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Jon Talton

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

January 28, 2015 at 10:10 AM

The Sea-Tac growth dilemma

I’m almost always in favor of public improvements, but plans for expanding Seattle-Tacoma International Airport present a quandary.

On the one hand, returning here last week from the sparkling and friendly Phoenix Sky Harbor International Airport, the nation’s 10th largest by passenger boardings, much of Sea-Tac looked like a dump by comparison. Also, Sea-Tac and Sound Transit planners had intimate relations with the proverbial canine by placing the light-rail station so far from the terminal. In Phoenix, light rail is reached by a quick ride on the Sky Train that runs directly to the two biggest terminals.

From a competitive standpoint, Seattle is held back against global “Alpha City” rivals in part by not having a major international air gateway. That makes a difference in attracting business, especially the high-quality assets. More flights to Asia might encourage greater foreign direct investment here.

An Alaska Airlines plane takes off from Seattle-Tacoma International Airport. (AP Photo/Ted S. Warren, 2013)

An Alaska Airlines plane takes off from Seattle-Tacoma International Airport. (AP Photo/Ted S. Warren, 2013)

But on the other hand Alaska Airlines makes an unimpeachable point that, as Sea-Tac’s biggest carrier, it would be disproportionately paying for improvements that would mostly help Delta Air Lines. The latter is not only operating international flights from here but has also in many cases targeted Alaska route-for-route domestically.

Delta has the deep pockets to run Alaska into the ground, which would be a calamity for the Puget Sound region. Not only does Alaska provide convenient, competitive service, but it is headquartered here, providing high-quality jobs and attracting capital. In an America where lack of antitrust enforcement has left us with four mega-airlines, Alaska is the last serious independent standing.

With Delta, as umpire Tony Randazzo said to Mariners manager Lloyd McClendon, “I’ve seen your act before.”

Delta was insistent that Cincinnati’s airport put millions into a massive expansion for what became the airline’s second-largest hub. The airport is one of the most pleasant in America and has more good flying days than most in the Midwest. Delta made big money from this “fortress hub,” with higher ticket prices because it had the staying power to keep out any serious rivals. But when Delta acquired Northwest, it closed the Cincinnati hub, an economic catastrophe for the region.

I’ve told this story before, but it’s worth remembering. When these airlines only want to get bigger, and much of an anti-competitive merger’s appeal comes from closing “excess capacity” when a competitor is killed off, communities are disposable. Remember that when you see all those friendly Delta ads at Sea-Tac. (And I say this with sadness: Delta was once my favorite airline, classy and reliable, but that was the old days).

Port of Seattle commissioners have the additional problem of assessing the real international growth we should expect in the coming years, especially from international routes. We should aspire to take on San Francisco and Los Angeles, but will they come if we build it? That’s a challenging case when competing against long-established international hubs and potential roadblocks, such as getting new international routes from governments.

Many projections call for more, more, more in travel growth. But how much? And experts are often wrong. Much of Asia’s economy is slowing, maturing, and geopolitical tensions are on the rise. Meanwhile, much of the world is in a prolonged slump. The United States, doing slightly better, faces severe lack of demand from the Great Recession, and is arguably in secular stagnation.

None of this is to advocate for either position. I’m torn. I hope the commission is, too. It will be a tough call and the devil will be in the details.


Today’s Econ Haiku:

They loved Nadella

But it was Wall Street ardor

Passes like a cloud


 

 

 

 

Comments | More in Airlines | Topics: Alaska Airlines, Delta Air Lines, Sea-Tac

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