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.