Alaska Air looks for ways to boost revenue

Airline already has cut capacity, increased redemption levels

Posted: Wednesday, December 03, 2008

ATLANTA - An executive at Alaska Air Group Inc. said Tuesday the company is looking for ways to increase revenue as the weak economy puts pressure on demand for air travel.

Alaska Air operates Alaska Airlines and Horizon Air, which together serve more than 90 cities through their network in Alaska, Hawaii, the continental U.S., Canada and Mexico.

Brandon Pedersen, vice president of finance, said at the Credit Suisse Global Airlines Conference in New York that there may be a few markets where the Seattle-based company can increase fares.

He said the company has increased redemption levels for its frequent flier program, making it more expensive for customers to redeem miles for reward travel. Alaska Air charges for a second checked bag, but currently doesn't charge a fee for a first checked bag, Pedersen said.

On the demand side, Pedersen said that Alaska Airlines' occupancy rate based on advance bookings for December is up 3 points. It's up 3 points for January and up 1 point for February, he said. At Horizon Air, the occupancy rate based on advance bookings is flat for each of the three months, Pedersen said.

He said the company reaffirms previously announced plans for capacity cuts that will extend into next year.

"We think we have a realistic view of the world today," Pedersen said.

In September, Alaska Airlines said it would cut capacity by 8 percent this winter and slash up to 1,000 jobs. The carrier said the capacity reductions will start in November and continue into next year. At the time, it was disclosed that Horizon Air expects to reduce capacity in the fourth quarter by about 20 percent compared to the same period last year.

Last month, Alaska Air Group inked an expanded marketing alliance with Atlanta-based Delta Air Lines Inc. The move will help feed passengers to support new international routes Delta plans to launch next year. Delta's chief said at the time that the two carriers have not had any discussions about a combination.

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