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All change

Alaska Airlines is on the brink of a second transformation, one even more cataclysmic than the previous round, as Ian Putzger discovers

Afew years ago Alaska Airlines (AS) took a dramatic turn when it extended its reach beyond the US west coast, based on the core sector from its Seattle hub to Alaska. The expansion brought Hawaii and Mexico as well as parts of the Caribbean into the fold. This was but a modest start, metamorphosing the airline into a player with a transcontinental network, with a fleet of three freighter aircraft to boot. As the US airline moved to phase out its Boeing 737-400 fleet, its combis and the single Boeing 737 freighter that haul cargo to and from points across Alaska are leaving the fleet too and will be replaced by three Boeing 737-700 all-cargo aircraft.


Jason Berry, Managing Director of Alaska Air Cargo, was looking forward to having the new freighters at his disposal for the cherry season this spring, but the conversion of the three aircraft has fallen behind schedule. As these are the launch planes for the conversion outfit’s Boeing 737-700 programme, the work took longer than anticipated. Instead of taking delivery of the planes during the first quarter of the year as planned, management now expects them to come on stream in June or July.


When in service, AS will have 15% more main deck capacity than now, but to Berry the gain is greater than the mere boost in lift. To begin with, the Boeing 737-700 can take heavier and larger shipments than the Boeing 737-400F, such as pieces that exceed the footprint of a ULD and items like generators that weigh about 5.5 tonnes.


Moreover, a fleet of three freighters gives AS Cargo more flexibility than the single full cargo plane and the combis, the schedules of which are dictated by passenger requirements, notes Berry. “With this we can do daily service where so far we’ve gone once a week,” he says.


The greater flexibility extends to the sectors where the freighters can be deployed. The Seattle-Alaska corridor will remain the focus of the operation, with Seattle and Anchorage as the hubs, but Berry intends to take the freighters further afield in the lower 48 states. First and foremost he is looking to fly a cargo aircraft to Los Angeles several times a week. From California this will go to Seattle and continue to Anchorage for a direct same day connection from Los Angeles to Alaska.


Down the road he envisages some freighter forays into the east-west flows in the lower 48 states, but in the foreseeable future this market is going to be tackled with the bellies of Virgin America, which AS agreed to take over for $4 billion last April. This immediately afforded AS a far stronger presence in the transcontinental market, notably out of California. It will have over 30 flights a day to the New York area, while connections from the west coast to Boston will more than double over AS’s current footprint.


Virgin’s fleet is going to boost AS’s cargo capacity in the lower 48 states by 30%. And for the new owner the additional lift starts with a clean slate as Virgin has thus far eschewed the cargo business and concentrated purely on the passenger cabin, something that Berry is looking forward to changing.


This will have to wait until 2018, though. “We have agreed to hold off until we have a single operating certificate,” says Berry, adding that this should be put in place in the first quarter of next year.


The larger network and capacity will require a stronger presence in the market. For Berry this means a need to raise AS Cargo’s profile and try to stand out with its offering. “We have to make sure we have the right product mix. We need to find a way to differentiate our product,” he says.


He stresses the operational aspect of this push. Instead of simply boosting sales channels, AS Cargo has appointed dedicated operations staff on the east coast and in the midwest. Their brief is to audit the carrier’s stations and to develop solutions. “We need operational resources in the regions to execute,” he comments.


With a stronger presence in the market and a significantly enlarged network comes a change in focus. In the Alaska market the airline has frequently worked directly with shippers, notably in the sectors of fish and seafood. Berry has no intention of severing the ties with such established clients, but in the new markets he looks to work with forwarders. “With the growth of our network we’ve become a more viable option to forwarders,” he remarks. His team is currently looking at an incentive programme for cargo agents. >>

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