Alaska Airlines Could Benefit From Amazon's HQ2 Decision – The Fool Motley

Earlier this week, Amazon.com (NASDAQ: AMZN) made its long-awaited decision on "QG2". The e-commerce and technology center has confirmed rumors that it will share its second seat between New York and northern Virginia. Both sites will receive 25,000 new high-paying jobs. More surprisingly, Amazon announced the creation of a new 5,000-strong operations center in Nashville.

Given the scale of recruitment planned by Amazon, the decisions of HQ 2 will have a significant impact on the economies of these regions. In addition, other companies providing services to Amazon could benefit from its expansion on the East Coast. One of those winners could be the Seattle City Airline, Alaska Air (NYSE: ALK).

Seattle's two major airlines face each other again

While videoconferencing technology has reduced the importance of face-to-face meetings, the opening of two new campuses for East Coast Headquarters and a new Operations Center will undoubtedly result in increased travel. professionals. There are two main options for Seattle-based companies like Amazon: Alaska Airlines and Delta Airlines (NYSE: DAL).

Alaska Airlines was historically the dominant airline in Seattle, providing a wide range of point-to-point services from its main base of operations. However, since 2013, Delta has become a formidable rival, having launched a competing hub.

Alaska and Delta offer non-stop flights from Seattle to New York, Washington DC and Nashville, checking the box for Amazon. Beyond that, the two carriers have different strengths and weaknesses.

The big wave of recruitment of Amazon on the East Coast will help Alaska Airlines. Source of the picture: Alaska Airlines.

Alaska remains largely the main carrier in Seattle, with about 300 daily departures to 90 destinations. The Delta Air Lines footprint in Seattle is about half of it – but it can provide a connecting service virtually anywhere in the world. It also offers non-stop flights from Seattle to many of the major business destinations in Europe and Asia, while Alaska Airlines does not serve North America. Last but not least, Delta happens to be No. 1 carrier in New York.

D.C. is the key

Alaska Airlines' smaller route network means that it will never capture 100% of Amazon's activities. However, it can offer the best travel arrangements for Amazon employees commuting between the company's headquarters in Seattle and its new facilities, primarily because of its position at Reagan National Airport in Washington, DC.

In most cases, airlines are limited to the shortest routes at Reagan Airport, but the number of slots for transcontinental flights is limited. Alaska has such "out-of-perimeter" slots for five daily round trips, including two daily flights to Seattle.

No other airline can serve Seattle from Reagan Airport, the most convenient airport in the region. In fact, Reagan Airport will be a short walk from the offices of Amazon in northern Virginia, thanks to the construction of a new pedestrian bridge. In contrast, nonstop flights from other airlines to Seattle use the Washington Dulles International Airport, located about a 30-minute drive away when there is no traffic, or where there is no traffic. Baltimore-Washington International Airport, which is even further away.

Travel times to Dulles and BWI during rush hour or public transit are considerably longer. As a result, Amazon will likely prefer Alaska Airlines' two stopovers from Reagan Airport as it commutes between its Seattle offices and its headquarters.

Small but powerful

Alaska Airlines is not as important as Delta Air Lines or other conventional carriers, but it offers a good amount of service where it matters most to Amazon, even beyond its monopoly on the route connecting the airport to Seattle to Reagan. For example, Alaska now offers three daily round trips between Seattle and New York's JFK Airport, compared to only one previously. It also serves Newark Airport, but this one is further away from Long Island City, where will be located the Amazon headquarters in New York.

Meanwhile, Alaska Airlines offers a wide service from New York and Washington DC to the San Francisco and Los Angeles areas, two major technology hubs. It has even coveted slots beyond the perimeter for daily return trips to San Francisco and Los Angeles from Reagan Airport.

All of these factors have allowed Alaska Airlines to see a significant increase in traffic and fares on some of its transcontinental routes. This should strengthen the recovery of the company over the next few years.

John Mackey, CEO of Whole Foods Market, an affiliate of Amazon, is a board member of The Motley Fool. Adam Levine-Weinberg owns shares in Alaska Air Group and Delta Air Lines. The Motley Fool owns shares and recommends Amazon. Motley Fool owns shares in Delta Air Lines. The Motley Fool recommends Alaska Air Group. Motley Fool has a disclosure policy.