Template revised January 10, 2019.
COMMISSION
AGENDA MEMORANDUM
Item No.
_______8g_______
ACTION ITEM
Date of Meeting
November 17, 2020
DATE: October 26, 2020
TO: Stephen P. Metruck, Executive Director
FROM: Dawn Hunter, Director Aviation Commercial Management
Tamara Kuiken, Business Manager, Airport Dining and Retail
SUBJECT: Smarte Carte Luggage Carte Agreement
Total estimated cost:
$3.25 million
ACTION REQUESTED
Request Commission authorization for the Executive Director to execute an agreement with
Smarte Carte to provide luggage carts and massage chair passenger services at Seattle Tacoma
International Airport (SEA). This agreement includes a Port paid fee of Six Hundred Fifty
Thousand ($650,000) Dollars adjusted annually for Smarte Carte to provide and maintain two
thousand (2,000) carts including carts new International Arrivals Facility (IAF).
EXECUTIVE SUMMARY
The current Smarte Carte concessions agreement expired on September 21, 2012 and has been
on a hold-over status. Since expiration the luggage cart business has changed industry wide.
Smarte Carte has emerged as the only provider of this service for US airports. The business
model for international arrival passengers has also changed. With this changed market, US
airports frequently pay a fee for the service of providing luggage carts within their international
arrival facilities as many airports are unwilling to pass this fee onto their arriving international
passengers. Smarte Carte has been implementing this annual fee with each of their contract
renewals around the country. SEA is one of the last airports to begin paying this fee.
This new agreement will have Smarte Carte provide new luggage carts throughout the airport
(both for domestic and international arrival) that have a built-in braking mechanism. It
dedicates two thousand (2,000) carts for use in the IAF while providing a quality product
needed to service passengers, reducing risk of damaging the new IAF facility, and reducing
potential injury to passengers and employees. Smarte Carte will continue to pay a Minimum
Annual Guarantee (MAG) and Percentage Rent for domestic luggage carts and massage chairs.
COMMISSION AGENDA – Action Item No. 8g Page 2 of 3
Meeting Date: November 17, 2020
Template revised June 27, 2019 (Diversity in Contracting).
JUSTIFICATION
This agreement is critical in providing passengers with a service they have grown accustom to
around the country. Port staff negotiated the lowest possible annual service fee for cart service
in the IAF. This fee is below what other US Airports are paying Smarte Carte, while continuing
to allow our international passengers use of the luggage carts without a fee.
Diversity in Contracting
Port staff in contracting with Smarte Carte is looking to find possible WMBE suppliers or
manufacturers that can supply the massage chairs as need to support the IAF passengers.
ALTERNATIVES AND IMPLICATIONS CONSIDERED
Alternative 1 – Leave Smarte Carte on month to month contract
Cost Implications:
Pros:
(1) No additional cost to the Port for luggage cart service in the IAF, so no incremental
cost added to the IAF rate base.
Cons:
(1) No luggage cart service in the IAF. This is not feasible operationally, as international
arrival passengers typically have more luggage and bulky parcels to transport out of
the facility.
(2) Use of existing luggage carts without a braking system has been evaluated by Port
Legal as a safety risk, due to the sloped IAF walkway.
This is not the recommended alternative.
Alternative 2 – Purchase the carts from Smarte Carte and use the Port’s third-party vendor to
manage the luggage carts
Cost Implications:
Pros:
(1) Port already has a third-party vendor in place for the IAF who could manage the
luggage carts inside IAF, so procuring an additional vendor would not be needed.
Cons:
(1) Initial cost of purchasing new luggage carts with built-in braking system would be an
operating expense in the year of purchase (expected to be 2021) and would hit the IAF
rate base in full in that year. Estimated cost to purchase 2,000 luggage carts for the
IAF is $1.5 million.
This is not the recommended alternative.
COMMISSION AGENDA – Action Item No. 8g Page 3 of 3
Meeting Date: November 17, 2020
Template revised June 27, 2019 (Diversity in Contracting).
Alternative 3 – Execute the contract with Smarte Carte
Cost Implications:
Pros:
(1) Use of new luggage carts with the automatic braking system significantly reduces
Port’s liability to passengers and damage to the new facility.
(2) The IAF is so expansive that the carts will be a passenger amenity to transport luggage
through the IAF, providing a greater customer service experience.
Cons:
(1) Incremental annual $650,000 operating expense added to the International Rate Base
for this service.
This is the recommended alternative.
FINANCIAL IMPLICATIONS
Annual Budget Status and Source of Funds
The annual cost under this agreement will be included in the operating budget, charged to the
Federal Inspection Services (FIS) cost center and recovered from airlines using the International
Arrivals Facility. For 2021, the $650,000 expense will increase passenger airline cost per
enplaned passenger (CPE) by $0.04.
Future Revenues and Expenses (Total cost of ownership)
• The Smarte Carte agreement will continue to generate revenue to the port through
domestic cart rental fees and massage chairs.
• The annual cost of the IAF luggage carts will be paid by the IAF cost center and
recovered through airline fees in the IAF rate base for international carriers.
ATTACHMENTS TO THIS REQUEST
None
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS
November 3, 2009 – Commission authorized the request for the Chief Executive Officer
to execute an Amendment to the Lease and Concessions Agreement of Smarte Carte,
Inc. at Seattle Tacoma International Airport that would extend the term for an
additional 5-year period as provided in the current agreement, under new negotiated
terms.
