PORT OF SEATTLE
MEMORANDUM
COMMISSION AGENDA
Item No.
5d
Date of Meeting
December 6, 2011
DATE: November 28, 2011
TO: Tay Yoshitani, Chief Executive Officer
FROM: David Soike, Director, Aviation Facilities and Capital Program
Wayne Grotheer, Director, Aviation Project Management Group
SUBJECT: Airline Realignment – Construction of Baggage Handling System (BHS)
improvements – C22 BHS Connection to C1 / C1-MK1 Replacement (CIP #
C800382)
Amount of This Request: $3,604,000 Source of Funds: Airport Development Fund
State and Local Taxes Paid: $294,000 Jobs Created: 15 (Total Project)
Total Estimated Cost: $5,335,000
ACTION REQUESTED:
Request Port Commission authorization for the Chief Executive Officer to (1) advertise and
execute a major construction contract and (2) authorize Port Construction Services (PCS) to
perform Regulated Material Management (RMM) design and monitoring for the C22 connection
to C1 Baggage Handling System (BHS), C1 make up device 1 (C1-MK1) replacement at Seattle-
Tacoma International Airport. The amount of this request is $3,604,000. The total cost of the
C22 BHS connection to C1 / C1-MK1 Replacement / TC3 Replacement project is $5,335,000.
The currently estimated capital cost of the airline realignment is $38 – 42 million, and the total
overall estimated total capital and expense cost is $58 – 72 million.
SYNOPSIS:
This authorization is one of many that are necessary for the one-time realignment of air carrier
operations that will take place at the Airport in coming years. The realignment was driven by the
merger of major carriers and the consolidation needs of Alaska Airlines necessitating the
repositioning of aircraft, gate holdrooms, and ticketing positions throughout the Airport. The air
carriers involved in the realignment program are pursuing an aggressive schedule in which they
propose to complete the moves of the initial set of carriers rapidly in order to occupy gates on
Concourse D by early 2012. Other moves on Concourses A and B would occur by early 2013.
Follow-on work on Concourse C and the North Satellite will take longer to complete.
Due to this realignment, a number of airlines are scheduled to relocate their ticket counter
operations. Baggage infrastructure must also be reconfigured to support the new ticketing
operations. Today’s project authorization request includes the procurement and site construction
work associated with reconfiguring subsystems (identified herein alpha numerically) that serve
COMMISSION AGENDA
Tay Yoshitani, Chief Executive Officer
November 28, 2011
Page 2 of 6
ticket counters in the center of the Airport ticketing lobby. Specifically this project authorization
is to reroute the conveyors of the C22 system and connect it to the C1 baggage screening system,
replace the existing C1-MK1 device in the bagwell, and install a new odd size baggage conveyor
system down to the bagwell for those airlines in the central section of the main terminal. After
Continental Airlines relocates off the ticket counters served by the C22 system, the project will
replace the C22 ticket counter conveyors and reroute and replace the outbound C22 conveyor in
the bagwell to a conveyor that feeds into the C1 baggage system pre-screening. It also replaces
the C1-MK1 baggage make-up device in preparation for daily use as a result of the airline
relocation initiative and provides a Central Terminal odd size conveyor feeding down to the C22
area. By connecting the C22 ticket counters to the C-1 baggage screening facility, the
Transportation Security Administration (TSA) will leave the old manually operated baggage
screening machines as a backup system.
BACKGROUND:
With ongoing airline consolidation interests and a goal to maximize utilization of our existing
facilities, the Airport has issued intent to exercise the One-Time Reallocation provision in the
current Signatory Lease & Operating Agreement. The reallocation will require a number of
modifications associated with the airlines which will relocate their gate and ticket counter
operations, to effectively operate in their new locations. The realignment was driven by the
merger of major carriers and the consolidation needs of Alaska Airlines necessitating the
repositioning aircraft, gate holdrooms, and ticketing positions throughout the Airport. The
following airlines are relocating their gates and/or ticket counters from their existing to new
locations under the provisions of the One-Time Reallocation: Frontier, Jet Blue, Air Tran,Virgin
America, Hawaiian, American and United Airlines.
PROJECT JUSTIFICATION:
The work planned under this project represents a critical component in supporting the broader
airline relocation effort while also providing improved operational efficiency throughout the
airport.
Project Objectives:
Support the timely relocation of airlines.
Removal of regulated materials as required.
Enable the Airport to gain more flexibility to maximize the use of Ticket Counters.
Minimize the cost to the Port of maintaining conveyors which have exceeded their
operational lives.
Reduce the cost to airlines as they relocate within the existing terminal facilities.
Provide ‘like for like’ facilities for airlines being relocated to new ticket counters.
Leave in place the two existing C22 baggage screening machines that are manually operated
allowing the TSA to utilize the system as a backup.
COMMISSION AGENDA
Tay Yoshitani, Chief Executive Officer
November 28, 2011
Page 3 of 6
PROJECT SCOPE OF WORK AND SCHEDULE:
Scope of Work:
Reroute the current C22 conveyor in the bagwell after the merge point of the C22-Curbside and
C22-Ticket Counter belts, to a conveyor that feeds into the C1 BHS pre-screening. Replace the
C1-MK1 baggage make-up device in preparation for daily use as a result of the airline relocation
initiative. Provide a Central Ticket Counter odd size conveyor feed down to the C22 bag
screening area.
Schedule:
Design May-November 2011
Authorize Advertisement for Construction December 2011
Advertise Bid December-March 2011
Award Bid April 2011
Start Construction May 2012
Complete Construction May 2013
FINANCIAL IMPLICATIONS:
Budget/Authorization Summary:
$5,335,000
$5,335,000
$1,731,000
$3,604,000
$5,335,000
$ 0
Project Cost Breakdown:
This Request
Total Project
Construction Costs
$2,672,000
$3,513,000
Sales tax
$ 294,000
$ 337,000
Outside professional services
$ 0
$ 540,000
Construction Cost (RMM) Expense
$ 85,000
$ 85,000
Aviation PMG and other soft costs
$ 553,000
$ 860,000
Total
$3,604,000
$5,335,000
Budget Status and Source of Funds:
This project is included in the 2011-2015 capital budget and plan of finance as a business plan
prospective project within CIP #C800411, Terminal Realignment. The scope and budget for this
project has been transferred to a new CIP, CIP # C800382. The funding source will be the
Airport Development Fund and existing 2010 bond proceeds.
COMMISSION AGENDA
Tay Yoshitani, Chief Executive Officer
November 28, 2011
Page 4 of 6
Financial Analysis and Summary:
CIP Category
Renewal/Enhancement
Project Type
Renewal & Replacement
Risk adjusted Discount rate
N/A
Key risk factors
N/A
Project cost for analysis
$5,335,000
Business Unit (BU)
Terminal – Airline Equipment
Effect on business performance
NOI after debt service will increase
IRR/NPV
N/A
CPE Impact
CPE will increase by $0.03 by 2013, but no
change to business plan forecast as this
project was included.
Lifecycle Cost and Savings:
Based on current information, annual operating and maintenance costs will not change.
ENVIRONMENT AND SUSTAINABILITY:
This project demonstrates environmental sustainability by improving existing Port assets and
better utilizing existing resources. The project will facilitate greater utilization of the C1
Baggage system which is the most current and up to date baggage system at the Airport, thus
reducing the potential environmental impact of requiring airline contractors to transport bags
farther with fossil fuel tugs and carts.
STRATEGIC OBJECTIVES:
This project promotes the Port’s strategic goals to “Ensure Airport and Seaport Vitality” and “Be
a Catalyst for Regional Transportation Solutions” by providing the airlines with greater facility
flexibility. Flexible operations will allow for greater and more efficient utilization of the
Airport’s existing facilities.
Air carriers have continually vied for increased market share since the passage of the Airline
Deregulation Act of 1978, thereby driving nearly constant change in their facility requirements.
Creating a flexible, common-use environment allows carriers and the Airport to spend fewer
capital dollars remodeling facilities as market conditions change. More carriers are able to share
the same facilities without continual redesign and construction to customize the operating
environment to their specific proprietary needs. This also increases total Airport through-put
rates, in a finite sized terminal, as passenger volumes continue to increase.
BUSINESS PLAN OBJECTIVES:
The Aeronautical business strategy aims to strike a right balance between meeting the needs of
our airline customers and the traveling public through cost-effective means. Minimizing new
COMMISSION AGENDA
Tay Yoshitani, Chief Executive Officer
November 28, 2011
Page 5 of 6
construction by making new operational improvements with up-to-date equipment and
technology helps to minimize costs to the airlines. The use of technology and thoughtful long-
term planning are key elements of the strategy. Aviation’s business strategies strike a balance
between providing high quality customer service while minimizing the growth of airline cost per
enplaned passenger. Realigning locations of carrier operations enable them to provide good
service, while re-directing existing baggage systems enable the Airport to cost-effectively better
utilize the modern C-1 system while adding make-up facilities to enable growth of airline
operations in the southern portion of the Airport.
TRIPLE BOTTOM LINE SUMMARY:
This project saves the Port the cost of continuing to maintain and repair obsolete conveyor
equipment, maintains the drive by the Port to standardize conveyor equipment and provides the
flexibility the Airport needs to operate more efficiently. The traveling community will also
benefit from increased airline availability to modern, functional baggage equipment.
ALTERNATIVES CONSIDERED AND THEIR IMPLICATIONS:
ALTERNATIVE 1: Proceed with bid and award of a major construction contract for this work.
This is the recommended alternative.
ALTERNATIVE 2: Do nothing: Leaving the baggage systems as-is will further complicate
several already complex operational arrangements, negatively impact implementation of the
airline relocation effort, and will negatively impact daily baggage operations for many carriers
and the travelling public throughout the Airport. This action is not recommended.
OTHER DOCUMENTS ASSOCIATED WITH THIS REQUEST:
Attachment A: November 22, 2011, oral prebrief visual aid slide, diagram map and artist
renderings of project site.
PREVIOUS COMMISSION ACTION:
On September 12, 2011, the Port Commission received a summary briefing on the Airport
Realignment Program at Seattle-Tacoma International Airport.
On June 14, 2011, the Port Commission authorized design of the Exterior Gate Improvements-
Airline Realignment project (C800472) at Seattle-Tacoma International Airport in the amount of
$499,000.
On June 14, 2011, the Port Commission authorized design of the Airport Signage-Airline
Realignment project (C800474) at Seattle-Tacoma International Airport in the amount of
$238,000.
On March 1, 2011, the Port Commission authorized design and some construction of the
Baggage Handling System (BHS) Improvements - C22 BHS connection to C1/C1-MK1
Replacement /TC3 Replacement (C800382) in the amount of $1,731,000.
On February 22, 2011, the Port Commission was shown a summary listing of realignment
projects and authorized Planning for Terminal Realignment in the amount of $713,000.
COMMISSION AGENDA
Tay Yoshitani, Chief Executive Officer
November 28, 2011
Page 6 of 6
On February 22, 2011, the Port Commission authorized design and some construction for the
Passenger Loading Bridge Replacement Project - Airline Realignment (C800467) in the amount
of $6,700,000.
On January 25, 2011, the Port Commission was given an overview of the airline realignment and
authorized design and construction of the Concourse D Common Use Expansion Project
(C800455) in the amount of $4,250,000. Commission was also briefed on the Airline
Realignment Program as part of this item.
On September 28, 2010, the Port Commission was given a summary briefing of the upcoming
2011 capital improvement plan that included the airline realignment program elements.
On June 8, 2010, the Port Commission authorized execution of an IDIQ contract for the
Terminal Development Strategy Campus Planning Services IDIQ in the amount of $1,300,000.