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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

June 3, 2014 at 10:33 AM

Delta: Help or threat to Seattle?

A Juneau International Airport fire engine fires off a welcome water salute to the first Delta Airlines commercial flight to start service in Juneau, Alaska, on  May 29.  (Photo by  Micheal Penn, The Juneau Empire)

A Juneau International Airport fire engine fires off a welcome water salute to the first Delta Airlines commercial flight to start service in Juneau, Alaska, on May 29. (Photo by Micheal Penn, The Juneau Empire)

Delta Air Lines has begun daily non-stop flights between Seattle-Tacoma International Airport and Seoul. It’s the eighth international route from Sea-Tac and, according to a press release from the Port of Seattle, “The new service continues to highlight Delta’s growing commitment to building Seattle as its West Coast hub.”

This no doubt helped the airport’s 10 percent increase in international passenger traffic in 2013 compared with the previous year. Delta has also ramped up domestic flights. It is now the airport’s No. 2 carrier. More choices, more competition. So far, so good.

The trouble comes if Delta drives Alaska Airlines out of business or into a merger. Alaska is a Delta code-sharing partner. But Delta is increasingly a direct competitor, including on Alaska’s most profitable routes. Delta is even flying to the state of Alaska, with more routes planned.

Seattle is incredibly blessed by Alaska, not only for travelers, but from the good jobs that come from having its headquarters, heavy maintenance and hub here. Alaska has done an amazing job of surviving, partly through the arcane route system in its namesake state that has, until now, made it less merger bait.

But even a casual glance around the airport shows how much the airline industry has changed: All those empty — and now cleared away — ticket counters. With essentially no antitrust enforcement by the federal government, the airline industry has  become a cartel of four gigantic airlines of enormous market power: American, Delta, United and Southwest. Otherwise, there’s a small number of insignificant players. And Alaska, sitting in the middle.

Gone are such venerable names as Continental, USAirways, Northwest and TWA. Many thousands of jobs have been killed. Once-mighty hubs that benefited from public investment were closed, and with that the cities have fewer flights and their companies might be tempted to look elsewhere to relocate. Midsize and smaller cities have seen service cut back dramatically. Customers are paying more, and for the prison-intake-like experience of flying in America today.

Bright-siders can imagine that Delta would build a real hub here if it destroyed Alaska. That’s doubtful considering the investment Delta has made in its Western hub of Salt Lake City. Instead, it is looking increasingly as if Delta is acting like cartels always act: as predators. And some wonder where the middle-class jobs have gone, leaving people to work at fast-food joints.

And Don’t Miss: Rising costs of production threaten energy profits, IEA warns | The Globe and Mail

Today’s Econ Haiku:

Coal hysteria

The costs those greenies demand!

Burn the planet? Cheap!

Comments | More in Airlines | Topics: Alaska Airlines, Delta Air Lines, Seattle-Tacoma International Airport

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