For those who hadn’t heard, Alaska Air Group’s wholly-owned regional subsidiary Horizon Air will be losing its brand some 25 years after Alaska first bought the airline. Instead, Horizon flights will all be marketed under the Alaska name. I spoke with Horizon’s president and Alaska Air Group veteran Glenn Johnson about this big change. Tomorrow, I’ll have the second part of our discussion where he talks about growth opportunities and outsourcing.
Cranky: A lot of changes at Horizon this week, several of which have been in the works for quite some time. To start, why retire the brand now?
Glenn: Sure, you know Horizon’s just about to celebrate its 30th anniversary, so the name and the brand has been built over all those years but we made the decision to go to 100 percent capacity purchase agreement (CPA) flying [Ed note: that’s where Alaska buys capacity from Horizon and handles pricing and marketing] effective January 1. While that doesn’t necessarily mean you have to change the external branding, we thought that was a good opportunity to look at it. Certainly the Alaska brand … I don’t know if you know my background; I’ve been at [Alaska] Air Group for 28 years back and forth between Alaska and Horizon so I think I recognize the value of both brands … but certainly Alaska is a much better-known brand.
I think what we came up is kind of unique in the industry. We didn’t go with Alaska Express or Alaska Connection but the Alaska name and the Eskimo on the airplane with the Horizon name still there. I think that captures the value of both of the brands. And as we think about taking Horizon up to the State of Alaska, certainly there’s no better brand to have on the side of the airplane than the name of the state. It all seemed to come together.
Cranky: What were you doing with the brand before this? Obviously it was on the side of the airplane but was there a lot of brand promotion over the last couple years?
Glenn: I would say that we’ve been ratcheting it down over the last few years. When we first acquired Horizon at [Alaska] Air Group back in 1986, we kept the two brands completely separate and over the years we’ve found more and more opportunities to co-brand things. In 2010 about 50 percent of our flying was done on behalf of Alaska as CPA flying and the other half was done on what we’d call brand flying where we did our own advertising and promotion in some of the small communities. So there was some level of effort and cost put into the Horizon-specific brand but I think there’s a more cost effective solution here to go with the Alaska brand and get the benefit of all the advertising that goes into the Alaska brand for both companies.
Cranky: Externally, the only thing that seems to be changing is the paint job, right?
Glenn: Right. There will be some airport signage so where we have a Horizon backwall we’ll change those out to Alaska backwalls. The airports will transition to be just Alaska. We have to still say the flights are operated by Horizon Air like any other CPA carrier.
Cranky: Is anything changing internally? I know there’s already been a huge behind-the-scenes effort to consolidate.
Glenn: It really doesn’t and that’s one of the things we’re talking about with employees this week. They’re anxious about this. Losing their identity, so to speak. But we remain a separate company with a separate operating certificate. We still have all the same employees. Still have our folks in Horizon uniforms in terms of pilots and flight attendants. We’re maintaining the service elements that we think are important to our customers. The free beer and wine onboard, the a la carte service … so all of those elements stay the same. It’s really just getting that visual brand recognition and the brand halo from the customer perspective.
Cranky: I find myself wondering how many people even know the Horizon brand outside of the Pacific Northwest.
Glenn: I would say where we have a fair amount of name recognition is in Idaho, Montana, Eastern Washington, and Oregon. Those are traditional Horizon locations, the small cities, where Alaska hasn’t had a presence. That was what we were trying to capture by keeping Horizon on the side of the airplane. Places like Missoula, Montana see Horizon as their hometown carrier and we still want them to have that same sense of pride and ownership in the airline even though we’ve got a new name on the side of the airplane. By contrast, when we are down in California flying from LA to Loreto or La Paz on behalf of Alaska or go up to the State of Alaska, it makes no sense to me to try to propagate it and promote two brands.
Cranky: So the assumption on your part is that there’s enough brand benefit by consolidating with Alaska to pay for the cost of painting the planes?
Glenn: Yep, and to that extent we’ve said it’ll take 12 months or longer to get everything painted. We have 8 new airplanes coming over the next 6 months so those will all be painted in the new colors, of course, and then we’ll take a period of time to paint the existing airplanes. We’ve held off on painting so there’s a bit of a backlog because we knew this decision was pending. And we have 8 airplanes with special liveries – the university airplanes and the green airplane – that will just be a simple change by painting Alaska with the script instead of Horizon. There’s not a huge amount of incremental cost because it’ll be done largely in the course of business.
Come back tomorrow for more on the recent deal Alaska made to outsource some flying to SkyWest as well as future growth opportunities for Horizon.
Sounds more like they are doing this to use Horizon in Alaska more then anything else. It will be easier for Alaskans to fly Horizon if the ‘Alaska’ name and eskimo are on the plane to get them away from flying Era and the other well know airlines in the state who fly to the smaller places.
So what happens with Long Beach? When they redired the Alaska MD-80s they first put in 737s, then they downgauged to Horizon CRJs, then they eliminated Portland and sold a few slots. Now Horizon is rebranding and going all turboprob — I doubt they’ll want to do Long Beach to Seattle on a Q400. Is this the end of Alaska/Horizon at Long Beach?
What Anon said. The routes haven’t been announced, but Long Beach has to be one that will now go to SkyWest. Those are 5 airplanes that Horizon is actually selling to SkyWest to have SkyWest do the flying.
Well, Skywest already operate at Long Beach — I wonder if they’d be able to consolidate. Will we see joint Alaska-Delta ticket counters?
Also, any idea why Long Beach was scaled back so much in recent years? Obviously because they weren’t making enough money, but JetBlue have multiple frequencies to both Portland and Seattle, so clearly the routes can support some big jets. I don’t remember when JetBlue got into these markets, were they the ones who drove Alaska out? And if the routes are such poor performers for Alaska, how does it make sense to hang in there with the two daily CRJs to Seattle?
Wait for tomorrow’s post. But, the short answer is that Alaska is going to contract with Skywest to operate 5 RJs on longer current-Horrizon routes on which Q400s wouldn’t work (mostly PDX / SEA to secondary LA airports).
One of the things I didn’t notice before when looking at this is that they still have “Operated by Horizon Air” up near the front door. I had figured the “Horizon” on the side of the plane had met the legal requirements, but apparently not..
12 months or longer seems quite a long time to take just to get the planes painted, how big the fleet that needs the work?
There is much more involved than just repainting them. The repainting process can take a day or two. So you have to schedule them to come out of service which isn’t always easy. There are going to be probably about 40 planes that need repainting, so even if you figure one per week, that’s almost a year. Most airlines try to wait until an airplane goes in for a heavier maintenance check as typically there is some repainting needed during that time anyways.
I think that Horizon employees should be nervous that their president is a former Alaska Airlines manager. It sounds like a spin-off to me. I’m curious why he has time to write blog posts, trying to get ideas for success from an internet chat. Well, whatever it takes to survive Mr. president Johnson, I hope you do. I’ve got stock in ALK.
Your post isn’t really arguing anything. He has had a number of varying roles at Alaska and Horizon over the years, so it’s not like he is some super secret guy that nobody knows about at Horizon. Horizon and Alaska are basically the same company, sharing many job tasks and working in many of the same buildings together. Nothing is changing because of this. And top level managers in companies regularly do interviews as it’s part of their job. If you’re suggesting he is taking ideas from the internet then you should reread the blog entry. You seem to not have read it.
YA BUT REMEMBER US AT HORIZON GET THE SHAFT IN PAY AND BENIFITS COMPARED TO ALASKA AND ALL OF THIS SMELL AND YOU KNOW WHAT THAT MEAN IF IT SMELL IT IS SH!@!