SFO’s second-largest airline slowly eliminates cheap seats

RENTON, Wash. — Alaska Airlines is betting big on tomorrow’s travelers who are willing to spend a lot more for a luxury experience. But its strategy comes at the expense of another category: budget travelers.

The airline announced Tuesday that starting in 2028, it is accelerating efforts to build a West Coast airline that relies heavily on selling lucrative business-class suites, exclusive lounges and larger, more expensive economy seats, while reducing its reliance on value-priced basic economy tickets.

The airline’s chief commercial officer stated bluntly this week that if the airline did not follow the latest trend in air travel that prioritizes high-end travelers, Alaska would essentially become insolvent and alien to California.

“To be relevant here, you have to win with premium travelers,” said Andrew Harrison, Alaska’s chief commercial officer, during his Investor Day presentation at the airline’s training center in Renton, Washington. “On the West Coast, traveling often means longer distances, which makes premium products even more important. »

California remains a key part of Alaska Airlines’ strategy, despite reductions in domestic routes, particularly at San Francisco International Airport, where the airline has cut nearly a quarter of its flights this year, while remaining its second-largest carrier. The airline’s hub in the state is San Diego International Airport and it plans to launch its 50th nonstop destination from SAN at the end of the year.

The airline makes it clear that its plan for the rest of the decade involves turning away budget travelers. Alaska said Tuesday it expects premium seats to generate more than 40% of its total revenue by 2030, up from 35% currently.

Alaska plans to increase the number of premium seats on jets flying some of its longest and most profitable routes, at the expense of cheaper economy seats. Basic economy tickets, Harrison said during the presentation, won’t be enough to fill the airline’s coffers in the long term, especially as soaring jet fuel costs, exacerbated by the war in Iran, weigh on the airline’s bottom line.

On its fleet of long-haul Boeing 787-9s, which operate international flights from its Seattle hub, the airline is renaming its business class cabin to Aurora Suites, inspired by the new blue-green design of the Dreamliner jets. The cabin includes 34 new reclining seats equipped with sliding doors.

Alaska also plans to introduce its Premium Reserve product, a 35-seat premium economy cabin with more legroom, greater recline, wider seats and an enhanced meal offering. The airline plans to offer 58 seats with extra legroom in its Premium Class cabin and 152 seats in standard Economy Class.

Of particular note is what Alaska plans to do with its upcoming Boeing 737 Max 10 deliveries. At least 25 of the 105 jets Alaska has on order will include 12 reclining Aurora suites, 12 Premium Reserve seats, 48 ​​Premium Class seats and 87 economy seats, according to the airline. This will be the first time Alaska has installed a flatbed product on a single-aisle aircraft.

The carrier said the jets would be deployed on key transcontinental routes, allowing Alaska to compete with competitors on lucrative transcontinental flights where travelers are willing to pay more for premium seats.

The Boeing 737 Max 10 is expected to operate on transcontinental flights between New York and San Francisco, Los Angeles, San Diego, Seattle and Portland, Oregon. Alaska lost money to competitors in those markets because it didn’t offer comparable premium seats, according to senior management.

For Hawaiian Airlines, purchased by Alaska in 2024, the carrier announced it would refurbish the outdated interiors of its Airbus A330 fleet from nose to tail. The forward cabin will accommodate 22 new reclining business class suites in the Leihoku cabin, a Hawaiian word meaning “lei of the stars,” the airline said.

There will also be a 28-seat Premium Reserve cabin, 48 Premium Class seats and 156 economy seats. Bay Area travelers can find Hawaiian Airlines’ A330 operating between San Francisco and Honolulu.

The airline also announced new lounges at its Seattle and Honolulu hubs, including a 200-seat business-class Aurora lounge under construction at Terminal C at Seattle-Tacoma International Airport. The lounge will feature showers, made-to-order meals served at the table, and wine flights that will allow travelers to taste the wines served on board and identify their favorites to accompany the gourmet in-flight meals.

High-profile investments have focused on markets where Alaska is growing: Seattle, Portland and San Diego.

This growth has come at the expense of other markets, such as SFO. “We are not trying to serve all California markets equally, but we are focusing on places where we have a strong foundation and competitive advantage,” Harrison said.

This year, Alaska Airlines cut five routes from SFO: Austin, Texas; Boston; Burbank; Newark, New Jersey; and Orlando, Fla. — further destroying a domestic route network it inherited when the carrier acquired Burlingame-headquartered Virgin America Airlines in 2016 for $4 billion.

In 2025, Alaska was SFO’s second largest airline in market share with 9.5%, but this is down from 10.4% in 2024. SFO’s leading airline, United, had a 48.7% market share in 2025.

Is there a cap on premium demand on the West Coast? Alaska executives said recent booking trends suggest the airline hasn’t found it yet.

“The domain of business travelers has become the domain of leisure travelers who book nine months in advance for next year’s big vacation,” said Shane Tackett, the airline’s president. “Once they start investing in their travel, including the onboard experience, they tend to want to keep doing it. People don’t want to back out.”

Editor’s Note: SFGATE recognizes the importance of diacritics in the Hawaiian language. We cannot use them due to limitations of our publishing platform.