Item No. ____ _7a ___ Meeting Date: May 8, 2018 SUSTAINABLE AIRPORT MASTER PLAN (SAMP) UPDATE May 8, 2018 Briefing Outline • Overview • Planning update • Financial feasibility • Environmental review • Next steps 2 Regional Growth and Market Demand 10.0% • Seattle's crane count has dropped by 22% from six months ago, but is still greater than any other US city UNEMPLOYMENT 8.0% 6.0% 4.0% 2.0% 0.0% Feb-12 Feb-13 King County Feb-14 Feb-15 Feb-16 Washington Feb-17 United States Feb-18 Source: U.S. Bureau of Labor Statistics • King County unemployment remains low, at 3.7% in February 2018 • Puget Sound is home to a wide range of employers that contribute to the vibrant growth in the region Microsoft Nordstrom Boeing Google JBLM Alaska Amazon Costco Providence Health Expedia Starbucks PACCAR University of Washington Robust regional economy is the basis for airport growth and sustainability Sea-Tac Growth is Tied to Regional Growth 2034 2027 2017 56 Million Total Passengers 4.3 Million Population 66 Million Total Passengers 4.7 Million Population 46.9 Million Total Passengers 4.06 Million Population 4 Sea-Tac Statistics • 69.4% of passengers began or ended their flight in Seattle in 2016 TOTAL ENPLANED PASSENGERS (thousand) 30,000.0 8.7% Annual Growth 25,000.0 20,000.0 Other 15,000.0 Delta(1) Alaska(1) 10,000.0 5,000.0 0.0 (1) 2013 2014 2015 2016 Includes regional affiliate airlines 2013 4.1% 9.8% 4.7% 2014 7.8% 6.8% 7.7% 2015 12.6% 14.4% 12.8% 2017 2016 7.6% 11.4% 8.0% • Both Alaska and Delta are increasing service at Sea-Tac Airport • Other carriers, including Southwest, American, and United, continue service along with new entrants ENPLANEMENT GROWTH RATES Domestic International Total • Enplanements grew 2.7% in 2017 and 34.8% from 2013-2017; Q1-2018 grew 4.8% (2018 projected to grow 5.0%) 2017 2.3% 5.9% 2.7% • Sea-Tac has 45 international services, with 22 airlines serving 27 international destinations Sea-Tac Airport remains the ninth busiest airport in the United States Concurrent Strategies to Serve Market Demand Current Projects (46.9M PAX Today) • • • • • North Satellite International Arrivals Facility Concourse D Hardstand Holdroom Baggage Modernization Airport dining and retail development Long-Term Vision SAMP Near-Term Projects SAMP (56M PAX by 2027) • • • • Meet market demand 19 additional gates & second terminal Cargo facilities 30+ projects to improve safety, provide support facilities, improve efficiency, and access to the airport (Demand Beyond 2027) • PSRC regional aviation baseline study • Sea-Tac Airport airfield and airspace study • Additional environmental review Participate in a broader conversation about our region's airspace and aviation resources 6 Planning Status Update • Airfield/airspace constraints result in major congestion (aircraft delays) as activity nears 59 million passengers (2029) • Phased approach required to advance SAMP - Identify projects to accommodate near-term demand within existing constraints - Near-Term projects - Conduct environmental review of Near-Term projects - Follow-on planning study to address airfield/airspace constraints • Near-Term projects - Near-Term projects can accommodate 2027 market demand - Approximately 56 million annual passengers Phased approach required to meet future demand 7 Long-Term Vision - phased approach Near-Term projects - 56 million annual passengers by 2027 Long-Term vision - Additional planning to meet demand beyond 2027 • Additional planning & associated environmental review required for any projects not included in Near-Term package 8 Near-Term Projects 9 Airport Capital Capacity • Capital costs are recovered through airline rates • Capital capacity of the airport is constrained by - Airport cost to airlines (CPE) - Airport debt level, and ability to borrow • Port's credit rating • Debt per enplaned passenger • Upper range of CPE is based on judgment of where "competitive" range will be in future Airport capital capacity must consider multiple factors 10 Current CPE Comparison 2016 CPE For The 30 Large Hub Airports $30.00 $25.00 $20.00 Targeted Middle Third $15.00 28.05 25.45 $10.00 21.00 19.76 18.68 16.52 $5.00 15.16 14.97 14.83 13.45 13.44 11.05 10.92 10.71 10.60 10.45 10.28 10.10 10.01 9.51 9.50 9.08 6.32 5.79 5.02 4.66 4.34 3.94 3.69 1.35 $0.00 CPE is competitive: SEA ranks 13 out of the 30 Large Hub Airports 11 Financial Feasibility • Baseline forecast of airport costs to airlines (CPE) is $20 in 2025, without SAMP projects • Upper range of Sea-Tac's future CPE based on judgment, likely $25 $30 for 2027 - 2030 • To make SAMP financially feasible (CPE <$30), must: - Increase non-aeronautical net operating income (NOI) - Manage growth of operating and maintenance costs - Prioritize future capital improvements, reduce or eliminate scope • Cost to region of not expanding Sea-Tac is high: congestion, fewer direct flights, and lost economic opportunities. SAMP is financially feasible, but requires vigilant cost management & increased non-aero revenues 12 Purpose of Environmental Review National Environmental Policy Act (NEPA) State Environmental Policy Act (SEPA) • Objective analysis of potential environmental impacts according to established procedures • Identify ways to avoid, minimize, or mitigate • Public disclosure of environmental impacts • Transparency and engagement key to process • Overlay of environmental laws Environmental review process studies cumulative impacts through comprehensive process 13 SAMP Environmental Review A single NEPA and SEPA document and process Anticipated duration is 12 - 18 months • DRAFT NEPA Environmental Assessment (EA) anticipated* - Final form of document depends on results - NEPA EA allows for maximum Port of Seattle involvement - Analysis driven by issues and standards • DRAFT SEPA Environmental Impact Statement (EIS) anticipated - Maximizes agency and public engagement - Analysis driven by issues and standards *NEPA EIS triggers are new airport, runway, or major runway extension FAA is Lead Agency for NEPA and Port of Seattle is Lead Agency for SEPA 14 Next Steps Planning • Q2 • Q2-Q4 • May 30 Finalize SAMP documentation with FAA Complete planning work to support environmental review Public open house Environmental • In progress Advance coordination with FAA • Q2-Q3 Agency and public scoping Commission will be routinely updated and engaged throughout environmental review 15