Unlike most of its competitors, Alaska Airlines has been profitable for 33 out of the last 39 years, and it has avoided merging with other airlines to stay afloat.In 2012, it reported a 29% increase in profit over the previous year and a record $316 million in net income. How has it managed to do so well in an industry that has been struggling in the aftermath of 911, record storms, the financial meltdown, and escalating fuel prices?
A large contribution has come from the basic components of marketing.
Building on its good financial performance, Alaska Airlines has seen its stock price rise more than 300% since 2008. It has also built an excellent reputation for serving the people of Alaska. Because of the climate, terrain, and vast distances between locations, Alaska Airlines is one of the preferred options for transporting people and goods around the state. For example, Nome residents regularly fly to Anchorage to buy what they need in the better-stocked stores, and since its hospital services are limited, patients are often flown to Anchorage for operations and emergencies.
I will never forget the time that United stranded me in Portland, Oregon on a business trip. I got to the airport and found my flight was cancelled. There was a huge line of people scrambling to find alternate flights back to LA. When I got to the front of the line, the United agent told me that the remaining flight was overbooked and my only option was to fly back to LA the next morning.
As I walked away dejected, an Alaska reservation agent offered to help me even though his airline had nothing tangible to gain (at the time, Alaska did not have flights to LA). He went into his computer and told me I could fly United to Seattle and then United from Seattle to LA.
I went back to United and told the agent to book me on the flights the Alaska agent suggested. I told her that the Alaska agent was kind enough to find me a solution even though she previously refused to help me. Because of the Alaska agent’s kind gesture, I do whatever I can to fly on Alaska Airlines whenever I have a choice.
Positioning and Product
Building on its good corporate image, Alaska has incorporated unique advantages into its service offerings that are represented by its Eskimo logo on the tail of the plane. Its pilots are given extensive training and practice under severe weather and terrain conditions. This contributes to the safety of Alaska’s airline service. Terrain and weather also make it difficult to use traditional ground-based radar. As a result, Alaska pioneered the latest satellite navigation technology – further contributing to the safety and reliability of its service. It was also one of the first airlines to offer in-flight moves in the 1950’s, and during the cold war, it was one of the few airlines to offer charter flights to the Soviet Union.
Because of the high cost of operating an airline over the distances, terrain, and weather of the state, Alaska has little or no serious regional competition. Deregulation enabled the airline to expand into other markets that include the West Coast, Mexico, Hawaii, and Salt Lake City — generating additional revenue and profits. It now covers 62 destinations with 119 aircraft and roughly 3,200 employees.
According the J.D. Power and Associates, as of 2011, Alaska Airlines was number one in customer satisfaction four years in a row. It also is frequently number one in on-time performance.
Pricing and Marketing Information System
When it comes to pricing, the high costs and lack of serious competition within Alaska produce higher prices. However, Alaska has pioneered a system that measures 50,000 points of data to improve on-time performance and save time and money. As a result, it is estimated that this system can save or make the airline an additional $25 to $30 million per year so that it can hold down costs and prices within Alaska and successfully compete on less costly routes in other markets.
In addition to widening out its network to 62 destinations, Alaska has forged agreements with American and Delta. These airlines can sell tickets on Alaska flights and Alaska can benefit from their international networks, reservations systems, and connecting with their frequent flyer programs.
If there is a weakness in the Alaska Airlines marketing mix, it would be in their promotion strategies. While their ads have a history of being clever and funny, they seem to be few and far between during the past few years. This is most likely a reaction to holding down costs to stay profitable. The Airline needs to communicate a bit more often than it has been or it risks losing business to competitors. You have to keep your brand in front of the public, and what too many companies do not understand is that people’s memories fade and younger prospects may not know the reasons why they should fly on your airline if you do not remind them.
Even so, Alaska Airlines is outperforming its competitors because it is doing a better job in marketing overall. As long as it focuses on better customer service, greater efficiency, and on-time performance, it is likely to continue its string of profitable performance.
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