Alaska Airlines believes it and American Airlines will be extremely competitive for west coast corporate travellers

The recent tie-up between American Airlines and JetBlue Airways on the US eastern seaboard has received a lot of attention, but Alaska Airlines is already following a similar concept with the US major across the west coast of the country. Despite a bleak outlook for corporate demand for the foreseeable future, Alaska Air Group believes its strengthened partnership with American and its upcoming entry into the oneworld alliance will help bolster its standing among business travellers.

“We’re seeing what I believe the whole industry is seeing is that corporate travel is massively down over -90%,” Alaska Air Group chief commercial officer Andrew Harrison recently told analysts and investors. “…with the extension of closing of office spaces right now we’re not really seeing any thawing of business demand,” he explained.

Over the long term, Alaska believes it and partner American “are really well positioned to grow our presence and strength off the west coast both on the corporate side and leisure side,” Mr Harrison concluded.

Earlier this year, Alaska and American strengthened their partnership in Los Angeles and Seattle, and American plans to add intercontinental service from Alaska’s Seattle-Tacoma International Airport hub to London and Bangalore. American is also seeking to move its service to Shanghai service from Los Angeles to Seattle.

Alaska is also working to become a full fledged member of the oneworld alliance by year-end, which is slighter earlier than its previously planned entry date of 2H2021. Its CEO Brad Tilden remarked that even as international travel is not at the top of most people’s minds in the current environment, “competitively, being able to go into the marketplace when corporate travel is back and have a robust solutions that covers an extraordinary domestic network, but also international is important”.

Air travel has been significantly suppressed by Covid-19 travel restrictions but capacity levels remain relatively strong at Seattle-Tacoma International which is currently ranked within the world’s 25 largest airports by capacity.

CHART – Alaska Airlines is the largest operator at Seattle-Tacoma International and accounts for more than half of the total capacity at the airportSource: CAPA – Centre for Aviation and OAG (Data: w/c 03-Aug-2020)

Alaska is the largest operator at Seattle-Tacoma International Airport by a wide margin, and can supply solid feed to American’s long haul service. “…when we have international travel again, which we will, we’re really well positioned”, Mr Tilden stated. “…the oneworld offering out of Seattle and other west coast cities is just going to be really, really strong. So we’re excited about this, and we’re going to push it hard”, he added.

Alaska Air Group, the holding company for Alaska Airlines and Leviate (formerly Horizon Air), reported a more than -50% decline in traffic levels over the first six months of the calendar year with passenger levels down -53.6% to 10.4 million for the six months ended 30-Jun-2020. Mainline levels were down -55.6% and regional flying -47.2% with group wide load factor slipping -20.6 percentage points to 62.8%.

The performance was heavily influenced by the challenging conditions during 2Q 2020. For the three months ended 30-Jun-2020, passenger levels were down -87.7% year-on-year to just 1.5 million with mainline demand hit the strongest – down -90.2% – but with regional flying also down -79.4%. During the three month period its aircraft were only around a third full on average with loads down -47.8 percentage points at just 38.4%.

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