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LAXintl
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AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 2:44 pm

Puget Sound Business Journal has a series of articles from interview with Alaska CEO Brad Tilden.

One of the stories touches on reaction to the frayed relations between AS as DL as the Atlanta based carrier grew its Seattle operations.

The frank comments made by AS make it clear they did not see this coming, nor did they settle on a strategy of how to combat this very quickly.


Brad Tilden was poised and calm Thursday when discussing the future of Seattle's hometown airline. But things weren't always so relaxed for the Alaska Air Group CEO.

Alaska Air Group faced a perilous situation last year when the company’s longtime partnership with Delta Air Lines came to a screeching halt.

“At first we were just sort of shocked, you know, that the thing seemed to be unraveling,” Tilden said Thursday at a Puget Sound Business Journal Live event.

Internally, it was a major issue for Alaska's leadership team. Executives disagreed on the best way to move forward.
“I would say we did flap around on that for awhile before we sort of came to peace with exactly what our mentality was, what our mindset about the competition was and how we were going to respond,” Tilden said.



Full artcle:
Alaska Airlines was 'shocked' when Delta partnership unraveled
http://www.bizjournals.com/seattle/b...hocked-when-delta-partnership.html

other articles in the series
CEO Brad Tilden: Alaska needs a say in what happens at Sea-Tac
http://www.bizjournals.com/seattle/n...a-needs-a-say-in-what-happens.html

Alaska Airlines pursues tech upgrades
http://www.bizjournals.com/seattle/b...o-hints-at-20-minute-check-in.html

This fuel-hedging tactic has saved Alaska Air millions
http://www.bizjournals.com/seattle/n...g-tactic-has-saved-alaska-air.html

=


Its interesting the aggressive push by DL has created a high-profile two carrier competition scenario which is making everyone from the Seattle Seahawks to community non profits to the regions big corporate players like Starbucks, Microsoft having to chose sides.

Bring the popcorn out

  
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avi8
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 2:56 pm

I like AS's "I'm not a victim" attitude. This is why AS hasn't succumbed to DL's invasion. This attitude is what's gonna keep the environment highly competitive in SEA. I have a strong feeling that both airlines can win at SEA. However I do think that AS will always be number one in terms of flights
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HPRamper
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 3:12 pm

Quoting avi8 (Reply 1):
I like AS's "I'm not a victim" attitude. This is why AS hasn't succumbed to DL's invasion. This attitude is what's gonna keep the environment highly competitive in SEA. I have a strong feeling that both airlines can win at SEA. However I do think that AS will always be number one in terms of flights

Unless there is some sort of major expansion at SEA (not likely) DL will never be able to pass AS in terms of flights or domestic passengers carried. Then again, that's not technically necessary for them to be successful at SEA.
 
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 3:39 pm

The old scorpion crossing the pond on a turtle or frog's back comes to mind here.
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jbs2886
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 3:42 pm

Quoting avi8 (Reply 1):
I like AS's "I'm not a victim" attitude. This is why AS hasn't succumbed to DL's invasion. This attitude is what's gonna keep the environment highly competitive in SEA. I have a strong feeling that both airlines can win at SEA. However I do think that AS will always be number one in terms of flights

I agree completely. This is competition at its best, with both carriers improving their hub structure and services. It is forcing AS to evolve substantially; there may be some growing pains as their financials are showing with lower margins, but as some people have commented they are looking at E+ and other enhancements. Plus, doing things like Tom Douglas meals and local beers makes a difference to flyers.

Both of them are at SEA to stay and will contribute greatly to growth in the city.
 
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 4:03 pm

Quoting LAXintl (Thread starter):
Its interesting the aggressive push by DL has created a high-profile two carrier competition scenario which is making everyone from the Seattle Seahawks to community non profits to the regions big corporate players like Starbucks, Microsoft having to chose sides.

Why do they have to choose sides? Why can't they just enjoy more flights, more options, greater flexibility, and lower fares?
 
HPRamper
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 4:12 pm

Quoting DolphinAir747 (Reply 5):
Why do they have to choose sides? Why can't they just enjoy more flights, more options, greater flexibility, and lower fares?

Because it's a huge marketing opportunity for an airline to say "We're the official airline of X" as silly as it may seem, it's really a big deal.
 
MSPNWA
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 4:12 pm

Honestly I see the AS leadership group as unaware and ignorant in regards to competition and the industry as a whole. They were able to expand peacefully in their corner of the world, as if no one would bother with them. But then their moat was crossed, and somehow they are surprised? Who on the outside didn't see the relationship with DL deteriorating? Few.

Now they are screwed. By putting so many eggs in one small basket, a basket invaded by the airlines version of a Starling, they are in a dubious position. Their fate in SEA is now in the hands of Delta shareholders. Unless they demand that Delta quit bleeding money in SEA, Alaska's profitable fate there is sealed. They will never be able to kick out the giant. So much for "only controlling what you can control"....
 
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LAXintl
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 4:17 pm

Quoting DolphinAir747 (Reply 5):
Why do they have to choose sides? Why can't they just enjoy more flights, more options, greater flexibility, and lower fares?

Read the articles. Mentions how Seahawks had to pick a sponsor, and companies like Microsoft and Starbucks had to weight access to a global network with DL versus AS when signing corporate travel deals.

Here is another one about how the two are battling for Seattle corporate market
http://www.bizjournals.com/seattle/p...-talk-of-any-animosity-though.html

[Edited 2015-05-29 09:18:52]
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jacobin777
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 4:21 pm

Quoting MSPNWA (Reply 7):
Their fate in SEA is now in the hands of Delta shareholders.

  
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 4:29 pm

Quoting MSPNWA (Reply 7):

Honestly I see the AS leadership group as unaware and ignorant in regards to competition and the industry as a whole...
Now they are screwed.

Gosh, never in a million years would I have thought you'd see things this way!   
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Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
BoeingGuy
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 4:32 pm

Quoting LAXintl (Reply 8):
Quoting DolphinAir747 (Reply 5):
Why do they have to choose sides? Why can't they just enjoy more flights, more options, greater flexibility, and lower fares?

Read the articles. Mentions how Seahawks had to pick a sponsor, and companies like Microsoft and Starbucks had to weight access to a global network with DL versus AS when signing corporate travel deals.

And picking DL over AS would be shortsighted. If (and I don't really think it will happen) DL puts AS out of business, you know darn well that DL will likely start cutting back in SEA. It will put a lot of local AS employees out of work and probably lead to higher fares and fewer choices. But then again, neither corporations or individuals are known for being able to see anything beyond their short term immediate needs.

Quoting MSPNWA (Reply 7):
Unless they demand that Delta quit bleeding money in SEA, Alaska's profitable fate there is sealed. They will never be able to kick out the giant. So much for "only controlling what you can control"....

I think this is incorrect. AS is taking on DL rather nicely in SEA. I still bet that AS wins the battle. Either AS wins and DL retreats, or at least they peacefully co-exist.
 
F9Animal
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 4:51 pm

Quoting MSPNWA (Reply 7):
Honestly I see the AS leadership group as unaware and ignorant in regards to competition and the industry as a whole. They were able to expand peacefully in their corner of the world, as if no one would bother with them. But then their moat was crossed, and somehow they are surprised? Who on the outside didn't see the relationship with DL deteriorating? Few.

Now they are screwed. By putting so many eggs in one small basket, a basket invaded by the airlines version of a Starling, they are in a dubious position. Their fate in SEA is now in the hands of Delta shareholders. Unless they demand that Delta quit bleeding money in SEA, Alaska's profitable fate there is sealed. They will never be able to kick out the giant. So much for "only controlling what you can control"....

No way is Alaska screwed! Why, because Delta is invading Seattle? LOL! How is Alaska putting all its eggs in one basket? Alaska has diversified it's entire operation, and continues a growth rate. A "screwed" airline tightens it's belt, stops growth, and shrinks in size. Alaska is doing none of the above. In fact, Alaska is growing, and enhancing it's products. Alaska is actually investing on the passengers experience, and making flying with Alaska pleasurable.

Look..... The big bad bully is in town. The bigger they are, the harder they fall. Let's discuss the big bad bully, Southwest. Not a big bad bully, but viewed by many legacies as the big bad bully.

Southwest survived brutal assaults by Braniff when it was just an infant. Braniff was hell bent on putting Southwest under. Did it happen? Which airline survived?

How about fast forwarding Southwest? Remember when US Airways screamed when Southwest came in to its home turf? US Airways put up a huge fight. Slashing fares, slashing tires, and creating a carrier within a carrier to battle Southwest. What did Southwest do? Kept chugging away, ignoring US, and running a good airline and operation. Who lost?

How about United? Shuttle was built to knock Southwest to its knees. United showed them how it was done. Shuttle collapsed, and Southwest never once flinched.

How about flipping around Southwest? Remember America West? Phoenix? America West had Southwest in 2 of its hubs. America West just did what it did, and survived just fine with a beast in its front and backyards. No massive wars, just 2 companies prospering just fine. Had America West decided to fight, America West would have failed.

America West, an airline with about 150 aircraft. Now, American, one of the largest airlines in the world. Nobody ever thought a small airline like America West would be what it is today, even with the big bully on its own territory. Sound familiar? Delta, the big bad bully, in Alaska's turf. Alaska with about 150 aircraft, and considered an underdog in this battle. Guess what? Alaska is doing exactly what America West did...... Running a great airline, and not sweating a big bad bully in its territory.

I wish I could see the future. Perhaps Delta might be finding itself on dark days, and Alaska becomes the big bad bully one day. Don't say it can't happen! History in this industry has repeated itself many times.
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threeifbyair
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 4:57 pm

AS made an odd strategic decision to become the primary sponsor of the Seattle Sounders arch-rival, Portland, in Major League Soccer. [Yes I know many don't care about MLS, but in Seattle it draws ~40,000 a game]

That would be kind of like DL saying it wants to be New York's airline, but then sponsoring the Phildelphia Flyers instead of the Rangers or Islanders (or Red Sox/Patriots/Cowboys/do the Knicks have rivals when they are so bad?). Seattle and Portland fans don't like each other. Needless to say, DL is the official airline of the Sounders. I have my doubts about AS renewing the sponsorship with Portland. DL is not a major threat there.

International flights are quickly becoming the achilles heel for AS, however. In fact, many of the international partnerships AS has are not that valuable for SEA-based customers. BA suddenly slashed its accrual rates to as low as 25% for discounted Y. Only EK serves SEA and offers full mileage accrual among the international partners. AA is the only other partner that gives AS elites any real benefits and full accrual.

Meanwhile, DL offers 3 TATL routes (LHR, AMS, and CDG) and 6 TPAC (NRT, HND, PEK, PVG, ICN, HKG) at full accrual. Plus a much better partnership with AF/KL for onward connections from AMS and CDG.

If you stay loyal to AS but fly extensively internationally, the low accural rates make it more difficult to maintain elite status. And the status you get on AS is not very valuable on most AS partners. If you fly DL instead, you'll get status much more easily and it does count on the other SkyTeam carriers. Although SkyRubles are nearly worthless, AS miles are not much better, especially for the high-value international J/F redemptions. Very slim pickings and terrible routings are the norm, if you find anything at all.
 
32andBelow
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 4:59 pm

Quoting threeifbyair (Reply 13):
AS made an odd strategic decision to become the primary sponsor of the Seattle Sounders arch-rival, Portland, in Major League Soccer. [Yes I know many don't care about MLS, but in Seattle it draws ~40,000 a game]

AS just sponsored a team in their second largest hub. PDX. When you are in Seattle they talk about the seahawks and when you are in Portland they talk about the Timbers...I don't really see the issue. They aren't preboarding in Seattle for Timber fans.
 
rentonview
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 5:09 pm

I'm a neutral observer in this battle, as I regularly fly both AS and DL and have a fondness for both. On my last AS flight to PSP and back last week, I was quite impressed by the quality of the product and service in Y (on a new 73J). AS has really stepped up its game, which was definitely needed, as its image had become a bit dowdy, especially in comparison to the likes of B6, VX, and even DL. Their new product and attitude still reflect their core values as a smaller, customer-focused carrier, but in a much more modern and tightly-executed manner.

The routes AS previously had a monopoly on will no longer be the cash cows they once were before DL muscled its way into markets like SEA-JNU. I hope that AS can make up for that revenue in other ways, perhaps on new routes.
 
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 5:18 pm

Quoting threeifbyair (Reply 13):
Needless to say, DL is the official airline of the Sounders. I have my doubts about AS renewing the sponsorship with Portland. DL is not a major threat there.

If they drop the Portland sponsorship, it's not going to make the Sounders bolt DL for AS. AS will just be losing something nice they already have. No Sounders fan is losing sleep that AS is sponsoring the Timbers. Alaska is the hometown airline of PDX, too.
 
EMB170
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 5:21 pm

I still don't understand why DL is viewed by so many as "evil" and a "bully". I honestly don't believe that DL had or has anything against AS personally. If DL had been able to make their partnership with AS work to their satisfaction, they would have. The reason DL set up shop in Seattle is because it needed a better gateway for its transpacific services- a role that NRT once had, but has become, by all accounts- increasingly unprofitable and unable to provide.

As such, DL's options were limited. SFO was and always is, UA territory, and DL would have been foolhardy to take them on at their home turf. They could have chosen LAX, but again, the competition not only from UA and AA but the Asian carriers would have made profitability particularly challenging. And, on top of that, LAX doesn't have the most ideal connecting geography. That left SEA as the only other viable option.

An added benefit: wingletted 763s could fly more routes from SEA nonstop than they could from LAX, thereby giving DL more flexibility to right-size markets that otherwise might be overserved, and serve some markets that they otherwise might not be able to serve at all. To make these flights work, however, like many international departures, DL needed (and still needs) sufficient connecting traffic -- feed that AS could not and would not be able to provide to DL without violating federal anti-trust law. So, DL launched their own domestic flights into SEA with the motive of feeding their Transpacific gateway- not to put AS out of business.

Just my $0.02.
IND ORD ATL MCO PIT EWR BUF CVG DEN RNO JFK DTW BOS BDL BWI IAD RDU CLT MYR CHS TPA CID MSP STL MSY DFW IAH AUS SLC LAS
 
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 5:25 pm

Quoting DolphinAir747 (Reply 5):
Why do they have to choose sides? Why can't they just enjoy more flights, more options, greater flexibility, and lower fares?

One has to chose as that is how business travel is conducted.
For companies to get established discount rates they need to provide the airline volume in return which often means giving that airline the bulk of not all your business on designated routes.

Quoting BoeingGuy (Reply 11):
And picking DL over AS would be shortsighted. If (and I don't really think it will happen) DL puts AS out of business, you know darn well that DL will likely start cutting back in SEA. It will put a lot of local AS employees out of work and probably lead to higher fares and fewer choices. But then again, neither corporations or individuals are known for being able to see anything beyond their short term immediate needs.

It is not the job of a travel manager to prognosticate what might or might not happen in 5-years. They have a job to do today and to purchase travel for a 2 or maybe 3-year contract.

Certainly DL will be aggressive and will steal business away from AS particularly as it can offer a global network from SEA, not just one primarily focused on Western US.

Quoting threeifbyair (Reply 13):
International flights are quickly becoming the achilles heel for AS, however. In fact, many of the international partnerships AS has are not that valuable for SEA-based customers.

AS international partnerships really mean zero to the corporate client as AS is not really selling those segments and even under code-share has minimal pricing or capacity authority to wheel and deal.
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INFINITI329
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 6:14 pm

When will their partnership officially end?
 
BoeingGuy
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 6:39 pm

Quoting EMB170 (Reply 17):
So, DL launched their own domestic flights into SEA with the motive of feeding their Transpacific gateway- not to put AS out of business.

They why is DL adding so many markets and times out of SEA that have nothing to do with connecting to their transpacific flights?
 
MSPNWA
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 6:40 pm

Quoting jacobin777 (Reply 9):
 

I stated it in the post. Unless Delta's shareholders get fed up with the bleeding in SEA, DL isn't going anywhere. That is the only way DL would back out of a huge investment with their tail between their legs. So as long as the global giant also occupies Alaska's nest, which could be for decades, AS is out to lunch there. SEA will never be the gold mine a small carrier needs to grow and survive in the long-run. AS isn't big enough or diversified enough to not fall behind the competition as they battle for the small SEA nest. DL holds all the cards. They the only way they lose and AS wins is if they decide to lose.

In the future, what AS has done at SEA (or more importantly not done) in the past 5-10 years may be looked upon as a lesson in what not to do in a competitive environment. They didn't properly defend their stronghold until it was too late. The walls were already down.

[Edited 2015-05-29 11:43:15]
 
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 6:48 pm

Quoting mercure1 (Reply 18):
One has to chose as that is how business travel is conducted.
For companies to get established discount rates they need to provide the airline volume in return which often means giving that airline the bulk of not all your business on designated routes.

My companies have deals with several airlines. All will cut you a deal. It just is a better deal the more travel you guarantee.
 
threeifbyair
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 6:59 pm

Quoting 32andBelow (Reply 14):
AS just sponsored a team in their second largest hub. PDX. When you are in Seattle they talk about the seahawks and when you are in Portland they talk about the Timbers...I don't really see the issue. They aren't preboarding in Seattle for Timber fans.
Quoting HPRamper (Reply 16):
If they drop the Portland sponsorship, it's not going to make the Sounders bolt DL for AS. AS will just be losing something nice they already have. No Sounders fan is losing sleep that AS is sponsoring the Timbers. Alaska is the hometown airline of PDX, too.

Sure, the Timbers sponsorship is not a bad idea. PDX is an important market for AS. AS did renew its Timbers sponsorship, which reportedly was for $3MM/year, so AS must feel it is getting good value for the deal.

But I have to imagine DL used the "we don't sponsor your arch-rival" line in its discussions with the Sounders to become the official airline. The Sounders reportedly only get $4MM from Microsoft despite SEA being a much bigger market and the Sounders having a higher attendance.
 
chrisair
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 7:05 pm

I fly both DL and AS regularly. Delta is a pretty solid operation--the morale has really improved in the last 5-6 years. I'll always be loyal to AS, but when AS charges $420 o/w PHX-SEA and DL is charging $250 o/w PHX-SLC-SEA in F, I'm flying DL. Period.

Quoting threeifbyair (Reply 13):
AS made an odd strategic decision to become the primary sponsor of the Seattle Sounders arch-rival, Portland, in Major League Soccer. [Yes I know many don't care about MLS, but in Seattle it draws ~40,000 a game]

Sorry to all you soccer fans in the US, but the MLS is irrelevant. Sure there might be 40k people at the game, but the TV ratings are dismal.

Anyway, the Timbers sponsorship came long before the Seattle dustup. I want to say it was announced in 2011 or 2012.

Quoting threeifbyair (Reply 13):
If you stay loyal to AS but fly extensively internationally, the low accural rates make it more difficult to maintain elite status.

That depends on what airlines you fly and what fares you're flying on...
 
BoeingGuy
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 7:53 pm

Quoting MSPNWA (Reply 21):
They the only way they lose and AS wins is if they decide to lose.

Oh brother.

Quoting MSPNWA (Reply 21):
In the future, what AS has done at SEA (or more importantly not done) in the past 5-10 years may be looked upon as a lesson in what not to do in a competitive environment. They didn't properly defend their stronghold until it was too late. The walls were already down.

Oh brother.

What evidence do you have to support either brash statement?
 
cloudboy
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 8:09 pm

Seriously, this battle is not going to be won on the basis of what corporate sponsorships an airline makes.

But really, I don't think there even will, or needs to be, a winner. somehow A.net seems to be under the impression that every airport and every route is going to end up at some point with one and only one carrier. Fortress hubs may look great on paper, but when it comes down to it, competition bring airfares down, encourages better economics, and in the end encourages a lot more people to fly. If anything, the growing competition is likely to bring more people to Seattle and make up for or the lost AS profits. They just need to recognize that they have to compete now, and fortunately Tilden's interview seems to indicate just that.
"Six becoming three doesn't create more Americans that want to fly." -Adam Pilarski
 
Prost
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 8:36 pm

I believe SEA traffic has been up 16-18% each month in 2015 vs. 2014, so there's evidence that the pie has gotten larger.

Correction, traffic has increased 13.1%, but still some big numbers are being posted:

http://www.seattletimes.com/life/tra...orts-passenger-traffic-is-booming/

[Edited 2015-05-29 13:40:14]
 
ghifty
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 10:06 pm

Quoting BoeingGuy (Reply 25):
Oh brother.

What evidence do you have to support either brash statement?

He said "in the future." As in we have yet to see the conclusion of the turf war at SEA.

If AS (or DL) fails, it's a lesson in what not to do. If AS (or DL) wins, it's a lesson in what to do. He didn't say AS has already lost. The last two sentences of his post are conjecture about what would be said should AS not hold out.

 

We should really try reading posts thoroughly here.

Quoting BoeingGuy (Reply 25):
Oh brother.

What's AS going to do in response? Execute a hostile takeover of DL? Flood Deltas hubs at DTW, LAX, ATL, JFK, LGA, AMS, and SLC till DL starts bleeding red and has to stop? With what planes, exactly? Alaska has SEA. It's their stronghold, yes. But it's their only one, and they're surrounded on all sides. They don't have the physical resources (read: PLANES) or hub layout to retaliate with an offensive similar to what DL is doing to them.

Does it mean DL holds more cards than AS? Yes. Does this mean AS is dead? Not necessarily. AS has been smart about playing their cards.

Not to mention the Seattle area is growing exponentially (wonder why that's not brought up more often). Hell, if DL didn't start growing SEA.. I'm sure the argument could be made that AS would have been unable to deal with all the extra demand. IIRC, AS load factors out of SEA are up... how can that be when DL is introducing "cut-throat" pricing and is flying out at (IIRC) 50% lf? GROWTH.

Quoting cloudboy (Reply 26):

Seriously, this battle is not going to be won on the basis of what corporate sponsorships an airline makes.

The war won't be won based on it, but corporate sponsorships are definitely a pretty important battle. Corporate sponsorships from corporate giants like Starbucks, Microsoft, Amazon, and so on will make or break DLs international flights. I don't think DL is intending to appeal to vacation travellers. Not very lucrative. Seattle's becoming an actual major US city. It's not just a tourist destination that also happens to be home to Microsoft anymore. That's what DL is going after. New sectors of international trade and commerce. Meanwhile, I have NO DOUBT that AS can happily continue to grow flying around new Seattleites for domestic trips.

[Edited 2015-05-29 15:25:13]

[Edited 2015-05-29 15:30:04]
Fly Delta (Wid)Jets

Comments made here reflect only my personal opinions.
 
Nola
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 10:16 pm

Quoting F9Animal (Reply 12):
Southwest survived brutal assaults by Braniff when it was just an infant. Braniff was hell bent on putting Southwest under. Did it happen? Which airline survived?

How about fast forwarding Southwest? Remember when US Airways screamed when Southwest came in to its home turf? US Airways put up a huge fight. Slashing fares, slashing tires, and creating a carrier within a carrier to battle Southwest. What did Southwest do? Kept chugging away, ignoring US, and running a good airline and operation. Who lost?

How about United? Shuttle was built to knock Southwest to its knees. United showed them how it was done. Shuttle collapsed, and Southwest never once flinched.

How about flipping around Southwest? Remember America West? Phoenix? America West had Southwest in 2 of its hubs. America West just did what it did, and survived just fine with a beast in its front and backyards. No massive wars, just 2 companies prospering just fine. Had America West decided to fight, America West would have failed.

America West, an airline with about 150 aircraft. Now, American, one of the largest airlines in the world. Nobody ever thought a small airline like America West would be what it is today, even with the big bully on its own territory. Sound familiar? Delta, the big bad bully, in Alaska's turf. Alaska with about 150 aircraft, and considered an underdog in this battle. Guess what? Alaska is doing exactly what America West did...... Running a great airline, and not sweating a big bad bully in its territory.

I don't think any of these analogies hold. First, Braniff was taken down by too many wide bodies and too large of an international expansion (and debt) too quickly. The move to DFW and dirty tricks by American to book BA tickets and then cancel them right before takeoff didn't help either. The pivot to try to be a low frills carrier focused on Texas was a last gasp that the balance sheet couldn't support. There are a few good books on the subject.

America West/US did have trouble in Phoenix, but Southwest had a significant cost advantage in not having legacy costs, having fleet commonality and having substantial fuel hedging over time. Alaska does have fleet commonality on its side, but that is a disadvantage when an airline is competing for customers who travel both domestically and internationally and want to stay on the same airline or at least within the same FF system. Not that they can't make some things work, but it is an issue.

As for UA and AA, again, and, for argument's sake, Song, the legacy costs of a traditional legacy hub-and-spoke carrier were too substantial to compete with a focused quality LCC.

Now, Alaska is faced with a very profitable DL determined to build a new Pacific gateway and, thanks to low fuel costs, the ability to run regional jets in to the market allows DL to increase capacity and fly domestic routes that otherwise wouldn't be profitable. I'm not saying that it's a home run for DL, but I don't think there are as many advantages for Alaska as have been suggested. In fact, I would say that the largest strength for Alaska isn't upping its game (although that helps) or new routes (although that helps too) or sponsorships (for whatever they are worth) but, instead, is facility capacity in that Alaska has the majority of gates at SeaTac and DL cannot grow as quickly as it wants as a result.
 
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 10:32 pm

Quoting ghifty (Reply 28):
We should really try reading posts thoroughly here.

I read the post thoroughly. Also that poster often has a clear choice of who he thinks is going to "win".

Perhaps you'd like to read the following more thoroughly and thoroughly understand why I replied as I did. I don't see much conjecture here.

Quoting MSPNWA (Reply 21):
They the only way they lose and AS wins is if they decide to lose.

In the future, what AS has done at SEA (or more importantly not done) in the past 5-10 years may be looked upon as a lesson in what not to do in a competitive environment. They didn't properly defend their stronghold until it was too late. The walls were already down.
 
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northwestEWR
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 10:40 pm

Corporate accounts are extremely important and Delta has deployed it's largest sales team ever to the Seattle area. They are very aggressively going after the corporate money and frankly they stand a good chance to take it. See below post. International travellers stand to benefit much more from Delta than Alaska.

Quoting threeifbyair (Reply 13):
If you stay loyal to AS but fly extensively internationally, the low accural rates make it more difficult to maintain elite status. And the status you get on AS is not very valuable on most AS partners. If you fly DL instead, you'll get status much more easily and it does count on the other SkyTeam carriers. Although SkyRubles are nearly worthless, AS miles are not much better, especially for the high-value international J/F redemptions. Very slim pickings and terrible routings are the norm, if you find anything at all.
Quoting MSPNWA (Reply 21):

I don't normally agree with MSPNWA since he's generally a Delta hater but this time I think he's right--albeit provocative. See ghifty's post--Delta has infinitely more resources EXCEPT gate space. Alaska's ace card is holding Seattle real estate--if they didn't--Delta could grow much faster.

Quoting ghifty (Reply 28):

  
Northwest Airlines - Now You're Flying Smart
 
Prost
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 10:44 pm

I still haven't experienced remote parking spots and buses used at SEA, but it's definitely a possibility. That'll open up some extra (remote) gate for flights. It's not ideal, but always a possibility.
 
ghifty
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 10:45 pm

Quoting BoeingGuy (Reply 30):
Also that poster often has a clear choice of who he thinks is going to "win".

Thankfully, that doesn't change the facts of reality. And the facts are that AS is doing just fine. They're improving operating metrics. In spite of increased competition. No matter what the reason for that, it speaks good things.

Quoting BoeingGuy (Reply 30):
Perhaps you'd like to read the following more thoroughly and thoroughly understand why I replied as I did. I don't see much conjecture here.


Actually, I'm not going to read it again. Maybe take off your angry glasses for a minute?

 scratchchin 

You originally replied, "what evidence do you have to support either brash statement? " I said his comment was conjecture. Now, conjecture is defined as "an opinion or conclusion formed on the basis of incomplete information." It seems like if there's one thing you and I are in agreement with, it's that what he said is conjecture. Unless, you think he's speaking the truth are asking for a WSJ article which supports what he said. But I don't (and didn't) think you are.

And for the record, I think both of his statements as presented are false. AS hasn't failed at SEA, and I doubt they will seeing their current performance. And AS didn't "let their walls down." DL is introducing domestic flights on current AS flights. It's not like AS discontinued SEA-LAX/SAN and DL picked it up. AS has been an active and fierce opponent. And will continue to be. We're experiencing growing pains.

Yeah, I'm a DL fan. But that doesn't mean I'm some pleb who thinks DL HAS TO WIN and AS MUST FAIL. This isn't a boxing match or, like, Darth Vader vs Captain Kirk (omg te jedis wuld slay te vulcanos). This is business. With actual statistics, reports, and facts to analyze and look at. And what I see is that the increased competition has improved both airlines, in terms of operations, economics, and consumer product/offerings.

I understand that a lot of older members here have seen their beloved airlines wither away in the face of competition. But Alaska is not, and was never, one of those airlines. They want to fight. They can fight (sitting on some major cash reserves). But, more importantly, they know how to fight. Can you say that about TW.. or even Pan Am?

[Edited 2015-05-29 16:11:06]
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MSPNWA
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 10:59 pm

Quoting BoeingGuy (Reply 25):
Oh brother.

Refute it then. Here's the facts. Delta is about 6 times larger than AS. It generates over 7 times the revenue. Losing money to win over the local SEA market is just a bleeding scratch. DL can live with that all day. They hold the cards in SEA due to their sheer size.

Quoting BoeingGuy (Reply 30):
I read the post thoroughly. Also that poster often has a clear choice of who he thinks is going to "win".

Perhaps you'd like to read the following more thoroughly and thoroughly understand why I replied as I did. I don't see much conjecture here.

The irony is that I would like AS to win, but I'm not going to let my rooting interest blind me from economic reality. Somebody will have to "win". The market simply isn't big enough for two healthy hubs.

If I was at the front of the classroom, I would already use it as a lesson. The damage has been done already. But it was a forward-thinking idea.

Here's a couple areas where AS failed to see the future. And yes it is my conjecture. First was that they have been operating SEA as a hub, yet they have decided to not operate long-haul international on their own metal. This has turned out to be a huge mistake. By relying on agreements with partners, AS gave up control and kept the door open for another carrier to be both a domestic and international hub. What AS elites would like most is to fly one airline out of SEA. For a while partners were enough to satisfy when there was no other choice. Now partner agreements are being devalued, and the wide open door has been breached by DL. It wouldn't have surprised me to see AA do what DL did if they hadn't. AS was sitting on a Pacific gateway (not an ideal one, but good enough to try), and they failed to operate it as one.

A second mistake has been to be an LCC but stay sheltered away in hubs. The problem now is that AS isn't diversified. A large portion of their business is seeing a major capacity dump, instead of just a small piece. They have no where to run to escape trash yields. Maybe routes like LAX-BWI are a sign of the more point to point flying they should have had long ago. They have the low cost structure to be another WN or NK, picking low hanging fruit around the country, yet they have done little of that.
 
Yukon880
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 11:11 pm

The cordial relationship that Alaska Airlines has shared with both Delta and Northwest had long been considered mutually beneficial. Brad Tilden claims he was "shocked," as if to say "We didn't see this coming!" AS has been dancing with multiple partners for a long time, they know how the dance goes. There's a lot more to this story than what is being commented on here, while the executive departments in SEA and ATL remain tight-lipped on the details.

It would be interesting to know ... the rest of the story.

Yukon
Pratt & Whitney, In thrust we trust!
 
Prost
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 11:16 pm

I think a lot of us would be interested in when the end date of th agreement is, and what both DL and AS have in mind then.
 
32andBelow
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 11:21 pm

No one talks about that the DL flights can be filled with people that never needed or chose or wanted to go to Seattle. Thye can Route connections through Seattle of ADDITIONAL pax that normally would of connected in SLC, LAX, DTW, MSP, etc.
 
Prost
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 11:24 pm

So are you saying the market isn't growing? I'm not refuting that, I guess I just never thought people would take some non-Alaska routings via Seattle as it's out of the way.
 
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EA CO AS
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 11:45 pm

Quoting MSPNWA (Reply 34):
They hold the cards in SEA due to their sheer size.

And you'd be correct IF DL had gate space to expand. They do not. And the majority of their planned expansion at SEA has already taken place.

In other words, AS has already absorbed DL's best shots.

Quoting MSPNWA (Reply 34):
Here's a couple areas where AS failed to see the future. And yes it is my conjecture. First was that they have been operating SEA as a hub, yet they have decided to not operate long-haul international on their own metal. This has turned out to be a huge mistake.

Thing is, they didn't "fail to see the future" - they entered into a partnership with DL with the idea that no large-scale international expansion was needed by AS, since DL would be handling that. And no large-scale domestic expansion was planned for DL, since AS would act as their domestic feed.

DL then singlehandedly elected to fundamentally change the dynamic of the relationship.

Your analogy is like blaming a domestic violence victim for not knowing on their first date that their significant other was abusive. You enter into a relationship wanting to be the best partner you can, and assuming the other has entered into that relationship in good faith. And don't get me wrong, AS is not a victim, but it's the best way I can illustrate how they didn't "let their guard down" in any way; their partner just changed their mind about the nature of the relationship, and as a result it was up to AS to adapt to that change.


Also, it's worth noting that while AS has and continues to build up SEA, they've resumed building outside of SEA and brand refresh items that had been placed on hold due to DL's incursion and not wanting to confuse the customer base are now back on.

This means AS is still wary of DL but based on DL's lack of impact to the bottom line (market share going to DL has largely come from WN and UA, not AS) there is no need to drastically alter or curtail their own expansion plans and evolutions to the brand.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Fri May 29, 2015 11:48 pm

Quoting Prost (Reply 36):
I think a lot of us would be interested in when the end date of th agreement is, and what both DL and AS have in mind then.

It's a long term agreement (I know the expiration date but cannot divulge) and while there are potential outs available, AS senior leadership has no interest in terminating the agreement early since it still does bring some value.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
Prost
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Sat May 30, 2015 12:03 am

Angst as well! But I'm sure AS has a irm grip on what is best for themselves.
 
Flighty
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Sat May 30, 2015 12:08 am

Quoting EMB170 (Reply 17):
I still don't understand why DL is viewed by so many as "evil" and a "bully". I honestly don't believe that DL had or has anything against AS personally

Because they are dumping seats in SEA and have it well within their power to destroy AS and make SEA into a nice monopoly for themselves.

Go ahead, tell me AS can fight DL. Which is patently ridiculous. But go on, say it, everyone.
 
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ER757
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Sat May 30, 2015 1:23 am

Quoting MSPNWA (Reply 21):

Boy, you must have gone to 7-Eleven and bought the Big Gulp size of Delta Kool-Aid because that isn't your garden variety 16 ounce size silliness your spouting
 
ghifty
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Sat May 30, 2015 1:28 am

Quoting Flighty (Reply 42):

If, "Alaska Air Group reported $149 million in profit in its first quarter earnings report, a 67 percent increase compared to the same period in 2014" doesn't say AS can fight DL I'm not sure what will.

Maybe, "It’s the best first quarter performance the airline has ever had."

Or, "The report reflects Alaska’s commitment to its customer base, a strategy to keep ahead of rival Delta – the company’s loyalty program grew by 15 percent in the first quarter, which means more people signed up for Alaska Air Miles card than any other quarter in the last seven years."

http://www.bizjournals.com/seattle/n...r-alaska-after-record-profits.html

To me, it looks like Alaska is saying they can fight Delta. People here are only saying it because a lot of AS fanboys want to believe their strong airline is weaker than it really is..

I mean, seriously. It's not like AS just magically opened up a new hub somewhere. SEA is still their cornerstone. And despite DL's market presence, into flights that AS has just brought online, they're doing great. To me that says they've found a way to make SEA continue to work.
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LAXtoATL
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Sat May 30, 2015 1:32 am

Quoting BoeingGuy (Reply 11):

And picking DL over AS would be shortsighted. If (and I don't really think it will happen) DL puts AS out of business, you know darn well that DL will likely start cutting back in SEA. It will put a lot of local AS employees out of work and probably lead to higher fares and fewer choices. But then again, neither corporations or individuals are known for being able to see anything beyond their short term immediate needs.


If you don't think it would happen, why bring it up? How can it be shortsighted and why should a corporation consider it
If it is not likely to happen???

And why would DL want to cut back SEA anyway? Delta is trying to steal a few local passengers, they are building a hub. A hub needs scale to function efficiently and maximize profits. Also, DL would not want to encourage any new competition. Job loss would be minimal as DL is already one of the fastest growing employers in SEA. Higher fares would of course result but I doubt you would have any fewer choices could possibly have more.

Quoting BoeingGuy (Reply 11):

I think this is incorrect. AS is taking on DL rather nicely in SEA. I still bet that AS wins the battle. Either AS wins and DL retreats, or at least they peacefully co-exist.

They peacefully coexist, but DL will be the winner. Delta doesn't need to put AS out of business, but once they build a network from SEA large enough to support a transpacific hub they would have definitely eaten significantly into AS market share and margins. AS financial performance best days are behind it.

Quoting BoeingGuy (Reply 20):

Quoting EMB170 (Reply 17):
So, DL launched their own domestic flights into SEA with the motive of feeding their Transpacific gateway- not to put AS out of business.

They why is DL adding so many markets and times out of SEA that have nothing to do with connecting to their transpacific flights?

In order for the international flights to work there has to be feed, in order for the feeder flights to work they need support from the local market, in order to get support from the local market you have to fly all the places they want to go. Who would have thought you need scale to build a hub. Regardless of whether you want to call it building a hub or going after AS traffic, it is one in the same and has been since day one.

Quoting EA CO AS (Reply 39):

And you'd be correct IF DL had gate space to expand. They do not. And the majority of their planned expansion at SEA has already taken place.

In other words, AS has already absorbed DL's best shots.


If you think DL is done expanded, think again. People thought they were done expanding in LA 2 years ago and they are still expanding there with fewer gates. SEA is not even the size of LA yet and SEA-TAC authorities have said they can accommodate Delta's future plans for expansion. Whether it will be profitable or not, you can expect steady growth from DL in SEA for at least the next 18 months.
 
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usxguy
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Sat May 30, 2015 1:36 am

I showed that article to someone in Delta's partnerships 'arena' the other day and his response was, well, interesting. Unfortunately its a one word, 2 syllable response that I can't type here.

but the gist was "someone has had their head in the sand too long.... if he was surprised then he's not talking to his middle management folks enough".

I have a gut feeling that things may have soured at the analyst/manager level dealing with the codeshare and it just never made its way to the top. Delta and Alaska were once best friends, and Delta essentially proposed and Alaska said no.
xx
 
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Sat May 30, 2015 1:40 am

Quoting usxguy (Reply 46):
Delta essentially proposed and Alaska said no.

Not quite. DL proposed and said, "By the way, if we get married, you can never speak to any of your family or friends ever again."

Would YOU agree to such a relationship?
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
hiflyeras
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Sat May 30, 2015 1:51 am

Quoting ER757 (Reply 43):
Boy, you must have gone to 7-Eleven and bought the Big Gulp size of Delta Kool-Aid because that isn't your garden variety 16 ounce size silliness your spouting

  

People spouting off about things they no nothing about...good for amusement if nothing else. AS is doing a fantastic job of dealing with DL threat. I don't imagine DL will be leaving anytime soon but AS is growing and thriving. Maybe DL has sewn the seeds of creating a new powerhouse out of the Pacific Northwest.
 
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RWA380
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RE: AS CEO Was 'Shocked' When DL Partnership Unraveled

Sat May 30, 2015 2:04 am

Quoting LAXintl (Reply 8):
Read the articles. Mentions how Seahawks had to pick a sponsor, and companies like Microsoft and Starbucks had to weight access to a global network with DL versus AS when signing corporate travel deals.

I've worked the Stsarbucks account personally & there was more than one preferred carrier 10 years ago, that will continue well into the future.

Quoting threeifbyair (Reply 13):

AS made an odd strategic decision to become the primary sponsor of the Seattle Sounders arch-rival, Portland, in Major League Soccer. [Yes I know many don't care about MLS, but in Seattle it draws ~40,000 a game]

Emmett Paulson (owner of the Timbers) has deep pockets & a passion for supporting Northwest businesses.

Quoting threeifbyair (Reply 13):
f you stay loyal to AS but fly extensively internationally, the low accural rates make it more difficult to maintain elite status.
Quoting mercure1 (Reply 18):
Certainly DL will be aggressive and will steal business away from AS particularly as it can offer a global network from SEA, not just one primarily focused on Western US.
Quoting northwestEWR (Reply 31):
Corporate accounts are extremely important and Delta has deployed it's largest sales team ever to the Seattle area. They are very aggressively going after the corporate money and frankly they stand a good chance to take it. See below post. International travellers stand to benefit much more from Delta than Alaska.

One thing you're all forgetting is that the loyal AS flyer is not a big frequent International traveler. That doesn't mean there aren't lots of MVP golds who travel out of the country for business, it means that the people who have loyally been flying AS have been doing it in the US, Canada & Mexico & although International partnerships are important to many MVP's there are many more who it's not very important.

Quoting EA CO AS (Reply 40):
It's a long term agreement (I know the expiration date but cannot divulge) and while there are potential outs available, AS senior leadership has no interest in terminating the agreement early since it still does bring some value.

Well DL is sure making use of the AS agreement to dump mileage awards on, it was easier for me to get rid of the rest of my Skymiles by buying my nieces two tickets to New York for the fall.

The best flights were all on AS via SEA to EWR. The DL flights offered were double connects via LAX & SLC or SEA & ATL.
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