PORT OF SEATTLE
MEMORANDUM
COMMISSION AGENDA
Item No.
5f
Date of Meeting
December 6, 2011
DATE: November 28, 2011
TO: Tay Yoshitani, Chief Executive Officer
FROM: Michael Ehl, Director, Airport Operations
Wayne Grotheer, Director, Aviation Project Management Group
SUBJECT: Airline Realignment Tenant Improvements (Expense) for Seattle-Tacoma
International Airport.
Amount of This Request: $3,776,000 Source of Funds: Airport Development Fund
Total Project Cost: $23,285,000
ACTION REQUESTED:
Request Commission authorization for the Chief Executive Officer to authorize design of the
Airline Tenant Improvements – Airline Realignment (CIP # C800475) at Seattle-Tacoma
International Airport (Airport). This authorization is for $3,776,000. The currently estimated
total expense cost of the airline realignment is $20 – 30 million, and the overall estimated total
expense and capital 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 Air Group 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 many of the moves by early 2013. The airlines have requested that the Port
of Seattle take over and complete design and construction of airline tenant improvements as part
of the Airline Realignment. The design work will be accomplished by the consultant hired for
the Airline Realignment Tenant Improvements and Ticket Counter Design services IDIQ
contract.
COMMISSION AGENDA
Tay Yoshitani, Chief Executive Officer
November 28, 2011
Page 2 of 5
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 who 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 for Alaska Air Group which necessitated
the repositioning of gates, holdrooms, and ticketing positions throughout the Airport.
Airline Realignment consists of seven (7) CIPs that include all capital improvements to be
constructed by the Port in order to relocate the subject airlines. Initially, the airlines intended to
self perform the Tenant Improvements (TI) related to the relocations. They are now requesting
that the Port complete the airline TI work. The work consists of design and construction of new
tenant space for eight airlines including: AirTran, Continental, American, Frontier, Hawaiian,
jetBlue, United, and Virgin America.
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 STATEMENT AND OBJECTIVES:
Design remodeled airline offices, operations areas, and customer service facilities as part of the
Airline Realignment. Project objectives include:
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.
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.
PROJECT SCOPE OF WORK AND SCHEDULE:
Scope of Work:
The work consists of design of new tenant space for eight (8) airlines including: AirTran,
American, Continental, Frontier, Hawaiian, jetBlue, United, and Virgin America.
COMMISSION AGENDA
Tay Yoshitani, Chief Executive Officer
November 28, 2011
Page 3 of 5
Schedule:
Start Design
Complete Design
Commission Authorization to Bid Work
Start Construction
Complete Construction
January 2012
June 2012
June 2012
September 2012
December 2013
FINANCIAL IMPLICATIONS:
Budget/Authorization Summary:
Original Budget
$23,285,000
Revised Budget
$23,285,000
Previous Authorizations
$0
Current request for authorization
$3,776,000
Total Authorizations, including this request
$3,776,000
Remaining budget to be authorized
$19,509,000
Project Cost Breakdown:
This Request
Construction Costs
$0
Sales tax
$0
Outside professional services
$2,276,000
Construction Cost (RMM) Expense
$0
Aviation PMG and other soft costs
$1,500,000
Total
$3,776,000
BUDGET STATUS AND SOURCE OF FUNDS:
This total of $23.3 – 30 million of operating costs will be spread over four years: 2011 – 2014.
The airport included $3.0 million in the 2011 operating budget and $8.2 million in the 2012
operating budget. The remaining costs will be incurred in 2013 and 2014. All of the costs will
be incorporated into airline rates and charges and recovered through terminal rents. As such, the
funding source will be the Airport Development Fund.
FINANCIAL IMPLICATIONS:
For 2012, the budgeted $8.2 million in operating costs associated with terminal realignment will
increase passenger airline costs per enplaned passenger (CPE) by $0.49.
COMMISSION AGENDA
Tay Yoshitani, Chief Executive Officer
November 28, 2011
Page 4 of 5
ENVIRONMENTAL SUSTAINABILITY/COMMUNITY BENEFITS:
We will consider sustainable materials and practices during design.
TRIPLE BOTTOM LINE SUMMARY:
This project is being performed at the request of our customer airlines. It will benefit the
traveling public and the environment through consolidated airlines and efficient operations.
ALTERNATIVES CONSIDERED/RECOMMENDED ACTION:
Alternative 1 – Port proceeds with design for airline ticket counters, offices, and gate areas. This
is the recommended alternative.
Alternative 2 – Each airline independently performs their individual tenant improvements.
Scope and schedule will be difficult to manage with 8 separate airlines. The expedited schedule
will likely be compromised. This is not the recommended alternative.
Alternative 3 – A single airline performs all tenant improvements on behalf of the other airlines.
No single airline has agreed to oversee the tenant improvements. Scope, schedule, and
reimbursements will be difficult to manage. This will result in more coordination required and
more cost. This is not the recommended alternative.
Alternate 4 – Do nothing. The airline realignment cannot be executed. This is not the
recommended alternative.
OTHER DOCUMENTS ASSOCIATED WITH THIS REQUEST:
Attachment A: November 22, 2011, oral prebrief visual aid slide and tenant space renovations
map.
PREVIOUS COMMISSION ACTION:
On September 27, 2011, the Port Commission authorized execution of an IDIQ contract for
Airline Realignment Tenant Improvements and Ticket Counter Design services totaling
$10,000,000.
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 1) design of the Airport Signage – Airline
Realignment project at Seattle-Tacoma International Airport (Airport). This authorization is for
$238,000 of a total project cost of $646,000, and 2) execute a professional services Indefinite
Delivery Indefinite Quantity contract for signage design services totaling $400,000 for four (4)
COMMISSION AGENDA
Tay Yoshitani, Chief Executive Officer
November 28, 2011
Page 5 of 5
years in support of upcoming capital improvement projects, including the Airport Signage –
Airline Realignment project at the Airport (CIP #C800474).
On June 14, 2011, the Port Commission authorized Exterior Gate Improvements – Airline
Realignment at Seattle-Tacoma International Airport. This authorization is for $499,000 out of a
total project estimated cost of $2,650,000 (CIP #C800472).
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 authorized design and some construction for the
Passenger Loading Bridge Replacement Project - Airline Realignment (C800467) in the amount
of $6,700,000
On February 22, 2011, the Port Commission authorized Planning for Terminal Realignment in
the amount of $713,000.
On January 25, 2011, the Port Commission 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 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.
