Alaska Air Will Take On All Comers, Chief Says
Ray Vecci minced no words:
"We will go head-to-head to match fares and compete on our terms. We have a competitive product and the right price. We no longer are hemorrhaging or worrying about the competition."
The chairman of Alaska Air Group, parent of Alaska Airlines and Horizon Air, told shareholders yesterday that Alaska is ready to meet the much-heralded start-up of service in the Pacific Northwest by no-frills Southwest Airlines.
"We will have more frequency (more flights) and capacity in every market Southwest will be flying, and our prices will be the same. Alaska is the preferred carrier and will remain so," Vecci said.
Industry watchers have been concerned that competition from Southwest, the Dallas-based carrier that outperforms most other domestic airlines because of low costs and productivity, would hurt Alaska. Southwest serves no food and does not check baggage through to other airlines.
Vecci said the trimming of $80 million from Alaska's operations costs in the past two years, including new labor contracts, and increased capacity have positioned it to be competitive with any airline.
Alaska has stepped up use of its 70 jetliners to an average of 10.2 hours per day from 8.3 hours last year. "That's 70 hours more per day we're flying," he said. He predicted capacity would increase by 24 percent this year.
Southwest is beginning service between Seattle and Spokane to compete with Horizon Air and on other routes to the Bay Area against Alaska Airlines.
It has been advertising heavily locally for several weeks. Some have said Southwest's strategy is to use low fares to create a new market by attracting people out of their cars. Horizon has been emphasizing this aspect of the market for years.
Alaska will be promoting its "superior service at the same price" as Southwest in ads that will begin next week, Vecci said.
Vecci, at times sounding evangelical, said Alaska decided some time ago that low fares are here to stay.
He said his airline is considering new service between Spokane and Oakland and is looking at a Spokane-Los Angeles nonstop flight. In addition, routes to Alaska are strong with 20 nonstops to Anchorage and Fairbanks, including from Seattle, Portland and San Francisco.
Will Alaska be profitable this year? Vecci wouldn't predict, saying a lot depends on how the summer unfolds. Stock analysts such as Bill Whitlow of Seattle's Pacific Crest Securities, and others, see $1 or more per share in profit this year for Alaska.
In the first quarter, ended March 31, sales increased 12 percent to $280.4 million, from $250.2 million a year earlier, but the group still lost money - $6.3 million, or 47 cents per share, narrowing from a loss of $15 million, or $1.25 per share, in the 1993 period.
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