Last Tuesday I participated on a panel at an airport industry conference and was asked the following question – what is Sea-Tac Airport’s biggest challenge today?
In 2017, our biggest challenge can be boiled down to one word: Growth.
Sea-Tac Airport has been the fastest growing large airport in the United States for each of the last three years. In 2016, 45.2 million passengers passed through Sea-Tac Airport, making us the ninth busiest airport in the country. Over the last year, the commission approved more than $3.2 billion in capital improvement projects at the airport, including our North Satellite Modernization project, a new International Arrivals Facility, a repaved center runway and a new baggage handling system. At the same time, we are in the midst of updating our 20-year master plan to handle 66 million annual passengers by 2034 – over 20 million more than we did last year. At this point we believe that additional capital expenditure will cost at least $10-15 billion to implement – above and beyond our current capital plan and financing plan.
At Sea-Tac, our two largest carriers have provided most of the growth in air service. They are the locally headquartered Alaska Airlines, which provides about half of our air service, and Delta, which is almost a quarter of our flights now that they have made Sea-Tac their west coast hub to Asia.
Yet, despite the prominence of these airlines, our airport works with over two dozen airlines flying direct routes to more than 80 domestic and 24 international destinations. And we continue to grow. In the last month alone we have welcomed two new international carriers to Sea-Tac: Virgin Atlantic with service to London Heathrow and Norwegian Air with service to London Gatwick, both flying hometown made 787s on their routes.
Our four main challenges in accommodating this airport growth are:
• Fitting needed new infrastructure in a limited physical footprint,
• Funding the new and upgraded infrastructure,
• Addressing the impact of a growing airport on our local communities, and
• Increasing transportation options to the airport and minimizing congestion.
Sea-Tac Airport encompasses a little over 2.5 square miles of property. We have one of smallest footprints of any international airport in the United States. Denver International and Dallas Fort Worth both are located on over 40 square miles of airport property, and Miami International (which handles approximately the same number of passengers per year as Sea-Tac) has twice the land we do.
Our challenge will be to handle the projected growth to 66 million passengers annually by 2035 and a corresponding increase in air cargo within our current footprint. That will likely mean a second terminal and a total of $10-15 billion in new infrastructure. Moreover, we need to time the new infrastructure in line with the growth trajectory of passengers. That is why we have been working on a 20-year airport master plan, which will lay out the infrastructure needed to accommodate projected growth and the timing of the build-out.
We will also likely have to make hard choices in terms of the mix of services at Sea-Tac (i.e., passenger vs. cargo vs. maintenance activity) and work with other regional airports to help distribute aviation activity as we continue to grow.
We rely on a combination of sources for funding infrastructure, including landing fees and rent charged to our airline tenants, revenue from our parking, dining and retail concessions, and revenue saved up over time in our airport reserve fund. The biggest revenue generator for capital projects at Sea-Tac Airport, however, is the Passenger Facility Charge. The PFC is a $4.50 fee that is added to the price of every ticketed flight and connection out of Sea-Tac. In that way, travelers pay for needed airport infrastructure. However, given the current federal cap of $4.50 for this fee, our current capital plan will use essentially all of Sea-Tac’s anticipated PFC collections through 2035, and most of the PFC collections through 2047, to pay revenue bond debt service on airport projects. And this is before we even begin to consider funding for our Airport Master Plan projects.
This is why we have increasingly advocated for a removal of that federal cap, which would allow airports and their governing bodies to make decisions that are in the best interest of their region to encourage competition among carriers, increase capacity and support economic growth through a passenger’s direct investment in local airport infrastructure.
As we grow, we also need to be a good community steward. My fellow commissioners and I are committed to Sea-Tac Airport not only being one of the most efficient and customer-service focused airports in the country, but also a leader in growing responsibly and making sure that our residents both benefit from our growth and that we minimize the impact of our growth on airport communities.
We do this through local economic and workforce development programs. As the baby boomers age, more and more industrial jobs will come open, and these are typically good paying middle class jobs on which workers can support families. Through our Airport Jobs and Airport University programs, and working with outside workforce, business and labor groups to support similar programs, we aim to both connect and train local residents with the skills needed to fill these jobs.
We are working to increase the percentage of funds spent with qualified small and disadvantaged businesses. Increasing the number of women and minority contractors on large airport projects has been a challenge and we hope within this year to push forward some aggressive programs to increase utilization.
We also need to focus on minimizing our environmental and health impacts on airport communities as much as possible. That is why I have been a strong supporter of the airport’s efforts to encourage the use of aviation biofuels by the airlines. Last year we completed a study on what physical infrastructure is needed at the airport to supply biofuels to our airline customers and we are currently studying how to work with other regional stakeholders to commercialize and incentivize the use of aviation biofuels at Sea-Tac Airport.
Transportation to the Airport
The biggest constraint to and challenge of airport growth is not actually the airfield. It is the airport drive – getting travelers to and from the airport. In the future we will have to rely more and more on mass transit, including Light Rail. We are currently working with Sound Transit on ways to make Light Rail to the airport more convenient, and we are working to bring other transportation choices to the airport.
Last year, we entered into an agreement with the Transportation Network Companies Uber, Lyft and Wings, allowing them to operate at the airport. In a groundbreaking agreement, the TNCs agreed to meet the same environmentally friendly fleet standards that applies to our airport taxi fleet, using hybrid and alternative fuel vehicles, incentivizing car pooling and minimizing deadheading (i.e., one way passenger trips).
The Need for More Federal Resources As We Grow
I should also note that all the infrastructure in the world doesn’t matter if we don’t have the federal staffing from Transportation Security Administration (TSA) and Customs and Border Patrol (CBP) to process our growing passenger numbers. We therefore spend a great deal of time advocating for increased CBP officers, TSA officers and additional passenger screening canine teams.
During last summer’s peak travel season, Sea-Tac Airport experienced passenger wait times that averaged well over an hour, which forced us to invest millions of dollars to contract 130 pre-security bin loaders to expedite the queue management and divestment process. This year, we expect two million more passengers during the summer than last year, and we will rely entirely on TSA to help us reach our goal of 20-minute average wait times during peak.
Statement by Port of Seattle Commission in response to Trump Administration Executive Order Banning Immigration
This Statement was originally published on the Port of Seattle website here.
This airport is owned by the citizens of King County and our responsibility is to steward it for their wellbeing and long-term future. The Port of Seattle Commissioners, Tom Albro, Courtney Gregoire, Stephanie Bowman, Fred Felleman and John Creighton are here today to express our concerns over the immigration ban executive order that was issued late last night. As the government that operates this airport, this executive order runs counter to our values. America is great because we are a land of immigrants and that is what made us great to begin with.
As the operators of this airport, we are deeply concerned that the abrupt nature of the executive order did not allow adequate process for public agencies such as ourselves to provide service that travelers and families expect and deserve. We took it upon ourselves to request a full briefing from Customs and Border Protection to understand how they are addressing this situation. We respect these hard working federal employees who are under tremendous strain. However, when we felt that traveler needs were not fully met, the Port of Seattle stepped up. We started providing private waiting areas for families here at the airport and connecting families to lawyers who can help advocate for their rights and the rights of their loved ones.
We met with some individuals who are impacted by this executive order. One of the impacted families happens to live right here in this community, and happens to be employed by this airport. We will continue to stand with you.
As I look back on the last year serving as President of the Seattle Port Commission, I feel fortunate in having the privilege – and, yes, sometimes the challenge – of leading the Commission in a year that saw a lot changes.
On the whole, the Port of Seattle is moving forward toward achieving its goals of creating economic vitality in our community, protecting the environment and building a great airport and seaport. The state of the Port is sound, not just financially, but as an engine of opportunity for every citizen.
Thank you to all of my fellow commissioners. We are a team, the strongest in years. We welcomed Fred Felleman to the Commission last year, and he’s brought a lot of energy and commitment to everything the Port does.
And thanks to CEO Ted Fick and our dedicated team of professionals at the Port, who work hard every day to make our Century Agenda goals a reality. They don’t often get the credit they deserve, but their hard work on behalf of our community is very much recognized and appreciated by the Commission.
Here are some of the highlights of 2016:
• We began work in earnest on major capital improvements at Sea-Tac Airport, including the new International Arrivals Facility and the North Satellite renovation and expansion project. In total, the Commission approved moving forward on over $2 billion in investments in the future of the airport. As we are the nation’s 10th busiest airport and the fastest growing large airport in the country for three years in a row, it’s imperative we build for the future.
• We’ve made great progress in developing our road map for the future, our Sustainable Airport Master Plan. I’m particularly proud of the work we’ve done to engage the community through a series of Commission roundtables. Together with panels consisting variously of airport and airline professionals, environmental leaders, airport community businesses and local elected officials, we looked at best practices for airport growth, as well as began drilling down on environmental and transportation issues that are critical to address as the airport grows.
• After a lot of study and input from the public and industry, we’re giving the public more choices than ever to get to the airport. We approved a one-year pilot program with ride-sharing Uber, Lyft and Wingz, and those services have seen amazing growth. We approved a new agreement for on-demand taxi services that ensures outstanding service for the customer while also requiring labor harmony between drivers and management.
• We weatherized the walk from the airport terminal to the SeaTac Light Rail station and approved plans to make access to the rail station easier.
Cruise and Fishing
• We saw close to a million cruise passengers pass through our two cruise terminals last summer on their way to Alaska, a record number. And we began a project to expand our Bell Harbor Cruise Terminal to handle Norwegian Cruise Line’s largest ships. Every time a cruise ship leaves from the Port of Seattle it brings in close to $2.5 million into our local economy.
• We completed a major update for the Fishermen’s Terminal strategic plan. We developed this in close partnership with fishing interests at the terminal, and throughout the community. We want create new opportunities for the public to see and hear the fishing industry up close. And we want to upgrade the facilities to better support our local maritime cluster by creating new storage and industrial activity at the terminal.
Northwest Seaport Alliance/Maritime Cargo
• We completed the first full year of the Northwest Seaport Alliance, our partnership with the Port of Tacoma to jointly operate our seaport cargo terminals, and made great strides in integrating management, marketing, planning and other operational aspects with respect to the two ports’ cargo and container businesses.
• In partnership with the Northwest Seaport Alliance, we’re moving forward with the permitting and design to bring Terminal 5 back into service as one of the region’s biggest and most advanced container terminals. It will be start of the art in handling cargo, as well as a great neighbor for West Seattle in handling air emissions and noise.
Community and the Environment
• The Commission launched two new policy committees, Energy and Sustainability, and Projects and Procurement. The energy committee was created to guide the port’s energy use and to address greenhouse gas reduction, and we look forward to seeing recommendations soon. The procurement committee successfully resolved some tough issues in developing new policies around construction labor agreements and improve minority and small business contracting.
• We’re also doing our part to address the critical shortage of skilled workers in the maritime and industrial fields, and to help airport workers move up in the air travel industry. We’re investing in workforce education in local schools. In 2016, we tripled the number of interns to more than 100.
• We launched two new initiatives to spur economic development locally and around the state: A grant program to promote tourism around Washington State and a grant program to support local economic development efforts in 38 King County cities.
• We are all proud of our environmental achievements last year. We became the first US airport to be named Salmon Safe. We moved forward on Duwamish River cleanup and developed new public access along the river. And we are breaking new ground in planning for the development of infrastructure to supply biofuels for aircraft at Sea-Tac Airport. Using biofuels will help the community breathe easier and reduce our use of fossil fuels.
• 2016 also saw great progress in our relations with the City of Seattle. After the City Council rejected the flawed proposal to build a sports arena in SODO, we’re very pleased the city is now investigating improvements to KeyArena. We stand ready to assist that effort. We traveled to Hamburg – a city similar to Seattle with a strong, historic port and aviation cluster – with a number of Seattle City Council members, which gave us the opportunity to see the potential for a better working relationship between the Port and the city. We will be so much more successful if we work in partnership.
Looking back on 2016, it’s been a busy year but one in which we accomplished a lot in keeping the Port a continued, strong economic engine for our community. Working together, we can look forward to even more success in 2017.