CEO Brad Tilden of Alaska Air Group – parent company of Alaska Airline and Horizon Air – has said that the companies will be carefully monitoring the competitive environment before making any commitments. But Tilden continued that the air group plans to add 2% capacity next year and is thinking of adding 4% capacity in 2020. The airline’s long-term target is a 4%-6% annual capacity increase.

CEO Brad Tilden said at the company’s Investor Day. “We just need to a get few good quarters under our belt and we will see what late 2020, 2021 look like.”

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Alaska Airlines Available Seat Miles

Year Available Seat Miles (in thousands (000))
2002 19,345,604
2003 20,898,103
2004 22,254,719
2005 22,275,724
2006 23,261,107
2007 24,195,506
2008 24,182,050
2009 23,074,109
2010 24,369,170
2011 26,482,118
2012 28,139,958
2012 28,139,958
2013 30,359,190
2014 32,379,216
2015 35,851,404
2016 38,635,474
2017 41,392,508

Available seat mile (ASM) is considered the fundamental unit of production for passenger airlines and is equal to the number of seats available multiplied by the number of miles flown. For example, if a 200 seat airplane flies a leg of 1,000 miles then that leg produces 200,000 available seat miles.

Cost per available seat mile (CASM) is the fundamental measurement of the unit cost in the passenger airline industry and is determined by dividing operating costs by available seat miles. CASM is expressed in cents to operate each seat mile offered.

Revenue per available seat mile (RASM) is the established measurement of revenue generated by an airline and is determined by dividing various measures of operating revenue by Available Seat Miles. Revenue per available seat mile is expressed in cents received for each available seat mile.

At the companies Investor Day Alaska Airlines also reported encouraging trends on their reported revenue per available seat mile. The company has not yet issued guidance, but its plans suggest a bump of at least 3%-4% on RASM in 2019.

Alaska Airlines is projecting increase of cost per available seat mile, excluding fuel, of 2%-2.5% in 2019. The carrier says that more than 1% of the planned cost increase is due to a higher projected mix of regional flying versus mainline flying, as regional CASM is roughly double mainline CASM. Alaska Air Group added 10 Embraer E175s to its regional operations in 2018 while only adding two airplanes to the mainline operations. Two Q400s turboprops were removed from operation at Alaska Air Group in 2018.

“We don’t know what’s going on with the competitive environment. We don’t know how the fare environment will sustain. We’re already seeing interest rates rise. We are seeing housing sales slow down, especially on the Pacific Northwest,” CCO Andrew Harrison said. “I think if everything went the right way and all tells were headed north, you could maybe see [mid-single-digit] and higher..”

Impact on Alaska Airlines Pilot Jobs

Horizon Air Q400It is important to be aware of the financial health and plans of potential pilot employers. If an employer is showing consistent poor financial results employee layoffs may not be far off. Additionally, pilot employer fleet capacity plans will have a direct impact on seniority and position advancement for pilots.

Learn more about analyzing pilot seniority lists and what it means for your quality of life.

The late 2018 momentum combined with both new and Virgin America merger-related initiatives has investors encouraged on the health of Alaska Air Group moving forward. “All-in, we have growing confidence in Alaska’s RASM performance into next year, which should deliver favorable results over peers given lower capacity growth, the easing environment, and the host of initiatives ahead,” Morgan Stanley analysts said.

Alaska Air Group 2019 fleet plans are to add eight airplanes to mainline operations and four E175s to regional operations as well as removing seven Q400s from regional operations.

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About Greg Thomson

Greg started his professional pilot journey in 2002 after graduating from Embry Riddle. Since that time he has accumulated close to 8,000 hours working as a pilot. Greg’s professional experience includes flight instructing, animal tracking, backcountry flying, forest firefighting, passenger charter, part 135 cargo, flying for a regional airline, and working as a manager in charge of a part 135 and part 121 training programs. Greg took a 5 year hiatus from flying and worked in software development and marketing. He has returned to flying and works for a major airline. Greg enjoys educating and helping pilots improve their professional lives and is passionate about applying technology and new methods to help with traditional challenges.