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2026.09.29 | TB | Airlines | Alaska Airlines Ancillary Products & Outlook

原标题：Alaska Airlines – Ancillary Product Roll-outs & Company Outlook

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Third Bridge · 2026-09-29

Analyst-led • 22 Sep 2026

Companies: ALK US, BAC US, AAL US, BA US, LUV US

Courtney Lansing (CL) Managing Director, Strategy, Sales & AI Transformation Consulting at Blue Strategy Consulting LLC

Liam Dorsey (LD) — Third Bridge Sector Analyst

Agenda

Key Insights

Introduction

LD [00:00:02]: Welcome to Third Bridge's Interview entitled Alaska Airlines – Ancillary Product Roll-outs & Company Outlook. I'm Liam Dorsey, and I'll be facilitating today's Interview. Pleased to welcome Ms Courtney Lansing, former Managing Director, Strategy, AI Products, Experimentation, Business and Partnership Development at Alaska Airlines.

Before we get started, would you please state I agree or I disagree to the following statement: You understand the definition of material non-public information and agree not to disclose any such information, or any other information which is confidential, during this Interview.

CL [00:00:26]: I agree.

LD [00:00:28]: Would you mind beginning with a brief introduction to your background and your time at Alaska or the rest of the industry?

CL [00:00:36]: I spent almost three years at Alaska Airlines as Managing Director of Commercial Strategy, Revenue Products, Business Development and Experimentation. It was a logical next step post my Boeing experience, where I was at Boeing for 23 years across most of the business functions at Boeing, working daily with the engineering teams and production teams and our customer set to make sure that Boeing was delivering what our customers needed when they needed it, spanning across strategy, finance, operations, sales, marketing and innovation. Then, I spent a little bit of time at a tech start-up in Seattle, a couple of years to hone my rapid sort of iteration of new technology skills that I brought into Alaska as I led that product team.

Questions

00:01:38] Alaska Airlines is guiding for RASM [revenue per available seat-mile] to sequentially improve from Q2 to Q3 2026, to low-double-digit growth. How do you weigh the drivers of that acceleration between fare catch-up environment and core demand or core business improving? What are your thoughts on the recapture environment for carriers throughout 2026?

CL [00:02:23]: Just on the last point on recapture, airlines fairly quickly pivoted, especially domestic carriers, to the surcharges on fuel, increasing fares and did that almost unilaterally. Alaska was a little bit late to that game, but also made that move, which really strengthened their position. The industry has been really very disciplined, I would say, on capacity growth as well, which is helpful to everyone. To a lot of people's surprise, demand remains very strong even in the leisure markets that are arguably more impacted by inflation and fuel prices in household and that kind of thing. I think for the industry, I do see strength. I don't see any reason why it wouldn't continue through the rest of 2026 as far as RASM, especially given the discipline in supply and capacity as well as recapturing that fuel. I do think Alaska has made some really good business strengthening moves on RASM as well, appealing to corporates beyond just the traditional leisure travellers. Corporate travellers, especially out of Seattle and some of the West Coast where tech impacts were maybe a little bit more severe post-2026 and COVID have now recovered and tech companies are doing quite well with the AI kind of boom, which means more travel for corporates and a lot of the tech companies along the West Coast.

I think there's no reason to believe that, that won't continue. I think the fuel increase is something that will probably stabilise. I don't know if fuel will continue to go up or just get more stable until the war is over, but I do think that, that's already kind of captured. I think Alaska has done a really good job with their loyalty programme and moving into a premium credit card. I think that, that also is a RASM tailwind for Alaska that will continue. It's still relatively new. To get the free Starlink wifi on aeroplanes, it requires that you sign up for a loyalty account and then making the international travel piece makes it more attractive for cardholders to sign up and even for the more expensive card, charge more on that card, which is all goodness for Alaska. I do see, especially Alaska being a little bit more of a leisure carrier, always strong in Q2 and Q3 of the year to do well through 2026.

00:05:45] You mentioned that the durability of the leisure portion's strength is somewhat surprising for all carriers. Do you think the customer demand profile for leisure and premium customers is changing post pandemic – ie, the revenge travel trend is not temporary, and the demand profile is strengthening or becoming a little more durable?

CL [00:06:38]: I don't think it's temporary. I think we've seen now post-COVID that it is more durable. I think from what I witnessed and have seen across domestic carriers, especially in the US, the premium cabin strength is undisputable. I think Delta and United did a really good job seeing that. I think Alaska was a little behind, but also recognised that. I would say right after COVID, quickly recognised that and made adjustments. You can't flip overnight to offer premium experiences and premium cabins, but I think it's become clear that that's what passengers like. I think that low-cost price-sensitive family travellers, that cohort is probably not going to be travelling as much because they're going to be priced out. Fares have increased 25% or more since the war started. I don't know that you'll be able to get those leisure travellers, but that's not where the money was really.

I think the one thing that is interesting to think about is a lot of the, I would say, younger generation who are coming into dual income careers, not having children maybe as early or at all as families used to are deciding to spend more on experiences. We saw that at Alaska, and I think other carriers recognise that, too. The baby boomers are maybe not as important as these younger generations that have a lot of discretionable income and are choosing to spend it on travel instead of mortgages and that kind of thing. I think carriers who appeal to that demographic will probably win the RASM race and the premium race. Those who are a little bit late to the game might have a lot harder time catching up.

00:09:11] Regarding the airfare environment in H2 2026 and 2027, how sticky would you expect pricing to be, assuming that fuel cost will normalise to pre-Middle East conflict levels? I understand that the sector is still lagging behind other industries in terms of catching up to inflation, and airfares have been up 10-20% since the start of 2026.

CL [00:09:59]: Fuel normalises back to pre-war levels, I think fares will be sticky until that happens. I think once fuel softens, there will be more reasons for competition to increase capacity into the system, which will likely affect fares. I think if there's discipline on that, fares will stay higher, but without that logical reason, fuel is a logical reason fares are higher and consumers understand that, businesses understand that. It can be explained, but when fuel goes down and prices continue to go up, there will be logically competitive moves made, which will drag those prices down. I would say postwar back to pre-war fuel levels, I think goodness for airlines is keeping the prices that are available today at fairly level pricing and just not inserting too much capacity into the system.

I also think it's an opportunity to really double down like the airlines who are great on a premium experience on loyalty, building that base, that kind of thing. Those are less price-sensitive customers. They'll be less interested in how fuel is impacting pricing. I think there could be strength there for airlines who have a really strong plan around premium and loyalty. I do see corporates continuing to fly. Alaska, for example, hasn't necessarily been a winner in corporates compared to competition. If Alaska figures out how to really win with corporates and expand beyond the West Coast, I think that would be great into some of the international locations and really fill those aeroplanes that are moving beyond just domestic.

00:12:28] Do you see any potential learning curves for Alaska regarding pricing for corporate customers, given that the company is still somewhat early on in corporate expansion? How do pricing negotiations with corporate customers differ vs higher-end premium travellers? I understand that there's a lot of overlap as well.

CL [00:13:22]: I think if corporate is a pillar of an airline revenue strategy, they might be a little bit more aggressive in discounts just to get corporates in the system. I can't speak to whether where Alaska is on, but I do know, you know Delta in Seattle has been quite aggressive and been successful there. United and San Francisco has been aggressive and quite successful there. By getting corporates into the system with a discount and then building loyalty in that travelling base, then it's a reinforcing loop. You have travellers who fly business on a certain carrier or in a network and then they'll book their leisure travel through that same carrier. I think Alaska has had a different view publicly that leisure travel is first and corporate travel kind of follows. I think it might be a little bit different for the Uniteds and Deltas of the world.

From all of our research, strengthening corporate so that they choose to gain loyalty in business when their corporate company is paying for the travel and then reap the benefits of that and get the card and buy all their daily purchases on that travel card really reinforces the value proposition and it starts with that kind of corporate discount. I think industry-wide, getting corporates to sign up for travel deals is about pricing generally. Obviously, it's about network and where you fly to.

00:15:10] Regarding international expansion, the first transatlantic flight for Alaska was implemented in April 2026. What risk would you put on domestic RASM potentially decelerating in 2027? Should we expect the company's 2027 RASM growth to accelerate and be even higher than what it's seeing in 2026, given both the strengthening domestic and leisure business and the international expansion? How should we gauge the success of European expansion for Alaska and whether this can flow through to or be exemplified by RASM performance?

CL [00:16:34]: To answer the RASM question first, I don't think RASM will grow in the way it has this year moving into 2027. Fuel surcharges are behind us. I think there's some durable business pillars that are strong, but it takes a while for that to materialise. International will be a bit of a drag on RASM. I think with flat domestic capacity, RASM will probably stay fairly even, but I would say what is low- to mid-double-digits this year, I would guess would be single digits next year, and that's not just Alaska, I think that's across all airlines. I think Alaska is in a good position, though, to be strong compared to peers. I think with the relatively new loyalty programme with international expansion, more 787s coming, all of that, I think Alaska is in a good position to continue to have a premium experience with loyal customers in a base that's growing because they're not very mature on that position, but yes, as an industry, I don't know that RASM will… I don't know what would have to be true for RASM to be in the high teens next year. I think it will probably normalise, but I still think the industry will be strong and premium will win and carriers that fly a system that offers international will be a first choice.

00:18:29] Why might international expansion be a potential drag on Alaska's RASM? Does that go back to the corporate dynamics and the pressure from United Airlines, Delta or other international carriers on pricing?

CL [00:18:58]: It's also on product. The 787s that are in rotation don't have a very good configuration. They don't have a recliner product. The A330s are old and dated. They're getting retrofit, but it's not really I think it's going to be hard for Alaska to win on product internationally. A lot of corporates also choose where they're flying based on the business class product. The 787s have a great product, but the 330s don't right now. I don't think there's any disputing that. I think just the percentage of RASM growth on international is just harder to lift when you have a smaller international network and you have a lot of seasonal routes. It's an immature kind of experience for customers still. Talking with folks in Seattle who have had the opportunity to experience the European routes on the 787s, the service is still… There's improvements that need to be made. I think all of that will work itself out in a couple of years, but it's not there yet. I just don't know what would cause somebody to choose Alaska when they had another option that was a little bit better product at the same time. Delta and United have a great product in the premium cabin.

00:20:52] Alaska announced a new Boeing 787 order in January 2026 and had taken on the legacy Hawaiian 787 order. What do you think was the rationale behind not including a different configuration or a lie-flat first-class product in these new aircrafts? I understand that there are cost considerations and some supply chain headwinds with seat certification.

CL [00:21:47]: Yes. The new deliveries had already been configured when Alaska took… Because they're in implementation at Boeing for a couple of years. The layout, the LOPA had already been decided, parts have been purchased. There's a nice suite offering in the 87s, which is really top class, but a lot of business travellers don't have approval to fly first class in a suite, but they have approval to do the reclining kind of premium economy, what Alaska would call first-class domestic. The 87 product doesn't have that. It goes from a suite to just an extra legroom product. That publicly has been disclosed that Alaska will be changing that, but they have to wait until future deliveries because of the seat certification process and all of that. I'm not sure the exact year. I think it might be 2028 that, that new reclining kind of premium economy or domestic first-class product will be available on the 787s. It will definitely be on the -10s when Alaska starts getting those, but it was kind of a mid-configuration change when Alaska bought Hawaiian.

00:23:20] Where in the cycle do you think Alaska is regarding premium exposure, product investment and overall product suite? What inning is the company in regarding integration of Hawaiian Airlines' loyalty programme and the Atmos programme, as well as the expanded partnership with Bank of America? How mature do you think Alaska's programme is? What gaps are still somewhat unresolved, or what products are still missing?

CL [00:24:12]: I definitely think there's a number of innings to go. I think the foundation has been built and you don't move into premium overnight. It's a journey to get there. It's a really good thing for Alaska that the company started that years ago. Others are trying to ramp up and offer a little bit more premium experience quickly, and it's clunky for them. I think it's middle sort of the road. I think just to go through the premium products, I think on the product, the seat product category of the premium experience, Alaska is in a good position. I think Alaska saw the premium wave, that signal was clear to leadership, and they made necessary moves, but it's a minimum of two years to get cabins retrofit and changed and manage that across your network. I think they're in a great position there. Now having first-class suites, that's another offering, going international, having that at their fingertips, even though maybe service needs to be a little bit better and training is still a little clunky, they're on their way.

I think Alaska was late to the game with a premium card. I think there was a lot of signal that premium cards, if you look at Delta, their earnings calls, their premium kind of penetration and their Amex cash was gigantic. I think consumers got really smart about mileage cards and wanted something more premium. I would say a little bit of conservatism in Alaska didn't necessarily support that. Now there's this premium card that's been launched at a fairly reasonable USD 350, I think it is cost is doing well. I think late to the game, but a lot of tailwind there to kind of double down on this premium card. Lounges are fabulous at Alaska, especially in the hubs, but there's a lot of room for improvement across the entire network and partner network. I think that's going to require some investment. I think there's a good plan there. Alaska is a company that lays out a plan and kind of works the plan unless there's something that causes the company to have a good reason to believe the plan needs to change. I think there's a plan there for lounges. I think going internationally, you have to have a different calibre of lounges. There's definitely a need of a better partner network there for lounges.

Bank of America, I think, has been a good partner for Alaska in high-quality credit cardholders who spend a decent amount of money. I think there's also a lot of runway for more spend. Atmos seems to be doing very well. I think there's going to probably be some tweaks to the programme. I think all airlines have to figure out how to balance the tiers. There's not too many high-level tiers who are getting premium seats and upgrades and sitting in all the lounges and all of that is going to be the tricky part. Then I think Hawaiian integration is going well. The one call out there, I would say, is Hawaiian and Alaska merged in a large part because they have very similar business models, customer bases, a spirit of care and that kind of thing. It makes a lot of sense, but I think it can't be underestimated how difficult it is for the Hawaiian culture to transition over to be serving international flights to Europe. It's just a different experience and a different work statement.

That's where you have to nail that premium experience, especially if folks are in first class and paying a lot of money for those seats, the service has to be fabulous. I'm just not sure it's there yet. I know it will get there, but I have a handful of examples just personally where it was not great. I think there's some room definitely to make sure it's an exceptional experience every time. Alaska has the capability to do that. That Hawaiian integration caused a little bit of messiness there with not having the staff to fly twin-aisle aeroplanes across the world.

00:29:48] Alaska noted that premium card sign-ups were well above its expectations. I understand that Hawaiian had to cease its relationship with Barclays in 2025. Do you think Alaska might have been expecting some churn from the Hawaiian card customers, which could have gone somewhere else, but actually ended up signing on with the company? What do you think drove that? Was it just added network connectivity?

CL [00:30:43]: I would say just standing back, looking at the sign-ups, there were maybe some flawed assumptions on how. I think there were flawed assumptions in how many Hawaiian members would transition because logically, it makes a ton of sense for them to transition over. I think the plan may have been kind of bad because of these assumptions. I think Alaska should have assumed a much higher sign-up rate for cards and for the premium card. I mentioned earlier that Starlink kind of value proposition where you get free amazing Internet if you sign up for Atmos. That is gigantic. I think it's all of those things. I think Alaska has definitely been a conservative airline. It might have been a conservative plan, thinking that we've penetrated a lot of the Seattle market with the card already, and there might not be a whole lot of growth opportunity there, but with all the things that I mentioned, including going international and having a lot more value for the points that you earn, I think it was a plan that maybe was not aggressive enough.

00:32:21] Regarding investment or product roll-out for the card programme and network, given that the sign-ups came in well above Alaska's expectations, should the company double down and accelerate investment into card networks and products? Or is that not really a very capital-intensive endeavour in the first place?

CL [00:33:01]: I think there's a ton of continued growth opportunity for the programme, the card programme and the loyalty programme, I think what we're just talking about, the Hawaiian members signing up, everyone who flies signing up because they want free wifi, now a whole new network opening up because of international. I think you see a huge spike of sign-ups right now and maybe for the rest of '26, but I do think it will taper off. I think there's a ton of opportunity still, though, in making sure that there's a great partner network and redemption network and the value of how you can use your points with partnerships. Delta has been really good at that. United is really good, but I think Alaska has a lot of opportunity to grow into that space. Just to continue that whole flywheel of a self-reinforcing value proposition, you choose Alaska. Alaska gives you a ton of value in not only being a premium member, but spending a lot of money on your card and always has new value to give you. You said that doesn't really cost money. It's not capital intensive. It's not building a lounge. It's partnering with companies who bring value to the traveller. I think there's a lot of room there. I'd say it's immature if that was your question. I don't think we'll see the growth continue exponentially, I think it will flatten out for sure, but Alaska does this well. There's a ton of opportunity.

00:35:10] What is the typical overlap between card customers and premium or international travellers?

CL [00:35:40]: I think what we've seen across the industry is there's pent-up demand from loyal card members when international routes are offered. I think as routes are announced and expansion begins, you'll see a lot of loyalty members taking advantage of that. I think that trails off a bit as routes mature. There's work to be done to make sure that you're continuing to have a decent paid load factor on those flights. I don't think Alaska discloses a whole lot about paid load factors or competitors do too, but there's a whole group of super intelligent travellers who figure out how to get upgrades. International is Alaska and others have to be really careful about how they offer free upgrades to some of their guests because that's a ton of money if you fill that seat with a full paying passenger.

I think there's a ton of excitement to start. A lot of loyalists are on those flights. I think over time, as there's more awareness about the flights, there's a great reputation of customer care and fabulous service growth happens and then the connectivity that's offered by the airline from even more destinations, that continues to grow, but I think you can't just sit on your laurels and drip feed a few new routes internationally. You kind of really have to go for it over a number of years, and Alaska has announced that with 12 international locations. It's not like you're just capturing that European traveller who wants to go to London or Rome. Travellers have options to go and connect between all kinds of different places as the network continues to expand internationally.

00:38:13] Regarding Alaska's expanded relationship with Bank of America beyond 2030, what could lead the company to leave Bank of America at the end of the contract? What would be the biggest factors for this partnership not working out, leading to Alaska not wanting to renew? What do you see as the biggest risk with this relationship?

CL [00:39:02]: I think the one thing would be just the economics that Bank of America offer. If they're going to start to get greedy compared to what Alaska can get elsewhere, that could be the end of the relationship, but so far, from what I've seen, it seems like Bank of America is a great partner to Alaska. I don't know what would cause Bank of America to make a move that wouldn't be in line with other financial institutions. They just have to make sure that they continue to offer value to Alaska that Alaska couldn't switch and get somewhere else. Switching is not an easy thing either. You want to switch banks every few years. I think it's a question of just kind of being at parity with what other financial institutions would offer and not being too greedy on the economics.

00:40:09] Regarding Alaska's key hub positioning in Seattle and Hawaii, could you outline how competitive those two areas are, perhaps including Portland and the broader Pacific Northwest in that bucket as well? What would be the risk of further market share deterioration?

CL [00:40:49]: Portland is real strong for Alaska. Definitely a hub of strength, but it's not a huge hub compared to others. Seattle is definitely threatened by Delta, has been 10 years. Delta appeals to a younger generation of travellers. Alaska has to figure out how to get in there. This is my personal view, it starts winning corporate. Those dual income, younger demographics who now have disposable income to spend, they're flying a certain carrier through work and then they decide to fly them for leisure. Alaska needs to get into some of our Seattle corporates in a bigger way. It would be my personal assessment, and that could be happening. I've been away from the company for a bit. It could be happening. I think Alaska has publicly said we're defending Seattle against Delta. That defence… Delta is not going to give up. Delta has their four corner strategy and Seattle is one of the corners. Seattle is definitely threatened by Delta. Through California, Southwest used to be a little bit more of a threat, but their premium offering isn't great. I would say United is more of a threat through California. Buying Hawaiian, part of that publicly was disclosed that it's about winning in California. A lot of Californians travel, they go west and to offer a good product and a good network going west through Hawaii and beyond was really important.

From what I have read publicly, Alaska is doing really good in California. I don't think there was ever an intention to go up against United in San Francisco or anything like that. It was more just to make sure Hawaiian can win with travellers that are a little bit maybe want another choice to go to Hawaii or to go to Asia. Hawaii is probably just mature. Hawaii is only so big. It's been, I think, mature for a bit now. You have all kinds of big wide-body aeroplanes coming in where competitors have to fill those seats. There's going to be pressure on pricing. I just don't know… I know Hawaiian and Alaska merger now has dominant market share in Hawaii, but I just don't know that that's really a growth market. I think it's probably more mature. I think Anchorage is a strong market, a little bit more seasonal for Alaska, but yes, along the West Coast, I think Alaska definitely has a right to win. I think also West Coast to Mexico, a right to win. The biggest challenge is making sure that the traffic can originate to move internationally, especially to Europe.

00:44:45] Given that Hawaii is a very mature market, I'd imagine there is only downside to Alaska's market share, with competition potentially further eroding it, and there isn't really a driver for the company to increase market share there. Is that correct?

CL [00:45:14]: I think similar to what we've seen with Southwest, Southwest has cut, especially interisland flying, and I think even West Coast to Hawaii flying. I'm not positive about that. With other competitors, Delta and American offering more twin aisle flying in, I think they're going to start bleeding and probably cut back capacity. My feeling is there's too much capacity coming in. Because Alaska is the dominant share, they have a very strong position to actually maintain or even grow share as some of these competitors fall out because it's just harder to compete when you don't have the share. I think local Hawaiians also really like Hawaiian. They don't like Southwest. They will choose to fly Hawaiian when they can, not that that's a huge market, but I think altogether, I would say too much capacity coming into Hawaii, some bigger competitors will decide to put that capacity elsewhere where they can make a little bit more money. It's not going to be a growth market, but I do think it will be a good market for Alaska. The same thing happened with Anchorage a bit ago. Fares were high, load factors were high and competition came in. Then couldn't make money. There was too much capacity coming into Anchorage. Those competitors fell away.

00:47:14] You mentioned that Alaska's capacity for domestic markets is flat YoY for Q3 and perhaps Q4 2026, and most of the capacity growth will be coming through non-US markets. When would you expect non-US revenues to become more of a focal point for the business moving forwards? Non-US has been about 10% of the company's revenues. When would you expect it to become 20-30%? What is your longer-term outlook for Alaska's non-US exposure? How big could it get?

CL [00:48:13]: Yes. I think non-US will obviously grow. I think it takes time because so much of it depends on Boeing and supply chain, making sure aeroplanes are delivered on time, making sure your fleet plan is really solid, having a good point of sale internationally, which has been a headwind for Alaska, just not having experience there. I think it will be a number of years just based on the delivery stream of aeroplanes and the big aeroplanes that will be flying internationally. If you just think about 787 deliveries and international locations, publicly disclosed 12 international locations by 2030 and all the right kind of halos of corporate contracts and partner networks and all of that to happen, I think maybe you'd hit 20% there when that happens in 2030. Then for 25% and beyond, I think you're looking at beyond 2032 when you've got a whole other kind of tranche of widebodies, you have some joint ventures similar to what Delta has internationally. Yes, and some sustained sort of wins. You know what markets work for your network. I think that takes time. I think 25% would be a massive deal by, let say, six or seven years.

LD [00:50:09]: Does developing or adding international POS [point-of-sale] contact require further partnerships with European carriers?

CL [00:50:32]: Yes. I am not an expert on point of sale. I just know that it has been difficult for a lot I think once you do it well at an airline, you know how to get it done. I think it's working with local authorities and making sure your revenue management system sync and all of that. I'm certainly not an expert on that. I know Mexico has been a good kind of beachhead for Alaska and trying to figure out how to get that done.

00:51:12] I understand that costs have been a larger headwind for Alaska over the past 12-18 months. Do you think the non-fuel cost burden is behind the company? What would be the drivers for cost per available seat-mile excluding fuel to linger through 2026-27? I believe the integration is largely completed. While there are still some labour contracts to work out, do you think the worst of the cost burdens are somewhat behind Alaska?

CL [00:52:09]: I think a lot are behind them. I do think the joint contracts is going to be important, but I'm sure there's a path there, and it will sit close to industry standard. I think we talked about it already. There's a fair amount of training, especially in international that needs to be done where workforce just hasn't done it before besides a small portion of the Hawaiian labour force. I think that's going to be one thing to focus on as well. The lounge network, continuing to invest in the lounge network is going to be important for CASM-ex and productivity, continuing to figure out how to do the same work smarter. I think airlines overall haven't really figured out AI in a way that increases productivity besides smaller use cases. I think there's a lot of opportunity there that will not only improve productivity, but probably even just help with safety and that kind of thing in the industry, having all kinds of information that you didn't have before at your fingertips.

I also think AI can be a real opportunity to increase revenue. Alaska is going to get a lot smarter on revenue management systems and that kind of thing. In the AI kind of maturity spectrum, I think airlines are… They have a lot of room for opportunity on both the cost and revenue side. Yes, I don't see anything else that would really cause CASM-ex to get a lot worse. I think continuing to upgauge like Alaska is doing is goodness, making sure that retirements happen in a logical way, getting the 717s retired, getting more efficient aircraft that need far less maintenance. 717s flying in Hawaii for years are a maintenance nightmare. Hawaii is such a hard environment on metal with all the water and the sea kind of impact. That will be helpful. I think, I don't see anything that would cause it to go up because a lot of those investments have been happening. Lounge investments have been happening. The labour contracts have been largely signed to industry standards. Now the joint agreement has to be done. I think the contracts are quite generous, and I don't see a reason for them to add a whole lot more costs.

00:55:19] How would you expect Alaska to deploy or cut back in capacity through year-end 2026 to early 2027? A lot of airlines, such as American Airlines and United, announced some capacity reductions during the Morgan Stanley conference in September 2026. Do you expect Alaska to be a little more aggressive in those decisions? The market is seemingly expecting around 2-3% capacity growth for the company in Q4 2026.

CL [00:56:30]: I see Alaska remaining really disciplined on capacity. Obviously, capacity will be increasing internationally for Alaska. That's a priority. I think the industry is really enjoying where they're at right now with not a whole lot of new deliveries. New deliveries are equal to retirement. It's not like you're adding capacity into the system. You're getting maybe a little bit more efficient when you get a new aeroplane because you've got old ones you have to retire. I feel like the industry has gotten really smart on capacity. One competitor is not going to make a move that's going to destroy that in my mind. International is the key. I think international expansion has to be really disciplined as well. Alaska being a new player here can't make some of the larger legacy carriers mad on certain destinations they're flying.

It just has to be really thoughtful. I think there's been enough hard times in the airline industry and lessons learned that everyone is acting very rationally. I think '26 is strong. '27 will be strong, especially if fuel goes down. If there's any relief in the economy for disposable income and spending, especially with those leisure travellers, I think it's going to be really, really good. I think as long as capacity is disciplined, there's just a lot of room for value creation here with all the younger generations spending on experiences and having those premium Instagram moments and really valuing that. I think it's a change that is going to stay.

00:58:56] Regarding Alaska's European expansion, you mentioned that the margin on those flights will be somewhat dilutive. What do you think might drive an acceleration of the European or broader international performance? Is it more external, perhaps related to fuel prices dropping, or could any internal initiative inflect the performance positively?

CL [00:59:51]: Fuel, you can't control and the industry has to figure it out. I do think it's more internal. I think Alaska has a lot of synergy opportunities still, revenue initiative, I should say, opportunity in front. We talked a little bit about the new revenue management systems, O&D pricing, continuous pricing, getting smarter on that, segmenting the cabin by product a little bit smarter. I think those are internal in my mind that can really create tons of value for Alaska. Fortunately, for Alaska, they're relatively untapped so far. Others have proven that they work. I think structurally, Alaska has the right kind of position to be able to capitalise on a lot of that.

01:00:57] Is there anything else that would be important to keep in mind about Alaska or the rest of the industry?

CL [01:01:15]: I think it would be really interesting to watch any more consolidation in the industry. We didn't really talk about that, but you've got arguably two really strong players, United and Delta, American is, I think, making a lot of really good decisions to strengthen their position. Southwest is also making some changes that were long overdue. Alaska is becoming an international carrier that used to arguably domestic and even more regional. Competitive-wise, you want those top five to really win. Where does JetBlue fit into that? Where does the Frontiers of the world fit into that? I think it's interesting to think about what that will look like because the more share you get, the more strengthen your hub network you get, obviously, it's harder to compete with you.

I just don't see regulatory bodies approving United or Delta to do anything that strengthens their position given they're number two. While I don't think it will be tomorrow or next year that Alaska does anything, I do think an acquisition would be interesting for them to really solidify kind of their top five position. I think also just a really strong global network. I think Oneworld is good, but I think really making sure you have a virtual international network before you have a physical international network that goes everywhere will be really important. Those are the two things I also think will be front of mind for Alaska.

LD [01:03:24]: I appreciate your time. Thanks so much for taking the time. We'll be in touch.

CL [01:03:37]: Thanks.

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