Template revised April 12, 2018.
COMMISSION
AGENDA MEMORANDUM
Item No.
8c
ACTION ITEM
Date of Meeting
November 13, 2018
DATE: November 5, 2018
TO: Stephen P. Metruck, Executive Director
FROM: Michael Ehl, Director Aviation Operations
Daniel Zenk, Senior Manager Airport Operations
SUBJECT: Centralized International Support Service Contract Amendment
Amount of this request:
$3,220,000
Amended contract cost:
$11,920,000
ACTION REQUESTED
Request Commission authorization for the Executive Director to execute a contract amendment
with VIP Hospitality (VIP) (Contract Number S-00318180) for support services in the
International Arrivals Facility at Seattle-Tacoma International Airport for an estimated amount
of $3,220,000, effective through December 31, 2019.
EXECUTIVE SUMMARY
The purpose of this request is to amend the VIP Hospitality contract for an estimated amount of
$3,220,000 to cover the remainder of the contract term, which expires December 31, 2019. Due
to the growth of international passenger traffic, in combination with constrained facilities and a
required operational/customer service need, the Port has required VIP Hospitality to increase
the number of employees to provide a high level of customer service and to assist with
passenger and baggage processing in the International Arrivals Facility. In doing so, the Port will
exhaust the planned budget amount. The Port is requesting Commission approval for VIP to
continue providing services for our international passengers through end of 2019.
JUSTIFICATION
Seattle-Tacoma International Airport (SEA) is one of the fastest growing international gateway
airports in the country. In 2017 alone, international travel through SEA increased 11% from the
prior year, to almost 5 million passengers, and the Port is experiencing close to a 12% growth
rate so far in 2018. Since 2016, SEA has added nine new international airlines (Aeromexico,
Volaris, Xiamen, Virgin Atlantic, Eurowings, Norwegian, Aero Lingus, Air France, and Thomas
Cook) with direct nonstop service to over nine destinations. In 2019, we anticipate at least
three new international air carriers to announce service.
COMMISSION AGENDA – Action Item No. 8c Page 2 of 4
Meeting Date: November 13, 2018
Template revised September 22, 2016; format updates October 19, 2016.
Following the award of the contract to VIP Hospitality in 2015, international traffic continued to
grow much faster than the anticipated contract budget projections. The traffic increase
required additional VIP staffing and a greater level of customer service, which was identified by
the Port and requested of VIP for 2015, 2016 and 2017, and to be maintained in 2018/2019.
Additionally, in August 2015, the City of SeaTac’s Proposition 1 minimum wage rate went into
effect for Sea-Tac Airport workers. VIP complied with the law and paid their employees the
new rate and the Port issued an amendment (in 2016) to comply with Proposition 1 and to pay
a retroactive payout to VIP for the difference between Port Resolution 3694 and the City of
SeaTac’s Proposition 1 wage rate. Again, the Port continued to use authorized contract funds
until exhausted, knowing this would shorten the total funding amount for the life of the
contract.
In 2016, at the Port’s request to improve customer experience, VIP continued to add staff to
the passenger processing and baggage handling areas. From contract inception to today, VIP
increased staff from approximately 18 to over 35 employees during peak hours. Again, this is
due to facility constraints and the volume of passengers required to be processed, the increase in
the number passengers being held in the International Corridor and on board aircraft. In some
instances (1,222 flights in 2018 so far), it was necessary to have held passengers in the
International Corridor for up to 2.5 hours, which resulted in an increase in customer complaints.
With the expected opening of the new International Arrivals Facility (IAF) to guests in August of
2020, the utilization of such services may be anticipated to evolve. Preparation of a new
contract and associated revised scope would thus be conducted in 2019 with operations
continuing without impact under this budget increase.
DETAILS
Since 2015, the Port has utilized the services of VIP Hospitality to assist in the facilitation of
international guest arrival in the Federal Inspection Service (FIS) facilities of the South Satellite.
With the growth has come an increase in need and demand for additional staff by VIP, at the
Port’s request, in areas of passenger service and baggage handling. Passenger services in the
existing International Arrivals Facility include customer service, foreign language interpretation,
crowd control, queue management, holding flights and passengers for processing, access
control and assisting passengers with CBP documents and new automated passport control
passport control technologies. This service significantly increases the processing rate through
passport control and reduces costly hold-on-board situations by providing the necessary staff to
accommodate waiting passengers inside the terminal rather than on board the aircraft.
Without these services, passengers would experience slower processing times through the
facility, overcrowding in passport control and baggage claim, process confusion, and an
increase in hold-on-boards and unnecessary delays.
Baggage Services include repositioning baggage at international carousels to maximize capacity,
assisting passengers with placing baggage on recheck belts, recirculating baggage carts, and
COMMISSION AGENDA – Action Item No. 8c Page 3 of 4
Meeting Date: November 13, 2018
Template revised September 22, 2016; format updates October 19, 2016.
manually handling baggage too large to fit through conveyor belt systems. These controls are
needed to keep baggage moving in and out of the facility. Without these services, delivery of
baggage would not be coordinated with the arrival of passengers to claim their baggage. The
result would be jammed claim devices and dangerous crowding in the international baggage
claim hall. Without staff assistance and guidance, passengers attempt to carry multiple
oversized bags onto the Satellite Transit System (STS) train, slowing down the boarding process
and causing dangerous conditions on escalators at the main terminal train station.
ALTERNATIVES AND IMPLICATIONS CONSIDERED
Alternative 1 - Discontinue existing contract with VIP due to lack of funds
Cost Implications: $0
Pros:
(1) None
Cons:
(1) Services are no longer provided.
(2) The lack of services during a 14-month period would result in a complete degradation
of the FIS, extensive passenger and airline delays, and major negative effect on the
passenger experience.
This is not the recommended alternative.
Alternative 2 - Cancel existing contract and issue Request for Proposals (RFP) to provide
services in the International Arrivals Facility to replace VIP Hospitality
Cost Implications: $0
Pros:
(1) None
Cons:
(1) RFP process and potential transition to a new contractor would require at least 4 to 5
months to complete, and duration of the new contact may be less than 1 year,
depending on need. Port staff is in process of evaluating the required scope of
services needed after the new International Arrivals Facility is open.
(2) The lack of services during a 4- to 5-month period would result in a complete
degradation of the FIS, extensive passenger and airline delays, and major negative
effect on the passenger experience.
(3) Current contract period of performance concludes in December 2019.
This is not the recommended alternative.
COMMISSION AGENDA – Action Item No. 8c Page 4 of 4
Meeting Date: November 13, 2018
Template revised September 22, 2016; format updates October 19, 2016.
Alternative 3 - Amend existing contract with VIP Hospitality for baggage handling and
passenger services in the International Arrivals Facility
Cost Implications: $3,220,000
Pros:
(1) Provides for continued services and continuity of operations.
Cons:
(1) Spending $3,220,000.
This is the recommended alternative.
FINANCIAL IMPLICATIONS
The annual cost of this contract is included in the Aviation operating budget. For 2018, the
budget is $2.592 million. The costs are assigned to the Federal Inspection Services (FIS) cost
center and all costs are paid for by the airlines that use the FIS facility.
ATTACHMENTS TO THIS REQUEST
(1) Presentation slides
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS
September 30, 2014 – The Commission authorized execution of a contract for Centralized
International Support Services in the Federal Inspection Services (FIS) Facility at Seattle-
Tacoma International Airport for up to five years (2015-2019) for an estimated amount
of $8,700,000.
