Third runway about to open, but will it fly?
Economy walloped industry
By KRISTEN MILLARES YOUNG
The Seattle Post-Intelligencer's
November 13, 2008
Sea-Tac Airport's third runway -- one of the most controversial and heavily litigated construction projects in the state's history -- opens to commercial service Nov. 20 at a time of economic upheaval and staggering losses for the airline industry.
The International Air Transport Association says combined airline losses could total $5.2 billion this year. Over the next few years, fewer planes will wing into Seattle-Tacoma International Airport.
Cash-strapped airlines -- which typically pay for capital projects through port-levied fees -- are balking at its $1.013 billion price tag (almost five times the original estimate). They point out that other runways around the country cost far less.
"The fact is that a billion dollars for a runway is high. It's too much money," said Ed White, vice president of corporate real estate for Alaska Airlines, Sea-Tac's largest tenant.
The port is wary of burdening the airlines, so in this case it's bypassing them to tap passengers directly with airport fees -- $4.50 per ticket -- that will be used to pay off $1.2 billion of debt service on the new runway's bonds through 2035.
Airlines and regional planners agree the runway is needed. While the port believes the airfield could handle 59 million passengers, it hasn't studied how to expand terminals to handle more than the 46 million annual passengers it expects by 2024. In less than 20 years, Sea-Tac's terminals could be overloaded, meaning the Puget Sound area could need another airport.
If the fight over the third runway is any indication, the debate over how to handle that will be long and difficult.
'New concrete' needed
The third runway's development traces back to 1987, when the airport began reviewing its needs to later find that two runways wouldn't be enough. Poor visibility during bad weather constricts the usual two arrival streams at Sea-Tac into one lane 44 percent of the year, according to the port.
Only 57 percent of Sea-Tac's arrivals were on time during the airport's peak traffic year in 2000, when it handled 445,000 takeoffs and landings with an average 17 minutes of delay. It was the nation's seventh-most delayed airport that year, but a 9/11-fueled downturn followed.
In October, the U.S. Department of Transportation reported 78.6 percent of arrivals were on time at Sea-Tac in the year leading up to August.
"We're looking forward to the new concrete," said Patrick Brown, the National Air Traffic Controllers Association union representative for controllers at TRACON, the Terminal Radar Approach Control, which covers aircraft approaching and departing up to 15,000 feet in altitude from Olympia to Everett. "The third runway is great because it gives us more options."
Airlines are looking forward to the additional strip of concrete but complain it's taken too long to build and is too expensive.
The third runway is opening the same day as new runways at Dulles International Airport near Washington, D.C., and Chicago's O'Hare International Airport. Dulles' new fourth runway was basically built in two years on a green field for $353.9 million, including construction, noise and environmental mitigation, land acquisition and support facilities.
The price of Sea-Tac's $1 billion third runway mushroomed from estimates of $217 million in 1992, to $405 million in 1996 and $587 million in 1999. The port blames delays, litigation, rising material costs and environmental, topographic and permit conditions.
In December, a more sinister possibility emerged.
The state auditor released an audit of the port's construction management that found the port had wasted nearly $100 million -- a figure the port disputes -- in airport construction contracts active from 2004 to 2007. The audit described port staff's improper relationships with contractors and lax oversight by the five elected port commissioners.
The audit, which characterized the port's construction management as "vulnerable to fraud, waste and abuse," spawned a federal criminal investigation -- and millions of dollars of port spending on attorneys to defend itself and the commission's internal investigation.
Airlines are watching the airport's cost management more closely, even as the port has centralized capital development and refined practices.
"There are runways built around the country for less," said White, of Alaska Airlines, which leads the consortium of airlines that negotiate with the port on which capital projects should be done, and how they should be funded.
"Seattle is one of our focus cities because of the size of our operations here, so we have started to work aggressively with the port on the costs of the airport," White said. "We're trying to inject our profit-oriented business realities."
White said airlines shared some responsibility for rising costs that almost drove Southwest Airlines and, with it, Alaska Airlines to Boeing Field in 2005 and commended the port for lowering costs since then. Still, he said, the port must cut costs.
"The fact is that when we look at Sea-Tac Airport's hard costs, they are notably higher than many of the other dominant airports on the West Coast," White said.
When the port asked the Federal Aviation Administration for more funding in March 2004, it compared the $1.02 billion runway cost to $4.76 billion in savings if it was built on the cost of delay to travelers and to airlines via fuel and crew time.
The 4.7-to-1 benefit to cost ratio, estimated by the port in 1995 dollars over 25 years of operations, helped persuade the federal government to pony up: 38 percent of the runway's cost will be funded by federal grants.
Catherine Lang, the FAA's deputy associate administrator for airports, said anyone who is an investor asks: Does this investment pay for itself?
"In this case, answer is a resounding yes," Lang said. "It was a good project 10 years ago, and it is a better one today."
Planners say the third runway will give controllers much needed options, allowing planes to stage, land, taxi and take off on all three runways.
"The third runway was not designed or conceived or justified for capacity," said Mark Reis, managing director of the Port of Seattle's Aviation Division. "It was justified on the bad-weather benefit."
Brown said the third runway will let controllers guide about 36 landings per hour during poor weather, compared with 28 per hour now.
The port recorded that 347,046 planes took off and landed at Sea-Tac last year with guidance from the FAA's air traffic control tower. Reis said Sea-Tac Airport's three runways could handle about 550,000 landings and departures per year with an average delay of 15 minutes. A 1995 port capacity plan showed a two-runway airport plagued with average delays of more than 40 minutes when handling 525,000 annual operations.
Third runway critics have questioned the figures and arguments used to justify the project.
"Is there any reality to the fact that the port has always stated that this runway's use is for foul weather?" asked state Sen. Karen Keiser, D-Des Moines. "They have been so focused on getting the third runway operational that they'll tell any tale."
A 2001 FAA report disputed by the port as "political" and "incorrect" showed only 1 percent of flights delayed more than 15 minutes. Airport expansion opponents championed the report as proof that a third runway was not needed.
"The delay statistics they were using were not good numbers," said Stuart Creighton, who chaired the Airport Communities Coalition, a group of cities near the airport that sued the port in a failed bid to stop the third runway. "There are a big number of delay hours recorded at Sea-Tac, but it is not delay that can be fixed by Sea-Tac: Planes are leaving late from other cities, and arriving late."
The FAA's data also showed that 97 percent of Sea-Tac's delays in 2000 were caused by poor weather.
More traffic coming
Sea-Tac Airport has swollen to handle more than eight times the 3.9 million passengers that flew through it in 1967.
The port's current $4.1 billion capital development plan paves the way for a projected 46 million annual passengers by 2024, when nearly 50 percent more people will be flying through than did last year.
According to the FAA, about 1.32 million aircraft in 2007 flew through about 300,000 square miles of airspace controlled by its Auburn Air Route Traffic Control Center.
Though economic woes could lower that number in the short-term, the future holds more planes, boosted by a growing population. Even though the new runway adds to capacity, state planners say it doesn't solve the region's long-term needs.
"The Puget Sound area is where we have most of the capacity shortfall," said John Sibold, aviation director for the state Department of Transportation.
The state is nearing the end of a lengthy public process of evaluating future air travel needs, considering whether to "let the market take care of itself," use or expand existing facilities or -- the political hot potato -- build a new airport. By February, it should have its recommendations, which will be presented to the Legislature in July. After that, Sibold said, "it's up to the governor to deal with it."
If traffic grows as anticipated, where might those planes go?
Horizon Airlines, owned by Alaska Air Group, recently said it wanted to begin daily round-trip flights from Snohomish County's Paine Field to Portland and Spokane by next summer, adding to the debate that has flamed through Snohomish County since May, when Las Vegas-based Allegiant Airlines began angling for regular flights to its home city from Paine.
The Snohomish County Council and Executive Aaron Reardon came out against commercial air service at Paine, prompting the FAA to write in a June letter that the county is bound by federal law "to make areas available for lease on reasonable terms and to negotiate in good faith."
To do otherwise would jeopardize federal grants at a time when airport officials say about $50 million in repairs are needed. Proponents say potential flight revenues would pay for any needed infrastructure, though federal law does not require that the county build it.
County Councilman Brian Sullivan said expanding Paine Field "would show bad faith" because the county "made a deal" with residents in 1978-79 that designated the area as "a major urban growth area" and discouraged commercial air service.
Sea-Tac has not analyzed what the debut of commercial passenger service at other airports would do to its demand, revenues and bond repayments. Though the port described the potential defection of Southwest and Alaska to Boeing Field in 2005 as a threat, Reis said Paine presents more of an opportunity to siphon off Sea-Tac congestion.
Travelers on Alaska and Horizon made up nearly half of the airport's 31.3 million passengers last year. Most flew Alaska, but it was Horizon that grew its Sea-Tac business more. Alaska is cutting this year's winter flights through Sea-Tac by 8 percent.
"We have to face the business realities," White said, adding that Alaska is "going to be watching Paine Field to see what the market says. That being said, we are headquartered in Seattle and the hub of our operations is in Seattle."
Still, airports in St. Louis, Pittsburgh and Cincinnati invested billions in their airports only to see their main carriers slash service. Reis said Paine would "start out as a point-to-point airport" best suited for connecting regional cities.
Keiser said locating an airport "should be a matter of good planning."
"The key, if you are going to look at a new location for a new facility, is to get the area with enough of a buffer around it sited so it doesn't infill with houses," Keiser said. "We need to have these conversations with people -- you can't just spring it on them."
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