Alaska Airlines and Horizon Air 2014 Annual Report Download - page 125
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We expect Regional passenger revenue to increase in 2015, primarily due to our expanded capacity
purchase agreement with SkyWest to fly E-175 regional aircraft beginning in the third quarter of 2015.
These aircraft will offer three booking classes.
Other - Net
Other–net revenue increased $91 million, or 16%, from 2013. This is primarily due to an increase in our
Mileage Plan™ revenues of $39 million or 15%, due to increase in miles sold and an increase in cash
received per mile. Additionally, bag fees and ticket change fees are up 23% and 12%, respectively, due
to changes in our fee structure that took effect in November 2013.
We expect our Other–net revenue to increase in 2015 as we provide more product offerings and have
more passengers.
Special Mileage Plan Revenue
In 2013, we modified and extended our co-branded credit card agreement with Bank of America
Corporation (BAC). In connection with this agreement and as a result of applying related accounting
standards, we recorded a one-time, non-cash Special mileage plan revenue item of $192 million
primarily related to our revaluation of the deferred revenue liability related to miles previously sold to
BAC.
OPERATING EXPENSES
Total operating expenses increased $88 million, or 2%, compared to 2013, primarily driven by higher
non-fuel costs due to increased capacity. We believe it is useful to summarize operating expenses as
follows, which is consistent with the way expenses are reported internally and evaluated by
management:
Twelve Months Ended December 31,
(in millions) 2014 2013 % Change
Fuel expense $ 1,418 $ 1,467 (3)
Non-fuel expenses 3,018 2,851 6
Special items (30) –NM
Total Operating Expenses $ 4,406 $ 4,318 2
NM - Not Meaningful
41
ŠForm 10-K