Competition in Seattle gets fierce


Throughout the last year Delta has outlined rapid expansion at Seattle, creating brisk new competition for its long-standing partner in the market and Seattle’s hometown airline Alaska Air Group. The stakes become even higher in June when Delta nixes its code from some strategic domestic markets to become a major rival for Alaska.

Delta is adding a raft of new domestic services in Seattle to feed long-haul flights from the airport, particularly to Asia. The carrier has deemed Seattle as its US west coast gateway to the Pacific, and is aggressively putting all the pieces of the network puzzle together to ensure its efforts in market are successful. Delta presently offers service from Seattle to Beijing, Shanghai and Tokyo Haneda and Narita. New flights to Seoul and Hong Kong begin in June. Delta’s offerings to Europe from Seattle include Amsterdam and Paris.

As its strategy in Seattle unfolds, Delta is adding its own service to numerous large domestic markets from the airport, which are routes that are presently included in the Alaska codesharing pact. By the end of this year Delta and Alaska will compete on 13 routes from Seattle – Fairbanks, Anchorage, Juneau, Vancouver, Portland, San Francisco, San Jose, Los Angeles, Las Vegas, Palm Springs, San Diego, Phoenix and Tucson.

Alaska has admitted Delta’s push has created overcapacity in the market, and has opted to reallocate some of supply into new markets, particularly Salt Lake City, one of Delta’s smaller US domestic hubs. During June Alaska is debuting flights from Salt Lake to Portland, Boise, San Francisco, San Jose, Los Angeles, San Diego, and Las Vegas.

At the same time Alaska makes a concentrated push from Salt Lake, Delta in June plans to remove its code on Alaska’s flights from Seattle to Las Vegas, Los Angeles, San Diego, San Francisco, San Jose and Vancouver. Throughout the remainder of the year Delta is lifting its code from Alaska’s service to Anchorage, Houston and Phoenix.

Ultimately the end result of all the shuffling occurring in Seattle is Delta and Alaska are emerging as rivals in some of the largest and strategic markets from the airport. Those new competitive dynamics pose an interesting question as to which carrier has the edge in onboard amenities and the passenger experience.

“Between the two there is frankly not a tangible difference,” concludes Atmosphere Research Group travel analyst Henry Harteveldt. Wi-Fi is a “net neutral” given that both carriers offer in-flight connectivity, he explains. Power outlets are not a key concern on most of the flights where the two carriers are competing head-to-head, says Harteveldt, due to the shorter duration of those trips, which range from 90 minutes to 2.5 hours.

Perhaps the two most poignant points of differentiation are roomier Boeing 737s operated by Alaska compared to Delta’s two-class regional jets on some routes, and Delta’s Economy Comfort product, Harteveldt notes. Delta’s Elite passengers likely receive discounts for Economy Comfort and the product could be attractive to customers interested in paying extra for a bit more comfort.

During the last year Alaska’s executives have repeatedly fielded questions about the changing nature of the carrier’s relationship with Delta. Recently Alaska’s management remarked that the partnership agreement includes a minimum number of codesharing routes, and presently the number of markets in the arrangement was far beyond the minimum. However, the carrier’s top brass admitted the routes would continue to contract as competition between the two carriers increases from Seattle.

Alaska has publicly displayed a brave face as the nature of its relationship with its largest codeshare partner measured by revenue looks to be eroding. For the nine months ending in September 2013 the $235 million in revenue Alaska netted from the Delta codeshare represented more than half of Alaska’s total $460 million in codesharing revenue.

As questions mount over Alaska’s relationship with Delta, Alaska is stressing its broad partnership base that also includes numerous international carriers. Those relationships have ebbed and flowed during the years, and will continue to do so in the future, the carrier says. But based on Delta’s recent moves Alaska may need to prepare for more ebb than flow in that partnership during 2014.