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AS Introduces Simplified Fare Structure

Fri Feb 07, 2003 3:57 am

New stuff coming from Alaska Airlines...let's see if others match it.  Smile

FOR IMMEDIATE RELEASE February 6, 2003

ALASKA AIRLINES SIMPLIFIES FARE STRUCTURE: CUTS BUSINESS FARES

SEATTLE – Alaska Airlines is slashing its highest fares by nearly 50 percent in a variety of markets as part of a test to see if a simplified fare structure will lure business travelers back to the skies.

“We’re going to test the theory that the convoluted nature of airline pricing is a major deterrent to flying,” said Gregg Saretsky, executive vice president of marketing and planning. “This will provide the best value to our customers and at the same time simplify the fare structure.”

Beginning today, business fares that require little or no advance purchase or minimum stay have been reduced by hundreds of dollars on routes such as Seattle-Boston, Anchorage-Chicago, Seattle-Las Vegas, Portland-San Francisco, Ontario-Seattle, Seattle-Miami and Vancouver, BC to San Francisco.

First Class fares in those markets have also been cut dramatically.

“A sluggish economy, coupled with the aftershocks of 9/11, has given rise to a troubling fact that has helped put the airline industry on its back: Many business travelers are no longer flying and those who are flying often modify their itineraries in order to qualify for the lowest possible fare,” Saretsky said.

For instance, the lowest-priced business fare, which requires only a three-day advance purchase, has been slashed from $839 to $499 for travel between Seattle and Boston, and between Anchorage and Chicago it is $574, down from $1,073. On the West Coast the San Francisco-Vancouver fare dropped from $306 to $189.

Another idiosyncrasy of the traditional airline fare structure is the existence of as many as 15 or more different fares between the same two cities. The new structure reduces the number of individual coach fares to as few as six.

The nation’s ninth largest carrier, Alaska Airlines was just named 2003 Technology Leader of the Year by Air Transport World magazine. It was also ranked best major U.S. airline in the 2002 Airline Quality Rating compiled by Wichita State University and the University of Nebraska at Omaha. And readers of Travel+Leisure magazine voted Alaska Airlines No.1 among the major airlines in the “World’s Best Domestic Airline.” Alaska and its regional partner, Horizon Air, together serve more than 80 cities in the Lower 48, Alaska, Canada and Mexico. For reservations go to www.alaskaair.com or call Alaska's toll-free reservations line at 1-800-ALASKAAIR (1-800-252-7522). For more news and information, visit the Alaska Airlines Newsroom on the Internet at http://newsroom.alaskaair.com.
# # #
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
akelley728
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RE: AS Introduces Simplified Fare Structure

Fri Feb 07, 2003 4:22 am

Sounds like what America West did last year with great success. Go AS!!!
 
Tango-Bravo
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RE: AS Introduces Simplified Fare Structure

Fri Feb 07, 2003 9:01 am

Surprising to hear the words attributed to Gregg Saretsky "We're going to test the theory that the convoluted nature of airline pricing is a major deterrent to flying." Seems like Mr. Saretsky has championed convoluted pricing--at least until very recently. This is a hopeful indicator that Bill Ayer's no nonsense approach is prevailing over, and perhaps reining in, marketing and pricing departments that have been, in all candor, tails that have been allowed to wag the dog at Alaska. The extent to which a handful of staff in these departments can negatively effect an otherwise great airline through all of the nonsense they devise is nothing less than a travesty.
 
tzsfo
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RE: AS Introduces Simplified Fare Structure

Fri Feb 07, 2003 3:30 pm

Wasn't it just last year that Alaska upped their fare buckets from 9 (?) to the 15 they currently have? I don't think I would call this a change but rather a failed idea that currently has market value to advertise!! I love AS and I think this will help them....but man you have to love their spin-doctors.....

TZ
It takes nerves of steel to stay neurotic. — Herb Kelleher
 
tzsfo
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RE: AS Introduces Simplified Fare Structure

Fri Feb 07, 2003 3:35 pm

I found the article from when they raised there fares in April of 2002 from 9 to 15....

http://www.alaskasworld.com/news/2002/04/18_farebuckets.asp

Maximizing revenue
Expanding number of fare buckets a team
effort that will go straight to the bottom line
Posted April 18, 2002


In an effort to maximize revenue, Alaska Airlines is expanding its fare "buckets" from 9 to 15.
"We’re going to peel the proverbial onion differently," said Dave Pelter, managing director of revenue management. "This will generate more revenue without increasing expenses."

How so?

Two reasons, says Pelter.

"First, splitting seat inventory into more fare buckets allows us to better control the number of seats sold at lower fares and maximize the number of seats sold at higher fares. In other words, we minimize the amount of money we’re leaving on the table because our pricing and revenue management departments will be able to track the true demand for fare specials. Each promotional fare will be given a specific bucket rather than being lumped with all fare sales into the same class."

Second, Pelter says, increasing the number of fare buckets provides a way for the airline to reserve First Class seats for passengers paying full fare."

The new system will be implemented April 22.

"This also allows Mileage Plan to modify the MVP/MVP Gold First Class upgrade program, which will improve access to First Class for our best customers," said Brian Johnson, manager of business travel marketing. The change in the upgrade program takes effect April 30.

The creation of the new system has been a cooperative effort involving many departments, including planning, revenue management, sales and marketing, Mileage Plan, alaskaair.com, the Image team, services, revenue accounting, the Instant Travel Machine team, Vacations, finance and ICS.

"It has been a colossal project," said Rick Pykkonen, the senior project manager, "but the increase in revenue will be worth it."
It takes nerves of steel to stay neurotic. — Herb Kelleher
 
cloudy
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RE: AS Introduces Simplified Fare Structure

Fri Feb 07, 2003 6:04 pm

This may be partly a defensive move to deter Jetblue and perhaps others
from invading Ancorage.
 
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RE: AS Introduces Simplified Fare Structure

Sat Feb 08, 2003 9:04 am

This may be partly a defensive move to deter Jetblue and perhaps others
from invading Ancorage.


ROFLMAO!!!!!!!

Whoooooo!!! Ok, lemme catch my breath...damn, that was funny!  Big grin

How exactly does one "invade" Anchorage? Many U.S. majors serve ANC, but find it uneconomical to do so based on it being a small market, and due to the operational challenges the market poses.

So please, enlighten me...how would B6, WN, or any other LCC "invade" a market they'd make only marginal amounts of money in?

AS isn't minting money by serving ANC, contrary to popular belief.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
gigneil
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RE: AS Introduces Simplified Fare Structure

Sat Feb 08, 2003 9:23 am

B6 has indicated in the past that they'd like to offer service to ANC... it is a very expensive route and their lower cost structure could make it work.

But a lot of Alaska's business from ANC comes from flights to the outlying cities in AK. JB would be at a disadvantage there.

N
 
TommyBoy
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RE: AS Introduces Simplified Fare Structure

Sat Feb 08, 2003 1:46 pm

Something AS isn't telling everybody...they've simplified business fares at the expense of leasure fares....for example, the day they announced their new business fare structure they "upped" the rountrip fare between LAX and Los Cabos, MX by $70.
 
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RE: AS Introduces Simplified Fare Structure

Sat Feb 08, 2003 3:19 pm

they "upped" the rountrip fare between LAX and Los Cabos, MX by $70

And your point is..? Oh, wait I forgot...that's "unfair", right?  Insane

The LAX-SJD fares have been unrealistically low for several months, as leisure travel to Mexico had been very low. The demand is picking back up now, and AS is able to charge a bit more for their product.

One thing that needs to be said...while there has historically been a huge gulf between the high end walk-up fares and the low end, advance-purchase "fly after 10pm wearing a green tie and a red sock" bargain-basement rates, it's not just because the walkup fares were unreasonably high. It's also that the discount rates have been unreasonably low. AS is attempting to address this problem by "right-sizing" the fares to more reasonable levels on both ends of the spectrum.

I know that's not too popular with the "I want everything for $49.00 each way" crowd, but that's how it is.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group