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SWA proposal for operation at King County

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jp1030

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Southwest Airlines has added a news release to its Investor Relations website.

Title: Southwest Airlines Releases Economic Proposal to Serve King County International Airport Date: 7/21/2005 2:00:00 PM

For a complete listing of our news releases, please click here

SEATTLE, July 21 /PRNewswire-FirstCall/ -- Southwest Airlines (NYSE: LUV)today released its economic proposal, detailing the $130 million capitalinvestment Southwest Airlines will make at King County International Airport.Southwest is proposing to construct facilities in order to move its airportoperation to King County International Airport, from Seattle-TacomaInternational Airport, where ever-increasing costs have become an obstacle togrowth. To view the entire proposal, click on this link:http://www.southwest.com/about_swa/press/king_county_proposal.pdf Southwest will use its own financial resources for the approximately$130 million improvement of King County International Airport (KCIA).Southwest Airlines proposes to build an eight-gate commercial airportfacility, which will include parking garage, passenger concessions, rental carprovisions, special accommodations for cruise traffic and buses, and thenecessary facilities for Southwest's flight operations, including gates,office space, baggage claim, and baggage screening. If approved by King County, Southwest's operations would start at KCIA in2009 with 60 daily flights, and plan to grow to 85 flights. Under the termsof the proposal, Southwest will own, manage, maintain, and operate theterminal. Southwest will pay King County landing fees and land rental ratesstipulated by the County. After the 50-year agreement expires, ownership ofthe entire facility will transfer to King County. "We are giving King County a $130 million airport and by doing this,preserving low fares for all the people of the Puget Sound Region," said GaryKelly, Southwest's CEO, at today's press conference. "The long-term economicbenefits to King County and the region far exceed our initial investment. Asa result of estimated direct expenditures, taxes paid, and the preservation oflow fares, there will be a projected $1.6 billion total economic gain to theregion." The Puget Sound region will benefit from Southwest's proposal.Stimulation of low fares at KCIA also can be expected to stimulate low faresat Seattle-Tacoma International Airport (Sea-Tac), as the result of what haslong become known as the "Southwest Effect," a term coined by the U.S.Department of Transportation. One of the more significant aspects of the Southwest Effect is thattraffic doesn't just surge at Southwest and the airport it serves; it alsostimulates traffic at other airlines and at airports in the same region thatare not served by Southwest. For years, Southwest Airlines has initiated and maintained air service incities served by more than one airport, including Chicago, Dallas, LosAngeles, Baltimore/Washington DC, the San Francisco Bay Area, and Houston. Ofthe top U.S. 20 cities in terms of 2004 domestic airport passenger traffic,Southwest served 15 of these markets -- nine of which were served viasecondary airports located within the metropolitan area. According toAirports Council International, all of the major metropolitan airportsincreased passenger traffic levels in 2004, even with airfare competition fromSouthwest's operations at a secondary airport. "The high cost of doing business at Sea-Tac has diluted the SouthwestEffect in the Puget Sound region," Kelly said. "By moving operations to KingCounty International and lowering costs, the Southwest Effect can flourish tothe benefit of all passengers traveling to and from the region." Southwest Airlines cannot afford to operate its successful business modeland preserve low fares for consumers at high-cost airports, which is why theairline looked for alternatives that would preserve its commitment andinvestment in the Seattle market. After more than five years of articulatedconcerns regarding increasing costs at Sea-Tac, Southwest looked to KCIA as aviable alternative. "Southwest has a keen focus on keeping costs low, particularly in thisvolatile energy environment," said Kelly. "Southwest is fulfilling theobligations of its current lease agreement with the Port of Seattle and wehave no plans to do otherwise. When that lease is up in December 2005, justas any lessee would, we have the option to move." Southwest Airlines hopes the Metropolitan King County Council will allowSouthwest Airlines to relocate to King County International Airport. Anypermitting, design, or construction will be undertaken by Southwest only aftera rigorous environmental review by local, state, and federal agencies. Theairline believes its proposal to be consistent with the requirements of localregulatory agencies, and noise impacts will be minimal. Southwest Airlines has the largest all-jet fleet in the world, flying onlyBoeing 737s. The airline exclusively purchases "Next Generation" Boeing 737-700s, a quieter, more powerful aircraft that climbs higher and faster, thusdiminishing the noise on the ground. The scale of Southwest Airlines' proposed initial operations at KCIAresult in just a 13 percent increase in daily departures for KCIA, whichcurrently oversees more than 800 cargo and general aviation departures andlandings each day. The under-utilized King County International Airport wouldproduce a better return on the community's investment with Southwest Airlines'proposal. "Southwest Airlines is committed to the Puget Sound region and its missionof low fares," Kelly said. "In allowing Southwest Airlines to launchcommercial air service from KCIA, King County affirms its dedication topreserving the Freedom to Fly and to the airport's future success." Southwest Airlines, the nation's largest carrier in terms of domesticpassengers enplaned, currently serves 60 airports in 31 states. Its 61stairport, Ft. Myers, begins service on Oct. 2, 2005. Based in Dallas,Southwest currently operates 3,000 flights a day and has 31,000+ employeessystemwide. http://www.southwest.comSOURCE Southwest Airlines -0- 07/21/2005 /CONTACT: Southwest Airlines, +1-214-792-4847/ /Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20040715/DATH028-a http://www.newscom.com/cgi-bin/prnh/20010718/SWNULOOK http://www.newscom.com/cgi-bin/prnh/20010724/SWALOGO PRN Photo Desk, [email protected] / /Web site: http://www.southwest.com http://www.southwest.com/about_swa/press/king_county_proposal.pdf / (LUV)CO: Southwest Airlines; King County International Airport; Seattle-Tacoma International AirportST: Texas, WashingtonIN: AIR LEI TRASU: ECOCJ-AW-- DATH027 --0655 07/21/2005 14:00 EDT http://www.prnewswire.com

If you are unable to click on the link above, please copy and paste the URL below into a web browser
http://phx.corporate-ir.net/phoenix.zhtml?c=92562&p=n
Southwest Airlines, Investor Relations Department, 2702 Love Field Drive, Dallas, TX 75235 Click Here to unsubscribe from this JoinMail list.
 
angry tanker said:
Isn't that the same as Boeing Field? Closer to Downtown, Better Weather, Sounds like a smart idea.
BFI (KBFI) Boeing Field
KCIA King County International Airport

Same airport. Closer to downtown
 
Any chance SWA is just talking about doing this to gain a little negotiating leverage with SeaTac? Aren't SWA's SeaTac gates the most expensive gates in their system? Could SWA get Cat II and III approvals for BFI? Currently ILS there is 5000 RVR.
 
k_EAT=ho_ME said:
Any chance SWA is just talking about doing this to gain a little negotiating leverage with SeaTac? Aren't SWA's SeaTac gates the most expensive gates in their system? Could SWA get Cat II and III approvals for BFI? Currently ILS there is 5000 RVR.
Maybe, soon to be?, and yes.
 
Seattle

This doesn't look like something that SWA is just considering to get SEATAC to lower its rates. I'll bet this will happen. Hopefully it will work out like ISP has.
 
There is word that SWA is also looking at comming back to Denver by using Front Range Airport, it is right next to DIA, they just put a tower there and it is about the same size as Boeing Field, that would be great
 
k_EAT=ho_ME said:
Any chance SWA is just talking about doing this to gain a little negotiating leverage with SeaTac? Aren't SWA's SeaTac gates the most expensive gates in their system? Could SWA get Cat II and III approvals for BFI? Currently ILS there is 5000 RVR.

That would be a big teaser for KCIA.

As a side note, the mock up tower in the Museum of Flight located at Boeing field might be a little more interesting to hang out in.
 
Now AS wants some of that action. Think SeaTac's paying attention?


http://seattlepi.nwsource.com/business/233645_boeingfield22.html

Friday, July 22, 2005

Southwest's $130 million plan for Boeing Field
Airline calls it 'expensive gift'; critics say otherwise

By JENNIFER LANGSTON AND BRAD WONG
SEATTLE POST-INTELLIGENCER REPORTERS

Southwest Airlines yesterday proposed spending $130 million to build a passenger terminal and other facilities at Boeing Field, with the goal of launching service there and abandoning Sea-Tac Airport by 2009.



Competitor Alaska Airlines immediately announced it would seek a similar deal with King County, which owns Boeing Field, raising the prospect of 370 new jet takeoffs and landings there each day.

Southwest wants to build an eight-gate passenger terminal, parking garage, office space, rental-car space and accommodations for cruise-ship traffic and buses. It would not share those facilities with competitors, officials said.

"Southwest Airlines is here today to propose a gift for ... this community -- a nice big, shiny new expensive gift," said Ron Ricks, a company vice president. "And when we finish doing that, we're going to give you millions of dollars in fare savings so people can fly more places, more often, for a lot less money."

Critics quickly pointed out that the gift comes with potentially expensive strings -- the unknown costs of road and highway improvements, neighborhood noise mitigation and airport security upgrades. Those presumably would be borne by airport users or taxpayers.


"Southwest just delivered a $130 million bouquet of roses to the King County officials, but you have to look under the surface of what that really brings," said Mark Cooper, a Georgetown resident who lives near the Boeing Field runway, located between the Duwamish Waterway and Interstate 5.

When the low-fare carrier announced its interest in moving last month, some called it a bluff to win cost concessions at Sea-Tac. But yesterday's announcement, combined with Alaska's response, should launch a public debate on whether the Puget Sound area needs a second passenger airport.

King County Council Chairman Larry Phillips said he's not convinced Southwest's proposal makes sense for the region, much less for neighbors.

Phillips supported legislation introduced this week that would require any airline to pay the entire costs associated with relocating from Sea-Tac to Boeing Field, which is accessible off Interstate 5 through a counterintuitive maze of turns.

"Doesn't this sort of beg for some kind of on- or off-ramp for the freeway?" he said. "Are you going to be able to do that bob and weave ... with stacks of people behind you and in front of you doing the same thing?"

King County Executive Ron Sims, whose office is negotiating the details of a lease, said yesterday that questions about traffic, noise and other concerns would be studied and publicly vetted before any agreement is approved.

But he said a preliminary look at the proposal indicates that major roadwork might not be necessary. Sims said he would look to finance improvements with airport user fees, not taxpayer dollars.

He called Southwest's offer a "very generous proposal" that could deliver varied benefits to King County's residents -- from shoring up the public airport's finances to increasing demand for Boeing airplanes.

Southwest, which currently offers 38 daily departures from Sea-Tac, would seek to begin passenger service in 2009 with 60 flights. That number could grow to 85 flights, the company said.

The Dallas-based airline estimates its local economic impacts -- including payroll, taxes and tourism dollars -- would nearly double at Boeing Field to $1.6 billion.

Instead of stealing passengers away from Sea-Tac, officials said that when Southwest introduces or expands low-cost service, more people are enticed to take a vacation or hop a plane rather than make a five-hour drive.

Before Southwest introduced service here in 1994, roughly 100,000 people flew from Seattle to Spokane, according to the company's proposal. The next year, Southwest's cheap fares lured 70,000 passengers, while other airlines that also cut prices handled nearly 175,000 passengers.

Port of Seattle officials, who operate Sea-Tac and have opposed the move, say that because Southwest is already operating here, consumers shouldn't expect to see those benefits again.

But Southwest CEO Gary Kelly said high costs at Sea-Tac have diluted the "Southwest effect" in Seattle.

He expects per passenger airport costs at Boeing Field to be less than half of what the airline would pay at Sea-Tac, allowing the company to grow.

Alan Bender, a professor of aeronautics at Embry-Riddle Aeronautical University in Florida, said a no-frills airport would make sense for Southwest passengers flying to regional destinations like Spokane, Boise, Portland or Oakland.

"Their needs are limited," he said, referring to the passengers. "They're not there to admire the airport or use all sorts of amenities."

Given the company's proposed 50-year lease at Boeing Field, spending $130 million on construction costs could over time be cheaper than paying fees at Sea-Tac, said Bijan Vasigh, a professor of economics at the same university.

Alaska Air Group CEO and Chairman Bill Ayer said the cost of building all the infrastructure that Boeing Field lacks is one of many reasons his airline would rather not pursue commercial service there.

He said that Alaska Airlines and Horizon Air, which currently offer 147 and 134 daily departures from Sea-Tac, would seek to compete with as many as 100 flights from Boeing Field.

A regrettable outcome of splitting those operations might be a decline in service for communities that depend on Sea-Tac flights for connections, officials said.

"If Boeing Field turns out to be viable for a carrier, then we're going to have to be there as well. We don't have any choice. We can't have a competitor with a significant cost advantage at a different airport serving the same market," Ayers said yesterday in a conference call with financial analysts.

King County Councilwoman Julia Patterson, who represents South King County, said she had extreme concerns about shifting that much noisy traffic over other communities.

She doesn't believe the loss of those flights would offer appreciable relief to her constituents around Sea-Tac. But adding hundreds of daily jet flights to Boeing Field would be a huge quality of life issue for neighborhoods under those flight paths, which range from Tukwila to Beacon Hill to Magnolia.

"They would simply spread those noise impacts and blight a brand new section of King County with noise pollution," Patterson said.

Sims dismissed the idea that Boeing Field would become a second Sea-Tac. There simply isn't enough space, he said.

Southwest's passenger facilities -- which would displace roughly a dozen tenants -- would occupy 21 prime acres around the airport's recently renovated historic terminal.

Sims vigorously disputed accusations that leasing that space to Southwest would show favoritism toward one particular airline. It's the only one that has made the county an offer.

Sims said the county would be happy to talk with Alaska, as it has several times over the past decade with no results.

"We have not shown preferential treatment at any time," he said. "We'll see what can be accommodated but our rule will be the same -- we're not going to spend any taxpayer money."
 
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