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updated 2:54 PM CDT, Jul 28, 2018

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Deal-maker Joe Schocken committed to making sure an Alaska-Delta deal never comes about

The walls of Joe Schocken's office at Broadmark Capital are filled with the financial "tombstones" of deals his firm has done over the years, but he is in the forefront of business-community efforts to make sure one deal doesn't come about. The deal that is anathema to Schocken would be the one-day disappearance of Alaska Air Group into the covetous arms of Delta Airlines.

When Schocken and I first discussed what has become Alaska's David-and-Goliath struggle with Atlanta-based, 10-times-larger Delta, he forcefully said "this community needs an anti-Delta campaign!"

We concluded the conversation that afternoon in the office at his financial-services firm with his reluctantly agreeing with me that we needed to help drive a positive campaign for Alaska because "anti" campaigns don't sell well in Seattle.

But in light of recent events, as Schocken and I visited again yesterday, I found myself saying "You may have been right the first time, Joe, given what has been unfolding of late."

The issue, of course, is growing concern within the business community in Seattle and Spokane that Delta is bent on driving Alaska, through tactical use of its dramatically greater income as one of the world's two largest air carriers, into a merger or acquisition.

But jumping ahead of the battle for passenger dollars at this stage of their competition, the current point of contention between the two airlines is the question of construction of a new international-arrivals facility at Seattle-Tacoma International Airport.

And a step that should be key to an "anti-Delta" mood in this community is Delta's blatant effort to insert one of its own onto the Port Commission that governs Sea-Tac operations, getting Des Moines resident Ken Rogers, a Delta pilot who has been on Delta's board for eight years, to seek election to the commission in the upcoming election.

Shocken shook his head as he discussed the logic for that "arrogant action, trying to directly control government decisions for Seattle from Atlanta" to instill anger in this community.

He notes that the projected cost of the international facility, which would benefit Delta more than any other airline but be paid for primarily by travelers on domestic flights of Alaska and other carriers, "isn't money for a new terminal but basically just a sky bridge to a concourse, being positioned as an international-arrival building."

How that eventually plays out, with Delta urging the Port Commission to approve the plan that has doubled in cost to an estimated $608 million with much more cost likely to come as a plan actually begins to be drawn up, is still to be decided by the commission.

  

Alaska's contention is that it's unfair that fees attached to domestic tickets would be used to benefit passengers on international flights and that the airport should go back to the drawing board to devise a less costly plan.

The commissioners are undecided on how the cost share should be parceled out, something Delta would like to influence with its own commission member.  

"Another angle that I think Alaska Airlines executives should be pointing out is how would you like to be an Alaska businessman envisioning a possible Delta takeover," Schocken observed. "As big a problem as it would be for Seattle to lose Alaska as its hometown-focused airline it would be a much bigger problem for the state for which Alaska Airlines is the lifeline and understands the needs of the state. They've grown up together."

"I doubt if the people in Atlanta even know where Alaska is," he chuckled.

"It isn't just trying to own a seat on the Seattle Port Commission that should upset people who are fans of Alaska," Schocken said. "What you have is a series of things coming together, including Delta beginning non-stop service to Sitka. There is no international traffic and little growth coming out of Sitka, thus undermining Alaska is the only purpose behind that flight."

"Finally there's the issue of June 1 reauthorization or the Export-Import Bank, something very important to our region's economy for which Delta's Dick Anderson is the key opponent, claiming it subsidizes its competitors," Schocken said. "Meanwhile Delta is buying planes from Canadian and Brazilian manufacturers and receiving subsidies from their governments. That makes Delta hypocritical, not mention anti-Boeing, but that's another subject."

Schocken emphasized, as he says he does when it makes his Alaska-Delta points in conversation he routinely has at business meetings or cocktail gatherings, to what he says are reactions of tremendous support for Alaska, that he's not hoping to see Delta lose a battle with Alaska. Rather he wants to see Seattle and the Northwest served by two successful airlines.

But in any event, he says "we're only in the first or second inning of a likely long game."

Meanwhile, Alaska keeps its focus on the goal of remaining the nation's most respected domestic carrier, last week being singled out for the J.D. Power customer-satisfaction award for the eighth consecutive year.

It was USA Today, not an Alaska press release, that noted "Alaska Airlines and Jet Blue continued their stranglehold atop the annual J.D. Power customer service satisfaction survey of North American carriers."

Alaska CEO Brad Tilden has avoided negatives about Delta in speeches he's given in recent months.

But he is the guest at next week's Business Journal Live q and a event where he will be interviewed by PSBJ Publisher Gordon Prouty, an environment where he could strategically refer to comments he's heard made by Alaska fans about Delta without saying those things himself.

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