The battle between Delta Air Lines (NYSE:DAL) and Alaska Airlines (NYSE:ALK) for passengers to and through Seattle is moving into a new phase. Delta has increased service from one round-trip between Seattle and Anchorage to three for summer 2014. Delta has also added one daily trip between Seattle and Juneau and Seattle and Fairbanks.
Air travel is the primary transportation method both to and within Alaska. Seattle has served as the main gateway city from the lower 48, while Anchorage is the gateway city in Alaska. The service between those two cities is the backbone of Alaska Airlines route structure, evidenced by the almost hourly service between the two cities.
The summer 2014 season looks to have a typical number of daily flights between Seattle and Anchorage, but there's been a shift in which carrier operates the trips. United Continental Holdings (NASDAQ:UAL) has pulled out of the route, removing two daily flights. Delta added two daily flights, increasing their share from 4% last year to 13% in summer 2014. JetBlue Airways Corporation (NASDAQ:JBLU) continues one daily trip for a 4% share of flights, and Alaska Air continues with 83% of the flights.
The return of Delta to both the Seattle-Fairbanks and Seattle-Juneau routes is a larger shift in capacity due to the smaller number of daily flights. On the Seattle-Juneau route, Delta will offer one daily round-trip compared Alaska's six daily flights. It has been several years since Alaska had any competition on this route, and Delta's daily flight gives it 14% of the daily flights and a slightly higher percentage of seats due to Delta operating a larger aircraft on the route.
Seattle-Fairbanks is an even larger capacity shift. Alaska is operating about the same number of flights, an average of three round-trips per day, but with Delta operating one round-trip, it is flying 25% of the flights on this route.
The challenge on the Seattle-Anchorage route for Delta will be the change from primarily seasonal, summer service to year-round flights. Over the coming winter, Delta plans to operate two or three daily flights between Seattle and Anchorage, but the Juneau and Fairbanks flights remain summer season only for now.
Alaska Airlines has held a strong reputation with residents of Alaska for years and traces its Alaskan roots back to 1932. Alaska Airlines is the primary source of transportation between Anchorage and many other communities in the state. To strengthen the relationship with Alaska residents for trips both inside and outside of the state, Alaska Airlines has a program specifically for Alaska State residents -- Club 49.
Membership has a few important benefits. The first is two free checked bags on flights within Alaska and flights to or from Alaska. Members also receive two discount codes annually for 30% off of a one-way refundable coach fare ticket. When your primary means of transportation within the state is via airline, this can be an important benefit.
In an apparent move to try and win over Alaska residents, Delta recently rolled out a targeted program only available to residents of Alaska and that closely matches the Alaska Airlines program.
The Delta program runs through December of this year and matches the two free checked bags for the member and gives and a one-time 30% discount off of a full coach fare (Y Class). The member also receives 60 days of Silver Medallion status and a fast track to keep Silver through February 2015, or a move up to Gold Medallion status by flying additional miles or segments. In addition, if the member buys an Economy Comfort ticket, a one-time $25 credit will be issued.
Will state residents remain loyal to Alaska or will they embrace Delta as an alternate travel source for trips to the Lower 48, Hawaii, and international destinations? The growing Delta hub in Seattle now connects to 11 international destinations, including Calgary and Vancouver, plus and an increasing domestic list. In addition to Seattle the Delta summer schedule also has flights from Anchorage to Salt Lake City, Minneapolis, and Atlanta.
This move by Delta to specifically target residents of Alaska is a new front in the battle for passengers between these two airlines in this market. The determining factor in the success of this move will be the response from the state residents; they will vote with their travel dollars. If Delta's move is successful, it could potentially add long-term customers. If Alaska can hold on to market share with Alaska residents, it will be an important victory.