Feb. 13, 2017, © Leeham Co.: It was subtle, but it was there: Alaska Airlines will take the Airbus A321neo for a test drive.
This will happen via its new sibling, Virgin America, which has 10 A321neos on order. VA is an exclusive A320 operator. Alaska flies only Boeing 737s. The acquisition of VA by Alaska immediately raised questions whether Alaska will retain the Airbus fleet and orders or phase them out in favor of the 737.
Of more interest to partisans than to me, the question over the future of the Virgin America brand also became a top question.
During the year-end earnings call last week, VP-CFO Brandon Pedersen volunteered, “At Virgin America, we’ll take some number of the A321neos Virgin was planning on but we’re working with the lessor on an arrangement where we don’t take all 10 that are scheduled to be delivered over the next two years. Virgin America will be the worldwide launch customer for those aircraft, which will be configured with 185 seats, and we’re very anxious to see how they perform.”
“The Airbus is a great airplane,” said Ben Minicucci, president and COO. “As you know, we love Boeings, we’re all Boeing and we’re proud of that, and we’re learning a lot about the Airbus. What I will tell you is where you put the Airbus. It’s one of the things we’ve done well. We’ve put the right airplane in the right market. The…320… is limited as [a] Trans-Con airplane. We think it is a better North to South airplane. So at least in the next five years, I think you’ll see [marketing] work with the ops team really to get these airplanes in the right markets to really maximize their potential. So, where the 321s go, whether they go Hawaii or Trans-Con, I think we’ll make the right decision for to maximize their potential.”
During the Q&A, Dominic Gates of The Seattle Times asked a follow-up about the fleet plan.
“We have been proudly all Boeing for I don’t know how many years, 10, 15 years,” said CEO Brad Tilden. “We have ‘Proudly All Boeing’ on the front of every one of our airplanes. We’re really proud of that. Flying Boeing airplanes has been fantastic for this company. That flying a single aircraft type has been fantastic for this company. So, that’s fact one.
“Fact two is we bought Virgin America and they fly Airbus airplanes. So overnight we now are in the position where we fly both airplane types. All that we have said is that we’re going to go through a process in 2017 where we make a decision as to whether to continue to fly two airplane types, or whether to go back and fly a single airplane type again. And that process is going to take six, seven, eight, nine months, something like that. But we’re going to–as any company would–we’re going to go through the right process to make the right decision for everybody at Alaska and we’re going to certainly talk with Boeing and Airbus as we go through that process.”
Tilden said that the issue is pressing because the first A321neos are delivered this year. (Four this year, the first in May, and six next year, according to the Ascend data base.)
“We’re having conversations with…the lessor and Airbus about that airplane to see if we can sort of reduce that, because that’s a new airplane type to Virgin America. We’re having a conversation to see if we can sort of reduce that commitment to A321s or put that off a bit while we go through this process to make the right long-term decision for everyone. And that’s really all that we can say about where we are right now.”
The lessor is GECAS.
Alaska has 17 737-9s on order, just a fraction compared with the large fleet of 737-900s/ERs that one day must be replaced. The -900ERs are relative new, but Alaska was the launch customer for the original, standard 737-900. The standard -900 is, by flexible standards, a sub-par airplane. Field performance is poor and it can’t do US trans-con. These would be the first to go in a re-fleeting.
But the MAX 9 pales to the A321neo, which carries more passengers, has more range and has better field performance.
The prospective MAX 10 carriers slightly fewer passengers compared with the A321neo and has substantially less range—but it can do US trans-con.
If all Alaska wants is more seats, the MAX 10 would serve it well. But if range is needed, Alaska must choose the A321neo.
The A321’s wider cabin also provides more flexibility for premium services, such as JetBlue’s Mint, should Alaska choose this path.
Given Alaska’s continued expansion into longer haul markets and increasing competition in the premium cabin arena, the A321neo is the more flexible airplane.
It all comes down to where the airline will go for new markets and passenger experience.
Although of less interest to me, especially since I’ve never flown VA, is whether the VA brand is retained. I don’t think it will be.
In the US, multiple-branded mainline operations within one company have never succeeded. USAir/Metro, Continental/Continental Lite, Delta/Song and United/Ted were all flops. The secondary brands all disappeared into the primary ones.
Even at Alaska, in the end, multiple brands were eventually merged into the Alaska name: Jet America and even Horizon Air became Alaska eventually. So it will with Virgin America, I believe.
The way that CEO and COO are talking suggests to me that Alaska is loocking to have a bargaining chip for the next big BCA order. They only want to see how the A321Neo is performing to get a substantial discount for a B737-8/9/10Max. And Boeing would get real life EIS data about their biggest narrowbody opponent. Everybody in Seattle would be happily ever after…
Ak is changing, Boeing is locked in with a very poor upper end in so far as the range and pax count goes.
The A321 is really a godsend for them.
They do have to compete with others who have it.
Looks like a “transcon-able” 737-10 is specially tailored for those case … “drop the A321 and stay with us”
Still the -10 is a least 3 years away ?
Will it be really capable of SEA-MIA ? (almost 2400 Nm)
Why the will it have a hard time on LAX-HNL (2200 Nm), specially with “low density” premium cabin ?
The 320 is limited as transfer con airplane -Why? He doesn’t seem to like them. It would be really interesting to see their technical evaluation once they’ve operated both for a while, but I don’t expect we’ll get the chance.
@Grubbie: A320ceo sometimes subject to tech stops WB in winter.
@Crise: 737-10 low density would be fine, but in AS standard configuration could be challenged–field performance (short runways) out of some Hawaii airports already require blocking seats with 737-800. 737-900ER/9/10 are poor field performers even with long runways.
Having 2 fleet types adds much cost such as pilot training,parts,maintenance,etc. While large carriers can support multiple types, Alaska is relatively small and in the long run, the Boeing’s have done well and is the small advantage on some flights worth the extra cost incurred?
Southwest has done very well with a one type fleet of Boeing’s and the Max’s seem to have added new capabilities to the 737 family.
SW is point to point and AK is not.
Comparing two different Airlines and route structure let alone an LCC with a regulator is not a good metric.
SW has DAL,BWI,MDW,PHX,MCI,DEN,all hub airports.SW is larger and maintains only one fleet type. Has been working good for Alaska, Why change the business model?
pilot training ?? Together with Virgin, Alaska will inherit of the airbuses AND trained pilots.
On the long term either they hire the needed pilots … there are both plenty Boeing or Airbus qualified pilots otherwise, they have to train youngsters in both cases.
There aren’t a whole lot of exciting markets that Alaska could get to with an extra 500 miles of range (or even 1,000 for that matter). LA to northern South America? Anchorage to Japan? None of these seem so compelling that it would justify operating a mixed fleet.
I think they will use the Airbus fleet as leverage to get a good deal from Boeing, but at the end of the day going back to all-737 seems like the most logical course. At least if Boeing goes ahead with the 737-10 concept.
How will Virgin America customers react to the narrower seats on a 737?
AS wouldn’t be the first airline to select the A321 next to their 737 fleets. Simply because its one step up in medium haul payload-range, comfort and efficiency.
Air Alaska has built its position not only as a paxliner but partly also as a freightliner, with fresh fish southbound the spearhead of its cargo trade. Ask airport dockers up there in the north, how they’d like to handle push-button AKH vs today’s crawl-around fish crates ? I think the answer is evident ! Immediately the route Marketing guys get a whiff of what’s really at stake here, the A321 NEOs are into Air Alaska to stay, pushing out the 737s… Bon Vent, off you are to retirement !
No one cares what the cargo handlers want.
It may come up as a spin item, feel good management stuff, but face it, those who work are just dog meat (not highly prized salmon) in todays world.
The question asked by the freight coaches to the handling people is we’re rotating in, say, 40 minutes … how much freight can you get onboard ? The answer varies. With the 738 or 739 or 731, the answer is “we’ll take what we can until you tell us to close the holds for pushback, anyway it won’t be much, whatever was left out we’ll put onboard the next flight” … With the A321, the answer is “all four AKH, or two more if there’s little checked-in luggage. We’ll depart FULL to the brim” … @ TransWorld, don’t tell me this kind of language doesn’t dig home to the sales people ?
Makes sense to use the Airbuses where there is lots of narrowbody cargo to handle. (Like fish in contianers) The 737’s strengh is on big city trunklines with biz pax, doing 14 jumps a day. That is were the 737-10 would fit in well. The late build A320 with winglets should to US transcontinental routes pretty comfortable.
Keep in mind the AK to Seattle run is 1500 air miles.
That’s well within the 737s capability.
Its the pax count and stage lengths that count.
ANC to Oakland etc might be a possibility, but most likely the A321 would be stationed where there are more than one flight here and there for maint purposes as well as pilot staffing.
Any of the old A320s are on lease and those will go back.
AK is probably only interested in the A321NEO because of its significant jump in capability, great prices they have on it from Virgin.
I don’t see any A320NEO either.