Alaska Airlines Marketing Strategy
Alaskan Airlines is one of the largest airlines in the US, ranking at number ten. It is based in Washington, using Tacoma international Airport in Seattle as a hub. Alaska Airlines is a major carrier on the US mainland, in Canada, Mexico and Hawaii. It has codeshare agreements with several big players in the market like British Airways, Cathay Pacific, KLM and Korean Airlines. Alaska Airlines is one of the few carries that retained profits even during the recession and in the aftermath of 9-11 attacks. Alaska Airlines marketing strategy is based on its regional market positioning, its strong corporate image and a focused differentiation strategy. The airline has strategically concentrated its services in the north western part of the US and largely in Alaska. Its marketing strategies are centered on the following: i. Positioning itself as the strongest carrier in Alaska by promoting a corporate image among the local people and incorporating the image of the locals on its planes. This identifies the airline with local customers. It is the preferred airline for the people in Alaska where air transport plays a major role in transportation of goods and services. ii. The airline offers specialized training for its pilots and staff on how to fly in difficult terrain. This differentiates it from other competitors in the industry. It pioneered latest navigation technology to enable it to safely operate in rough terrain and weather conditions. This is a competitive advantage against other airlines. Such features and training have led to a higher safety and high reliability rating. iii. The airline is able to keep its operational and marketing costs low because it has implemented a system that has the ability to measure 50,000 points in its performance and eliminate waste. This has increased its competitive capacity. This has a net effect of lowering costs which are in turn passed on to the customers, thus maintaining a loyal customer base. iv. Alaska Airlines has for a long time operated on single fleet of Boeing 737, thereby achieving cost advantage.
Alaska Airline is succeeding in its strategy because very few airlines have attempted to go into the Alaskan market. Delta Airlines is currently increasing capacity at the Seattle hub putting more pressure on Alaska Airlines., though no airline is venturing into the Alaska market itself. It is poised to increase its capacity by 9 percent in 2015, its capacity increase will be achieved by adding seats to the fleet of 737 Boeing planes, while reducing capacity in underperforming markets (Bentley, Ranson & Sobie, 2013). This will provide a pushback for Delta Airlines thrust into the market. It is poised to continue increasing its revenue by continuing to add markets, it added 16 new markets in 2014. Alaska Airways brand is strong in the Seattle area. It is projecting an 11 percent increase in the margins.
The three key financial ratios selected for this purpose are: 1. Long Term Debt to capital ratio: Long term debt divided by long term debt + Total stockholders’ equity; this ratio indicates the balance between long term debt and stockholder’s equity in the firm’s long term capital structure. Low ratios indicate greater capacity to borrow additional funds if needed. The trend for Alaska Airlines is a positive one, the 2013 ratio of 0.42 indicates a stronger credit worthiness for the airline FY 2013 | FY 2012 | FY 2011 | FY 2010 | 871/2029 = 0.43 | 1032/1421 =0.73 | 1307/1174 =1.11 | 1534/1106 = 1.38 |

These ratio indicate that Alaskan airlines is very solvent and is able to finance its operations without borrowing. 2. Net return on Total assets (ROA) Profits after taxes/Total Assets. This ratio is a measure of the return earned by stockholders on the firm’s total assets. Alaska Airline ROA has been trending upwards in the past four years which indicates a positive outlook for the company.

FY 2013 | FY 2012 | FY 2011 | FY 2010 | 508/5838 = 8.7% | 316/5505 = 5.7 | 245/5167 = 4.7% | 251/5017 = 5.0% |

3. Return on invested capital (ROIC). Profits after taxes/Long term debt + Total Shareholders’ equity;
This ratio measures the return shareholders are earning on the long term monetary capital invested in the enterprise. FY 2013 | FY 2012 | FY 2011 | FY 2010 | 508/2900 = 17.5% | 316/2453 = 12.9% | 245/2481 = 9.87% | 251/2640 = 9.51% |

Alaska Airlines Strength’s: The airline has a high ROIC, which is one of their strength’s, this indicates that the airline’s bottom line is effectively used and this allows for growth by increasing capacity, which the strategy the airline is using to counter Delta’s entry in the market in the region.
Alaska Airline operates a singlet fleet which gives the company a competitive advantage by reducing the learning curve of the operators and flight engineers, thereby reducing unit costs. It is a human capital strength.

Alaska Airline serves a diverse customer base and has strengthened its customer value proposition by packaging its services to meet their customer needs which makes it a high quality service. Over the past five years, its customer satisfaction has averaged over 90 percent, allowing the airline to make about more profit in the Northwest market (93.3 %). It has a strong balance sheet as witnessed from the financial ratios.
It’s able to hedge its fuel costs than other airline competing in the same market (Bentley et al., 2013).
Its unit cost for the fiscal year 2013 stood at 7.49 c compared to Delta’s 10.12c.
Alaska Airlines Weakness: The airline is losing ground to Delta airlines and is underperforming in some routes where Delta is increasing capacity.
Fuel volatility in the entire industry is causing cost containment to be difficult as more airlines enter the regional market.
It’s not a member of any Airline Alliance and has no continental route in the ever growing Asian market.

Alaska Airline has differentiated itself by operating a single fleet of planes in the past years. It also caters to a loyal and highly satisfied customer base. The company is focused on cost differentiation in the region over the competitors.
Alaska Airlines has focused differentiation on the North West segment of the US flying customers where it holds a 65 percent share (Kalb, 2013).
The advantages are: Delivering value to customers on the basis of competencies and competitive capabilities that rivals cannot match (Thompson, 2013), Incorporating features that enhance buyer satisfaction, incorporating product attributes that lower buyer’s overall costs of using the product. Incorporating features that raise product performance and deliver added buyer value. Pitfalls include: Technological changes is fast paced, few rival firms are following similar differentiation approach, and buyer needs of the product are diverse.

Reference

Thompson, A. A. (n.d.). Strategy Core Concepts and Analytical Approaches (3rd ed.). Burr Ridge, Illinois: McGraw Hill Education. Bentley, D., Ranson, L., & Sobie, B. (2013, May 31). Alaska Air Group face tough 2Q 2013 as competitive capacity hurts yield, Cost Crunch looms. CAPA. Kalb, I. (2013, March 7). Why Alaska Airlines has one of the best corporate image in the industry. Business Insider.