EDC Insights

Dec 21
Economic Development Council

The Place "Where Big Ideas Take Flight" becomes the Home of the Nation's 5th Largest Airline

By Economic Development Council
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suzanne-dale-estey.jpgSuzanne Dale Estey, CEO & Aerospace Business Development Manager

Since The Boeing Company was founded in Seattle a century ago, the birthplace of commercial aerospace remains the largest center for aerospace activity in the country. In Q4 2016, exciting new opportunities have emerged for the place Where Big Ideas Take Flightas SeaTac-based Alaska Air Group, a valued EDC investor, celebrates its now completed merger with San Francisco-based Virgin America. This significant development will benefit the aerospace supply chain, service industry companies and help grow jobs in large and small businesses throughout the region. The EDC was honored to host the presentation of the Puget Sound Business Journal’s Executive of the Year award to Brad Tilden at our Economic Forecast Conference in January of this year, and the conclusion of this deal makes the award even more deserving.

It’s been nine months since the Alaska-Virgin deal was first announced, but the news became official in mid-December. The Alaska-Virgin merger makes Alaska Air Group the fifth-largest airline in the country. Virginvirgin-alaska-merger-usa-today-3.png America began flying just nine years ago as a US majority-owned spin off of British tycoon Richard Branson’s wide range of airlines ventures. The combined company will still be based just outside of Sea-Tac Airport.

The merger gives Alaska Airlines much greater clout in California, creating the largest airline on the West Coast. Both companies will now make 1,200 daily flights to 118 destinations. After adding in partnerships involving foreign carriers such as Dubai-based Emirates, China’s Hainan Airlines, British Airways, Hong Kong-based Cathay Pacific, and Australia’s Qantas, the company has links to 800 cities around the globe. According to an Alaska Airlines media release, the merger “brings together two of the country's favorite airlines into a unified force that will provide an attractive alternative to the ‘Big 4’ airlines that currently control 84 percent of the domestic market.” Alaska Airlines and Virgin America will spend the next year working to secure Federal Aviation Administration (FAA) certification to allow the two airlines to operate as a single carrier.

While Alaska has long served California, Chief Executive Officer Brad Tilden said in multiple national and global media stories that the Virgin American acquisition gives it a major boost in the West Coast’s two biggest markets, San Francisco and Los Angeles. “Virgin flies to eight of the top 10 cities,” said Tilden. “Immediately, we reach critical mass in the two biggest markets in California.”

This good news at Alaska Airlines will build on Washington State’s aerospace industry’s total impact during 2015 of more than a quarter million jobs and nearly $95 billion in revenues, an increase of over 9% percent over 2014. King County currently has the most aerospace jobs in the state: 44,640 direct jobs and the most companies in the state (507). Importantly, aerospace employees earned an average wage of $107,000 (not including benefits) which is nearly twice the state’s overall average wage of $54,000. We also know that the broad economic impact of these high wage aerospace jobs significantly deepens through benefits to small businesses like restaurants and auto dealerships,  as well as significant contributions to improve communities across the state.

The economic development opportunities in aerospace remain strong, and they just got stronger with Alaska’s merger with Virgin.  But we must continue to aggressively position the assets of our region in the global competition if we are to retain, expand and attract aerospace companies and talent. We welcome your partnership as we continue to “crank up” our proactive work in aerospace, and our related tradeshow activity, marketing and client follow up.  Let’s make sure the birthplace of commercial aerospace, Seattle-King County, and the Hometown of Alaska Airlines, remains the largest center for aerospace activity in the country and the place “Where Big Ideas Take Flight!”