Changes to Alaska Air Group's frequent flier program (FFP) for Alaska Airlines and Horizon Air are expected to generate as much as $2 million to $3 million in revenue per quarter.
In addition to creating new redemption levels, the company eliminated about 7% of total outstanding miles when it deleted accounts that have been inactive for more than two years, Alaska Air CFO and executive VP finance and planning Brad Tilden said during an earnings call with investors today.
Removing inactive frequent flyer accounts translated to a $42.3 million benefit during the third quarter of 2008. Moving forward, the company may invest in new tools and practices for the FFP, as well as schedule planning and revenue management, he says.
While Alaska may purchase new technology or other tools, the company is actively cutting costs.
"[We're] targeting a 10% reduction in overhead spending," Tilden says.
Aggressive goals for employee productivity and real estate utilization are also being set, he says.
The company continues to mull new ancillary revenue opportunities such as internet connectivity and trip insurance.
The company is the launch customer for Row 44's Ku satellite-based broadband internet, and depending on the outcome a trial-run on a single Boeing 737 if it will begin fleet-wide installations.