Alaska Airlines is undergoing a comprehensive renovation of its cabins on both Alaska Airlines and Hawaiian Airlines flights, adding hundreds of premium seats and constructing new airport lounges, in the hope that customers are still willing to pay a premium for luxury travel experiences, with the aim of driving profit growth for the company over the next decade.

These changes were announced by Alaska Airlines ahead of its Investor Day event held in Seattle on Tuesday. At that time, company executives will face questions from the outside world regarding new products and how the company is coping with the soaring prices of jet fuel this year, which have eroded profits. Executives are also likely to link these new products with the prospects of expanding the company's co-branded credit cards and loyalty programs, which have generated billions of dollars in revenue for the airline.

Alaska Airlines CEO Ben Minicucci will participate in the CNBC television program at 10:20 Eastern Time. Viewers can watch the live broadcast via CNBC + or CNBC Pro.

Even after making cabin adjustments, Alaska Airlines will continue to operate under two separate brands after completing its merger with Hawaiian Airlines in September 2024.

The following are some of the changes:

• Alaska Airlines' Boeing 787 Dreamliner will be equipped with 34 lie-flat suites, and this new product is named Aurora. This model will also add 35 premium economy class seats on the 787-9 and 787-10, known as Premium Reserve, with rollout expected to begin in 2028.
• At least 25 uncertified Boeing 737s Max 10 will be equipped with 12 flat-bed Aurora suites and premium economy class seats in order to compete with other airlines on lucrative transcontinental routes.
• Each of Hawaiian Airlines' 24 Airbus A330 aircraft will be equipped with 22 new first-class suites featuring sliding doors starting from 2028, and for the first time, a high-end economy class will be introduced, totaling 28 seats.
• The airline will open a new Alaska lounge at Seattle-Tacoma International Airport, covering an area of 41,000 square feet, and will provide a dedicated area for Aurora suite passengers, similar to the tiered lounge systems of Delta Air Lines, United Airlines, and American Airlines.
• Hawaii Airlines is building a lounge of nearly 13,000 square feet in Terminal 1 at Honolulu, with plans to open it in early 2028.

In the past few years, American airlines have been reconfiguring their cabins to add more premium seats, often at the expense of reducing the number of economy class seats. This is because first-class ticket prices are typically several times higher than those of economy class, and passengers are still willing to pay more for seats that are further forward in the cabin.

Alaska is not the first airline to transform its cabins, but this could be advantageous for them as new products enter the market.

The founder of the travel consulting company Atmosphere Research Group, Henry Harteveldt, stated: "As the last company to take action, there is an advantage; because you have already seen what the competitors have offered, if you wish, you can try to do better."

Hawaiian Airlines A330 Transformation

The head of Alaska Airlines' fleet, Shane Jones, stated that the cabins of the Airbus A330 aircraft used by Hawaiian Airlines for flights to and from Hawaii, Asia, and Oceania are "internally outdated in decoration."

The new configuration will reduce the total number of seats on these aircraft from 278 to 254. Jones states that the new configuration will offer a range of premium options for Alaska, ranging from luxurious honeymoon experiences to Hawaii tourists who wish to upgrade from economy class.

He stated to CNBC that the company spent several months examining fabric samples at its headquarters in Seattle under various lighting conditions in order to select the appropriate styles.

Some colors are too bright and pink, while others are too dull. He said that the company hopes to evoke the colors and atmosphere of Hawaiian tropical vacation destinations through the wave patterns on the seats, and they also considered the number of waves, as too many could be dazzling to the eyes.

Hawaii Airlines' CEO, Diana Birkett Rakow, stated that more than half of the tourists visiting Hawaii come from the West Coast of the United States. This group of passengers "is very valuable to us from an economic perspective, in terms of their income, travel budgets, consumption patterns, and flying habits. Therefore, this gives us the opportunity to enhance the experience for them."

Meanwhile, Alaska Airlines has been expanding its international routes departing from Seattle, including flights to London, Iceland, and Italy, with more destinations expected to be added this fall. The airline's executives stated that despite the soaring fuel prices, demand for international travel remains strong.

Debit card launch, Frequent Flyer program adjustments

Alaska Airlines also plans to launch a reward debit card for its Atmos loyalty program at the beginning of next year, expanding its co-branded card products issued in collaboration with Bank of America. Airlines such as Southwest Airlines and United Airlines have also begun offering similar reward cards through their partner JPMorgan Chase.

Alaska Airlines stated that this new debit card is aimed at young people and those who have recently arrived in the United States, calling it "an expansion of the program's coverage beyond traditional credit products."

In addition, starting from Thursday, Atmos frequent flyer program members will have to choose between accumulating miles based on flight distance, ticket price, or flight segments. Airlines no longer primarily use the distance-based method for mileage accumulation; instead, they give more priority to the amount spent by passengers on the airline's services or through their reward credit cards.