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Alaska Airlines is overhauling cabins across Alaska and Hawaiian Airlines to add hundreds of high-end seats and building new airport lounges, banking on customers' continued willingness to pay a premium for travel luxuries to grow its profits into the next decade. The changes were announced ahead of Alaska's investor day in Seattle on Tuesday, when the carrier's executives will face questions on the new offerings, how the airline is coping with the profit-eating surge in jet fuel this year, and its ability to reach its goal of $1 billion in added profit from end of 2024 to the end of 2027. It said Tuesday that it's two-thirds of the way there. Investors are also likely to tie the new products to the company's prospects to grow its co-branded credit card and loyalty program, which have generated billions for airlines. Alaska said it's working to become more reliant on revenue from premium seats, international flights, its loyalty program and cargo, which is higher margin than the main cabin. It forecast on Tuesday that those more lucrative products will reach close to 60% of its total revenue by 2030, up from 53% currently. Even with the cabin changes, Alaska, which completed its merger with Hawaiian Airlines in September 2024, will continue to operate the two airlines as separate brands. Here are some of the changes: - Alaska's Boeing 787 Dreamliners will get 34 lie-flat suites in a new offering it's calling Aurora. It will also have 35 seats in a new premium-economy section, called Premium Reserve, on the 787-9 and 787-10, starting in 2028. - "At least" 25 of the yet-to-be certified Boeing 737 Max 10s will have 12 lie-flat Aurora suites and premium-economy seats, a bid to compete with other airlines on lucrative cross-country routes. - Hawaiian Airlines' 24 Airbus A330s will each get 22 all-new first-class suites with sliding doors, starting in 2028, and its first-ever premium-economy section, with 28 seats. - The carrier will open a new 41,000-square-foot Alaska lounge at Seattle-Tacoma International Airport, with dedicated space for Aurora suites flyers, similar to the tiered lounge system Delta Air Lines, United Airlines and American Airlines have. - Hawaiian is building an almost 13,000-square-foot lounge in Honolulu's Terminal 1, slated to open in early 2028. U.S. airlines have been spending the past few years revamping their cabins to add more premium seats, often at the expense of coach seats, since first-class fares can go for many times more than an economy-class ticket, and customers keep paying to sit closer to the front. Most of Alaska Airlines' fleet doesn't have lie-flat or other premium options that are common on competitors' jets. Alaska is far from the first carrier to remodel its cabins, but that might work to its benefit when the fresh product hits the market. "There is an advantage to being the last mover in that you've seen what your competitors have and if you want to you can try to one-up them," said Henry Harteveldt, founder of Atmosphere Research Group, a travel consulting firm. Hawaiian Airlines A330 overhaul The Hawaiian Airlines Airbus A330s, used for flights to Hawaii, Asia and Oceania, have "aging interiors," said Shane Jones, Alaska's head of fleet. The new options will bring the total count down to 254 seats from 278 on those planes. Jones said the new options will give Hawaiian a range of premium choices, from the honeymoon splurge to repeat Hawaii visitors looking for a step-up from coach. He told CNBC that the airline spent months looking at fabric samples at the company's headquarters in Seattle under different types of lighting to pick the right one. Some shades were too bright pink, while others were too drab. He said that the airline wanted to evoke the colors and mood of tropical escapes to Hawaii with a wave pattern sewn into the seat, and that the carrier evaluated how many waves were enough because too many could be dizzying. Hawaiian Airlines CEO Diana Birkett Rakow said more than half of Hawaii's visitors are traveling from the West Coast of the U.S., a customer base that is "valuable to us from an economic perspective, just in terms of their income, their travel budget, their spending patterns, their flying patterns. And so this gives us an opportunity to elevate the experience." Meanwhile, Alaska has been expanding its international flying from Seattle, including to London, Iceland and Italy, with more destinations slated to begin this fall. International travel demand has held up despite surging fuel prices, airline executives have said. Debit card debut, frequent flyer program changes Alaska is also planning to launch early next year a rewards debit card for its Atmos loyalty program, expanding the carrier's co-branded cards it offers with Bank of America. Airlines, including Southwest Airlines and United Airlines, have started offering their own rewards debit cards with Sunrise Bank. Alaska said the new debit card is aimed at younger and new arrivals in the U.S. and said it "expands the program's reach beyond traditional credit products." Also, starting on Thursday, Atmos frequent flyer program members will have to choose between earning miles by distance traveled, price of the ticket or segments flown. Airlines have largely moved away from distance-based earnings, instead prioritizing how much travelers spend on the airline or on rewards credit cards. Correction: This story has been updated to correct the issuer of Southwest and United airline debit cards.
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