Alaska Airlines and Horizon Air 2013 Annual Report Download - page 93

Based on 2013 revenues, the leading nonstop
routes are Seattle-Anchorage, Seattle-Los
Angeles, Seattle-San Diego, Seattle-Las Vegas,
and Seattle-San Francisco. At December 31,
2013, Alaska’s operating fleet consisted of 131
Boeing 737 jet aircraft, compared to 124 B737
aircraft as of December 31, 2012.
The percentage of mainline passenger capacity
by market and average stage length is presented
below:
2013 2012 2011 2010 2009
West Coast ...... 28% 29% 31% 33% 37%
Within Alaska and
between Alaska
and the U.S.
mainland ...... 18% 18% 20% 21% 23%
Transcon/midcon . 25% 22% 21% 24% 23%
Hawaii .......... 21% 22% 18% 13% 8%
Mexico ......... 7% 8% 8% 7% 7%
Canada ......... 1% 1% 2% 2% 2%
Total ....... 100% 100% 100% 100% 100%
Average Stage
Length ........ 1,177 1,161 1,114 1,085 1,034
REGIONAL
Our regional operations consist of flights
operated by Horizon, SkyWest and PenAir. In
2013, our regional operations carried
approximately 7.7 million revenue passengers,
primarily in the states of Washington, Oregon,
Idaho and California. Horizon is the largest
regional airline in the Pacific Northwest and
represents over 90% of Air Group's regional
revenue passengers.
Based on 2013 passenger enplanements on
regional aircraft, our leading airports are Seattle
and Portland. Based on revenues in 2013, our
leading nonstop routes are Seattle-Portland,
Seattle-Spokane, and Seattle-Boise. At
December 31, 2013, Horizon’s operating fleet
consisted of 51 Bombardier Q400 turboprop
aircraft, compared to 48 Q400's at
December 31, 2012. Horizon flights are listed
under Alaska's designator code in airline
reservation systems, and in all customer-facing
locations.
The percentage of regional passenger capacity
by market and average stage length is presented
below:
2013 2012 2011 2010 2009
West Coast ......... 66% 68% 68% 71% 71%
Pacific Northwest .... 21% 20% 19% 17% 18%
Canada ............ 9% 9% 9% 9% 8%
Within Alaska ....... 2% 2% 2% 2% 2%
Mexico ............. 1% 1% 2% 1% 1%
Midcon ............ 1% — % — % — % — %
Total ........... 100% 100% 100% 100% 100%
Average Stage
Length ........... 290 294 309 333 327
INDUSTRY CONDITIONS,
COMPETITION, AND ALLIANCES
GENERAL
The airline industry is highly competitive, subject
to various uncertainties, and has historically
been characterized by low profit margins.
Uncertainties include general economic
conditions, volatile fuel prices, industry
instability, new competition, a largely unionized
work force, the need to finance large capital
expenditures and the related availability of
capital, government regulation, and potential
aircraft incidents. Airlines have high fixed costs,
primarily for wages, aircraft fuel, aircraft
ownership, and facilities rents. Because
expenses of a flight do not vary significantly
based on the number of passengers carried, a
relatively small change in the number of
passengers or in pricing has a disproportionate
effect on an airline’s operating and financial
results. In other words, a minor shortfall in
expected revenue levels could cause a
disproportionately negative impact on our
operating and financial results. Passenger
demand and ticket prices are, to a large
measure, influenced by the general state of the
economy, current global economic and political
events, and total available airline seat capacity.
In 2013, the airline industry is expected to report
record revenues and profits with passengers
topping 3 billion for the first time in history. As
the industry recovers from the deficits
accumulated in the past decade, airlines are now
moving toward making significant investments in
the customer experience to attract demand, and
thus, the level of competition is expected to
increase in the future years.
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ŠForm 10-K