Anchorage, Fairbanks open up to international transit traffic

Your next flight between the US and Asia might just stop over in Alaska. And a foreign airline could operate the entire route. The state won approval on Tuesday for its two major international airports, Anchorage and Fairbanks, to handle transit passenger traffic foreign carriers, similarly to how cargo has moved through the state for 25 years. Alaska applied for the permission from the US DOT in August.

The state has held an exemption for cargo traffic since 1996. It is part of why Anchorage thrives as a major freight hub. And now Alaskan authorities hope to replicate that success with passengers. It is very much an uphill climb.

Only San Juan, Puerto Rico holds similar exemptions, issued earlier this year. Alaska cited the San Juan decision as precedent in its application to the US Department of Transportation.

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Just because foreign airlines can operate a hub at Anchorage or Fairbanks does not mean they will. Odds are very much against it given the success airlines have had with overflying Alaska with non-stop passenger flights for decades. Even the Tokyo-Narita hubs for United Airlines and Delta Air Lines, effectively the same concept headed the other direction, have been retired in recent years. Passengers generally want to fly non-stop unless the alternate route is very cheap (bad for airline profits) or there are no nonstop options available.

Anchorage is hoping that local tourism traffic stopping en route to the mainland could help solve that challenge. While suggesting that Alaska is a strong candidate for increased tourism from Singapore owing to the latter’s “miserably hot and humid climate” might not win many awards for subtlety, the idea if bolstering the cargo demand with passenger traffic to help restore tourism numbers could be a compelling play.

Also key to the passenger transfer application, and to the existing cargo exemption, is that it applies as a blanket rule. Airlines need not apply individually for permission to take advantage off the relaxed rules. This helps keep cargo moving smoothly through Anchorage, and the State hopes for similar with passengers.

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There are a couple restrictions on the blanket approval, but they should not be seen as onerous to airlines looking to set up a hub at Anchorage. Cabotage remains prohibited, meaning a foreign carrier cannot sell just the US portion of the trip (e.g. JFK-ANC). And if the airline in question only holds rights to serve certain US destinations then those limits remain in place. For airlines based in a country with an open skies treaty with the USA, however, any destination is in play.

Passengers should expect to clear inbound customs and immigration at Anchorage based on current US policy requiring that at the first port of entry. That could further hamper the efficiency of this sort of route structure, but it is already sufficiently a long-shot that the immigration processing shouldn’t be a top consideration for airlines at this point.