OM in the News: Alaska Airlines’ Operations Success

Alaska Airlines is puny compared to the major carriers, says The New York Times (March 3, 2013): it has 124 planes, while United has more than 700 and four times as many passengers. But because of the state’s topography and extreme weather, it was the first to develop satellite guidance, a navigation technique that has transformed landing at Alaska’s tricky airports. The technique is now at the heart of the FAA’s plan to modernize the nation’s air traffic system.   The technology works much as GPS does in cars: it allows pilots to chart a precise course in the air and safely navigate hazardous terrain, weaving through valleys and around mountains with perfect accuracy right up to the edge of the runway. It opened a new landing approach for Juneau in 1996, allowing flights to come through the thickest fog. Jet wingtips practically graze the trees on the final stretch to the airport.

Largely because of that technology, flying in Alaska is now remarkably reliable — even in the dead of winter, when it is snowing, when there are just two hours of daylight, when runways are icy, when winds blow at more than 50 mph, and pilots can barely see out the windshield. Alaska Airlines, in fact, had the industry’s best on-time performance for the third consecutive year in 2012, with 87% of flights landing on time. And unlike carriers that have faced bankruptcy or acquisition, Alaska has turned a profit for 33 of the last 39 years.

The airline can keep costs down in part because it measures obsessively. It has established 50,000 points of data to improve its on-time performance, from the time bags are loaded and passengers board to when the pilot pushes back from the gate. Alaska also figured out that if it could shave just a minute of taxi time from each flight, it could save 500 minutes, or over 8 hours, a day — the equivalent of flying an extra plane daily, said COO Ben Minicucci. If such small efforts allowed the carrier to free up a plane, it could generate $25- $30 million in revenue a year.

Discussion questions:

1. How has technology helped drive Alaska Airlines’ success?

2. Why is productivity an important OM factor at Alaska?