32°

Juneau's only jet airline hasn't escaped the financial troubles of its industry, and Alaska Airlines passengers are about to feel it more as fees go up.

"The electrical energy crisis you are now experiencing mirrors quite well the impacts the airline industry is facing now and has for several months," said Mookie Patel, airport affairs manager for Alaska Airlines, in a letter to the city airport board last week.

Patel asked the board to cut the budget and staff, and stop the airport terminal expansion to avoid raising his rent. He wrote that "passing these costs on to the tenants is not an option, especially when we are all trying to absorb a year over year cost increase in jet fuel by 300 percent."

Alaska Airlines and Horizon Air are owned by Seattle-based Alaska Air Group.

"We're having similar conversations with all the airports that we serve about the possibility of rising airport costs," said Caroline Boren, spokeswoman for the airline.

She said she was not aware of any increases specifically for Juneau fares in the works.

Across the industry, those costs are being passed on to customers. Alaska Airlines will follow other airlines as it starts charging coach passengers $25 for a second checked bag this summer.

That fee will not apply to travel within Alaska, Boren said.

"We recognize that the communities we serve in the state of Alaska have unique requirements when it comes to baggage," she said, mentioning the quintessential bush Alaska Costco run.

Alaska Airlines is "aggressively pursuing creative solutions to reduce our costs," Boren said in a statement to the airport board.

Starting Wednesday, the airline will increase the charge for booking through sales agents from $10 to $15. The fee for overweight baggage will rise from $25 to $50. The price of taking a pet in the cabin will rise from $75 to $100. And the fee for unaccompanied minors will rise to $75 from $30 for one-way and from $60 for connecting flights.

The airline expects these fee hikes and a transition to larger airplanes will bring in another $150 million in revenue, according to its quarterly statement.

Alaska Air Group blamed fuel prices - about 30 percent of its operating expenses - for the company losing $56.1 million in the first quarter of 2008. That compares to $17.8 million lost in the first quarter of 2007. Operating revenues were $733 million, the report said.

Patel's letter cited a Goldman Sachs analyst's prediction that in 2008 Alaska Air Group would lose more than $70 million in market capitalization, the aggregate value of its stock.

Wednesday afternoon, Moody's Investor Service changed its Alaska Air Group outlook from stable to negative.

"The negative outlook reflects Moody's expectation that Alaska will record a net loss and negative cash flow from operations in 2008," Moody's said in a statement.

Alaska Airlines has hedged fuel contracts more than many of its competitors.

Even so, Moody's said, the airline would have a tough time coming out of 2008 with positive cash flow if fuel prices stay high.

• Contact reporter Kate Golden at 523-2276 or e-mail kate.golden@juneauempire.com.