Alaska Airlines and Horizon Air 2012 Annual Report Download - page 92

PART I
ITEM 1. OUR BUSINESS
Alaska Air Group operates Alaska Airlines and
Horizon Air, which together with its partner
regional airlines, serve 95 cities through an
expansive network in Alaska, the Lower 48,
Hawaii, Canada and Mexico. During 2012, we
carried 26 million passengers while earning
record full-year adjusted earnings of
$339 million.
Our objective is to be one of the most respected
domestic airlines by our customers, employees,
and shareholders. We believe our success
depends on our ability to provide safe air
transportation, develop relationships with
customers by providing exceptional customer
service, and maintain a competitive cost
structure to increase our profitability, provide low
fares and grow our network. Over the past
decade, we have worked to transform our
company to achieve these objectives. In 2012,
Alaska Airlines ranked “Highest in Customer
Satisfaction among Traditional Network Carriers”
by J.D. Power and Associates for the fifth year in
a row. For the ninth consecutive year, we have
reported an adjusted annual profit, allowing us to
strengthen our balance sheet and achieve an
after-tax return on invested capital of 13% in
2012, surpassing our 10% goal for the third year
in a row. In addition, over the past decade, we
have diversified our network to better respond to
the seasonality in our business and provide more
destinations for our customers. As we look to
the future, we will build on the success of the
past few years by executing our strategic plan—
the Five Focus Areas:
Safety and Compliance
We have an unwavering commitment to run a
safe and compliant operation, and we will not
compromise this commitment in the pursuit of
other initiatives. Alaska and Horizon, in
coordination with the FAA, began implementing a
Safety Management System to better identify
and manage risk. Both airlines achieved Level
One certification in 2012 and plan to achieve
Level Two certification in 2013.
People Focus
While aircraft and technology enable us to
provide air transportation, we recognize this is
fundamentally a people business and our
success depends on our employees.
Strengthening our “small company feel” will
allow our employees to execute as a united team
on the frontlines and behind the scenes. All Air
Group employees have attended or will soon
attend our Flight Path program, a one-day
workshop to share the future vision for our
company. In addition, all employees participate
in the Performance-Based Pay (PBP) and
Operational Performance Rewards (OPR)
programs, which encourage employees to work
together to achieve metrics related to safety,
profitability, low costs and customer satisfaction.
Over the last four years, our incentive programs
have paid out over $325 million.
Hassle-Free Customer Experience
We want to be the easiest airline to fly, which we
will do by improving each step of the customer’s
journey from booking a ticket to our in-flight
experience. During 2012, we launched a new
mobile website, m.alaskaair.com, which provides
customers quick and easy access to important
travel information from any handheld mobile
device or tablet, including the ability to purchase
tickets, track flight details, check-in, get mobile
boarding passes, and view optional upgrades.
After the successful launch of booking on our
mobile website, we upgraded our Android app in
December 2012 and iPhone app in January
2013 to allow our customers to book tickets
using our apps. We introduced self-bag tagging
to four locations in 2012, which allows
customers to print and attach their own luggage
tags from a self-service kiosk in the airport lobby
or, as part of a pilot program, at home during
web check-in. The Transportation Security
Administration (TSA) launched their Pre-Check
Program in 17 of our locations, which allows
eligible customers to opt-in for reduced
screening requirements. As passengers take
4