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Vol. 13, No. 48 Week of November 30, 2008
Providing coverage of Alaska and northern Canada's oil and gas industry

AK-WA Connection 2008: Airline protects its ‘bread and butter’

50 percent hike in costs prompts Alaska Airlines to cut flights, lay off up to 1,000 workers; but no cutbacks in plans for Alaska

Rose Ragsdale

For Alaska-Washington Connection

Alaska Airlines has refrained from increasing fees for its passenger and cargo services in the state of Alaska even though the cost of keeping its airplanes aloft has jumped 50 percent during the past year.

“Alaska is a huge part of our business, both in passenger and cargo services, and in a lot of areas, there are no roads” said company spokeswoman Marianne Lindsey. “We’re maintaining our flight schedule. In many communities we serve in Alaska, we’re almost considered a utility, so we haven’t increased our fees despite the increase in fuel costs we’ve experienced.”

The Seattle-based air carrier followed the industry by increasing its fees in the Lower 48, including charging passengers for a second bag, and cutting its flight schedule by 8-15 percent.

After losing $50 million during the first six months of 2008, the airline said it needed to take “decisive action.”

But the changes will not extend to Alaska, according to Lindsey.

“We consider Alaska our bread and butter, and we’re protecting the state,” she said.

The belt-tightening is also forcing Alaska Airlines and its sister carrier, Horizon Airlines, to lay off up to 1,000 employees, including pilots, cabin crew, technicians and service staff. The job cuts represent about 10 percent of the work force, and will begin Nov. 9.

Alaska Airlines CEO Bill Ayer recently told reporters that “the one-two punch” of record oil prices and a weak economy, on top of increased competition, has hurt.

“Regrettably, a reduced schedule means we need fewer employees,” he said.

It could have been worse. The airline is adding flights to Hawaii and Minnesota, but its flights around the fringes that are getting cancelled, such as red-eyes and some weekend flights that lose too much money.

The cutbacks, however, will not affect flights or services in Alaska, Lindsey said.

In Alaska, “we’re continuing to keep our fares low so people will continue to fly in this economy,” she added.

Runway software to enhance safety

Despite the higher fuel costs, the airline is moving forward with at least two planned upgrades, installing runway collision avoidance technology and providing access to the Internet for passengers aboard all of its aircraft.

In the first safety move of its kind on passenger jets, Alaska Airlines recently said it will install Runway Awareness and Advisory System, or RAAS, in cockpits. The technology is designed to guide pilots through what seems routine on the ground, but can be very dangerous.

Regulatory agencies, airlines and others in the aviation community regard runway incursions as one of the industry’s biggest safety issues.

This summer, for example, an AirTran Boeing 737 landed at Sea-Tac International Airport from Baltimore when Northwest Flight 106 was departing for London. Airtran was supposed to hold its place, letting the Northwest Airbus take off. Instead, investigators say without clearance, the Airtran jet crossed in front, leaving the Northwest pilots barely enough space to pull up. An estimated 728 people have died in runway accidents between 1996 and 2007.

Installing the Runway Awareness and Advisory System, will enable Alaska Airlines pilots to weave their way through the myriad of taxiways at busy airports and make sure through verbal warnings that they have enough room to take off.

“Runways are a challenging environment where everything comes together,” said Gregg Saretsky, Alaska Airlines’ executive vice president of flight and marketing. “RAAS is the latest step in Alaska’s ongoing journey of innovation with Honeywell. By putting this advanced situational awareness technology on all of our planes, coupled with other systems we have in place, Alaska will be flying the most technologically modern airline fleet in the United States, and our pilots will be assured of an additional layer of safety while on the nation’s runways.”

Alaska Airlines began installing RAAS on its Boeing 737s in July after working with Honeywell to make sure the technology met the carrier’s specific operational needs. During the past three years, Alaska pilots have helped develop and test RAAS.

The Wall Street Journal reports Alaska Airlines has adopted four of the nine possible pilot warnings. Makers Honeywell told the newspaper that the system doesn’t tell you whether there is another plane on the runway, but technology companies are working on that. Alaska Airlines planned to have its entire fleet of 737s (112) outfitted by the end of September.

Internet access to woo customers

Alaska Airlines is also moving forward with plans to install Internet access for passengers in all of its aircraft. After working with technology developer Row 44 of California for more than a year, the airline plans to roll out the service by the end of 2008, according to Lindsey.

Though it has researched several pricing scenarios, Alaska Airlines is considering offering free Internet connectivity aboard all 114 of its aircraft in an effort to inspire customer loyalty.

The Internet system uses a constellation of Hughes satellites to communicate with the planes. Each aircraft will be equipped with an antenna and a computer that will transmit the broadband content via Wi-Fi “hotspots” aboard the plane to individual customer electronic devices.

The Row 44 system will provide about 45 megabits per second bandwidth to each aircraft, compared with about 3 megabits per second for ground-based systems. That’s enough bandwidth to allow every passenger to connect, if they chose to do so. Research has shown that up to half of a plane’s passengers are likely to log on with gaming devices, Blackberries and/or laptops.

The airline will continue to prohibit use of cell phones.

The airline isn’t looking at the satellite-based Internet service so much as a source of additional direct revenue for the airline, but rather as a way to differentiate the airline’s service from that of its rivals, he said.

Alaska could become the first U.S. airline to equip its whole fleet for Internet service if its spring test flights prove the service technically feasible. At least two other U.S. airlines and Air Canada also have announced plans to provide airborne Internet service.

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