"Seattle airport debate follows familiar lines"

Sunday, June 3, 2005

Seattle airport debate follows familiar lines
By Trebor Banstetter
The Fort Worth (TX) Star-Telegram


The case will seem quite familiar to North Texans: Southwest Airlines wants
unfettered access to a small, alternative airport closer to the heart of the
city.

Southwest executives say consumers will benefit. But officials with the
bigger airport worry about losing flights and passengers, as well as
financial damage.

A competing hub airline, the largest in town, vows to move flights as well,
if necessary. Neighborhood groups voice concern about traffic and noise if
the smaller airport expands.

But this particular airport debate doesn't concern Dallas/Fort Worth
Airport, Dallas Love Field or the Wright Amendment. In this case, the
setting is Seattle, and the argument centers on whether Southwest will fly
from sprawling Seattle-Tacoma Airport or the smaller King County Airport,
also known as Boeing Field.

"There are some similarities, aren't there," said Ron Ricks, senior vice
president of governmental affairs for Dallas-based Southwest. "Both of these
cases are about costs."

Analysts say it's part of a broader strategy to minimize costs and boost
revenues now while the airline still has some protection from high fuel
prices.

"Southwest sees where things are heading with oil prices, and they're
battening down the hatches," said Mike Boyd, an airline consultant for the
Boyd Group of Evergreen, Colo. "That means they have to get their costs down
even more while they still can."

Unlike most airlines, Southwest can buy jet fuel at cheaper prices because
of hedging contracts. But those contracts begin to expire over the next few
years, and the airline's advantage will dwindle.

That means other costs must come down. It's nothing new for the airline _
Southwest is notorious for making the most of its assets. Its airplanes have
among the highest productivity levels in the industry. Pilots fly more hours
per day than those at other major carriers. Flight attendants clean airplane
cabins between flights.

In North Texas and Seattle, Southwest is clearly trying to apply that
strategy to the airports as well. The resolution could have a significant
effect on the carrier's bottom line _ and how consumers in both communities
travel.

Battle in Seattle

Last month, King County officials stunned many in Seattle when they revealed
that they had been discussing a potential move to Boeing Field with
Southwest.

The airline flies out of Seattle-Tacoma, typically called Sea-Tac, with
about 35 flights a day. The airline accounts for about 9 percent of the
airport's market share.

But Southwest executives worry about the cost of flying from the airport,
which is owned by the Port of Seattle. It costs the airline roughly $10 to
$11 per passenger to fly from Sea-Tac, which makes it a relatively expensive
airport.

But a host of expansion projects, including a new runway, is likely to boost
that cost even further. By 2009, it could be as high as $25 per passenger,
Ricks said.

"At those prices, it would be virtually impossible to be a low-fare airline
and be profitable at Sea-Tac," he said.

So Southwest began looking around for alternatives. It found a potential
savior at Boeing Field, which King County owns.

That airport hasn't had regular commercial service since the 1970s. But
airport officials were excited about the prospects of landing Southwest.

"King County must explore such a once-in-a-generation opportunity," Ron
Sims, the county executive, wrote in a letter to the county council
chairman.

Ricks says that there could be a competitive advantage because Boeing is
cheaper and is closer to Seattle's population base. It is just five miles
from downtown, less than half the distance to Sea-Tac.

"The proximity to downtown is advantageous, from our standpoint," he said.
"It suits our customer profile better."

The Port of Seattle has concerns. Area residents would be the big losers if
Southwest moves to the smaller airport, said M.R. Dinsmore, the port's chief
executive.

"It would mean the cost of Sea-Tac operations and expansion would be spread
among the remaining airlines," Dinsmore said in a statement. "That would
translate into higher ticket prices for air passengers not flying on
Southwest."

Port officials argue that they can work with Southwest to bring its airport
costs under control, even with the expansion.

Alaska Airlines, the largest carrier at Sea-Tac, has voiced its opposition.
Alaska, which along with its affiliate Horizon Airlines accounts for about
48 percent of that airport's traffic, said that it could move as many as 100
daily flights to Boeing.

That could cut even further into Sea-Tac's revenues, forcing fees to
skyrocket as the new facilities come on line.

"We are opposed to any major carrier exiting Sea-Tac," Alaska spokeswoman
Amanda Tobin said. "We would have to consider moving flights for purely
competitive reasons."

Parallel flights

The situation has some remarkable similarities to the debate in North Texas
over the Wright Amendment. Here, Southwest has refused to fly from D/FW
Airport because, the airline claims, the airport is too congested and the
costs are too high.

Southwest also cites American Airlines' formidable D/FW hub, one of the
largest in the nation. American fiercely defends its turf at D/FW, and
Southwest executives say they don't typically operate at so-called "fortress
hubs."

And Love, close to downtown Dallas, is more convenient to the largest
population center, much like Boeing Field in Seattle.

That's why the airline is seeking to repeal the amendment, which restricts
flights from Love to the states adjacent to Texas, as well as Kansas,
Mississippi and Alabama, rather than move to D/FW.

Southwest would like to expand its Love service to add about 50 flights,
serving popular cities like Chicago, Los Angeles and Las Vegas.

Like Sea-Tac, D/FW officials worry that having an unrestricted, smaller,
cheaper competing airport could do serious damage. A study commissioned by
D/FW concluded that the airport could lose 21 million passengers, a 35
percent drop, if the amendment is lifted.

And American Airlines' response has mirrored Alaska's. Fort Worth-based
American has declared that it will move a substantial number of flights _
perhaps hundreds _ to Love Field if the restrictions are eliminated.

Neighborhood groups in both cities have mobilized, airing fears that
expanding the smaller airports could mean more traffic and noise for nearby
residents.

Less rancor

There are, of course, many fundamental differences in the two cases. Boeing
Field isn't restricted by federal law. Southwest doesn't want to switch
airports here, just expand its current home. And although costs are rising
at D/FW, they remain far below the levels at Sea-Tac.

Ricks said the Seattle debate, so far, has lacked the bitterness of the
North Texas brawl.

"There isn't the rancor we've had here, with this ancient rivalry between
two different jurisdictions," he said. "Seattle doesn't have that historical
baggage that Dallas and Fort Worth have."

Ultimately, both debates have the same roots _ Southwest's need to bring in
more money and cut more expenses if it wants to continue as the nation's
largest profitable airline.

"Southwest needs to go where it can collect the most people at the best
price, and that doesn't necessarily mean the big airport in town," said
Boyd, the airline consultant.

Ray Neidl, an airline analyst with Calyon Securities in New York, said
Southwest doesn't have much choice if fuel prices remain high.

Southwest "may offset higher fuel costs with revenue offsets and trimming
nonfuel costs further," he said in a recent investment report. He added that
he believes that Southwest will be one of only two profitable airlines this
year.

Southwest's Ricks stresses that although the drive to repeal the Wright
Amendment is moving at full speed, the Seattle proposal is in its infancy.
He said any move will probably take four to five years at least.

He also doubts that it will ever become as passionate as the Wright
Amendment debate.

"All of these things that tend to be controversial in Dallas and Fort Worth,
that doesn't seem to be the case in the Puget Sound area," he said. "Things
have been a lot more relaxed there."

Parallel airports

Southwest Airlines is considering leaving Seattle-Tacoma Airport and is
refusing to begin service at Dallas/Fort Worth Airport. The decision in both
cities has sparked debates over the best use of the communities' airports.
All figures 2004:


Seattle-Tacoma Airport

Total passengers: 28 million

Total aircraft operations: 358,894

Total air cargo (in metric tons): 346,966

Largest carriers: Alaska Airlines, United Airlines, Southwest Airlines,
Delta Air Lines

Top destinations: San Francisco; Los Angeles; Portland, Ore.; Spokane,
Wash.; Chicago


Dallas/Fort Worth Airport

Total passengers: 59 million

Total aircraft operations: 804,865

Total air cargo (in metric tons): 818,392

Largest carriers: American Airlines, Delta Air Lines, United Airlines,
Northwest Airlines

Top destinations: Atlanta, Las Vegas, Los Angeles, Denver, Chicago

SOURCES: The listed airports, U.S. Transportation Department 


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