Alaska rolls out Saver Fares across its network, as American touts its success in product changes to Basic Economy

Alaska Air Group has deployed its answer to basic economy – Saver Fares – network wide after a soft launch in Nov-2018. Saver Fares prohibit seat selection, places the passengers in last boarding group and doesn’t allow for changes to an itinerary, but customers can still accrue miles.

It is sticking to previous declarations that Save Fares will generate USD100 million this year, and the airline’s executives recently concluded the Nov-2018 product test went smoothly, and allowed the company to refine the processes and technology before a full network roll-out on 7-Jan-2019.

“We look forward to updating you more fully on Saver’s progress in the near future,” Alaska’s chief commercial officer Andrew Harrison recently told analysts and investors.

Alaska has also previously stated it plans to generate an additional USD50 million in revenue next year by offering exit row seats for sale, improving its post-sale revenue management, dynamic pricing for Premium classes, and eliminating fee waivers for ticket changes outside 60 days.

The airline also concluded its recent bag fee increase that raises the rates on first bags from USD25 to USD30 and on second pieces of luggage from USD25 to USD40 should also produce USD50 million in revenue during 2019.

Additionally, Alaska also plans several product improvements in 2019 including deploying satellite Wi-Fi with higher bandwidth on 125 aircraft and the installation of next generation interiors on a third of its mainline fleet. The company also continues to add two-class Embraer 175s, which now represent 60% of its regional fleet.

Meanwhile, American Airlines’ decision to align its Basic Economy offerings with rival Delta Air Lines by eliminating a carry-on bag restriction appears to be reaping rewards for the airline’s continuing product segmentation strategy.

The US’ largest domestic airline opted to remove the restriction as of Sep-2108 after concluding that Google filters on a passenger’s search would push American’s fares farther down a list due to the prohibition on carry-ons.

With the elimination of the carry-on restriction, “we are now able to roll out our full range of fares to more than twice as many customers as before”, American president Robert Isom recently told analysts.

He explained that since the change, the average upsell rate for basic economy continues at roughly 60%, which has exceeded American’s initial expectations, and the upsell amount is now roughly USD26, a USD5 increase.

American is also continuing to roll out premium economy on its international aircraft. The section was added to more than 100 aircraft in 2018 out of a total of 124 planned jets.

Mr Isom boasted that “American has more aircraft with premium economy than any other US airline”. He also concluded the average fare for premium economy “continues to be twice the coach fare, and when we look at the booking profile for this product, it is clear that customers are buying up from the main cabin”.

American’s president also concluded that looking forward, “we will further monetise premium economy with new revenue management and merchandising capabilities”.