SWA proposal for operation at King County

[jp1030]

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

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[angry tanker]

Isn't that the same as Boeing Field? Closer to Downtown, Better Weather, Sounds like a smart idea.

 

[TR4A]

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

 

[k_EAT=ho_ME]

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.

 

[TR4A]

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.

 

[Turbojet]

Can you say Seattle Crew Base?...oh yeah!

kidding....or maybe not, we will see.

 

[Pinto]

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.

 

[batsky2000]

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

 

['72Gremlin]

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.

 

[k_EAT=ho_ME]

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."

 

[k_EAT=ho_ME]

"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."

The BFI noise police recently sent an operator there a nasty gram because their 172 operating on a company flight plan was "only" 1200' AGL (ducking under Bravo VFR) above Magnolia. Imagine how bad their panties get wadded up over the potential of all those 73's every day.

 

[SirFlyALot]

Boeing Field is not that much closer to Seattle than is Sea-Tac. Geographically, it's not that much of an advantage; maybe a ten-minute difference in driving time coming from Seattle. Coming from south Puget Sound or from much of the Eastside, Sea-Tac is closer.

SWA proposes that their new eight-gate terminal be located on the east side of BFI along Airport Way. Without major revisions to roads allowing access to Airport Way and to Airport Way itself, Sea-Tac will be much easier to drive into and access. Expect some very large backups getting in and out of BFI unless some big changes are made.

Also, Alaska Airlines has said that if SWA is allowed to pull out of Sea-Tac, it also will move at least a portion of it's operations to BFI as well. Losing SWA would not be a tremendous blow to Sea-Tac, but losing Alaska would be. If losing Alaska Airlines as a tenant of Sea-Tac is a consequence of SWA going to BFI, then major resistance should be expected from the Port of Seattle and the political forces it can muster.

 

[Snoopy58]

Without major revisions to roads allowing access to Airport Way and to Airport Way itself, Sea-Tac will be much easier to drive into and access. Expect some very large backups getting in and out of BFI unless some big changes are made.

Well, $130,000,000 might be enough to build some "major revisions" & "big changes" there. Southwest has some very sharp people looking at issues like these (see the .pdf of the Southwest web site -- clearly not amateur hour), and they're all about a good customer service experience.

 

[ivauir]

Boeing Field is not that much closer to Seattle than is Sea-Tac. Geographically, it's not that much of an advantage; maybe a ten-minute difference in driving time coming from Seattle.

Not true, you've made this assertion before (or someone did) and it is just wrong.
I grew up on capital hill and Boeing Field can be way faster than SEA TAC when the traffic backs up. That will apply to airborne traffic and taxiing too. This has the potential to work out very well.
Ultimatly it doesn't matter: this is about the cost more than anything else. All SEA TAC has to do to keep SWA is control their costs. They are the most expesive airport in the system and they want to get even more expensive. Like D H says "my freind you have say - no way, I won't pay, I won't paaaaaay!"

 

[ReverseSensing]

All SEA TAC has to do to keep SWA is control their costs.

They've got to pay for those plastic stomach-looking thingies hanging from the ceiling halfway down the A concourse somehow. Those things are friggin' creepy.

 

[XR650R]

SWA just showed their hand- and trust me there will be sweeteners added if necessary. Alaska has to either put up with checkbook in hand or shut up. It's that simple. And another point- you don't want to get into a spending contest with SWA.

 

[miles otoole]

Herb's thoughts in Seattle

Shamelessly plagiarized from Airliners.net

http://www.airliners.net/discussions/general_aviation/read.main/2233293/

[font=ARIAL,]

[font=ARIAL,]Hey guys! I got an once of a lifetime opportunity in the last few hours and I thought I'd share it with you. Herb Kelleher, executive Chairman of Southwest Airlines (WN) and the entire Board of Directors for Southwest came to Seattle today to tour several of our facilities. Everyone knew that he was coming, but I got a heads-up from an engineering friend of mine that Herb and his crew were specifically coming to his office in the 737 Final Assembly building to shake hands and take a look around. Well he got me in and I got to meet the "old pissant" as he calls himself. I shook his hand and spoke with him briefly for a minute, telling him about what I do at Boeing and whatnot, before Alan Mulally came over and stole his attention away. (Of course I had to defer to my CEO http://www.airliners.net/discussion...milies/wink.gif )

Anyway...about half an hour after I met him, Alan (Mulally) held an hour long "Excellence Hour" session with Herb as the guest of honor. Let me tell you, that guy is one charismatic speaker! He spoke for maybe 15 minutes from his notes and then opened it up to a Question and Answer session. (I was seated on the aisle seat, 5th row back) I decided that there was a question I wanted to ask that I didn't get to, so I was the first one with my hand up and got to ask my question in front of thousands of employees over a microphone.

My question was: "When it comes time to replace the 737, what kind of specifications are you looking for in a new airplane?"

His reply (paraphrased as I was hurriedly scribbling notes): "Well we (the board) took a tour of the Interiors Display center this morning and saw the mockup of the new 787. And let me tell you, this is going to change the face of air travel as we know it today. Now if you (Boeing) can take the experience with the 787 and use it to shrink into a new 737, I'll order a few hundred of 'em!"

(Note: this is particularly neat for anyone that was at the SEA meet because the chairman and board toured the exact same mock-up that we saw, over a year ago. We really got an insider's look that most people outside of the industry never get!)

Anyway.. that was the highlight of the speech for me, but below are the rough notes that I took in chronological order:

• I noted that as I came in, there was a shiny new, 73G parked outside of the Rosie the Riveter cafe, with ropestands all around it. I've never seen an a/c parked there. It turns out that Alan and some of the other Boeing exec's did a photo op with the WN exec's in front of this new plane (N220WN), that is going to be delivered on August 1st; the 215th 73G for Southwest. With the next 73G (# 216) to be delivered on 8/24.
• There are currently 436 737's in service with WN, with orders and options for 315 more.
• Alan Mulally seemed to confirm that we (Boeing) are indeed working on a 737-replacement when he introduced Herb as a "long time 737 supporter that is getting ready to support us on another great airplane."
• Herb was a hilarious speaker that immediately won over the crowd as he came to the podium, as he blew kisses to us in response to our thunderous standing ovation. He then immediately followed up with several jokes about himself possibly "getting canned" by the Board tomorrow when they meet here in Seattle; and how he's a "great cure for insomnia."
• He address the move to BFI immediately in his opening remarks, saying that he loves Boeing so much he wanted to move in next door at BFI by 2009.
• He told a hilarious story about how years ago during the negotiations for the launch of the 733, he went out drinking Fogcutters the night before with someone (can't remember the name). And Boeing took them out early the next morning on a hydrofoil in Puget Sound. Well while he was waiting to go on the boat, he turned to someone and said "I need to give up drinking, I can't keep level, I'm trembling." To which they informed him that it wasn't him, it was a floating dock. Herb immediately came back "Oh wait, I'm back! I'm not giving up drinking!"
• He also said remarked about his negotiating tactics with Boeing. That he called up Airbus years ago and asked if they had any lighters and if they could send him one. While they sent him 25. And so when he went into the negotiations with Boeing he "accidentally" dropped his smokes and lighter on the floor. When Phil Condit bent over to pick them up for him he nearly died when Herb was using an Airbus lighter!" http://www.airliners.net/discussion...ilies/rotfl.gif
• More about the move to BFI: "We are giving King County something for nothing. We will pay all of the expenses." He noted that originally the Port of Seattle was talking something in the ballpark of $25 per passenger in fees, and now remarkably after he gets serious about moving to BFI, they're now suggesting something around $13 per pax! But regardless, WN is "determined to come to BFI in 2009." And that "if Sea-Tac is so fragile that it can't handle losing 8% of it's revenue, then it shouldn't have been built." He also remarked that there will be a Wild Turkey Burboun store in the new BFI terminal.
• Regarding the threat by AS/QX to move operations to BFI: "If other airlines wanna make the investment that we are, then they're welcome to. There has been a spot that has specifically been left open so they can build their own terminal and garage."
• Regarding our favorite show, Airline: "AIRLINE was a gutsy thing for us to do." But apparently it's paid off for them as "the reservation center lights up and the number of job applications goes up about 20-30% the day after AIRLINE shows."
• And last but not least, a question was directed to Alan and Herb together about shrinking the 787 into a 737 derivative to which Herb replied: "If he (Alan) doesn't make a 787 derivative for us, he'll have a much higher voice then he has now. We are covetous of what the 787 can do for us and want it in a 737 as soon as possible.

[/font][/font]

 

[SWA/FO]

Awesome baby!!!

 

[beytzim]

Thanks for the forward. Anyone know what's so different about the 787 interior?

 

[SirFlyALot]

Not true, you've made this assertion before (or someone did) and it is just wrong.

I grew up on capital hill and Boeing Field can be way faster than SEA TAC when the traffic backs up. That will apply to airborne traffic and taxiing too. This has the potential to work out very well.

Ultimatly it doesn't matter: this is about the cost more than anything else. All SEA TAC has to do to keep SWA is control their costs. They are the most expesive airport in the system and they want to get even more expensive. Like D H says "my freind you have say - no way, I won't pay, I won't paaaaaay!"

You grew up in Seattle? So did I! Lived there since 1976. Yes, of course, if traffic is bad enough, it could take hours, maybe days, to get from BFI to SEA. It could take years to get from the U District to the Mercer St Exit. However, most of the time, it is about a ten minute (or so) drive. From much of the Eastside (via 405), SEA is equidistant or even closer than BFI in terms of driving time. For example, I live on the Eastside now, and BFI is about ten minutes further than SEA.

And yes, you're right, the move doesn't have a lot to do with geography. I only brought up the point for those who are unfamiliar with Seattle and would compare moving to BFI as a situation that is similar to the advantages of MDW, where it is significantly closer to downtown Chicago than ORD.

And, as you are familiar with Seattle, you know that road access to BFI is limited especially on the east side of the airport where the new terminal is proposed. Road and infrastructure modifications will be necessary. Is SWA going to pay for those?

In return for this capital investment, Southwest Airlines requests that King County provide for the following:

• Deliver a site by an agreed upon date that is ready for the commencement of construction.

• Make necessary roadway and signage improvements facilitating access to KCIA.

• Provide for other services as outlined in an exhibit to the Airport Lease Agreement entitled “Project Development Agreement.”

Well, no I guess they are not going to pay for those improvements. How much will they cost? I might have missed them in the proposal, but I didn't see any figures offered for how much SWA's venture is going to cost the taxpayers. SWA contends, "only minor highway and access improvements are likely to be required." That is almost laughable. Personally, as a taxpayer, I'm not in favor of spending what is likely to be at least several tens of millions of dollars in order to help SWA gain a competitive advantage in Seattle.

Also, a major fight should be expected from Alaska Airlines both on the business and political fronts. Seattle is Alaska's home turf, their headquarters, and their main base of operations. They will not let SWA gain a major advantage in Seattle without a huge stink. They will spend money to defend Seattle and they will spend a lot of money if they have to. They do not want to have to do that, so be ready for them to begin calling in political favors and lining up support to oppose SWA's move. Ivauir, as you know, Alaska is a bit of an institution in the Northwest. They have lots of friends in high places here. I imagine SWA does too, but probably not to the extent that Alaska does. Maybe SWA will end up getting what they want, but it will probably not end up being as easy as they would like.