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Alaska finds sweet isle air

The airline is expanding into the Hawaii market as it finds more room to grow from the West Coast

By Dave Segal

POSTED:
LAST UPDATED: 01:51 a.m. HST, Aug 18, 2010


Hawaii is proving to be a paradise for Alaska Airlines.

Full flights to the four major islands. Service from four states. And more flights on the way.

It couldn't get much better for the 78-year-old, Seattle-based carrier, which just a few years ago had tapped out the West Coast and the state of Alaska and was looking for new opportunities.

That's about the time Aloha and ATA airlines shut down, leaving a gap in service to the islands. And it's also when Alaska's fleet of Boeing 737-800 aircraft was certified for overwater flights. Alaska Air was in the right place at the right time with the right equipment.

"We've been amazed at the growth of Hawaii for Alaska Airlines," said Alaska Air President Brad Tilden, who was in Honolulu yesterday to meet over four days with state, industry and tourism officials. Tilden met yesterday with Gov. Linda Lingle.

"When Aloha and ATA left the market, they left a big vacuum that very honestly we could step into and fill the void," Tilden said.

While Alaska's growth has been rapid, the airline said the Hawaii market is far from saturated.

"We started with Seattle-Honolulu in October of 2007, and this winter we'll have 17 flights a day some days a week and 16 flights a day on others," Tilden said.

Unlike the interisland market, which endured a price war when Mesa Air Group's go! entered Hawaii in June 2006, Alaska doesn't think there's any immediate risk of oversaturation in the trans-Pacific market.

ALASKA COMES TO HAWAII

Alaska Airlines is the eighth-largest U.S. carrier:

» Founded: 1932 in Anchorage, Alaska
» Headquarters: Seattle
» Employees: 9,283
» Destinations: 61
» Fleet size: 116
» Hawaii aircraft: Boeing 737-800 (157 seats)
» Hawaii islands served: Oahu, Maui, Kauai, Big Island
» Daily Hawaii flights: 16 or 17 depending on day
» States serving Hawaii: Alaska (Anchorage), Washington (Seattle, Bellingham*), Oregon (Portland) and California (Oakland, San Jose, Sacramento, San Diego)
* Beginning in January

Source: Alaska Airlines

"The kind of load factor we're seeing on our flights suggests we're not close to saturation," said Keith Loveless, Alaska vice president of legal and corporate affairs. "There's plenty of demand."

Andrew Harrison, vice president of planning and revenue management for Alaska, said the load factors, or percentage of seats filled, on its aircraft used for Hawaii service have ranged from the mid-80s to "well into the 90s" during peak periods.

Alaska Air, which now depends on Hawaii for 15 percent of its service, will bring 613,085 seats into the Hawaii market this year, according to data compiled by the Hawaii Tourism Authority. That counts service due to come online later this year between Portland, Ore., and Honolulu; San Diego and Maui; Seattle and Kona; and Portland and Kona.

Then, in January, Alaska is beginning daily nonstop service between Bellingham, Wash., and Honolulu before adding in March three-times-a-week service between San Jose, Calif., and Kauai, and four-times-a-week service between Oakland, Calif., and Kauai.

Tilden said it's difficult to say how much more Alaska can expand in Hawaii but said any additional service likely will be from secondary mainland markets and will include neighbor islands.

"It's just kind of a continuous refinement process of balancing the number of seats with the demand," he said. "What we've seen is, with the economic weakness, we've been pulling other parts of our network and redeploying aircraft into Hawaii. So far it's been very, very good for the company."

Alaska has been picking up San Francisco Bay Area customers that once used the Oakland hub for flights on Aloha and ATA airlines.

"We're increasing our presence in the Bay Area," Harrison said. "A number of our markets, like San Jose and Oakland, have four days of service to one island and three days of service to the other island. Naturally, longer term we'd like to get that to daily service. So that's where our head is right now."

Alaska has only two employees based in Hawaii and has no plans to establish a base here, according to Tilden. However, the company does subcontract its Hawaii work, such as baggage handling, maintenance, cargo and customer service, to locally based companies that employ 109 people to work for Alaska. Tilden also said roughly 15 percent of the airline's roughly 2,300 flight attendants and 1,200 pilots overnight in the state.

Tilden said the 157-seat Boeing 737-800 has been "a perfect airplane" for Alaska in serving Hawaii.

"It works out of Sacramento, San Jose, Oakland and San Diego," he said about the California-Hawaii routes.

Joe Sprague, Alaska's vice president of marketing, said there are several similarities between Alaska and Hawaiian Airlines, Hawaii's oldest carrier and a competitor on many of the routes.

"Obviously, their roots are here in Hawaii, and our roots are in the state of Alaska," Sprague said. "Of course, the 50th and 49th states have a great many similarities, such as dependence on aviation and the native cultures. The two airlines also have a real appreciation of connecting closely with our customers. In the case of Alaska Airlines, that comes from our ties for almost eight decades of serving small communities in the state of Alaska."

Alaska Air Chairman and Chief Executive Officer Bill Ayer was supposed to be in Hawaii yesterday but canceled his visit so he could attend the funeral today of former U.S. Sen. Ted Stevens, who died last week in a small-plane crash in southwestern Alaska. U.S. Sen. Daniel Inouye, who was supposed to meet in Hawaii with Alaska Air officials, also was in Alaska for the funeral.






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