinental markets that crimped its unit revenues during 2Q2013. The carrier is also warning that its unit revenues will fall again year-on-year in 3Q2013.

The carrier previously warned of a tough 2Q2013 as more carriers added capacity from the US mainland to Anchorage during the summer high season. Its predictions crystallised as Alaska reported significant decreases year-on-year in its yields and unit revenues during the quarter.

At the same time Alaska is feeling pressure from some of its own rapid growth - the introduction of roughly 30 new markets within the past three years. With the bulk of that expansion complete, Alaska during the next year plans to digest the rapid expansion, and states it may not introduce any new markets during 2014.