Alaska Airlines and Horizon Air 2014 Annual Report Download - page 90

Energetic and Compelling Brand
We want to be recognized as the preferred airline to fly. With our message, “Calling All Explorers,” we
want our customers to choose us whether they are exploring new destinations or traveling to familiar
cities, because flying on Alaska is an adventure in itself. Our Alaska Beyond™ flight experience,
launched in 2014, features Beyond Entertainment™, Beyond Delicious™, Beyond Comfort™, and
Beyond Service™, which together create a unique Alaska experience that is designed to go above and
beyond customer expectations. Customers can now stream in-flight entertainment to their personal
devices, enjoy gourmet Tom Douglas signature entrées, rest comfortably in our Recaro seats with
power, enhanced space, and six-way adjustable headrests, and fly with our flight crews that provide J.D.
Power award-winning customer service. We will refresh the visuals at our gates to communicate a
consistent message to our customers and will roll out more airport and in-flight enhancements in 2015.
Due to the increased competition in 2014, we focused our marketing efforts to defend our Seattle
market. We launched our TV advertising campaign in partnership with Russell Wilson, the quarterback
for the Seattle Seahawks and Alaska Airline’s Chief Football Officer. The Alaska Air blog was introduced
in 2014 to better connect with our customers and provide Alaska news stories in an informal and
authentic way. We remain focused on strengthening our relationship with our customers in all of our
markets through our energetic brand message and exceptional in-flight experience. We are currently
planning to refresh all of our airport stations at over 100 destinations with our new brand image in
2015.
Low Fares, Low Costs and Network Growth
We believe that in order to provide low fares for customers in a growing network of destinations, while
returning value to our shareholders, we must maintain a competitive cost structure. In 2014, we
lowered our unit costs, excluding fuel, by 1.3% on a consolidated basis, representing the fifth
consecutive year of annual reduction. We achieved this through a continued focus on productivity, cost
management, and network growth. We increased employee productivity by 2.0% in 2014 and will
continue to focus on that metric as we leverage growth. We also 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 4.5% over the last five years. Additionally, we have added split-scimitar winglets to
48 aircraft, which are expected to increase fuel efficiency by 1.5% per aircraft. Looking forward, we have
committed to purchasing 42 737-900ER and 37 737-MAX aircraft with deliveries from 2015 to 2022,
and three Q400 aircraft with deliveries from 2015 to 2017. In addition, we will increase regional
capacity by having SkyWest operate seven E-175s with deliveries from 2015 to 2016. The capacity
increase with the new B737s, Q400s, and E175s position us for growth and ensure that we will
continue to operate the most fuel-efficient aircraft available for the foreseeable future.
In 2014, we added 16 new markets to our network and exited five as we continued to better match
supply with demand. We strengthened our Seattle network in 2014 by offering non-stop flights to
markets like Albuquerque, Baltimore, Cancun, Detroit, New Orleans, and Tampa, and began 7 non-stop
routes out of Salt Lake City. New routes in 2015 will include Seattle to Milwaukee, Oklahoma City, and
Washington D.C. (Dulles), from Las Vegas to Mammoth Lakes, from San Diego to Kona, and from
Portland to St. Louis.
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.
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