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Alaska Air Seeks San Diego Niche

Stocks in this article: ALKDALLCCLUVSAVE

San Diego is a tough place to find a niche, Harrison said. "It is a lovely city, (but) it has one runway, and it will (always) have one runway. Southwest is No. 1 there, its dominant service is intra-California, and it has a heck of a lot of frequencies. Next are the big guys to their hubs. At the peak morning bank that thing is full; every major airline in country flies to its hub: Atlanta, Chicago, Dallas, Houston, Denver ...." The majors "complement their service with flow" beyond their hubs, he said. "We don't have flow.

"But that leaves some interesting point to point service," Harrison said. "The big growth for us has been to Hawaii." Alaska serves Honolulu and Maui and will start Lihue service in June." On the Boston route, which began March 29, Alaska departs at 9:30 a.m., arriving about 6 p.m., while JetBlue (JBLU) has two flights that depart at noon and 9 p.m. "We have it timed for people who live on the West Coast," Harrison said.

Though the presence is small, San Diego is important to Alaska. "Alaska's small size allows it to make adjustments in capacity that meaningfully impact its profitability," wrote Imperial Capital analyst Bob McAdoo, in a recent report.

On the Orlando flight, which began in October 2011, Alaska operates the only non-stop. But Harrison has calculated that each day, from San Diego, "you can get to Orlando 200 different ways, on routes through hubs, some with ridiculously low fares." Also, the Orlando non-stop is a red-eye. That is good from the point of view of aircraft utilization, but not so good in terms of taking your children to Orlando. "We have loads, there is volume there, but we have a yield problem," Harrison said. "We are relooking at it: we may change the time."

Meanwhile, Santa Rosa, Fresno and Monterey "are doing OK but they take time to work." Of course, whatever Alaska can do in San Diego the carrier remains strong because of its dominance in Seattle and also in Portland. "We have a very strong brand in the Pacific Northwest," Harrison said.

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