Alaska Airlines and Horizon Air 2013 Annual Report Download - page 92

Also in support of our brand, we position
ourselves as the industry leader in community
and environmental stewardship. In 2013, we
were named the most fuel-efficient airline in the
U.S. by the International Council on Clean
Transportation, collected and recycled over 77%
of waste collected during flights, and donated
$7.6 million to more than 1,300 charitable
organizations including support for the grand
opening of Aviation High School in Seattle and
other educational efforts. Our employees also
volunteered more than 10,500 hours of
community service.
Low Fares, Low Costs and Network Growth
In order to provide low fares to our customers while
returning value to our shareholders, we believe we
must maintain a competitive cost structure. In
2013, we lowered our unit costs, excluding fuel, by
0.1% on a consolidated basis, representing the
11th such annual reduction out of the past 12
years. We achieved this through a continued focus
on productivity. In 2013, we increased employee
productivity by 4.0% and will continue to focus on
that metric as we leverage growth. We also
continue to manage fuel costs by flying larger,
more fuel-efficient aircraft, which have increased
our fuel efficiency as measured by available seat
miles flown per gallon by 3.7% over the last five
years. Looking forward, we have committed to
purchasing 32 737-900ER and 37 737-MAX
aircraft, with deliveries in 2014 to 2022, to
position us for growth and ensure we will continue
to operate the quietest and most fuel-efficient
aircraft available for the foreseeable future.
In 2013, we added 17 new markets to our
network and exited two as we continued to better
match supply with demand. We diversified our
network further to offer more utility to our
customers by expanding services out of
Anchorage, Portland, San Diego, and Seattle,
and began service to Salt Lake City, Omaha,
Steamboat Springs, and Colorado Springs. We
will also add new routes out of Salt Lake City to
Boise, Los Angeles, Las Vegas, Portland, San
Diego, San Jose, and San Francisco in 2014.
AIR GROUP
Alaska Air Group is a Delaware corporation
incorporated in 1985 and the holding company
of Alaska Airlines and Horizon Air. Although
Alaska and Horizon both operate as airlines,
their business plans, competition, and economic
risks differ substantially. Alaska Airlines is an
Alaska corporation that was organized in 1932
and incorporated in 1937. Horizon Air Industries
is a Washington corporation that first began
service and was incorporated in 1981. Horizon
was acquired by Air Group in 1986. Alaska
operates a fleet of passenger jets (mainline) and
contracts with Horizon, SkyWest Airlines, Inc.
(SkyWest) and Peninsula Airways, Inc. (PenAir)
for regional capacity under which Alaska receives
all passenger revenue from those flights. Horizon
operates a fleet of turboprop aircraft and sells all
of its capacity to Alaska pursuant to a capacity
purchase arrangement.
We attempt to deploy aircraft into the network in
ways that best optimize our revenues and
profitability, and reduce our seasonality.
The percentage of our capacity by market is as
follows:
2013 2012 2011 2010 2009
West Coast ....... 34% 35% 37% 41% 45%
Alaska ........... 16% 17% 18% 19% 20%
Transcon/midcon . . 22% 19% 19% 19% 17%
Hawaii ........... 19% 20% 16% 11% 7%
Mexico ........... 7% 7% 9% 8% 8%
Canada .......... 2% 2% 1% 2% 3%
Total ......... 100% 100% 100% 100% 100%
MAINLINE
We offer extensive north/south service within the
western U.S., Canada and Mexico, and passenger
and dedicated cargo services to and within the
state of Alaska. We also provide long-haul east/
west service to Hawaii and 20 cities in the mid-
continental and eastern U.S., primarily from
Seattle, where we have our largest concentration
of departures; although we do offer long-haul
departures from other cities as well.
In 2013, we carried 19.7 million revenue
passengers in our mainline operations, and we
carry more passengers between Alaska and the
U.S. mainland than any other airline. Based on
the number of passengers carried in 2013,
Alaska’s leading airports are Seattle, Los
Angeles, Anchorage, Portland, and San Diego.
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