Alaska To Charge For First Checked Bag
Darren Shannon darren_shannon@aviationweek.com
Disappointed that double digit cuts in both mainline and regional capacity failed to produce a profit, Alaska Air Group has joined the growing ranks of U.S. airlines to charge for a first checked bag.
The decision to add the $15 fee from July 7 comes as the airline group reports a first quarter net loss of $19.2 million. The holding company for Alaska Airlines and Horizon Air posted a $37.3-million net loss in the same three month period in 2008.
"While our first quarter financial results improved over last year due to a significant decline in fuel cost, we're disappointed to report a loss for the quarter. To minimize the impact of the steep decline in air travel demand, we have reduced our schedules, reallocated capacity and taken fare actions," said Alaska Air's Chairman and CEO Bill Ayer.
"We are responding to the continued economic uncertainty by maintaining a healthy level of liquidity, retiming some capital expenditures, controlling costs, reducing capacity and actively pursuing revenue opportunities."
This response includes the new bag fee. "We're adapting to a marketplace in which customers increasingly want the lowest fare possible, with the option to pay extra to use other services," said Ayer.
"We want to continue matching the lowest fare in the market without being at a revenue disadvantage to our competitors. But we're also going to provide customers more value for what we're charging through the bag service guarantee, which no other airline offers."
That offer guarantees $25 off a future flight or 2,500 Alaska Airlines Mileage Plan miles if luggage is not in baggage claim within 25 minutes of the aircraft parking at its gate. Alaska also unveiled a drop in its third bag fee from $100 to $50, and exemptions for first class ticket holders, certain frequent flyers, unaccompanied minors, military personnel on active duty and passengers traveling to Mexico City and Guadalajara, Mexico.
Customers traveling within Alaska, as previously, will not be charged for the first three checked bags.
Alaska Air's near 50% year-on-year reduction in its first quarter net loss was produced on 11.6% less revenue, which stood at $742.4 million for the three-month period. At the same time, expenses fell 15.4%, resulting in an improved operating loss of $11.9 million.
This financial performance came on a 12.9% cut in mainline capacity and a 16.5% drop in Horizon Air's available seat miles. Demand, however, fell 19.5% and 20.4%, respectively, at these operating divisions.
Photo credit: Alaska Airlines
