Delta Air Lines (Atlanta) has issued this interview with Mike Medeiros, Vice President – Seattle and the following charts about their fast growing SEA hub:
A Delta News Hub conversation with Mike Medeiros, Vice President – Seattle, about the role the fastest-growing airport in the U.S. plays in the airline’s domestic and international strategy.
SEATTLE – A Delta News Hub conversation with Mike Medeiros, Delta’s Vice President – Seattle, who is charged with developing and executing Delta’s key strategic objectives for Seattle and the Pacific Northwest – from financial performance and marketing to community relations and government affairs.
It’s been two years since Delta began building its hub at Sea-Tac. What do you wish you’d known then that you know now?
It is really hard to believe that we began this journey in Seattle two years ago. Having been in a similar situation in New York back when we began growing there in 2007, I guess I’m not surprised about how long it takes to get major facility improvements started, but it’s probably one of the things that I had hoped would be different in Seattle from how it was in New York. The good news is that we are working closely with the Port of Seattle, and it is my hope that we will break ground on a new International Arrivals Facility by mid-2016.
Delta is building for the future in many ways – for example, it’s partnered with China Eastern and it’s launched an initiative to engage future business travelers while they’re still in college. What role does Seattle play in building for Delta’s future?
Seattle is an important element of the overall strategy at Delta, and that’s precisely why it is called out in our Flight Plan (internal goals statement) each year. We all know that Asia – China in particular – is growing at a far greater rate than any other region in the world, and even with the recent challenges their economy has faced, they are still expected to grow at an annual rate that exceeds 6 percent. Seattle has a unique opportunity to capitalize on that growth by virtue of the global diversity the city offers but also as a convenient connection hub for passengers traveling to Asia from all across the U.S. Being located in the very top corner of the United States, we are able to offer the shortest flights from the U.S. to Asia, and we are able to do it more efficiently than any other carrier is able to do it from their West Coast gateways. This is a strategic advantage that places Seattle in a great position and, importantly, helps ensure a strong future for Delta.
What challenges has Sea-Tac’s rapid growth presented? How are you helping to make the experience easier for customers in the short-term and long-term?
As the fastest-growing airport in the country, SeaTac is bursting at the seams. That growth has largely come from Delta, but it has also come from other airlines adding flights in response to our growth. Over the summer, the airport had a 13 percent increase in passenger traffic over the previous year, which led to operational challenges, including longer taxi times, baggage system failures and an overall increase in congestion at the airport. Now that the summer is behind us, we are working with the Port of Seattle to create specific actions that can be taken between now and next summer that will help improve the passenger experience. From a Delta perspective, we are working to build a new 23,000-square-foot Sky Club and a Delta One premium check-in area, both of which will be up and running in time for at least some portion of summer 2016.
What impact has Delta had on Seattle? And, maybe the more intriguing question is, what impact has Seattle had on Delta?
The single biggest impact Delta has had on Seattle is that we’ve brought competition to a market that has been largely underserved for a very long time – and that competition has driven innovation and required other airlines to step up their game in areas beyond just passenger travel, like community investment and volunteerism. As for how Seattle has impacted Delta – the city has been extremely gracious and accepting of the Delta brand coming to Seattle and competing for their business.
How has Delta’s entrance into state of Alaska from Seattle impacted that market?
Delta now serves three markets in the state of Alaska year-round and two seasonally, which places the brand in the state’s top five destinations by passenger traffic. Since Delta entered these markets, consumers have benefited by seeing fares drop dramatically, and when Delta ends its seasonal service, fares in those markets immediately return to those higher levels. Beyond fares, residents of Alaska now have choice, better products, a global network and the world’s best employees. All of this has been missing until Delta entered Alaska.
We’ve brought competition to a market that has been largely underserved for a very long time – and that competition has driven innovation and required other airlines to step up their game in areas beyond just passenger travel, like community investment and volunteerism.
Seattle is a major commercial focus for Delta in addition to New York and Los Angeles, but there are many distinctions between the three markets. How are they similar/different?
There’s a lot that’s similar about these three markets, and it starts with the fact that they’re all emerging markets for Delta – at different stages, of course – where we are building new hubs and strengthening our network to help ensure we have a strong future for many years to come. In New York, we began that work back in 2007, and it has evolved from creating an international gateway at JFK to also creating a domestic hub at LGA – and that work continues. LAX and SEA are more similarly situated in that we began developing our West Coast strategy a few years ago and truly are in the early stages of creating something very special in both cities. That said, having lived in all three of these cities with Delta, I’ve experienced how different they can be from a cultural and customer perspective, and that’s where it’s so important to have a team of Delta professionals on the ground that understand the nuances of what each of those region’s customers want and expect from their airline.
So what’s next? What are Delta’s top priorities over the next few years?
We have several imperatives in Seattle. First, we have to get the new International Arrivals Facility started so we have a competitive arrivals experience for our customers. Second, we’ll continue building strong relationships and partnerships in Seattle to become a trusted and respected brand like we are around the globe. We’ve made great progress in this regard in a very short time, but we need to continue working hard at this every day. Finally, we will continue developing our network of flying that builds enough mass of flights that enables us to compete for every passenger, every day because we fly to where they want to go. Again, we’re getting there but we still have some work to do.
Delta and Seattle: A story of growth, success
Copyright Photo Above: Joe G. Walker/AirlinersGallery.com.
SEATTLE – Fresh off the assembly line, Delta Ship 3809 – a Boeing 737-900 ER (above) known as the ‘Spirit of Seattle’ – shone as it flaunted its new paint job on a December morning in 2013, nearly 80 years to the day after Delta’s first Seattle flight. A nod to the airline’s history with the Emerald City, the jet has since flown thousands of miles, proudly sharing Delta’s Seattle story in its travels.
That commitment began with a Hamilton H-47 metal plane that carried Delta’s first Seattle passengers in December 1933 on a Tacoma-Seattle-Wenatchee-Spokane route. Later, in a fitting twist, it was Delta predecessor Northwest Airways that helped give Sea-Tac the “international” in its name when it started service to Tokyo in 1947 using the Great Circle Route.
Today, the story continues – but it retains the pioneering spirit for which the Pacific Northwest is known. Instead of prop planes, Delta serves Seattle with some of the largest jets in its fleet. Instead of a single flight to Tokyo, Seattle is a full-fledged international hub for Delta, with service to the top five destinations in Asia and three of the top four in Europe from Seattle-Tacoma International Airport.
But how – and why – did Seattle grow from a secondary air market to an international gateway?
“In the early years after our merger with Northwest, we had to take a hard look at our network,” said Bob Cortelyou, Delta’s Senior Vice President – Network Planning. “We were well-positioned to compete on the trans-Atlantic because of our joint venture partnership with Air France and KLM, but the holes in our network across the Pacific were gaping, leaving us without a real chance to compete in some of the world’s most important emerging economies.
“We are a global company, and we want to be the airline of choice for customers around the world. And Seattle gave us that chance to compete in Asia.”
Delta’s story in Seattle parallels that of the city itself. Decades removed from its humble beginnings as a lumber town, Seattle is the seat of strong economic growth, widespread prosperity, a burgeoning tech scene and growing interest by investors from one of the world’s most powerful emerging economies: China.
At the center of the growth story is Sea-Tac, now the fastest-growing airport in the U.S., in large part due to Delta’s 35 percent overall growth since July 2014. The airline operates 128 daily departures to 36 destinations from Sea-Tac, including nine long-haul international routes.
Geologists estimate that it took more than 30 million years to form the Cascade Range that defines the region. But things are moving a little more quickly these days – it’s taken less than three years for Sea-Tac to morph from a largely regional operation to an international gateway to key global commerce centers such as London, Shanghai and Tokyo.
“Seattle had so much opportunity, and we moved quickly to fill that gap in our network,” said Mike Medeiros, Delta’s Vice President – Seattle. “Economically, the city is a major commerce center and home to some of the world’s most important brands. Geographically, we are as close to Asia as you can get from the U.S. mainland. And it’s a market that had been severely underserved for many years. It was a natural fit and has very much been a mutually beneficial relationship.”
Many a U.S. airport has fallen victim to the “build it and they will come” fallacy. But in Seattle, “they” were there all along – and now those customers have choice. Despite unprecedented capacity growth, revenue performance and traffic remain strong, showing that Delta’s presence in Seattle has helped to stimulate pent-up demand.
The impact to the region’s economy is significant. Delta’s growth at Sea-Tac is bringing more revenue to the airport – and to the city – than ever. That growth is creating jobs and providing more resources to enhance the airport’s role as a regional economic engine. Delta’s growth will contribute to 4,900 jobs paying $246 million in wages and $571 million in economic output in Seattle. The multiplier is astounding.
And Delta’s growth has placed Sea-Tac among the fastest-growing large hub airports in the U.S., moving more than 100,000 passengers per day. According to the Port of Seattle, nearly 37.5 million people traveled through Sea-Tac in 2014 – a 7.7 percent increase over 2013 – marking its fourth consecutive year of record growth.
Passenger growth at the airport is increasing this year at 13 percent over last year’s record levels. Cargo shipments are up 18.5 percent this year. Forecasts project the airport’s annual passenger numbers will rise to 66 million by 2034. And the Port’s plan to build a new International Arrivals Facility will further cement the Puget Sound region as a global commerce center.
In a sense, the story has come full circle. It’s fitting that Delta – an airline built with the help of Boeing, powered by Microsoft and fueled by Starbucks – all iconic Pacific Northwest brands – and Seattle – a city built on innovation and with deep roots in aviation – would collaborate to help drive the future of both the region and the airline industry. And that future looks bright.
Charts Below: Delta Air Lines.