Item No. 9a_supp . Meeting Date: June 26, 2018 Aviation Division 2019 Business Plan and Budget Preview June 26, 2018 Outline • STRATEGY TO BUDGET PROCESS • STRATEGIC PRIORITIES • ANTICIPATED 2019 BUDGET NEEDS • ANTICIPATED 2019 STAFFING NEEDS 2 Strategy To Budget Process Implementation Strategic Planning Century Agenda Vision 5- 10 Years SWOT Gap Strategies and Objectives (Long Range Plans) 3 - 5 Years 2019 Business Plan 2019 Budget Annual 2019 Performance Plans 3 Industry/Business Context • Strong regional economy • Airlines profitable, but rising oil price • Ground Transportation mode shifts • Alaska and Delta account for over 70% of passengers at SEA • Paine Field starting commercial service SWOT 4 Challenges • FACILITIES - Gate shortage - Future gate capacity 10 years away • CUSTOMER SERVICE - Intensive use of facilities - Congestion on drives - Security checkpoint times increasing • SUSTAINABLE AIRPORT MASTER PLAN (SAMP) - Port debt level and airport cost to airlines (CPE) will increase SWOT 5 Projecting Growth in Passengers Passengers (000s) • 5% growth in 2018 60,000 50,000 5% 3% • 3% growth for 2019 40,000 • SAMP Phased Approach 30,000 20,000 10,000 - 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 SWOT 6 Century Agenda Drives Aviation Division Priorities AV Priorities Employees Customer Service Facilities/Capacity Financial Safety Security Community Diversity Sustainability Partners Century Agenda - High Performance Organization HPO 2: Eliminate workplace injuries HPO 3: Act as one Port HPO 4: Foster employee development and leverage talent HPO 1: Increase customer satisfaction CA 2 Obj 6: Make Sea-Tac "Gateway of Choice" CA 2 Obj 8: Meet the regions air transportation needs CA 2 Obj 8: Meet the regions air transportation needs HPO 2: Eliminate workplace injuries HPO 3: Public safety and Security HPO 3: Public safety and Security HPO 1: Customer Service and Public Engagement CA 3: Promote small business HPO 4: Model for Workplace Equity, Diversity and Inclusion CA 4: Be the greenest and most energy efficient Port HPO 1: Improve customer service and public engagement STRATEGY 7 Key Priorities for 2019 CUSTOMER SERVICE FACILITIES/CAPACITY FINANCIAL EMPLOYEES STRATEGY 8 Customer Service • OBJECTIVES: - IMPROVE OVERALL CUSTOMER SATISFACTION SCORE EACH YEAR • Improve Airport Service Quality (ASQ) scores • Achieve Skytrax 5 Star Rating - DEPARTING PASSENGERS • Roadway to through security checkpoints < 45 minutes • Aircraft taxi time < 20 minutes - ARRIVING INTERNATIONAL PASSENGERS • Minimum Connect Time < 75 Minutes STRATEGY 9 Customer Service • STRATEGIES - Realtime info and engagement with customers - Lean techniques to improve movement processes - Data driven approach to prioritization - Targeted facility investments for capacity, efficiency and appearance - Technology: more and better information STRATEGY 10 Facilities/Capacity • OBJECTIVES - Maintain functionality of existing facilities - Add needed capacity to facilitate growth • STRATEGIES - Interim improvements for SSAT - delay full renovation - Address life safety issues for main terminal - Complete environmental review and permitting of SAMP - Integrate sustainable practices - Stakeholder partnership to reduce noise impacts STRATEGY 11 Financial • OBJECTIVES - Grow non-aeronautical revenues to $299 million by 2023 - Maintain competitive airline costs (CPE) - Achieve debt service coverage >1.25x • STRATEGIES - Expand duty free offerings - Implement new parking products and innovative concessions program - Develop alternatives for vehicles access fees - Manage within + or - 5% of capital budget STRATEGY 12 Employees • OBJECTIVE: - Increase employee engagement by 3% - Baseline and Improve Net Promoter Score (NPS) - Annual Employee turnover rate < 10% • STRATEGIES: - Develop systematic approach to behavior based safety - Talent Management - Complete Lean training for all AV leaders in 2019 - Implement 20% of Shark Tank innovation ideas STRATEGY 13 Other Priorities • SUSTAINABILITY: - Achieve Sustainable Aviation Fuel (SAF) targets - Evaluate options to convert use of natural gas to lower carbon emssions - Continue Airfield emissions reduction initiatives - Continue terminal and Landside emissions reduction initiatives - Ongoing compliance: federal pollution control permits (NPDES), other - Continue and expand Social Responsibilities programs STRATEGY 14 Other Priorities (Cont.) • AIRFIELD SAFETY - Achieve annual airfield composite safety score >30 - Plan and build second fire station to continue to achieve 3 minute response time requirement • NEW EMPLOYEE CONSOLIDATED SERVICE CENTER • ONGOING SOUND INSULATION, PART 150 PROGRAM • ADDRESS ISSUES RELATING TO FIREFIGHTING FOAM STRATEGY 15 2019 Budget • Aero revenues driven by new assets • Non-aero revenue challenges • O&M growth reflects resources needed to support strategies • Peak capital spending • CPE growing - as anticipated BUSINESS PLAN & BUDGET 16 Staffing Resource Needs • Airport is continuing to grow • Intense utilization of existing facilities • New and expanded facilities and equipment • Staffing study anticipated the need for 45 additional FTEs in 2019 • New requests will be reviewed against strategic priorities • Intention is to stay within the planned increase for 2019 BUSINESS PLAN & BUDGET 17