Alaska Airlines has its work cut out for it.
With Delta threatening its dominance at its hometown airport, Seattle, Alaska is facing what could be a fight for its life. Sure, Alaska does a lot of things right, and enjoys a high level of customer satisfaction. But Delta boasts a far larger flight network, virtually expanded by its long list of SkyTeam global alliance links. It’s a David-and-Goliath story, with the smart money on Goliath.
What can Alaska do to solidify its market position against Delta’s onslaught? There’s no easy answer. Bulking up on flights risks creating an overcapacity situation, which would undermine the airline’s pricing power and dilute its profits. An all-out price war with Delta would similarly dilute profits, and probably have little effect on market share. Like price promotions, aggressive frequent-flyer promotions would likely be matched, tit for tat, and leave both carriers’ positions unchanged.
What Alaska has opted to do most recently amounts to playing small ball. At least partly in response to Delta’s new-for-2015 revenue-based SkyMiles program, which will award more miles and perks to higher-spending customers, Alaska will increase the class-of-service bonuses earned by Mileage Plan members.
And smaller still is the Mileage Plan initiative announced today: waived fees for the first checked bag, throughout January, for all program members.
It’s a smart move on Alaska’s part, designed to call attention to Mileage Plan and the fact that it will continue to award miles the old-fashioned way, according to the distance flown. In 2015, that will be a major point of difference between Alaska’s traditional program and Delta’s new spend-based scheme.
Alaska can’t be bigger than Delta. But maybe it can survive by being better.
Reader Reality Check
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This article originally appeared on FrequentFlier.com.
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