Threatened by the potential for airlines to bolt from Seattle-Tacoma International Airport, the Port of Seattle is whittling down the projected...
Threatened by the potential for airlines to bolt from Seattle-Tacoma International Airport, the Port of Seattle is whittling down the projected cost for carriers to operate there.
Airport officials said yesterday that in recent weeks they’ve shaved nearly 9 percent off the costs, which are due to rise when the third runway opens in 2009.
A $4.2 billion expansion at Sea-Tac is expected to send costs soaring — making it among the most expensive airports in the country for airlines and possibly raising ticket prices.
Last month, Southwest Airlines acknowledged it was negotiating to move to King County International Airport, known as Boeing Field, where costs would be lower.
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Southwest’s statement rang alarms, because its departure would boost airport costs for airlines remaining at Sea-Tac. That might prompt them to move also, which in turn could hurt the finances of the Port of Seattle, which operates Sea-Tac.
Mark Reis, managing director of Sea-Tac, told Port commissioners yesterday that airlines costs could rise to as little as $14.15 per passenger in 2009, when Sea-Tac’s new third runway opens.
That compares with an original estimate of $25 per passenger, later reduced to an estimated $15.50 through cost cutting, careful financing and scaling back some parts of the capital plan, Reis said.
Currently, airline costs at Sea-Tac work out to about $11.36 per passenger on average, the Port said.
“It’s an increase, clearly, over where they are today,” Reis said of the $14.15 figure. But, “it’s way short of $25.”
Overall, the average cost would rise 15 percent at Sea-Tac in 2009 from current levels, after factoring out inflation, according to Reis’ figures.
The projections assume t no airlines leave and that passenger growth continues at the 2.7 percent a year forecasted.
“We applaud the Port’s efforts to get the cost down,” said Marilee McInnis, a spokeswoman for Southwest. “We’ve been concerned about costs for a long time.”
However, she said Southwest wasn’t going to abandon its bid to evaluate Boeing Field. “We remain committed to carrying out our due diligence,” she said.
Southwest accounts for just 8 percent of the airport’s traffic. However, the Port fears that if Southwest offers lower fares at Boeing Field, it could draw lots of customers from airlines still at Sea-Tac.
Southwest has been in talks with the county for a year, but any potential move is probably four or five years away, officials have said.
Southwest said its costs at Sea-Tac average about $7 per passenger and are rising to $9.25 by the end of 2005.
A cost of $15 per passenger was “astronomically high” for a low-cost carrier, it said.
The Port, however, said it expects Southwest’s costs at Sea-Tac to rise only to $10.46 by 2009. Adjusted for inflation, the figure would be $9.66 in current dollars.
Airport costs vary among airlines, since they are based on flights and usage. Airlines pay for fixed charges for gates and other airport facilities, but it’s common to calculate the costs on a per-passenger basis to compare with other airports.
The Port said it would trim the cost increase in part by changing the terms of its leases with airlines that expire this year.
Under current terms, airlines pay more than the cost of financing the expansion project to provide a cushion that makes investors more comfortable and lowers the cost of the debt, Reis said.
But under a proposal being discussed, Reis said, the Port would take on that responsibility, leaving airlines only to pay the actual cost of the debt.
“We would be providing the cushion through the net profit we’re making through the non-airline income: concessions, rental cars and parking,” Reis said.
Alwyn Scott 206-464-3329 or email@example.com