Horizon Air puts hopes on short-haul simplicity

Like most U.S. carriers, Seattle's Horizon Air has lost scores of business-fare passengers in the past year because of the weak economy and concerns about security hassles. But as a short-haul regional airline, Horizon faces an extra pressure — many of its flights are quick enough trips for cars.

The result: Horizon's average flight distance is getting longer, but the airline is collecting less money per mile.

So the airline is doing all it can to woo back its most lucrative customers from the freeways. In June, to address concerns about long security waits, it guaranteed that Seattle-to-Portland shuttle passengers would wait no more than five minutes in its express security-screening lines.

Horizon also is offering those shuttle fliers a free day of parking for a limited time. It has continued offering amenities such as newspapers and Northwest wines.

Now Horizon, owned by Alaska Airlines and the nation's eighth-largest regional carrier, is taking another step: simpler ticket pricing and cheaper fares for business travelers. In a departure from the Byzantine world of airline pricing, where passengers aboard the same plane may have paid more than 20 different prices for their tickets, Horizon has been narrowing the number of different fares it sells on each route.

For instance, Horizon in March condensed the number of fares between Seattle and Fresno from 13 to seven. Before the switch, the most expensive last-minute round-trip business fare was $768. Horizon has since cut that to $420.

Top prices for leisure or sale fares also dropped slightly, from $374 round-trip to $348. The change has produced big gains in the number of business fliers, Horizon says.

Horizon has simplified fares for 17 city pairs, including Seattle-Long Beach and Billings-Seattle. In nine of those 17 markets, Horizon also lowered prices for business fares.

The airline is hoping the changes will fill more seats with lucrative business travelers, with fewer seats empty or sold at discount.

Pat Zachwieja, Horizon's vice president of marketing and planning, said profit margins from business travelers may never return to their 1990s peak. He believes airlines have to fundamentally readjust their pricing methods to meet passengers' new expectations about service and value.

"They are telling us, 'Keep it simple and keep it cheap,' " Zachwieja said. "We think we're making the right decision."

Regional airlines, which serve mostly small and medium-size towns, say 65 percent of their passengers are business fliers. Many of them are self-employed people paying for tickets with their own money.

Doug Abbey, executive director of the Regional Air Service Initiative, an industry advocacy group, said traffic among regional airlines is growing at a double-digit clip. In comparison, traffic among major U.S. carriers fell 9.5 percent to 58.7 billion revenue-passenger miles during the first eight months of this year, according to the Air Transport Association.

Regional carriers have yet to recover from a steep drop in average fares since Sept. 11, 2001.

Horizon's yield, the money it collects for flying one passenger one mile, fell by 11 percent to 25.98 cents during the first six months of 2002 from a year ago. Its Seattle-Portland shuttle service, a key route for business travelers, now accounts for 11.5 percent of the airline's overall traffic, up slightly from two years ago. But it generates 10.8 percent of Horizon's revenue, down from 11.4 percent in 2000.

Kyung M. Song can be reached at 206-464-2423 or ksong@seattletimes.com.