SWA proposal for operation at King County

[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/

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[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.

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[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.

 

[QCappy]

I guess what I don't understand is, if everyone's costs are the same at SEA-TAC, then how can Southwest claim that they cannot continue there? Wouldn't it therefore be a level playing field compared to the other airlines that operate out of there? They may not be able to offer the fares they want, but they still could offer competitive fares.

I think it comes down to the fact that if they move to KBFI, they would then raise the costs for every competitor at KSEA. Therefore gaining an advantage.

As a resident of Seattle I can guarantee that this move will not happen. As stated before, the noise issues, and the political issues will never let it happen. If the fact that it has taken Seattle over 40 years to build a light rail system is any indication of the political red tape in this town, I can't see this will ever happen.

 

[traffic pilot]

Yea Alaska homtown airline. Well I believe every single airplane SWA has ever purchased and flown has been built by the folks in Seattle.

 

[canyonblue]

I guess what I don't understand is, if everyone's costs are the same at SEA-TAC, then how can Southwest claim that they cannot continue there?

Same reason we left Denver, costs. If everyone wants to pay high costs to fly out of SEA-TAC fine, they can have it. Just like DEN we will leave, unless there is an alternative, and BFI might be it. And as far as us leaving SEA I agree with Herb,......"if Sea-Tac is so fragile that it can't handle losing 8% of it's revenue, then it shouldn't have been built."

 

[Buckaroo]

Great post about Herb's visit to Boeing. He truly is the messiah of the airline industry.

 

[FlyBoeingJets]

I guess what I don't understand is, if everyone's costs are the same at SEA-TAC, then how can Southwest claim that they cannot continue there? Wouldn't it therefore be a level playing field compared to the other airlines that operate out of there? They may not be able to offer the fares they want, but they still could offer competitive fares.

I think it comes down to the fact that if they move to KBFI, they would then raise the costs for every competitor at KSEA. Therefore gaining an advantage.

This is Bass ackwards thinking. If someone wants to fly out of an airport, and the public wants it, it should happen. Noise will be low with the -700's being quieter and quicker to altitude.

But I'm just a Libertarian at heart. I can tell you aren't.

 

[Yank McCobb]

Yea Alaska homtown airline. Well I believe every single airplane SWA has ever purchased and flown has been built by the folks in Seattle.

So do half the airlines in the world. So what? It appears you have no idea about local politics. It's the same everywhere. Just look out our own backdoor in Dallas.

I still say this will never happen for a host of reasons. Not the least of which is Alaska's clout with the people and politicians out THEIR own backdoor.

 

[Yank McCobb]

Same reason we left Denver, costs.

Were you around when we left Denver? It had nothing to do with costs. (Well, the pissing contest was about different things, and cost was one of them, but if Denver's cost was such an issue, and the ONLY issue, then we would be in Colorado Springs, or the Front Range airport.) It had everything to do with Herb and Roy Romer's pissing contest. Herb took his ball and went home and vowed never to come back. Not only to Denver but anywhere in Colorado.

It is no coincidence that SWA has not been back since. I'm not saying never like Herb did...but probably not in my lifetime, and certainly not in my lifetime at SWA.

 

[SirFlyALot]

Same reason we left Denver, costs. If everyone wants to pay high costs to fly out of SEA-TAC fine, they can have it. Just like DEN we will leave, unless there is an alternative, and BFI might be it. And as far as us leaving SEA I agree with Herb,......"if Sea-Tac is so fragile that it can't handle losing 8% of it's revenue, then it shouldn't have been built."

Canyonblue; I don't have a complete breakdown of financial data for the Port of Seattle's operations at Sea-Tac, however I think it is safe to say that it would do okay without SWA. Herb saying what he did was nothing more than hyperbole. He knows better than you or I that Sea-Tac is in no way dependent on SWA for it's continued existence.

HOWEVER, Sea-Tac does depend to a great extent on Alaska Airlines. If SWA's withdrawal from Sea-Tac forces Alaska Airlines to follow suit, then THAT would be a severe blow to Sea-Tac.

Overall, I think this latest episode in SWA's new chapter speaks volumes. The once perennial underdog has emerged the swaggering bully. Don't forget that SWA agreed all along to the various projects that have been initiated at Sea-Tac. As M.R. Dinsmore, Port of Seattle CEO, pointed out, "It is important to note that Southwest voted consistently to approve and financially support the expansion and remodeling at the airport." Perhaps SWA never signed any legally binding contracts regarding Sea-Tac. However, if what Dinsmore said is true, then what SWA is proposing is eithcally shady. I'm sure all of the SWA-Aid drinkers out there will scream in protest, "It's business, stupid! Gary and Herb have every right to do what they've gotta do. It's a dog-eat-dog world." Keep telling yourselves that. You reap what you sow.

 

[canyonblue]

HOWEVER, Sea-Tac does depend to a great extent on Alaska Airlines. If SWA's withdrawal from Sea-Tac forces Alaska Airlines to follow suit, then THAT would be a severe blow to Sea-Tac.

Ask DFW about Delta.

As M.R. Dinsmore, Port of Seattle CEO, pointed out, "It is important to note that Southwest voted consistently to approve and financially support the expansion and remodeling at the airport."

The model is Low Cost, Low Fare. If it doesn't fit we better quit. If the other airlines want to play there fine, they can have it. We can always find another place to fly. Im glad Kelly has been taking these stands, no one else will. Then again, since no one else could afford it should we just go along with the masses.

Find me an airport in the US that is not having construction, remodeling etc. What happened to the original intent of the passenger service fee? SEA-TAC has gone nuts, they need to quit complaining. The Airports survive only because of the Airlines, they are all starting to figure that out. Too late for some.

 

[FlyBoeingJets]

Overall, I think this latest episode in SWA's new chapter speaks volumes. The once perennial underdog has emerged the swaggering bully. Don't forget that SWA agreed all along to the various projects that have been initiated at Sea-Tac. As M.R. Dinsmore, Port of Seattle CEO, pointed out, "It is important to note that Southwest voted consistently to approve and financially support the expansion and remodeling at the airport." Perhaps SWA never signed any legally binding contracts regarding Sea-Tac. However, if what Dinsmore said is true, then what SWA is proposing is eithcally shady. I'm sure all of the SWA-Aid drinkers out there will scream in protest, "It's business, stupid! Gary and Herb have every right to do what they've gotta do. It's a dog-eat-dog world." Keep telling yourselves that. You reap what you sow.

Whoever is responsible for not getting SWA to agree, in writing, with expensive fees is feeling pretty low right now. He or she is going all out to paint SWA as the bad guy. It's just human nature. Managers in government, and elsewhere, try to cover their butt by getting everyone to "agree" to a course of action, even when no actually does. Otherwise they risk their jobs and reputation. These managers have to answer to higher ups that often tell them what kind of deal to get no matter what. I'm sure the SEATAC machine was/is at work trying to prevent any other regional airport from stealing "their" business. I need more convincing to think otherwise.

As far as who is ethically challenged, we will have to disagree. Trying to strong arm an airline into agreeing to humungous fees is not very ethical to me.


BTW, the argument that Alaska could move and hurt SEATAC is ridiculous. They have feeder traffic that requires a hub and spoke friendly airport. Just panic inducing rhetoric from people who want to manipulate you.

Seattle is big enough to support 2 airports just fine. Traffic will increase with a SWA move to BFI. There is a balance that will eventually be achieved. Hub and spoke carriers will have their loyal customers and advantages and point to point will have theirs. We can all live in harmony