Delta continues to increase their presence in Seattle — what will Alaska do about it?

The expansion we’ve seen from Delta in Seattle over the past year has been incredible. Last October they announced their Seattle expansion, and that was just the beginning. Now all their flights between Seattle and New York JFK are operated by aircraft with BusinessElite seats, and in addition to their already amazing international route network out of Seattle they recently announced they’ll also add service to Hong Kong, Seoul Incheon, and London.

Not only have they massively increased their international presence out of Seattle, but they’re also sprucing up their domestic service. By next year they’ll have a handful of flights per day between Seattle and Las Vegas, Los Angeles, and San Francisco. They just announced the San Francisco service earlier this week, and I have to imagine it places an interesting strain on their relationship with Alaska Airlines.

Alaska Airlines has always fascinated me. I endearingly refer to them as the “slut of the skies” because they’ll partner with just about any airline. As long as the other airline doesn’t ask for monogamy Alaska is DTF (down to fly).

So Delta’s continuing expansion was obviously initially really exciting for Alaska, since Delta was increasing their international presence out of Seattle, and it was Alaska’s “job” to provide the feeder traffic, since Delta wasn’t putting much of a focus on expanding their domestic route network out of Seattle. Reciprocal mileage earning and elite benefits between the two airlines seemed like a no brainer.

But what happens now? Delta — hands down Alaska’s strongest partner — is going head to head with Alaska on some of their “bread and butter” routes. You certainly can’t blame Delta for wanting to provide feed for their own flights rather than basically “contracting” out to Alaska, but at the same time we all know what increasing capacity in a market does to fares.

The thing about Alaska is that despite the horrible shape the airline industry has been in over the past decade, they’ve been able to do what almost no other airlines has by fairly consistently turning a profit. That’s probably largely thanks to the fact that they don’t have direct competition in so many of their markets.

But as Delta continues to expand in Seattle, and in the words of a Delta VP “Delta and Alaska are ‘fierce competitors,'” it will be interesting to see what happens.

My guess is that they’re eventually hoping for a merger. An Alaska and Delta merger has been rumored for a long time now, and long term it seems like it would be a win-win. Short term Alaska has two choices. They can either continue their non-monogamous relationship with Delta and just take the scraps they’re given (since I doubt Delta is interested in entering smaller markets in the Pacific Northwest), or Alaska can try to “prove a point” and end their relationship. I assume Alaska isn’t thrilled with either option, but they don’t seem to have much leverage here.

What do you guys think? Where is this partnership headed?

Comments

  1. Really loving the tone of the blog these days. DTF, slut of the skies. Next we will see some references to scruff or grindr. 🙂

  2. Alaska may fight back. A few years ago they went all-in on the SEA-LAX market, and pretty much drove United out of it. AS had, I think, 14 flights per day, with one every 20 minutes in the evening peak. They are now down to 8 per day SEA-LAX, and have 6 per day SEA-SFO – the same as DL is proposing.

  3. @ Biggles209 — And that’s a great point, though this might be a bit different since they’re actually partnering and offer reciprocal benefits and everything. Makes it all the more interesting…

  4. Doesn’t make a lot of sense for Alaska to get absorbed by Delta though it would make Delta soo much stronger if they were able to. I’m surprised that alaska has not retaliated so far. It’s time they rolled their sleeves up and got the upper hand against delta.

  5. Well, AS has started up PDX-ATL and SEA-SLC recently, and they’ve added frequencies on SEA-ATL. They could:

    – add SEA-DTW, PDX-MSP, ANC-MSP
    – add some competitive routes with DL out of LAX (which is a focus city), like LAX-FLL
    – add frequencies on SEA-MSP

  6. With DL’s recent purchase of SQ’s shares of Virgin Atlantic, now owning 49% of the carrier, I’d think Delta would merge with Virgin Atlantic first before Alaska.

  7. From a overall perspective, if AA/US do not merge, look for more AA/AS co-operation and that will fill the TPAC void in the AA map.
    Or perhaps even AS/US may well go together and be the slut of FF.

  8. With added lift from Virgin, DL needs more TPAC capacity to handle growth from China.
    It was a disaster for AA to let NW be bought by DL and not file BK years ago.

  9. Who says those flights are AS bread and butter? Perhaps they make a lot better return on the routes where they have a monopoly like SNA.

    Because those of us in the NW who need to fly those routes are tethered to AS, when its time to fly the routes where they have competition its no contest, we still go with AS so long as the premium is modest or non existent.

    AS is a very well run airline. I’m happy to pay hard dollars for a seat (unlike UA) and the miles I earn can be used on the airlines (CX and EK) that I want to fly. DL can’t compete with that package when I’m flying domestic.

    When going overseas unless DL decides to penalize travelers who connect via AS flights rather than their own, I’ll always choose AS and think most business travelers will do the same where ever possible.

    DL is smart to expand their international presence in SEA but I’d guess that the way this pans out is long term it will be AS feeding those flights if the passenger isn’t originating in SEA.

    It’s not droves of people from SFO are going to fly DL to SEA then on to asia or LHR rather than flying nonstop. These flights will be used by WA.OR, ID and Canadians looking for a better fare. Nobody has the depth of coverage AS does and DL would be nuts to try and unseat them rather than use them to craft a seamless experience when flying long haul.

  10. Lucky, this doesn’t have anything to do with AS, but have you noticed if the situation booking AF J with DL miles has improved any? It SEEMS like it has to me, but I’ve just checked a few flights on a few dates.

  11. Alaska needs DOJ to kill US/AA merger, and should court AA. It’s the most logical relationship, and would stand up to those bumbling idiots at Delta.

  12. I doubt a merger would pass. Just think of the us aa merger… No way they’d let that happen.

  13. @ed – AS has been saying for years that they don’t want to merge with anyone, and they like being what they are.

  14. Not surprisingly, you lot are focusing on a non-existent merger, where DL is clearly building up Asia like crazy out of SEA and going to gobble up anything in it’s path 😉

    AS and DL have a great partnership going on and I sincerely doubt they will do anything to harm it. Besides, AS is too strong on it’s own to even consider a merger.

    I want folks to take a step of the “I hate DL” train for just a little bit and focus on what could be an altering situation to DL’s landscape.

    Currently, there are 5 flights exSEA that DL flies to the Far East. SEA-NRT/HND/KIX/PVG/PEK. Come spring, when these new routes are supposedly going to take shape, they will be adding HKG and ICN as well as drop KIX.

    With the obvious exception of NRT/HND, come SP’14 they will have SEA-NRT/HND/PVG/PEK/ICN/HKG.

    PVG/PEK/HKG will be overlapping routes from both SEA and NRT. ICN could be considered a replacement of NRT-ICN. All Delta would have to add would be SEA-SIN/TPE/BKK/GUM/MNL and they could possibly cease NRT as a hub and just utilize it for the HNL/ROR/GUM/SPN flights and just keep all Asian flying stateside.

    Mainly because I just moved to SEA and if DL did this, it would bring many joys and making flying a lot easier. The only downside to this conspiracy theory is that we would lose that fantastic SC in NRT.

  15. @Zach
    I’m sure you are aware that it isn’t only SEA pax who are connecting through NRT to PEK/PVG/HKG. The vast majority of DL’s US-NRT traffic doesn’t go through SEA, so to suggest that SEA-### acts as a replacement to NRT-### is a bit misguided. When it takes 5+ TPACs to support 1 NRT-###, what makes you think those 5+ TPACs can remain profitable when all of those NRT-### pax are gone and going through SEA?

  16. @ Brian L. — Yep, have noticed that as well. It seems that for next summer (now that Delta is raising redemption rates for travel on Air France) Delta is no longer blocking Air France space, which is great news.

  17. While my idea is fairly far-fetched, please give me a little credit that I would not base that assumption alone on O&D traffic alone.

    Up until June or July last year when the SEA-NRT flight appeared, SEA had two international destinations, AMS and CDG. The rest of the flights were hub based flights with the exception of SEA-HNL.

    JFK-SEA was a mixture of mostly 738s and a few non-BE 757s thrown in there. The PMNW flights from DTW and MSP to SEA were fairly untouched. ATL had maybe 6 daily flights and SLC was mostly RJ flying and a 738 or A320 thrown in there. CVG had one or two daily 738s.

    Fast forward to today where they have upgauged the aircraft flying back and forth between all cities, placed BE seats from JFK, plus have now added three additional cities at a much higher frequency than they have now, placing DL in direct competition with their AS partnership.

    Granted the SFO added flights are to make up for the loss of the SFO-NRT direct flight. But why the increased frequency to and from LAX and LAS? Why add SEA-JAC?

    The amount of times I have been stuck behind hordes of people in transit security at NRT tells me that folks are connecting way more than staying in Tokyo.

    What would be the difference if they connected via SEA or NRT? Besides the obvious, what difference would it make to load up SEA with domestic connections to capture all Far East traffic vs having to do a stop in NRT and do the same thing?

    RA has made it no secret that he wants to hub SEA. And with virtually no competition (comparatively to the LAX and the lesser SFO traffic) I don’t see why it can’t work.

  18. I’d love to see DL try and eat up some of AS Canadian routes. Besides in YVR and YYC in the summer AS is the only carrier that flies nonstop to SEA for most of the west coast of Canada. Me and AS don’t get along very well,plus they only fly turboprops on their Canadian routes. It would be nice to see DL brings some jets and customer service back to Canada

  19. My bet is that AS will fight for their share of the SEA-SFO traffic. They don’t have the power to reverse Delta’s entry, but I’m sure they will hold their own. And ca’t blame Delta for adding the link. It feeds their international routes out of SFO.

  20. If Delta doesn’t treat Alaska well, the logical choice would be for Alaska to quit being pals with both American and Delta, and become a full OneWorld member.

  21. 777 or 77L. Either one would work. Neither flight (SEA-BKK/SIN) are any further than ATL-JNB.

    SEA-BKK is roughly the same distance as LAX-SYD.

    SEA-SIN is 500 miles less than ATL-JNB.

  22. Not sure your argument makes sense. They have to fuel two aircraft xxx-nrt-xxx vs one flight from sea-xxx.

  23. I think Delta has big plans for Seattle…from an international perspective.

    I also think that for the next few years Delta will be very happy to keep a good relationship with Alaska. Delta doesn’t have the planes or gates to make a domestic hub out of Seattle. Delta is also highly fiscally disciplined and has make debt reduction pledges to Wall Street. I doubt they want to get in a fare war with Alaska. I suspect Delta will add domestic flights to Seattle where it makes strategic sense…particularly where Alaska is not providing enough feed for there international flights.

    Things could turn bad in this relationship and that would make it interesting. I suspect neither party really wants that at this point.

    I also think that Seattle would have made a great spot for American Airlines to do the same thing that Delta is doing and I think Delta is working urgently to effectively shut that door.

  24. One thing folks are forgetting is energy markets. Plenty of the big oil companies (think ConocoPhillips,BP, Chevron, Exxon, etc) and their major contractors (McDermott, KBR, Bechtel, URS CH2MHill) typically have contracts with United sue to their IAH hub. Not surprisingly, many of these firms have AS contracts since AS provides unparalleled access and cargo service to alaska. DL has made no secret of its new energy desk and its build up in Africa (where 90%+ biz travel is energy), so this could easily be seen as a bigger move to go after UA’s contracts in the energy sector.

  25. I would hate to see a hypothetical merger between Delta and Alaska. The highly churnable Bank of America Alaska Airlines credit cards would be gone, as well as the Alaska Airlines debit card. That would be terrible.

  26. @ Zach
    The fuel burn rate increases with aircraft weight. At takeoff, one if the heaviest weight components is the fuel onboard. Unlike other weight components, the weight of the fuel decreases as the flight progresses.

    Ultra long range flights have a longer period of hauling an extreme weight of fuel. Breaking up that flight with a stop somewhere does help to “distribute” the fuel weight, thus possibly saving fuel (though an extra landing/takeoff raises fuel, so you have to calculate the tradeoff.
    This is a major reason why AA dropped ORD to India.

    And you can get hit with a double whammy.
    The weight of the fuel at takeoff can be so high that you have to limit freight and possibly passengers to stay below the max takeoff weight.

  27. Alaska is code sharing with emirates as well as AA, factually going one step closer into the one world, now keep in mind emirates i is a state owned airlines with plans to overtake US international routes …disastrous for US carriers economics

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