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High Costs
Drive Airlines To Reconsider
Citing the high cost of doing business at Seattle-Tacoma International Airport, Southwest Airlines & King County Executive Ron Sims announced on 14 June that the County and Southwest Airlines were in negotiations to enable low-cost carrier Southwest to shift its local operations from Sea-Tac to King County International Airport (Boeing Field, or BFI). On 23 June, Alaska Airlines said that while it opposed the move by Southwest, if Southwest left Sea-Tac, Alaska would be forced to consider moving some of its flights to Boeing Field. In the mean time, Alaska wants the King County Council to do it a big favor, by refusing to invest in any passenger facilities at BFI that its competitor might use. The Regional Commission on Airport Affairs (RCAA) says that the proposed moves demonstrate the shaky financial basis of the Port's plan for financing its major expansion projects, including the very pricey embankment for the third runway. [See EDITORIAL]. “This sort of move cannot come as a surprise,” said RCAA President Larry Corvari. “RCAA laid out the whole scenario in our September 2004 newsletter – on the basis of public documents & common sense.” We Build (Cost No Object), But You Pay The Port finances a large share of its ambitious Airport expansion projects by issuing bonds, to be repaid from future revenues. Paying these bonds (scheduled to reach $4.7 billion in 2013) will require a lot more revenue. One part of the plan is a big increase in the fees paid by the scheduled airlines. While the airlines were slated to pay $151 million in 2004, the Port plans to collect $378 million from them in 2009 – a 250 percent increase. [TiA 13 Sept 2004 – Table, Airport Financial Forecast] For this, the airlines will gain a bigger, splashier Central Terminal for their passengers to walk through on their way to & from the gates, and a supplemental runway half a mile farther from the terminal, to use when landing in poor weather. Any airline moving to a less-expensive airport in the area (such as Paine Field or Boeing Field) gains an immediate competitive edge on its competitors who stay at Sea-Tac, while passing on that additional $225 million in costs per year to their customers. Choosing the lowest-cost airport in multi-airport markets is a well-recognized element in the Southwest business plan, so a move by that airline was not unexpected. Most observers, however, assumed that the move would be to Paine Field in south Snohomish County. In 2004, two different Snohomish County task forces identified commercial passenger service out of Paine as a goal for economic development, & County officials have signed on to this idea, opposed as it is by the immediate neighbors. If Southwest leaves Sea-Tac, the Port of Seattle will be looking at a potential revenue shortfall in the year 2009 & beyond of roughly $30 million (8 percent of $375 million) – assuming that its place (or its business) is not taken over by other carriers, assuming that the Port cannot make savings in its expenses, and assuming that the Port goes forward with completion of the third runway, with all of its remaining costs. Under present plans, the Port would jack up the fees to the other carriers to squeeze that missing $30 million from them. It is the prospect of this additional cost increase that has made Alaska Airlines wake up & take notice. Sea-Tac To Increase Its Traffic by 171 Percent?? Port of Seattle officials were quick to condemn the prospective move. Port Commission President Bob Edwards was quoted by the Seattle-Post Intelligencer on 14 June as saying that he was surprised to hear that Southwest was feeling cramped at Sea-Tac. There's no reason for that feeling, he said, because Sea-Tac is expanding its capacity to handle 48 million passengers a year, up from 28 million (a boost of 171 percent). This statement, if it reflected reality, would be very bad news for Sea-Tac neighbors. But … RCAA knows of no approved or announced plan for such an increase. All the official planning documents for the third runway state unequivocally that the runway, if built, will NOT increase the number of planes arriving Sea-Tac, period. The runway is NOT a capacity-enhancing proposal: it only replaces the existing second runway when that facility cannot be used at the same time as the main (closest-to-terminal) runway, because of poor visibility. If the Port in fact has undisclosed plans to add capacity for another 20 million passengers per year, this would be a good time to publish them. Is this perhaps an early warning for a fourth runway? M.R. ”Mic” Dinsmore”, chief executive officer at the Port, said in a statement issued on 22 June, that if Southwest moved “the costs of Sea-Tac operations and expansion would be spread among the remaining airlines,” as if that were a compelling reason for Southwest not to seek cheaper facilities. Mr Dinsmore also asserts that the Puget Sound Regional Council determined a decade ago that expansion of Sea-Tac was THE appropriate alternative for accommodating commercial airline traffic for the future. This is not accurate. PSRC recommended a multi-airport system, & has had development of a second major regional airport as an action item on its agenda since 1993. More to the point, the PSRC is not in a moral or legal position to tell an airline that it must bear high & unnecessary costs to accommodate expansion plans of any airport. Also of interest was Mr Dinsmore's denial that the Airport has been on “a spending spree”. But that is just what has been going on. Billions spent, but no significant improvement in air service, now or in the future. Can Boeing Field Handle the Traffic? Critics & skeptics expressed concern about the costs of the move. Several kinds of new facilities would be needed. No doubt, the airline can afford to pay for any ground facilities it might need for itself, or the County could build such facilities with hardly a blip in its debt load. But who will bear the cost of the sophisticated security equipment now being required for carriers like Southwest? Concerns about the cost of passenger parking are exaggerated, however: it appears that there is ample room for expanded surface parking. A parking structure would be a good long-term project: airport garages usually make good profits. King County International Airport began as Boeing Field, at a time when the Boeing Company's manufacturing operations were largely based near-by. The general public still calls it Boeing Field, & in the aviation world, it is “BFI”. The airport's campus is only 594 acres. Its main runway is exactly 10,000 feet long. The passenger terminal underwent a major renovation, finished in early 2004. Georgetown, to the airport's north, and Tukwila, to the south, are the two neighborhoods over which most Boeing Field flights pass. Cargo jets from delivery companies UPS and DHL use the facility late in the evenings and early in the mornings, with corporate jets and smaller aircraft flying throughout the day. Noise complaints have been very high from these areas, & from Magnolia (to the north-west), and the Skyway area to the south-east. Neighbors in Seattle's Beacon Hill and Rainier Valley also experience severe noise from BFI traffic. Existing usage is largely by single-engine “general aviation” aircraft, typically privately owned. Annual operations by category (an “operation” is a combined take-off and landing) for the year 2002/2003 were as follows: Single engine General Aviation (47.5%) 141,755 Multi-engine General Aviation & Helicopters (19.8%) 59,065 Air Taxi (14.3%) 42,576 Corp Jet Gen Aviation (11.9%) 35,439 Air cargo <60,000lbs (2.6%) 7,880 Air cargo >60,000lbs (1.6%) 4,802 Military (0.9%) 2,766 Boeing test flights (0.8%) 2,410 Passenger [scheduled] (0.6%) 1,770 TOTAL (100.0%) 298 463 Southwest would add 30 or 40 operations a day (in the range of 12,000 a year). Clearly, in terms of air-traffic control, the airport could accommodate this slight increase. A Board member from Seattle Council on Airport Affairs who lives near BFI, speaking anonymously, told Truth in Aviation that the larger air-cargo flights (4,802 per year) & the military flights (2,766) cause far more noise problems in the near-by neighborhoods than all the rest of the traffic put together. “I wonder if we would even notice the Southwest planes,” the source added. Thousands of New Jobs? In his letter to Council President Phillips, Executive Sims wrote that a move by Southwest to Boeing Field would “create thousands of jobs in Georgetown, Beacon Hill, and White Center”. This is, of course, a nonsensical claim. Southwest is not proposing to increase the number of its flights or to switch to bigger aircraft. If the airline flies the same number & same type of planes, it will have no reason to add personnel. Some on-the-ground jobs now done at Sea-Tac would be done a few miles to the north at Boeing Field, but these are not new jobs. Any slight spin-off effect – it would be slight – would be offset by a slight loss of jobs elsewhere. This is not in any way a net gain – and all jobs would remain right here in King County. Adverse Reactions from Politicians & Neighbors Immediate reaction to the news from Southwest was skeptical-to-negative from a very broad range of groups that normally are in profound disagreement on aviation/airport issues. Residents close to Boeing Field were fearful of increased overflight noise. A wide range of opinion was reflected in numerous letters-to-the editor – readers should check individual papers' websites for details. It was noteworthy that ordinary citizens – often from areas far from Sea-Tac – recognized that Sea-Tac's excessive costs justified a possible move. King County Councilmember Dwight Pelz (Dem., 5) was quoted as saying the move was a "terrible idea", & he has introduced legislation in the County Council to make the move impossible. Mr Pelz is an announced candidate for a seat on the Seattle City Council. King County Councilmember David Irons (Rep., 12), an announced candidate for County Executive, questioned the need for the "additional roar of commercial flights in this area”.
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Statement by Port Exec. Director Mic Dinsmore 6/22/05 [.pdf] Alaska Airlines Letter to Larry Phillips 6/22/05 [.pdf]
Original Seattle PI story June 16, 2005 MSNBC/King County Journal Article on Alaska Opposing Move 6/28/05 [.pdf]
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