In March, Alaska Air (NYSE: ALK) began operating its first routes at Paine Field: a secondary airport in Everett, Wash., near the airline's hometown of Seattle. Now, with a few months of service under its belt, the carrier is responding to customer requests by adding a new route to Palm Springs, Calif.
However, due to the tiny size of Paine Field's terminal, Alaska Airlines can't increase the number of departures it offers at the airport. As a result, this move requires a broader realignment of Alaska's flight schedule there.
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A new opportunity in the Puget Sound region
Alaska Airlines is the No. 1 airline in Seattle, with more than 300 daily departures. That said, it faces a growing challenge from Delta Air Lines (NYSE: DAL). While Delta has significantly fewer daily flights from Seattle than Alaska right now, it has a much larger global route network. It flies nonstop from Seattle to numerous destinations in Europe and Asia (unlike Alaska Airlines) and offers one-stop service to pretty much everywhere in the U.S.
In response to Delta's expansion, Alaska has added extra flights of its own in Seattle. This has contributed to growing congestion at Seattle-Tacoma International Airport (Sea-Tac). There simply isn't enough gate space to accommodate much more growth there right now.
As a result, Alaska Airlines saw the opening of Paine Field to commercial flights earlier this year as a valuable opportunity to improve its position in the greater Puget Sound region. At times, heavy traffic can increase the driving time from Seattle's northern suburbs to Sea-Tac (which is south of the city) to well over an hour. By flying to Paine Field, which is located about 25 miles north of downtown Seattle, Alaska can better serve customers who live in that area.
The one complication regarding Paine Field is that the commercial terminal recently built there has just two gates. Alaska Airlines -- one of two carriers to serve the airport -- has the right to operate 18 daily round-trips. That's almost certainly fewer flights than would be supported by demand in the area. Thus, Alaska has had to choose carefully how to utilize its relatively scarce Paine Field slots.
Alaska will tweak its Paine Field schedule
Initially, Alaska Airlines served eight destinations from Paine Field: Los Angeles, Portland, Las Vegas, San Diego, San Francisco, San Jose, Phoenix, and Orange County. However, nearly half its schedule consisted of flights to Los Angeles and Portland, with four daily round-trips on both routes.
Alaska now plans to spread its flight schedule more broadly. Beginning Nov. 5, it will offer one daily flight from Paine Field to Palm Springs, Calif. It will also add a second daily flight on its Phoenix route effective Aug. 26.
To make room for these new flights, Alaska will cut back to three daily flights on the Los Angeles and Portland routes. The new schedule will offer more convenient connections for business travelers flying through Los Angeles and Portland, according to the carrier.
It's hard to know if that's really true or if that statement is just a way of saving face amid cutbacks on those routes. What does seem clear is that Alaska is shifting the focus of its Paine Field service ever so slightly toward leisure routes. That decision is probably based on a combination of customer requests and the company's analysis of traffic and booking patterns over the past few months.
Alaska is staying close to its customers
Delta's aggressive expansion in Seattle over the past few years has contributed to severe margin deterioration for Alaska since 2016. Alaska is responding by becoming even more focused on meeting its customers' needs. For now, that entails continuing its growth at Sea-Tac while also adding flights at Paine Field.
Alaska Airlines will never be able to match the size of Delta's global route network. But as Seattle's hometown airline, it can better understand travelers' needs in its home market and make route planning decisions accordingly. For example, Delta didn't even attempt to get slots at Paine Field, because its main interest in Seattle is in using Sea-Tac as a gateway for flights to Asia. Paine Field flights are all about serving the local market, which is the core of Alaska's business.
Alaska isn't likely to regain the unprecedented level of profitability it had achieved prior to Delta's growth in Seattle. Still, by focusing on tailoring its route offerings to the specific needs of its loyal customer base in the Seattle area -- and the Pacific Northwest more broadly -- Alaska should be able to remain quite successful.
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Adam Levine-Weinberg owns shares of Alaska Air Group and Delta Air Lines. The Motley Fool owns shares of and recommends Delta Air Lines. The Motley Fool recommends Alaska Air Group. The Motley Fool has a disclosure policy.