Alaska Airlines pax numbers up 1% in Sep-2012, load factor stable
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Alaska Air: the airline's network diversification continues ahead of closing Virgin America merger
During the next couple of years Alaska Air Group faces one of the most important milestones of its 84-year history with the presumed approval and closing of its merger with Virgin America, followed by the complex integration of the two companies.
Alaska has not offered capacity guidance for 2017, but its mainline fleet is projected to grow by just a single aircraft as it completes the phase-out of its Boeing 737-400 Classics. Its regional subsidiary Horizon begins deliveries of Embraer 175s in 2017, which could drive most of the group’s capacity growth for the year. But it is likely that Alaska is aiming to grow total ASMs below 2016’s increase of 8.5%.
As it prepares to close on its acquisition of Virgin America Alaska is continuing its stand-alone network evolution that includes capitalising on loosened operating restrictions at Newark airport, which helps the company bolster its position on the US east coast. Alaska is also targeting more midwestern markets in 2017, one feature of its efforts to diversify its offerings during the last few years.
Alaska and Delta: the end of a partnership, but the start of new competition on the US west coast
A decision by Alaska Air Group and Delta Air Lines to dissolve their codesharing partnership in late 2016 was not surprising, given that the demise of their relationship began about four years ago when Delta opted to build Seattle into a strategic trans Pacific hub. Since that time the financial benefit Alaska has enjoyed from the relationship has dwindled as Delta has built up its own network in Seattle to feed its long haul flights, rather than rely on passengers from Alaska.
After the two airlines formally announced their split: through the planned launch of seven new markets from the airport in 2017 Delta sent a clear message that it had no intention of backing down in Seattle, breaking an Alaska monopoly in several of those markets. However, Delta’s international expansion from Seattle appears to be on hold until the airport completes a new customs facility at the airport in 2019.
Even as their relationship officially ends, competitive dynamics between Alaska and Delta will intensify on the US west coast as Alaska embarks on its merger integration with Virgin America. Alaska will find itself competing with Delta and numerous other airlines in the strategic and fragmented Los Angeles market, and the merged entity retains a solid presence on numerous key routes from the airport.