Delta Air Lines Building Hub In Seattle, Putative Partner’s Hometown

Jun 17, 2014

Pacific Northwest travelers will get ringside seats to see if two airlines can be partners and rivals at the same time. One of those "frenemies" - if you will - is Seattle-based Alaska Airlines. And in the other corner is Delta Air Lines. The two are long-term contractual allies. But the relationship is being tested.

Port of Seattle fire trucks salute a Delta Airbus A330 as it departs for Hong Kong on Monday.
Credit Port of Seattle

On Monday, Delta used the occasion of a new route celebration to declare Seattle as its newest hub. Correspondent Tom Banse has more on what this means for the region.

Delta and SeaTac Airport pulled out all the stops to celebrate the inaugural Delta flight from Seattle to Hong Kong.

A lion dance troupe paraded through the terminal. Caterers passed out champagne and cake at the gate. Two airport fire trucks saluted the departing flight with a water cannon arch.

The Hong Kong nonstop is just the latest in a rapid expansion this year by Delta in the Northwest. The airline's vice president for Seattle Mike Medeiros says by year's end Delta will nearly triple its daily departures from Seattle.

Medeiros: "With the addition of Hong Kong and the 95 flights that we'll have by the end of this year, Seattle is now Delta's newest hub. So, congratulations Seattle."

The Atlanta-based carrier says Seattle is ideally situated to be its Pacific gateway. Medeiros says the airline's planners determined travelers and businesses in the region were "vastly underserved." Delta is adding lots of feeder flights from other Western cities to fill its international widebodies. It's heavily advertising itself as "Seattle’s global airline" in tandem with increased charitable involvement in the community. And another thing...

Medeiros: "We have been on a hiring spree to get ready for this summer. That is a tremendous story. We are up to nearly 2800 employees here in the area. That's up from just a few hundred several years ago."

But wait, Seattle already has a hometown airline. It’s the biggest hub for sibling carriers Alaska and Horizon Air. Alaska Air Group CEO Brad Tilden claims Delta’s rapid buildup is adding too many seats.

Tilden: "We believe our competitor's actions are creating a surplus of capacity in many of the markets we serve, which we'll be dealing with until supply and demand come back into balance, which is something that we do believe will happen."

Delta calls its expansion disciplined and says that it's filling its seats. Either way, during a recent earnings call, Tilden said Alaska Air’s lower cost structure and loyal customers will help it withstand the new competition.

Tilden: "We've had a couple of big competitive onslaughts over the last twenty years that we have come through just fine. I am very confident we will come through this... and come through as a stronger company."

Passengers waiting in the terminal see potential upside from the rivalry of the two carriers. There are the additional nonstop flights. Both Delta and Alaska are tempting frequent fliers with mileage program bonuses. Selected customers get electronic coupons too. Traveler Eric Parish of Seattle hopes the added competition pushes down airfares.

Parish: "Any competitor should be able to come in take on somebody else. Allegedly we have free markets here. Some people debate how free they are, but I'm saying anybody could start an airline and compete head to head. It would be a good thing for consumers."

Increased competition should at least keep a lid on fares, says SeaTac Airport managing director Mark Reis. However, Reis does not expect a no holds barred airfare war.

Reis: "We're confident that the demand in Seattle is such that an increase in capacity, an increase in flights will certainly have some downward effect on fares. But it is going to be able to be accomplished with both airlines being competitive and being successful."

Reis says the Port of Seattle, which runs the airport, is looking to design an expanded international arrivals area. He says the airport may also need to add gates to a separate terminal used by Alaska Airlines.

And finally there's a "back at you" twist to this. This month, Alaska is launching flights to seven new cities from Delta's longtime hub in Salt Lake City.

The move does not threaten Delta's dominance in Salt Lake City. Conversely in the Pacific Northwest, Alaska Air Group remains the dominant carrier. At Seattle-Tacoma International Airport, Alaska currently has more than 250 daily departures compared to Delta's 88 daily flights as of this August. Both figures include the airlines' regional units.

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