In the highly competitive and low-margin airline industry, the corporate culture of Alaska Airlines (Alaska Air Group Inc. NYSE: ALK) is making them stand out (Ekstein, 2017). Their commitment to customer service over corporate greed is responsible for their gigantic collection of airline awards (Ekstein, 2017).

One major difference between Alaska and its competitors is the way they approach performance management. Unlike airlines that give out bonuses based on revenue per seat mile or on time performance, Alaska gives out bonuses to employees who “do the right thing (Ekstein, 2017).” This includes anything from giving champagne to a couple celebrating their wedding anniversary to waiving flight change fees for a family emergency (Ekstein, 2017).

Customer service is becoming increasingly important in the airline industry and a key reason why the “legacy carriers”* are losing market share. With public relations nightmares on the rise due to social media, protecting a brand image is becoming increasingly difficult. By dealing with the issues on the spot and ensuring that customer needs have been met, Alaska avoids the costly and time consuming processes that are involved in cleaning up a public relations disaster. The savings is evident after United Airlines spent millions of dollars and lost one billion dollars in value after a passenger was dragged off of an aircraft in April (Cox, Rodinova, 2017).

The difference in key performance indicators (customer service over profit) and rewards for employees who demonstrate Alaska’s values shows their commitment to the customer over anything else. These values display the immense weight Alaska puts on creating loyalty through the customer decision journey by creating an experience so good that any non-Alaska flight is a major disappointment. In this sense, Alaska is looking to create value through stakeholder theory; bringing value to the employees by empowering them in their role, bringing value to the customer by creating the best in-flight experience, and brining value to the company by creating strong brand loyalty.

Even with their great customer service, Alaska still faces the issue of being a relatively small west coast carrier. Despite their acquisition of Virgin America, another airline that focused heavily on customer service, Alaska is still struggling to establish their brand through the United States. Much like WestJet relied on their slogan “owners care” to brand themselves as customer friendly alternative to market leader Air Canada, Alaska will lean heavily on their strong customer service to drive their marketing in new markets.

In an industry that only makes $5.42 per passenger, cutting every unnecessary expense is a top priority (Irvine, 2014). Alaska bucks that trend by increasing its discretionary budget and encouraging employees to go out of their way to make the customer experience better. This unique strategy might be key for Alaska to join the big four** in the US airline industry.

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Appendix:

*The “legacy carriers” consist of American Airlines (American Airlines Group. NYSE: AAL), Delta Airlines (NYSE: DAL), and United Airlines (United Continental Holdings Inc. NYSE: UAL).

**The “big four” references the three legacy carriers and Southwest Airlines (NYSE: LUV).

Sources:

Cox, J., & Rodionova, Z. (2017, April 11). United Airlines suffers near $1bn loss in value after passenger was violently dragged off overbooked flight. Retrieved October 14, 2017, from http://www.independent.co.uk/news/business/news/united-airlines-united-continental-shares-slide-drop-expect-passenger-dragged-flight-3411-overbooked-a7678051.html

Ekstein, N. (2017, May 24). Why little Alaska Airlines has the happiest customers in the skies. Retrieved October 14, 2017, from https://www.msn.com/en-us/money/companies/why-little-alaska-airlines-has-the-happiest-customers-in-the-skies/ar-BBBtL2u?li=BBnbfcN

Irvine, D. (2014, June 03). How airlines make ‘less than $6 per passenger’. Retrieved October 14, 2017, from http://www.cnn.com/travel/article/how-airlines-make-less-than-6/index.html

Images (in order they are displayed):

Alaska Airlines Aircraft [Digital image]. (2016, January 25). Retrieved October 14, 2017, from https://blog.alaskaair.com/alaska-airlines/who-is-the-eskimo/

Why Little Alaska Airlines Has the Happiest Customers in the Sky [Digital image]. (2017, May 24). Retrieved October 14, 2017, from https://www.bloomberg.com/news/articles/2017-05-24/how-alaska-airlines-became-the-best-airline-in-the-u-s