Alex Corey, Alaska’s MD of Revenue Products & Strategy, told me yesterday that the airline had been developing the idea of entering the subscription game for years — they were just looking for the right time and opportunity. About a year ago they began working with Caravelo on a firm plan, and yesterday all that hard work became public with the rollout of the Flight Pass and Flight Pass Pro.
The over-arching idea was to create something that would play into the never-ending appetite for subscriptions. Alex rattled off all sorts of numbers, including that subscriptions would reach $1.5 trillion by 2025 and there is a growing trend of “power subscribers” who have more than 10 subscriptions at a time. With the pandemic trends of people being able to work from anywhere along with wanting “safe exploration” and nearby vacations, Alaska figured it had finally found its opportunity.
First, Alaska had to define a target market, so it could build the right product. Initially that was the price-sensitive traveler who liked the idea of having an “incredibly low fixed price” that would allow them to plan their travels out for a full year. A college student going home (or on spring break) was an obvious example of someone with regular travel needs and a low budget. That defines the Flight Pass market.
The Flight Pass Pro, however, was more about flexibility than price. Small businesses that wanted to set their travel budgets firmly were a perfect opportunity. And so, the team went to work on crafting a product.
Alaska turned to California as the right geography. Again shooting off stats, Alex noted that there are 3.5 times more people traveling within California than any other state. The airline’s network in California is thick with short-haul flying, but that wasn’t quite enough. Phoenix, Las Vegas, and Reno were thrown into the mix to make sure there was enough variety to attract travelers. Here’s the map.
California made sense logistically, but also in my mind, this was a play to take a bigger chunk of what is a highly competitive market that Alaska can’t win. Southwest is the 800 lb gorilla within California, and the addition of Fresno, Palm Springs, and Santa Barbara during the pandemic has only solidified that further. Alaska does have some unique markets, like Santa Rosa and San Luis Obispo, but intra-California is a market Southwest refuses to lose. By creating a subscription product, Alaska was able to come up with something that Southwest likely won’t be able to match — quick tech development is, shall we say kindly, not its strong suit. Beyond that, it should give Alaska a nice little marketing bump.
For those with starry-eyed memories of the old JetBlue All You Can Jet pass, this couldn’t be more different. That was a flat fee for a month of travel. This is a flattish fee for a set number of trips. It’s clear that Alaska architected this very intricately.
Flight Passes come in two flavors. The Flight Pass requires booking travel more than 14 days in advance of departure. The Flight Pass Pro allows you to book same day. The Flight Pass is about price, so it starts at $49 a month while the Flight Pass Pro is about flexibility, so it starts at $199 a month. All plans require a full 12-month commitment.
These come in three denominations. You can buy 6, 12 or 24 roundtrips in a year. And yes, all of these have to be booked as roundtrips. No one-ways allowed.
When a travel uses a Flight Pass, taxes and fees are still on the traveler. Since these are all domestic, that means every traveler will pay the September 11 Security Fee of $5.60, the segment fee of $4.50, and unless there’s an airport that doesn’t charge it, the passenger facility charge of $4.50.
Further, each ticket comes with a minimum fare of $0.01. Alex said it made it a lot easier for them to have an actual fare, but he didn’t get into details. The pass books into a “middle upper fare bucket,” but I couldn’t get any hard details about what that bucket is. I was told, however, that it can vary. And if that bucket isn’t available? Travelers will still be able to book that flight at a discounted rate, but one that is higher than a penny.
I did a little digging on my own on the microsite and looked at LA to San Francisco tomorrow. Based on the selling fares, it looks like this books into M class. If only K, H, or B are available then it’s an extra $100. If only Y is available, it’s $200 more. On the other hand, Santa Rosa appears to book in H, and only B or Y would have premiums. I didn’t check to see if this varies by date or just by route.
But let’s assume that you never run into that problem and you can always book an available flight. Is it worth it? Well, here’s the math provided by Alaska.
This is not a bad deal. Sure, you can sometimes pay less than $127 for a roundtrip, but it all depends on where you’re flying. If you do Vegas in the middle of the week, this is probably a bad deal. But if you do Santa Rosa? Winner, winner, chicken dinner.
The reality though is that this isn’t about gaming and trying to figure out what’s the way to save the most money. This idea is about simplicity and consistency. It makes it easy for someone to budget for travel, and that’s why people like subscriptions in the first place.
Of course, it requires someone who plans to regularly travel on the routes the airline has, and I imagine that will create some interesting geographical differences. For example, it’s a much more robust network if you live on the peninsula in between San Francisco and San Jose than, say, if you live in Orange County. I hope I can coax Alaska to share geographic data down the line.
As far as the airline is concerned, this is a “long-term, ongoing product,” so this isn’t just a test. Could it make it into another market? Alex says it’s possible, but California is pretty unique with its network and with Alaska’s need to juice the business there.