Delta Partners with Alaska Air

(MoneyWatch)  The chief executives of Delta Air Lines and Alaska Air both showed up at Sea-Tac Airport today to announce their new code-sharing agreement, an expansion of their more than 20 years of shared services.

Code-sharing means allowing airlines to put its name on a flight operated by another without buying new planes or adding employees. Hence, you pay for Delta, but Seattle-based Alaska or its regional carrier, Horizon Air, actually services and flies the plane -- but both share in proceeds.

I'm a little perplexed -- if Delta wanted to bolster its Pacific Northwest presence, wasn't that what Northwest Airlines was already doing? Delta made headlines recently for merging with Northwest, notably killing off several routes because of costs or other, as yet, unknown reasons. One example was terminating Northwest's Seattle-London route after only six months. (Incidentally, Northwest does code-sharing with Alaska, too.) My guess it that it was cheaper for Delta to "outsource" the flights to Alaska -- and outsourcing may be the future for all of Northwest's former routes that Delta decides to keep.

But many in the industry think it's more than just a simple partnership or about Pacific Northwest dominance. They believe that ultimately Delta wants Alaska. According to Credit Suisse, Alaska Airlines, which serves around 90 destinations, is an attractive company because it turns a neat profit and holds the keys to strategic markets. It's no surprise Delta would also be feeling out the Alaska for a possible merger.

But what is Alaska getting out of it? Aside from business in a difficult economy, some say that Alaska is getting lucrative international routes. Delta flights from Spain, Africa and Japan could bring in hefty profits for the carrier, said Steve Danishek, president of TMA Inc., a Seattle-based industry consultant and agent. And in this economy, it's likely that a comfortable and economic partnership for both Delta and Alaska will continue.

Photo courtesy of Alaska Airlines