Alaska Airlines and Horizon Air 2014 Annual Report Download - page 98

decreases in our yields. We will defend our core markets vigorously, and if necessary redeploy
capacity to better match supply with demand. We believe the restructuring we’ve completed
over the past decade has decreased our costs to the point we can offer competitive fares while
still earning appropriate pre-tax margins.
‰Routes served, flight schedules, codesharing and interline relationships, and frequent flier
programs
We also compete with other airlines based on markets served, the frequency of service to
those markets, and frequent flier opportunities. Some airlines have more extensive route
structures than we do, and they offer significantly more international routes. In order to expand
opportunities for our customers, we enter into codesharing and interline relationships with other
airlines that provide reciprocal frequent flier mileage credit and redemption privileges. These
relationships allow us to offer our customers access to more destinations than we can on our
own, gain exposure in markets we don’t serve and allow our customers more opportunities to
earn and redeem frequent flier miles. Our Mileage Plan™ offers one of the most comprehensive
benefits to our members with the ability to earn and redeem miles on 14 of our partner carriers.
In addition to domestic or foreign airlines that we compete with on most of our routes, we also compete
with ground transportation in our short-haul markets in the regional operations. Both carriers, to some
extent, also compete with technology such as video conferencing and internet-based meeting tools that
have changed the need for, or frequency of face-to-face business meetings.
TICKET DISTRIBUTION
Airline tickets are distributed through three primary channels:
‰Alaskaair.com: It is less expensive for us to sell through this direct channel and, as a result, we
continue to take steps to drive more business to our website. In addition, we believe this channel
is preferable from a branding and customer-relationship standpoint in that we can establish
ongoing communication with the customer and tailor offers accordingly.
‰Traditional and online travel agencies: Both traditional and online travel agencies typically use
Global Distribution Systems (GDS), such as Sabre, to obtain their fare and inventory data from
airlines. Bookings made through these agencies result in a fee that is charged to the airline.
Many of our large corporate customers require us to use these agencies. Some of our
competitors do not use this distribution channel and, as a result, have lower ticket distribution
costs.
‰Reservation call centers: These call centers are located in Phoenix, AZ, Kent, WA, and Boise, ID.
We generally charge a $15 fee for booking reservations through these call centers.
Our sales by channel are as follows:
2014 2013 2012 2011 2010
Alaskaair.com 57% 55% 54% 51% 48%
Traditional agencies 25% 27% 27% 28% 28%
Online travel agencies 12% 13% 13% 13% 15%
Reservation call centers 6% 5% 6% 8% 9%
Total 100% 100% 100% 100% 100%
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