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Abstract
In 2003, amid the turmoil of the U.S. airline industry in the post-9/11 environment, the senior
management of the Alaska Air Group announced a “strategic vision” entitled “Alaska 2010.” The
pronouncement articulated positions with regard to cost leadership, product differentiation, and
growth. This study empirically assesses the efficacy of this decision with regard to the major network
carrier of the air group, Alaska Airlines. The analysis focuses on the period beginning with the
announcement and ending in 2010.
The implementation of such a strategic protocol is dynamic and inter-temporal in nature.
Therefore, it is often difficult to assess the effectiveness of changes in strategies, particularly since
such effectiveness is often a function of the confounding forces of organizational strategy and market
conditions. Thus, this study utilizes the multi-period methodology of the strategic variance analysis
of operating income.
This methodology decomposes operating income into three components: (1) growth, (2) price
recovery, and (3) productivity. This is of particular interest from a strategic planning perspective, as
the price component evaluates a company’s product differentiation strategy while the productivity
component evaluates whether an airline’s low cost strategy was successful because of efficiency
gains.