There’s two things I’m unsure of by Alaska Air’s latest moves. First, I’m not sure why they want to establish a focus city at LAX. Second, if those are their intentions, I’m not sure Costa Rica and Baltimore are going to accomplish it.
Alaska Air announced recently that they would add 4 flights a week each to San Jose, Costa Rica (SJO) and Liberia, Costa Rica(LIR). These are routes that Delta already operates out of their LAX hub, a place that’s tough to compete in because of how many carriers already have a presence there, as well as a lack of substantial room for growth.
They also announced a new flight between LAX and Baltimore-Washington, Airport (BWI) to complement their LAX-DCA service. The flight times actually make sense, with a red-eye to BWI and a 7:30am departure to LAX that lands before 11am. But, this one also has a decent amount of competition.
Looking at the fares to Costa Rica, Delta doesn’t seem to command much of a premium for their non-stop options to SJO. I see plenty of days where their fare is just over $500 round-trip, and numerous connecting options from competitors are plus or minus $50. They do seem to command a higher fare to fly into LIR, with fares typically in the $900 range on dates I reviewed, and competitors again plus or minus $50.
If the plan is a fare war against Delta, that LAX-SJO route doesn’t leave a lot of room to cut into Delta’s profitability without affecting their own ability to make money. LIR probably has a lot more fat on it, but you’re talking one route, 4 times a week.
LAX-BWI is already flown nonstop by United and Southwest, so that route certainly isn’t a dig against Delta. United charges anywhere from $400 to $600 as a normal round-trip fare on this route. Southwest’s yields on these routes must be great. While they offer some Wanna Get Away fares just under $400 round-trip, Anytime pricing on this route will set you back over $1,000 round-trip. Looking two weeks out, the fares are still around $700 for a nonstop flight. Though most Wanna Get Away options are gone, the nonstop is still for sale.
Alaska Air already has an existing partner in American Airlines at LAX, and they’ve done a good job of not stepping on each other’s feet. So, I don’t see this “focus city” move as one that necessarily jeopardizes the existing relationship with AA. I actually think that it’s possible American could provide feed for LAX-BWI given the regional jet operation they have out of LAX. But, I don’t think the market for the Costa Rica flights is big enough for AA to be sending them business.
After spending an hour with this today, I guess I can’t fault Alaska for adding these flights. They’re a successful airline that’s under attack by Delta, and it seems likely that they can make money operating these new flights. They also announced new service from Seattle to Nashville, Raleigh-Durham and Charleston. While none of those strike me as sexy destinations, I think they’re good routes to add to attract business travelers to Alaska, who does a really good job with their loyalty program.
It’s unclear to me how many spare aircraft Alaska has on hand to schedule new routes with. They did place an order for 737 MAX airplanes from Boeing to go along with a couple dozen airplanes they’re still waiting for delivery on. I’m interested to see where this plan goes. I still think it might be easier to building profitable routes out of SEA than tackling LAX. And, I imagine it won’t be easy to fill two flights to Costa Rica from LAX, even if it’s only 4 times a week.
The post Why Does Alaska Air Want To Create a Focus City At LAX? was published first on Pizza In Motion.
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