Alaska Airlines and Horizon Air 2007 Annual Report Download - page 108

to our hedging program, we believe that
operating fuel-efficient aircraft helps to mitigate
the effect of high fuel prices.
Due to the competitive nature of the airline
industry, airlines often have been unable to
immediately pass on increased fuel prices to
customers by increasing fares. Conversely, any
potential benefit of lower fuel prices could be offset
by increased fare competition and lower revenues.
Although we do not currently anticipate a
significant reduction in jet fuel availability,
dependency on foreign imports of crude oil and
the possibility of changes in government policy
on jet fuel production, transportation and
marketing make it impossible to predict the
future availability of jet fuel. In the event of
significant hostilities or other conflicts in
oil-producing areas, there could be reductions in
the production and/or importation of crude oil
resulting in price increases, which could
adversely affect our business. If there were
major reductions in the availability of jet fuel, our
business would be adversely affected.
MARKETING AND COMPETITION
ALLIANCES WITH OTHER AIRLINES
We have marketing alliances with several other
airlines that provide reciprocal frequent flyer
mileage credit and redemption privileges as well
as code sharing on certain flights as shown in the
table below. Alliances enhance our revenues by:
• offering our customers more travel
destinations and better mileage credit/
redemption opportunities;
• giving us access to more connecting
traffic from other airlines; and
• providing members of our alliance
partners’ frequent flyer programs an
opportunity to travel on Alaska and
Horizon while earning mileage credit in
our partners’ programs.
Most of our codeshare relationships are free-sell
codeshares, where the marketing carrier sells
seats on the operating carrier’s flights from the
operating carrier’s inventory, but takes no
inventory risk. Our marketing agreements have
various termination dates, and at any time, one
or more may be in the process of renegotiation.
Our marketing alliances with other airlines as of
December 31, 2007 are as follows:
Frequent
Flyer
Agreement
Codeshare—
Alaska
Flight #
on Flights
Operated by
Other Airline
Codeshare—
Other Airline
Flight # On
Flights
Operated by
Alaska/
Horizon
Major U.S. or
International Airlines
American Airlines/
American Eagle .... Yes Yes Yes
Air France .......... Yes No Yes
British Airways ....... Yes No No
Cathay Pacific
Airways .......... Yes No No
Continental Airlines . . . Yes Yes Yes
Delta/Delta
Connection** ..... Yes Yes Yes
KLM............... Yes No Yes
Lan S.A. ........... Yes No Yes
Northwest Airlines .... Yes Yes Yes
Qantas ............ Yes No Yes
Regional Airlines
Era Aviation ......... Yes* Yes No
PenAir ............. Yes* Yes No
Big Sky Airlines ...... No Yes No
* This airline does not have its own frequent flyer
program. However, Alaska’s Mileage Plan members can
earn and redeem miles on this airline’s route system.
** Alaska has codeshare agreements with the Delta
Connection carriers Skywest and ASA as part of its
agreement with Delta Air Lines.
COMPETITION
Competition in the airline industry is intense. We
believe the principal competitive factors in the
industry that are important to customers are:
• safety record and reputation,
• flight schedules,
• fares,
• customer service,
• routes served,
• frequent flyer programs,
• on-time arrivals,
• baggage handling,
• on-board amenities,
• type of aircraft, and
• code-sharing relationships.
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