PORT OF SEATTLE 
MEMORANDUM 
COMMISSION AGENDA               Item No.      6c 
ACTION ITEM 
Date of Meeting     March 10, 2015 
DATE:    March 2, 2015 
TO:      Ted Fick, Chief Executive Officer 
FROM:   Michael Ehl, Director Aviation Operations 
Kazue Ishiwata, Senior Manager Air Service Development 
SUBJECT:  Revised Incentive Program for New Small Community Air Service for Seattle-
Tacoma International Airport 
ACTION REQUESTED 
Request Commission authorization for the Chief Executive Officer to implement a revised
incentive program for new commercial air service for Seattle-Tacoma International Airport to
enhance its Category E - Small Community Air Service for unserved destinations in Washington,
Oregon, and Idaho through fee waivers and the inclusion of promotional funding consistent with
Categories A-D of the Airport's overall air service incentive program. 
SYNOPSIS 
The primary purpose of this action is to enhance the Airport's incentive program for new
commercial air services, specifically for small community airports in the Pacific Northwest, with
a goal to attract airlines to establish critical links between Seattle and smaller regional
communities. 
No airlines have taken advantage of the previously authorized incentive program for small
community air service since the Commission initially implemented the program in 2007, while
the industry's economic environment for the market has grown even more challenging.
The proposed modification is aimed to increase the ability to attract service on economically
challenging but valuable routes to small community airports in the Pacific Northwest by
temporarily waiving landing fees and certain facility charges, and by providing joint promotional
funds. The program is designed to mitigate the risk for prospective airlines by providing
estimated annual benefits of $200,000 to $434,000, depending on the level of service. The
program elements of Categories A through D in the New Air Service Incentive Program will
remain unchanged. 
BACKGROUND 
For many communities in the Pacific Northwest, air service to Seattle-Tacoma International
Airport is a critical link to the global transportation network. However, air service from other 
Washington airports to Seattle has steadily declined in recent years. In 2000, there were nearly

Template revised May 30, 2013.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
March 2, 2015 
Page 2 of 8 
42,000 annual scheduled passenger departures to eleven Washington airports; by 2005, the
number had halved to just over 20,000 departures to eight Washington airports.  The economic
downturn that followed further deteriorated the small community air service environment, and in
2015 the annual scheduled departures decreased to less than 15,000 to seven Washington
airports. 
Smaller airports nationwide have faced similar challenges due to fundamental shifts in airline
economics over the past two decades and to the lack of an economically viable small aircraft to
serve smaller communities. Most major U.S carriers are removing smaller, inefficient 37-50 seat
aircraft from their fleets entirely. Communities around the nation are working hard to find
solutions to improve air service to a broad section of the traveling community, provide better
access from secondary markets to the national and international air transportation system, and to
develop strategies for improving air service. 
PROJECT JUSTIFICATION AND DETAILS 
In recognition of the difficulties faced by small Pacific Northwest communities in attracting
viable air service, the Airport is proposing to enhance Category E of the previously authorized
New Air Service Incentive Program. The modification will allow prospective airlines to reduce
the risks of beginning such services, particularly the high start-up costs associated with new
services. The program provides participating airlines with temporary waivers of landing fees and
certain facility charges, as well as joint promotional support designed to assist the establishment
of new services in their first two years. 
Project Objectives 
To develop vital air service links between the Airport and the Pacific Northwest's small
community airports in order to stimulate and facilitate the region's growing economy and to
enhance the role of the Airport as the regional hub. The incentives are designed to alleviate cost
pressures on new services as they establish local operations and assist in the development of a
visible presence in the market. 
Scope of Work 
The previously authorized New Air Service Incentive Program includes five categories under
which a prospective route can qualify for the Airport's incentives. Small community air service
is designated as Category E of the New Air Service Incentive Program, and includes air service
to an unserved destination in Washington, Oregon, and/or Idaho. 
Proposed changes to the Category E incentives affect Parts II and III of the New Air Service 
Incentive Program. The Part I Incentive (Discounted International Arrival Facility Charges) is
not applicable to Category E services. 
Part II Incentives for Category E have been updated to include full waivers of landing fees,
gate/lobby fees, and ticket counter fees for the first two years of service. Previously, ticket
counters were not included as part of the incentive program.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
March 2, 2015 
Page 3 of 8 

Existing Part II Incentive  Proposed Part II Incentive 
Fee/Charge         Duration 
Category E           Category E 
Landing Fee Waiver      2 years               100%               100% 
Gate/Lobby Fee
2 years                 100%                  100% 
Waiver 
Ticket Counter Fee
2 years                     -                  100% 
Waiver 
* The second year of eligibility for Category E small community air services is contingent upon the air carrier
meeting a minimum of 75% of their projected operations in the first year of the program. 
Part III Incentive: Joint Promotion Program 
Part III Incentives have been introduced for Category E for the first time. Eligible services will
receive $12,000 per year for the first two years of service to assist in promoting the service and
developing a visible market presence. 
Existing Part III Incentive  Proposed Part III Incentive 
Incentive        Duration 
Category E            Category E 
Joint Promotional
2 years                      -          $12,000 per year 
Fund 
Eligibility 
Eligibility for Category E services has been expanded to allow services with a minimum of five
flights per week (reduced from a minimum of daily service), and to allow carriers to qualify for
the incentive program if the same carrier has not served the route for at least 18 months (reduced
from a minimum of 36 months). 
To be eligible as a new small community air service for Category E, the route must be: 
A nonstop service for unserved destinations in Washington, Oregon and Idaho; 
A minimum of five scheduled round trips each week via any aircraft type; 
Year-round scheduled service sold to the public; 
Not served by the same carrier or its subcontract partner carrier previously and canceled
within 18 months; 
Not considered a replacement service of another service previously served by profit-sharing
Joint Venture agreement carrier on the same city pair. 
Schedule 
To be eligible for this incentive program, the new air service must be announced and become
publicly available prior to the termination of the current Signatory Lease and Operating
Agreement (SLOA).  The current SLOA includes provision of the incentive program for

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
March 2, 2015 
Page 4 of 8 
passenger air services. However, the carrier does not have to be a signatory carrier to be eligible
for the incentive benefit per the Federal Aviation Administration guidelines for the incentive
program. 
FINANCIAL IMPLICATIONS 
Financial Analysis and Summary 
Fee Waiver Example: 
Aircraft:     76-seat Bombardier DHC8-Q400 
Frequency:   1 flight per day 
Standard    Additional
SLOA                    Estimated
Annual Cost  Annual Costs  Waived
Airport Charges    Signatory                              Cost Paid
to Existing      for New  Amount 
Carrier Rate                               by Airline 
Carrier      Entrants 
Landing Fee           $3.48      $78,752              $78,752       $0 
per 1,000 lbs 
Gate/Lobby         $246.72      $90,053              $90,053       $0 
per turn 
$21.62 
Ticket Counters    per position per      $31,565               $31,565       $0 
hour 
Ramp Tower Fee       $8.63      $3,150                 -    $3,150 
per landing 
Passenger Airline       $0.41        $9,278                   -     $9,278 
Apron Fee         per 1,000 lbs 
Bag Claim        $146,686                           - 
Device Charge*       per carrier                 $146,686          $146,686 
Bag Claim Fee         $0.96      $21,305                  -    $21,305 
per deplaned pax 
Baggage Makeup      $1.20      $26,630                -   $26,630 
System Fee      per outbound bag 
Baggage Makeup     $60,436                          - 
Device Charge*       per carrier                  $60,436           $60,436 
Baggage Makeup      $3.91      $86,771                -   $86,771 
Device Fee      per outbound bag 
Total for Existing Carriers          $347,504                      $147,134 
$200,370 
Total for New Entrant Carriers                   $554,626          $354,256 
Notes: 
- Rates assume carrier is a signatory to the Airport's Signatory Lease and Operating Agreement (SLOA);
non-signatory carriers pay higher rates but are exempt from charges marked with an asterisk (*). 
- Carriers with existing leased preferential gates and ticket counters are eligible for fee waivers only if they
use common-use facilities for the new service. 
- Ticket Counters: assumes 4 ticket counter hours per turn 
- Bag Claim Fee: assumes 80% load factor to estimate passenger numbers 
- Baggage Makeup System and Device fees: assumes 1 bag per passenger

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
March 2, 2015 
Page 5 of 8 
Fee Waiver Example: 
Aircraft:     9-seat Cessna Caravan 
Frequency:   3 flights per day 
Standard
Non                   Estimated
Annual Cost to      Waived
Airport Charges    Signatory                         Cost Paid
New Entrant      Amount 
Rate                          by Airline 
Carrier 
Landing Fee        $4.35per 1,000       $37,153      $37,153        $0 
lbs 
Gate/Lobby           $308.40      $337,698      $337,698        $0 
per turn 
$27.03 
Ticket Counters      per position per       $59,196       $59,196         $0 
hour 
Ramp Tower Fee        $10.79       $11,815          -     $11,815 
per landing 
Passenger Airline          $0.51         $4,356           -      $4,356 
Apron Fee           per 1,000 lbs 
Bag Claim Device          n/a           $0          -        $0 
Charge*             per carrier 
Bag Claim Fee           $1.20        $9,461           -      $9,461 
per deplaned pax 
Baggage Makeup        $1.50       $11,826          -    $11,826 
System Fee        per outbound bag 
Baggage Makeup         n/a          $0          -       $0 
Device Charge*         per carrier 
Baggage Makeup        $4.89       $38,553          -    $38,553 
Device Fee        per outbound bag 
Total                             $510,058      $434,037     $76,011 
Notes: 
- No existing carrier at the Airport currently utilizes a Caravan in its fleet, necessitating a new entrant
carrier 
- Rates assume carrier is not a signatory to the Airport's Signatory Lease and Operating Agreement
(SLOA). Non-signatory carriers pay higher rates but are exempt from charges marked with an
asterisk (*) 
- Ticket Counters: assumes 2 ticket counter hours per turn (6 per day) 
- Bag Claim Fee: assumes 80% load factor to estimate passenger numbers 
- Baggage Makeup System and Device fees: assumes 1 bag per passenger 
Examples above do not include additional expected income from indirect revenues such as
Passenger Facility Charges or Airport Dining and Retail.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
March 2, 2015 
Page 6 of 8 
STRATEGIES AND OBJECTIVES 
This project supports the Century Agenda objective to advance this region as a leading tourism
destination and business getaway by making Seattle-Tacoma International Airport the West
Coast "Gateway of Choice" for international travel. 
This project also addresses the Aviation Division's strategic objectives to become one of the top
ten customer service airports in North America and to operate a world-class international airport
by ensuring safe and secure operations and by anticipating the meeting needs of tenants,
passengers and the region's economy. 
ALTERNATIVES AND IMPLICATIONS CONSIDERED 
Alternative 1)  Maintain Existing Incentive Program As Is 
This alternative would maintain the New Air Service Incentive Program in its current state, with
no modifications made to any incentive category. This is not the recommended alternative. 
Pros: 
Does not require any additional financial commitments for new services beyond those in
the current Commission-approved New Air Service Incentive Program. 
Cons: 
Effectiveness of the incentive quality in Category E services is highly questionable, since
no carriers have participated in the program for a Category E service despite the
program's implementation since 2007, presumably due to the inability of the incentives
offered to sufficiently mitigate risk to the carrier. 
Alternative 2)  Expand Category E Incentives and Expand Eligible Communities 
This alternative would not only expand the benefits given under the Category E incentive
program, but would also expand the eligibility of the program to include Pacific Northwest
communities that currently have limited services to the Airport. This is not the recommended
alternative. 
Pros: 
The incentive is more attractive to the carriers with reduced risks for the start-up
operation. 
Expanding the support to the community with limited air services would stabilize
vulnerable operations. 
Cons: 
For the Airport to provide incentives to services that are currently in place is considered a
"subsidy" and is expressly forbidden by the FAA's guidelines on Air Service Incentive
programs in violation of the revenues diversion prohibition. 
Overly generous incentive program has the tendency to attract an unsustainable new
service only for the duration of the fee waivers and terminal rent discount.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
March 2, 2015 
Page 7 of 8 
Providing incentives solely to new entrant carriers to existing markets would likely
weaken the financial viability of both services, and would not further the goals of the
small community incentive program. 
Alternative 3)  Expand Category E Incentive Benefits for Unserved Destinations 
This alternative expands the incentive benefits for the participating airline under the Category E
incentive program, but limits the eligibility to previously unserved new routes. This is the
recommended alternative. 
Pros: 
This modification enhances the benefits for the prospective carrier and serves as the final
inducement in their decision-making process with reduced financial risk to operate small
community air services, and adheres to the guidelines on incentive programs as set forth
by the FAA. 
Cons: 
While the modification to the incentive program is not excessively generous, there is still
a risk of potentially lost revenues if the service is not sustainable beyond the incentive
period. 
ATTACHMENTS TO THIS REQUEST 
Seattle-Tacoma International Airport New Air Service Incentive Program, proposed
March 2015 version 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
September 27, 2011  the Commission authorized revision to the incentive program to
include a new category for ultra-long-haul international operations. 
June 28, 2011  the Commission approved a revised incentive program consistent with
recently-published Federal Aviation Administration guidelines on airport incentives. 
June 14, 2011  the Commission was briefed on the growth of international air service in
recent years. 
May 5, 2009  the Commission authorized revision to the incentive program to include a
narrow-body international air service to Europe, previously not included in the category. 
November 2, 2007  the Commission authorized a modification to the previously
approved program by allowing the Joint Promotion Program's fund to be utilized with
greater flexibility within the existing cost and timeline limit in multi-years, eliminating
the previously defined per-year usage limit. 
April 27, 2007  the Commission authorized the implementation of a small
community air service incentive program. 
April 10, 2007  the Commission authorized revision to the incentive program to include
trans-border commercial air service routes at a different benefit level. 
February 16, 2007  the Commission authorized modifications to the first request of the
incentive program and raised the maximum benefit to an air carrier.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
March 2, 2015 
Page 8 of 8 
December 13, 2005  the Commission authorized the first request for implementing a
new international air service incentive program.