Alaska Airlines may soon have a single airport in the Seattle area
IIn early 2019, the Seattle metropolitan area acquired a second commercial airport: Paine Field in Everett, Washington. While Paine Field is best known as the home of BoeingThe main assembly plant for wide-body aircraft, a private two-door terminal has allowed commercial flights to resume at the airport for the first time since World War II.
Two airlines operate at Paine Field: Alaska Air (NYSE: ALK) and United Airlines (NASDAQ: UAL). However, United recently confirmed that they will be suspending service there in early October. This could potentially allow Alaska to expand its footprint at Paine Field over the next two years.
Image source: United Airlines.
A back-up airport for Seattle’s northern suburbs
Paine Field is located just over 20 miles north of downtown Seattle. In contrast, Seattle-Tacoma International Airport (Sea-Tac) – the city’s main airport – is located almost 15 miles south of downtown.
The growth of the Puget Sound area has resulted in frequent traffic jams on freeways in and around Seattle. This makes Paine Field a huge time saver for most of the over 800,000 residents of Snohomish County (of which Everett is the county seat).
However, the airlines did not find it easy to be successful at Paine Field. End of 2018, Southwest Airlines canceled plans to operate five daily flights there, leaving Alaska and United as the sole tenants when the new commercial terminal opens. And Alaska overhauled its Paine Field route map and flight frequencies several times even before the COVID-19 pandemic upset the airline industry.
United give up as Alaska tries new things
Initially, United Airlines flew from Paine Field to San Francisco and Denver. The airline, however, discontinued service to San Francisco in February 2020, choosing to route all Paine Field traffic through Denver, which is a larger connecting hub.
It also appears United Airlines doesn’t see a path to profitability for the Denver route, which has led to the recent decision to pull out of Paine Field. The move is particularly striking in light of United aggressive growth plans. However, most travelers seem to prefer a longer trip to Sea-Tac – which has plenty of non-stop flight options – rather than flying from Paine Field to Denver and then connecting to another destination.
Alaska Airlines’ point-to-point strategy avoids this problem. That (along with his hometown Seattle airline status) made him a bit more successful at Paine Field. Alaska last month announced that it plans to return to its full schedule of 18 daily departures from Paine Field by spring 2022, if not earlier, noting that the airport “remains very popular with our customers. “.
Image source: Alaska Airlines.
That said, Alaska Airlines had to adapt its strategy at Paine Field to meet demand. This fall, it plans to operate 13 daily departures to nine destinations, primarily warm-weather recreation locations and key markets in the Pacific Northwest. Almost half of these flights will serve destinations that were not on the original map of Alaska’s Paine Field route as of 2019. Conversely, Alaska Airlines will not fly from Paine Field to Portland or Los Angeles this fall. Those two cities accounted for eight of the airline’s 18 daily departures from Paine Field two years ago.
An opportunity to develop
The two-door terminal at Paine Field can only support 24 daily departures. United’s decision to exit the market will put six of those starting “slots” up for grabs.
Alaska Airlines will likely pursue these niches to allow for future growth. Indeed, without additional slots, the airline is expected to reduce leisure routes and regional routes where it recently added flights to restore meaningful service to major business markets like Portland, San Francisco, San Jose and Los Angeles. .
Other airlines are unlikely to pursue these niches, particularly as the constraints of Paine Field’s gates limit its appeal to low-cost carriers looking for growth opportunities. Thus, Alaska Airlines could have the monopoly of Paine Field by the end of the year, thus completing its leadership position at Sea-Tac.
With a maximum of 24 daily departures allowed from Paine Field, Alaska’s operations will never be the primary driver of its revenue. However, Paine Field service could become a profitable and deep niche for Alaska Airlines – and it’s incredibly valuable in the ultra-competitive airline industry.
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Adam levine weinberg owns shares of Alaska Air Group and is short of $ 80 calls in January 2022 on Alaska Air Group. The Motley Fool recommends Alaska Air Group and Southwest Airlines. The Motley Fool has a disclosure policy.
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