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Alaska Airlines: Marketing of New Routes
Transcript of Alaska Airlines: Marketing of New Routes
The Alaska Airlines Mileage Plan o w T Marketing Plan
BA643 Marketing Management STP Rudi Gens, Catherine Gilmore, Karl Schulz and Venus Sung Marketing of New Routes Situation Analysis Context Company Customer Segmentation
Positioning Market Analysis,
Strategies/Goals (STP) Tactical Plans Competitors Collaborators Strengths Threats 5C'S s Weaknesses Acquisition of a smaller airline company Additional destinations Expansion of products and services offered Vertical takeover Airlines are charged a fee using Global Distribution Systems (GDS) to obtain fares (Alaska Air Group, 2012).
Geographic area of operations, Alaska and the Pacific Northwest, has seasonal fluctuations. Second and third quarters see an increased vacation travel for the state of Alaska, while the traffic is lower for the rest of the years.
Adverse weather conditions during the winter months lead to increased operating costs (Alaska Air Group, 2012).
Dependency on sole supplier for supplies and services. Starting in the mid 90's, Southwest started a paradigm shift in the airline industry. The concept was offering low fares, no frills. Starbucks
Bank of America
Delta Airlines (Sky Alliance)
DGS (Delta Global Systems) Opportunities Alaska Airlines is a principal subsidiary of the Alaska Air Group, incorporated 1985 in Delaware, that provides scheduled air transportation for passengers and cargo throughout the United States, Canada and Mexico (Alaska Air Group, 2012). "On-Time Performance Service Award among major North American Airlines" for the last two years. The customer service is ranked "Highest in Customer Satisfaction among Traditional Network Carriers" in the North America Airline Satisfaction Study for five consecutive years, performing particularly well in four of the seven criteria: boarding/deplaning/baggage; flight crew; check-in; and reservation (Powers and Associates, 2012). Frequent flier program, allows customers to earn and redeem miles from 15 airline partners. It was awarded a number of Freddie Awards, the most prestigious member-generated awards in the travel loyalty industry (Alaska Air Group, 2012). Wages, aircraft fuel, aircraft ownership, and facilities rents add to high fixed-costs of airlines.
Jet fuel prices at the West Coast, the main operating market of Alaska Airlines, are higher and more volatile than prices in the Gulf Coast or on the East Coast.
Potential accidents or incidents are the most significant threats of any airline S strategies Alaska Airlines focuses on the brand perception to a diverse and evolving demographic of airline
travelers. This involves the improvement to airport spaces at Los Angeles International Airport (LAX). In order to increase direct customer relationships, Alaska Airlines invests in its online purchasing portal, social media, and customer loyalty programs such as Club 49. CARRIER SEA LAX ANC PDX Alaska
8.9% BUSINESS CLASS VS. ECONOMY CLASS
Customers traveling for business are more likely part of an airline's frequent flyer program. More interested in schedules, punctuality, and flexibility.
Customers vacationing occasionally fly and are more fare conscious . (Teichert et al., 2008). Product Differentiation
from competition frequent flyer program on-time performance and
other key operational metrics baggage service guarantee
travel experience (airport environment) on-board experience Wi-Fi availability
high-quality food and beverage products
interior design of new aircrafts environmental leadership 20% aviation bio-fuel on selected routes alliance with Delta Air Lines and American Airlines Price Prices are re-evaluated in comparison to competitors and depending on how many tickets are sold, prices are lowered to get people on board through a Yield Management system. Place Promotion “Bolstered by strong demand from the business community and vacation
travelers alike, we’re thrilled to announce convenient nonstop service from San Diego to historical ‘Beantown’ and the beautiful ‘Garden Isle. With the addition of these two new routes, Alaska Airlines will offer 160 flights a week from San Diego to a dozen cities by next summer.”
- Joe Sprague, Alaska Airlines Vice President of Marketing. “ Boston Promotion "Parhk the cah in Bawstun" Alaska Airlines announces daily service from San Diego to Boston beginning March 29. San Diego Alaska Airlines will offer 160 flights a week from San Diego to a dozen cities by next summer.
Since May, Alaska has added four flights from San Diego including nonstop daily service to Orlando, Fla., and three intra-California routes to Fresno, Monterey and Santa Rosa. Alaska already offers daily service from San Diego to Honolulu on the island of Oahu and to Kahului, Maui. San Jose Cabo Puerta Villarta Extend network by low air fares for new routes Experience superior customer service Sign up for mileage plan/visa card Email service for news To announce the new services from San Diego to Lihue, Kauai, a San Diego-based Polynesian dance group performed native dancers. Build relationships and brand awareness through selective distribution
Alaska Airlines magazine
Online presence through parent site and other social media outlets customer service The customer service is ranked "Highest in Customer Satisfaction among Traditional Network Carriers" in the North America Airline Satisfaction Study for five consecutive years, performing particularly well in four of the seven criteria: boarding/deplaning/baggage; flight crew; check-in; and reservation (Powers and Associates, 2012). Introductory Fares: Starting $129 each way
Earn Double Miles on flights between May 7 and July 17, 2013 Introductory Fares: Starting $209 each way
Earn Double Miles on flights between June 7 and August 7, 2013 Introducing high quality airlines with new 737 900ER through TV, radio, print: 80 flights to 160 flights/month.
Currently spending 3 million dollars in advertising in San Diego to gain brand awareness Overall economy in the airline industry
Expansion into a competitive, established market
Differences between opening up routes in San Diego and Seattle Targeting for new routes All Boeing 737 fleet (importance pilots, mechanics, parts)
Paid for the last nine aircraft in cash
Lowered debt to income ratio by 18% with a goal of 50/50 by 2015 Connectivity to hubs
High demand/low service
Local short distances East Coast destinations
Destinations with international connectivity REFERENCES
Alaska Air Group, 2012. Annual report 2011, Form 10K. U.S. Securities and Exchange Commission, http://www.sec.gov/Archives/edgar/data/766421/000076642112000018/0000766421-12-000018-index.htm (accessed 20-Nov-2012).
Alaska Airlines, 2012. Route Map. http://www.alaskaair.com/content/route-map.aspx?lid=nav:planbook-routeMap (accessed 22-Nov-2012).
Bureau of Transportation Statistics, 2012. Aviation and Airline Data. http://www.transtats.bts.gov/airports.asp (accessed 21-Nov-2012).
Delta Air Lines, 2012. Annual Report 2011, Form 10K. U.S. Securities and Exchange Commission, http://www.sec.gov/Archives/edgar/data/27904/000144530512000272/dal1231201110k.htm (accessed 21-Nov-2012).
Koo, B., B. Mantin, and P. O'Connor, 2011. "Online distribution of airline tickets: Should airlines adopt a single or a multi-channel approach?" Tourism Management no. 32 (1):69-74. doi: 10.1016/j.tourman.2009.11.008.
Powers and Associates, 2012. 2012 North America Airline Satisfaction Study. Press Release. http://www.jdpower.com/content/press-release/aOGunkG/2012-north-america-airline-satisfaction-study.htm (accessed 20-Nov-2012).
Ramon-Rodriguez, A.B., L. Moreno-Izquierdo, and J.F. Perles-Ribes, 2011. "Growth and internationalisation strategies in the airline industry." Journal of Air Transport Management no. 17 (2). doi: 10.1016/j.jairtraman.2010.11.002.
Schulz, K., 2012. Interview with Joe Sprague VP of Marketing, Alaska Airlines. Personal communication.
Southwest Airlines Company, 2012. Annual Report 2011, Form 10K. U.S. Securities and Exchange Commission, http://www.sec.gov/Archives/edgar/data/92380/000119312512049647/d293991d10k.htm (accessed 21-Nov-2012)
Teichert, T., E. Shehu, and I. von Wartburg, 2008. "Customer segmentation revisited: The case of the airline industry." Transportation Research Part a-Policy and Practice no. 42 (1):227-242. doi: 10.1016/j.tra.2007.08.003.
United Continental Holdings, 2012. Annual Report 2011, Form 10K. U.S. Securities and Exchange Commission, http://www.sec.gov/Archives/edgar/data/100517/000119312512073010/d260625d10k.htm (accessed 21-Nov-2012).
United States Census Bureau, 2011. Information & Communications: Internet Publishing and Broadcasting and Internet Usage. Statistical records. http://www.census.gov/compendia/statab/cats/information_communications/internet_publishing_and_broadcasting_and_internet_usage.html (accessed 20-Nov-2012). “With roots in San Diego spanning more than two decades and a growing presence in the city, Alaska Airlines is proud to support San Diego State University and the community with a plane they can call their own.” -Joe Sprague, VP Marketing