On the surface, Alaska Airlines seems like a company that Americans would love to hate, yet exactly the opposite is true. People love Alaska, and it’s no accident. Let me explain.
Think about everything going against the airline. First of all, it’s an airline. Hating every move an airline makes is actually required in the US in order to graduate from high school. If, however, you build a brand as a low fare airline that eschews fees like Southwest, then you get a pass. Alaska is not that airline. Alaska looks more like a traditional hub-and-spoke airline. You’ll pay to check bags and fares aren’t rock bottom. Want inflight entertainment on a long haul? That’ll be $14. How about food? You’ll pay for that as well.
Last quarter, Alaska had an epic meltdown when its computer system failed and thousands were stuck. As if that’s not enough, Alaska is posting record profits. In the first quarter, Alaska had an operating profit of nearly $134 million. Its operating margin was nearly 14 percent. That’s a rock star result.
Were any other airline making that kind of money, people would be screaming bloody murder. Employees would be clamoring for fair treatment and better pay while customers would demand that the “outrageous” fees go away. But that’s not what’s happening here. And here’s why.
1) Alaska is Small
The bigger the company, the bigger the target it is. Think about oil companies. People love to jump on ExxonMobil and BP, but how many people hate, say, Sinclair Oil? Nobody. Well, I’m sure someone does, but it’s not vilified on a daily basis. Sinclair has gas stations in 21 states, so it’s certainly a visible name, but it’s not in the cross hairs when people think of big, bad oil. Being small also means that earnings don’t look so huge. Sure, Alaska had a great margin but its operating profit was only $134 million. Had United achieved a similar operating margin, it’s operating profit would have $1 billion. That just sound enormous.
2) Alaska’s Fees Seem “Fair”
It helps when other airlines set the bar for what the public considers to be greedy. It means if you do something below that level, you look like a hero. The big legacy airlines charge $150 to change a ticket. Alaska charges half that for changes made online. If you want to check a bag on Alaska, it’ll be $20 for each bag up to three. That may not seem that much cheaper than other airlines, but it comes with a promise. If your bag isn’t on the carousel within 20 minutes, you get compensation.
3) Alaska Operates Out of the Spotlight
Being based in Seattle means that people don’t really pay attention to you. Oh sure, the local papers will jump on stories when things go wrong, but you’re not likely to end up on the national news unless you really mess something up in a huge city like LA, New York, or Washington DC. Being in the Northwest insulates Alaska nationally, both when things are good and when they’re bad so it’s a mixed blessing.
4) Alaska’s Mileage Program is Flexible
Loyalists to Alaska’s Mileage Plan program are VERY loyal. There are so many mileage partners around the globe that members can use their miles to go just about anywhere. Those with MVP elite status get the same kind of benefits as other airlines give but with a lower mileage qualification threshold. (It’s only 20,000 miles to become MVP.) The program is also integrated with Delta SkyMiles to the point where elite members get priority boarding, better seating, and more. So it’s a program that can compete with the big guys and even provide better benefits by partnering across alliances.
5) Alaska Runs a Good Operation
For the twelve months ending February 2011, Alaska was second in on-time performance with 87.2 percent arriving within 15 minutes of schedule. There’s no question that the airline is helped by not flying much in horrible east coast congestion, but that’s not the point. Running on time means that there’s less for people to complain about. It doesn’t matter why you run on time. It just matters that you do.
6) Alaska Understands Customer Service
One of the most important reasons that people don’t hate Alaska is because when things go wrong, the airline is all over it. When computers failed, Alaska was pumping updates out constantly. Execs filmed a video apology and gave details on what happened. Alaska also encouraged everyone impacted to write in so that the airline could deal with compensation individually. It was an excellent effort all around and certainly reduced the negative impact that might have been felt by others in a similar situation.
I’m sure there are more reasons, and I’d love to hear everyone’s thoughts. I should make it clear that this doesn’t mean Alaska has a sparklingly perfect record. This is the same airline that in 2000 had one of its MD-80s crash off the coast of California. The resulting scrutiny over the airline’s maintenance created a ton of bad press and without question damaged the brand significantly. Alaska also took a hit after it laid off its 500 ramp workers in Seattle and outsourced the work to a third party. (It was later determined Alaska actually violated the union contract.) For these reasons, some people will always hate Alaska and I can’t blame them. But those people are in the minority today, and Alaska finds itself in one of the most enviable positions in the industry when it comes to customer perception.