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Alaska Airlines is getting a big boost from first class, Premium seats
Edward Russell
Contributor
Edward Russell is a contributor for TPG. An AvGeek at heart, he covered the airline business at FlightGlobal for eight years and previously covered finance in New York and Hong Kong.
Jan. 30, 2020
•
4 min read
Alaska Airlines is getting a big boost from first class, Premium seats
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Alaska Airlines wants to be the airline where travelers can still snag complimentary upgrades — or even afford first-class seats — all while keeping Wall Street happy.
The Seattle-based carrier saw revenues from its first-class and Premium Class economy seats rise by double-digits year-over-year in the fourth quarter, Alaska commercial chief Andrew Harrison said during a quarterly earnings call on Tuesday. Notably, premium revenues rose faster than the airline added premium seats to its fleet, an indicator of profitable growth.
“Our goal is to keep out premium cabins affordable, provide generous benefits to our loyalty members while competing effectively against our peers," Harrison said. He added that premium revenues are an "important contributor" to Alaska's earnings growth going forward.
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Alaska is far from alone in betting on premium dollars. Delta Air Lines, by far the leader in the segment, saw a nearly double-digit rise in premium- and loyalty-related revenues in 2019, and is seeing "increasing product affinity" from its business class and premium economy investments, according to executives.
United Airlines, for its part, is expanding domestic first class cabins on its Airbus A319s and A320s, and adding 50-seat Bombarder CRJ550s that have 10 first class seats to expand its premium offerings in smaller markets.
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Alaska tries to differ its premium offerings from those of its competitors. For example, on lucrative transcontinental routes between New York and the West Coast, the airline paved its own trail eschewing the lie-flat first class seats offered by competitors for a new first-class recliner seat. However, it offers complimentary upgrades to its elite frequent fliers on the routes — something travel consultancy Atmosphere Research founder Henry Harteveldt has called a "prized" perk — that either are not offered or are hard to snag on competing nonstops by American, Delta, JetBlue Airways and United.
Related: Delta says passengers are spending big on its premium products
Another way Alaska is boosting premium revenues is adding first-class seats to its jets. The airline had retrofitted roughly 60% of its 61 Airbus A319s and A320s with 12 first-class and 24 premium economy seats at the end of December. This represents four additional first class, and up to 12 additional premium economy seats on each aircraft.
The first reconfigured A320 entered service in February.
Operating revenue at Alaska grew 6% year-over-year to $8.78 billion on a 65% increase to $1.06 billion in operating income in 2019. The airline achieved a pre-tax margin of 12%.
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Go to reviewCard Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
Rewards Rate
| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
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Why We Chose It
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- Packed with credits foodies will enjoy
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Cons
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- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
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- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.