Alaska Airlines Adding More Fare Classes

Back in November Alaska Airlines had an Investor Day conference where they revealed some fascinating information. The most interesting information had to be about award redemptions, including the following fun tidbits:

• 84% of award redemptions are for travel on Alaska
• 12.5% of award redemptions are for travel on American and Delta
• 3.5% of award redemptions are for travel on all other carriers, including Cathay Pacific and Emirates
• 1.4% of award redemptions are for first and business class travel on partner airlines other than American and Delta

But that’s not the point of this post, so check out the previous post if you’d like to read more about their award redemptions.

Another interesting thing they talked about — which we’re now seeing the first signs of — involves adding more fare classes. As I wrote about in November:

Another interesting fact revealed during the presentation is that on average five first class seats are paid for per flight. Most of Alaska’s planes have 16 first class seats, so that means roughly a third of Alaska’s first class seats are paid for, while the rest are upgraded into. While Alaska thinks their cabin layout contributes to half of their cost disadvantage compared to low cost carriers, they’re committed to keeping first class since they think it’s something Mileage Plan members value. In order to hopefully sell more first class seats, Alaska will be introducing more first class fare buckets. Presently they only have a single first class fare bucket, which probably makes them the only airline where that’s the case. By introducing more fare buckets they’ll better be able to segment the first class market.

Anyway, last night while browsing ExpertFlyer I noticed several new fare classes for Alaska flights. For example, previously the first class fare buckets were as follows:

F: refundable first class revenue fare and refundable first class award
A: saver first class award
U: confirmable first class upgrade space

Now I also see the addition of D & P fare buckets in first class. So the new first class fare buckets will be as follows:

F: refundable first class revenue fare
P: non-refundable first class revenue fare
D: refundable first class award
A: saver first class award
U: confirmable first class upgrade space

I’ve always appreciated just how simple Alaska’s first class fare buckets are, though I totally see why they’re doing this. They’re the only airline I know of to offer just refundable first class fares, and they’re probably not optimizing revenue by having such a simple fare structure.

My hope is that this translates into lower non-refundable first class fares, rather than non-refundable first class fares being priced similarly to current refundable fares, and the price of refundable fares being raised.

It’s also very interesting to see that they’re creating a separate fare class for refundable first class awards. In the past refundable first class awards had last seat availability. That means if a flight was “F1,” you could purchase a full fare seat either with cash or miles. I wouldn’t be surprised if in the long term the new D bucket (refundable first class award) doesn’t match F availability in all cases. In other words, a flight might be “F2 D1,” meaning they’re willing to sell two first class seats for cash, but only one first class seat as a refundable award. It’s a trend we’re seeing in the industry lately, whereby many “standard” awards no longer have absolute last seat availability.

On the plus side, per Alaska’s mileage earning page, it appears as if the P fare bucket will still be eligible for a 50% mileage bonus:

Economy Class Cabin*: Earn actual flight miles* flown in S, B, M, H, Q, L, V, K, G, T, R, O, X and U class of service; Earn actual flight miles* flown in Y (Refundable Coach) class of service plus 25% Bonus Miles.

First Class Cabin*: Earn actual flight miles* flown in F or P class of service plus 50% bonus.

While Alaska has loaded the new fare classes for future flights, it doesn’t look like they’ve actually published any discounted first class fares yet. They did add a new column for “lowest” first class fares, though, so I assume it’s coming soon.

So there’s nothing that has really changed yet, though it’s an interesting development and I’ll post when we find out more.