Alaska Airlines debuts subscription service for flights
Alaska Airlines is taking a flyer on a subscription service, joining the recurring-payment ranks of Netflix, Amazon and Peloton as the travel industry recovers from its pandemic woes.
Why it matters: The subscription economy is taking over more areas of our lives, offering new payment and service options while threatening to disrupt businesses that can’t keep up. And as the fifth-largest carrier in the U.S., Alaska Airlines has the heft to shake up the marketplace.
How it works: Subscription options include six, 12 or 24 roundtrip flights annually from 13 destinations in California to each other and to Phoenix, Las Vegas and Reno, Nevada.
- Customers can pay as little as $49 monthly for the cheapest option, Flight Pass, providing six flights a year that must be booked at least 14 days in advance.
- A more flexible option, Flight Pass Pro, starts at $199 a month, providing flights that can be booked up to two hours before departure. Customers still pay taxes and fees averaging $14.60 per one-way segment, according to The Points Guy.
The big picture: The airline industry could use a source of dependable revenue in turbulent times, as it continues to suffer from a decline in travel due to the pandemic.
- And now’s the time to win over consumers and business travelers as they tiptoe back into the airways.
- “They want the same things that a typical retailer or other private enterprise would want, which is recurring revenue that is predictable and customer loyalty,” says Adam Levinter, CEO of Scriberbase and author of “The Subscription Boom." " Subscription models provide an anchor for all of those things."
Our thought bubble: The devil is in the details with deals like this. People won’t pay if the value isn't there.
- “It remains to be seen how consumers will wrap their heads around this,” Levinter says. “It’s not completely intuitive.”
But, but, but: Subscription services often rely on a certain degree of "breakage" — an insider term for the rate at which subscribers don't use the services they're paying for.
The bottom line: One-off flight purchases aren’t going away. But if this works, expect others to follow.