Withdrawal of Airport Services Latest Shots Fired In Brewing Seattle Battle Between Delta and Alaska Airlines

by Vinay Bhaskara – Airchive.com Senior Business Correspondent

Image Credit: Chris Sloan/Airchive.com

Image Credit: Chris Sloan/Airchive.com

Update 1:

A Delta Air Lines spokesperson has confirmed as well that Delta will stop providing ground handling services to Alaska Airlines at these stations but declined further comment.

Original Story

In just the latest salvo in what has evolved into a veritable battle royale in Seattle, Delta Ground Services (a division of Delta Air Lines) will discontinue service agreements with Alaska Airlines for airport services at 13 stations, 6 cargo offices, and various de-ice locations from March 31st, 2014. In a story first reported yesterday by AirlineReporter.com, Alaska Airlines had been planning on transitioning out of these contracts to help lower costs, but it appears Delta Ground Services sped up the timeframe under which the shift to other providers will happen. Alaska Airlines will backfill these services with a mix of new ground handling vendors, plus in-sourcing with Alaska’s own employees.

Delta Ground Services handles Alaska Airlines at many of it’s destinations east of the Mississippi including: Boston, Newark, Dallas – Fort Worth, St. Louis, Washington – Reagan, Philadelphia, Kansas City, Houston, and Tucson. We are working to confirm the other stations affected with Delta and Alaska and are waiting on statements from both carriers at this time.

In and of itself, the termination of a ground services contract is not major news. There is constant churn in this industry as airlines search for ways to reduce costs and improve profit margins. But the interesting thing here is the compression of the timeline. Delta could have just let the contract lapse in due time, but instead it chose to speed up the timeline, so as to put more pressure on Alaska.

Delta and Alaska are currently in the midst of a protracted battle in Seattle. The two carriers are long time code share partners and with reciprocal frequent flyer programs, but in recent years, the relationship has tightened, coinciding with Delta’s build-up of Seattle as a major Asian gateway. Seattle is Alaska Airlines’ largest hub with close to 300 departures per day, but Delta is the dominant international player. Reports have emerged that the code share feed provided by Alaska was not satisfactory, especially on international routes (given lower fares and Alaska’a mixed incentives to provide feed for long haul flights – which give it a lower share of overall revenue than domestic feed, and often less revenue per seat). So Delta has taken moves to create its own organic feed for Seattle’s long haul flights, adding high frequency services to Los Angeles (a Delta hub), Las Vegas, and San Francisco, stepping on Alaska’s toes in the process. Alaska is Seattle’s dominant hometown carrier in almost every sense of the word, but Delta has slowly stepped up pressure on them – adding flights in core Alaska markets.

And the following quote from new Seattle EVP Mike Medeiros in an interview with the Puget Sound Business Journal provides some interesting context about Delta’s mindset towards Alaska right now:

We’re very committed to Seattle….And what that means is we’ll be looking for opportunities on the West Coast — including California — for Delta airplanes.

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