Each night, janitors at Seattle-Tacoma International Airport drag dozens of sturdy wooden chairs away from a soaring glass window in the...
Each night, janitors at Seattle-Tacoma International Airport drag dozens of sturdy wooden chairs away from a soaring glass window in the new Central Terminal and arrange them at tables in the spacious food court where they belong.
The next day the chairs, including four old-fashioned rockers, are back by the giant window, filled with people talking, snacking, knitting and watching planes thunder into the sky.
The 449 glass panels suspended on more than a mile of steel cable form a shimmering centerpiece for the $4.2 billion makeover of Seattle’s airport.
“People love the wall,” Sea-Tac Director Mark Reis said, strolling through the terminal that opened in May. “It gives the room an energy. It attracts people who come here.”
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But for airlines, the $4 million cost of that wall of glass symbolizes an airport that’s becoming difficult to afford — and may ultimately be uncompetitive.
“It is an expensive airport,” Diana Fung, spokeswoman for British Airways, said of Sea-Tac. “On our routes in North America, it has one of the highest costs per passenger in the system.”
Sea-Tac’s 10-year expansion plan is under scrutiny after Southwest Airlines proposed last month to decamp to Boeing Field in 2009, just as the bill at Sea-Tac comes due.
Southwest said it is cheaper to build its own $130 million terminal and parking garage at the busy county airport than to stay at Sea-Tac, where expansion costs have escalated in recent years.
A $2.6 billion expansion, mapped out in 1999 by the Port of Seattle, which owns and operates Sea-Tac, is now budgeted at $4.2 billion when the plan concludes in 2008.
Attention so far has focused on the third runway, which climbed to an estimated $1.13 billion today from $587 million predicted in the mid-1990s, mostly due to litigation and environmental reviews that delayed construction.
But runway aside, the Port is spending $3.1 billion — roughly three-fourths of the total cost — for other Sea-Tac projects, such as expanding the South Terminal (known as Concourse A), rebuilding the subway system, sprucing up terminals and infrastructure, improving roads and adding security.
And more costs lie ahead. The Port’s $4.2 billion spending plan adds little room for airlines to expand — only seven new gates for a total of 91.
So the Port is budgeting an additional $2 billion to build gates and other facilities over the coming years to match the capacity added by the third runway. That forecast is up from $1.5 billion estimated late last year.
That work would be triggered by rising passenger traffic, with projects built as needed. But the Port clearly envisions the need.
“Already bursting at the seams, [Sea-Tac] cannot support the region’s growing air-transportation needs without modernization and expansion,” says a Port study.
“Sea-Tac’s terminal and roadway system can handle 25 million annual passengers comfortably,” it says. “It is currently at 28 million annual passengers and … expected to reach 45 million annual passengers by 2021.”
If the expansion is fully built, Sea-Tac’s construction program would cost $6.2 billion, according to current estimates.
Getting a handle on Sea-Tac’s costs is complicated by the fact that the Port’s figures frequently changed. Full tallies of the capital program, for example, are not provided in the Port’s annual reports and budgets. Figures given to commissioners and airlines differ from year to year, reflecting changes in cost estimates.
The Port even had trouble determining the number of gates at Sea-Tac. In June, a spokesman said the Port couldn’t give a precise count because some might be out of service or have more than one plane parked outside. Several weeks later, the Port said there were 104 gates, up from 97 before the expansion. Last week it said there were only 91 gates, compared with 84 before the expansion. Someone had mistakenly double-counted some gates to arrive at the 104 total, the Port said.
Who pays, and for what?
Sea-Tac’s construction bill is paid not by taxpayers or the Port but by airlines and, to a lesser extent, restaurants, shops, car-rental agencies and other businesses that use the buildings. Because Sea-Tac receives federal funding, the Port isn’t allowed to take profit out of the airport.
Accordingly, none of the $59 million in tax money levied annually from King County property owners has paid for Sea-Tac expansion. Taxes are used for the Port’s other operations, such as cruise-line terminals and ocean cargo facilities.
Travelers pay part of the tab, too. Airlines collect a $4.50 passenger-facility fee, tacked on to the price of each ticket, which is passed to the Port to pay for terminals and infrastructure.
Construction spending at most airports around the country long ago outstripped this fee, prompting further charges to airlines to pay for the airport.
Airlines can pass those costs on to travelers through higher ticket prices, but they risk empty seats on planes.
Keeping pace with demand
That’s why airlines are concerned about costs. Faced with brutal ticket-price competition, some carriers say they can’t afford the pricey airports planned in the 1990s.
“You have to be very, very careful that you’re only adding infrastructure and capacity that can pay for itself,” said Dion Flannery, a vice president at America West, which flies from Sea-Tac.
Expensive airports that don’t add enough room for growth often drive away airlines.
“You can very easily overbuild an airport to the point where you create a decelerating growth curve,” Flannery said. “The economics are upside down from day one.”
The Port says normal additions to the plan caused the price tag to rise, and that a larger expansion was envisioned as far back as 1999, even though only $2.6 billion was tallied at the time.
Many pieces were excluded from the 1999 plan, the Port said, because they were too far in the future for accurate estimates.
Legal battles and environmental reviews pushed up the third runway’s price. And as projects got under way, the Port said, it often discovered other work, such as installing fiber-optic cables or upgrading utilities, that made sense to do at the same time.
“We certainly knew it was going to be a bigger number, but we didn’t know how big it was going to be and we didn’t anticipate all the additions that were going to come out of 9/11,” said Reis, the director of Sea-Tac.
Critics, including airlines and Port observers, say Sea-Tac construction spending was liberal, if not lavish, and may have produced a white elephant. The 25 carriers that serve Sea-Tac will find their profitability shrinking, these critics say, especially if Southwest defects without paying its share of the bill.
“There are airports that do things every bit as nice that bring it in for a much lower unit cost,” said Bob Montgomery, Southwest’s vice president of properties. “My desire is to see as wonderful a facility as can be afforded.”
At Tampa International Airport in Florida, which handles about one-third the passengers of Sea-Tac, Southwest occupies a new 16-gate terminal that opened last year.
While more spartan than Sea-Tac, it has a glass wall, shops and restaurants. It cost $134.8 million to build. That compares with the $587 million budget for Sea-Tac’s new Concourse A, which has 14 gates and also opened last year.
Southwest says Sea-Tac’s costs have soared beyond what its low-fare tickets will support. At Sea-Tac, the cost to enplane — a measure of how much an airline pays per passenger to operate at an airport — is set to rise to $14.15 in 2009 from $11.42 today. It was around $4 in the 1990s.
While the expected $14.15 cost is down substantially from the $25 per passenger that Sea-Tac forecast two years ago, it’s far more than the $4-$5 Southwest pays at most airports.
Tampa’s cost per passenger, by contrast, is $4.21. Its 10-year spending plan through 2008 is budgeted at $750 million, while Sea-Tac is spending $3.1 billion, excluding the third runway.
Tampa weighs service vs. cost
Tampa’s expansion includes two new concourses with 30 gates, a new baggage-handling system with 24 security scanners, a new 5,600-space parking garage, an expansion of the existing garage by 2,000 spaces, and renovation on all three levels of the main terminal building, from baggage claim and ticket counters to shops and restrooms.
“Customer service is important to us and we spend a lot of time making sure the customers are well served,” said Louis Miller, executive director of the Tampa airport. “But cost is also very important.”
The Port says Concourse A included other facilities, such as office space and baggage handling for one-third of the airport, which accounted for its higher cost. It says its costs are in line with other airports, and outside experts review plans to ensure costs are controlled. It also said higher labor costs in Seattle could be a factor when compared to construction in Southern states.
“It’s very hard to find an apples-to-apples comparison,” Reis said.
Other costs at Sea-Tac appear higher than at other airports.
Dallas Fort-Worth, for example, opened a new international terminal earlier this month. The 2-million-square-foot terminal cost $1.2 billion and added 28 gates — about $43 million per new gate, said DFW airport spokesman David Magana.
In contrast, Sea-Tac’s $587 million Concourse A project — which replaced an earlier terminal building — has 14 gates but added only seven new ones, for a cost of $83 million per new gate.
Sea-Tac is planning a $230 million rental-car facility outside the airport as part of its $2 billion long-term spending plan. It would house up to 10 rental companies, and use a shuttle bus to carry passengers to the terminal.
“I think the cost is appropriate because we’ve had experts in the field who price out these facilities do it,” said David Soike, Sea-Tac’s deputy director.
Tampa built a similar facility for six agencies for $50 million, Miller, its director, said.
Port of Seattle defends budget
The Port acknowledges that Sea-Tac’s price tag grew, but it insists the project isn’t over budget. Under Port definitions, any additions to the project are “changes in scope” that count as new work, not overruns.
For example, work had already begun on the new Concourse A when the Sept. 11, 2001, terror attacks occurred. The subsequent changes in airline security required much of the baggage-handling system beneath the terminal to be redesigned. The cost rose by $200 million.
In Tampa, work on a new terminal also was under way when the attacks occurred. The airline’s baggage-screening system didn’t need extensive redesign, as Sea-Tac’s did. Costs rose by only $2 million, to pay for expanding corridors to accommodate two additional passenger security-screening lines, Miller said.
Port officials worry that Southwest’s departure from Sea-Tac would prompt other carriers to leave, both to compete and to avoid shouldering Southwest’s share of the costs. Alaska Airlines, which said it sees no problems with Sea-Tac’s costs, has declared it would shift an equal number of flights to Boeing Field if Southwest moves.
This can lead to a downward spiral, says America West’s Flannery.
“Where you have high costs and a competing airport in the same general area,” Flannery said, “you’re inviting your competing airport to take your airlines away from you.”
Alwyn Scott: 206-464-3329 or email@example.com