AGENDA MEMORANDUM                        Item No.          7a 
BRIEFING ITEM                            Date of Meeting     September 12, 2017 
DATE:     August 24, 2017 
TO:        Dave Soike, Interim Executive Director 
FROM:    R. Borgan Anderson, Director, Aviation Finance & Budget 
SUBJECT:  Airline Signatory Lease and Operating Agreement  Status Update 
EXECUTIVE SUMMARY 
The current Signatory Lease and Operating Agreement (SLOA III) between the Port and
signatory airlines for the use of facilities at the Airport expires on December 31, 2017. Airport
staff and airline representatives have been meeting regularly since February of this year
negotiating a successor lease agreement (SLOA IV).  Progress has been made on a number of
issues, but there remain outstanding issues.   Agreement on key business terms is needed in
September in order to have the lease drafted, reviewed and executed in time to implement on
January 1, 2018. 
All outstanding issues are likely resolvable with the exception of one. The Port has expressed a
strong interest in incorporating language that would preserve the option for the Port to use
non-airline revenues to contribute to a sustainable airline fuels (SAF) program, if such a
program is developed, and if state and federal legal issues can be resolved.  The airlines hold
the view that provisions relating to a SAF program do not belong in a lease agreement.  The
negotiations are at an impasse over this issue. 
BACKGROUND 
A signatory lease and operating agreement is a comprehensive agreement that defines airline
rights to use the airport, the methods for allocating airport facilities such as gates to airlines,
the methodology for charging the airlines for use of airport facilities (e.g., landing fees, terminal
rents, etc.), as well as many terms and conditions found in a typical lease document. SLOA III
included provisions granting the airlines rights to vote to disapprove capital projects meeting
certain criteria, and to share in airport net revenues. Once an agreement is reached with the
airline negotiating committee, separate lease documents are prepared for each airline that
chooses to sign. An airline choosing not to sign the agreement would pay non-signatory rates
(125% of signatory rates per SLOA III) and would be required to sign an operating agreement.



Template revised September 22, 2016; formatting update October 19, 2016.

COMMISSION AGENDA  Briefing Item No. 7a                                  Page 2 of 5 
Meeting Date: September 12, 2017 
Terms of signatory lease and operating agreements vary, but 5-10 years has been common
among airports in recent years.  SLOA III has a five year terms (2013  2017), while its
predecessor, SLOA II, had a term of seven years (2006  2012). For SLOA IV , we have narrowed
our discussion of term to between seven and nine years. 
Compared to the 2012- 2013 time frame when SLOA III was developed, growth at Sea-Tac has
consumed much of the availability of gates, particularly at peak periods. Thus, a major focus of
the negotiations has been on clarifying how gates are defined and allocated.
SCHEDULE 
Milestone                                             Original Target   Last Possible 
Reach agreement on major business terms                August 16        September 27 
Drafting and review of lease documents  ready for        September      October 13 
signature 
Commission briefing on agreement                       October         October 24 
Commission approval                                  October         November 14 
Airlines signed leases received by Port                      October -         November 17 
November 
Implement SLOA IV                                    January 1        January 1 
Failure to reach agreement on major business terms in September will likely mean SLOA IV
could not be implemented on January 1, 2018. In the absence of a new agreement, there are
two alternatives. Either the existing lease agreement could be extended on a month-to-month
basis, or the Port could implement rates and charges by resolution.    Resolution 3677,
establishing a rates and charges methodology for use of facilities at the Airport in accordance
with applicable federal Department of Transportation requirements, was approved by the
Commission on May 14, in 2013.  Staff implemented that resolution on August 1, 2013.
Resolution 3677 was suspended in November, 2013, when SLOA III became effective. 
MAJOR ISSUES 
The following issues are being worked on: 
1.  Gate definition  clarifying existing ambiguities 
2.  Gate allocation methodology, including the determination of the number of common
use gates 
3.  Signatory status  change qualifications to sign agreement? 
4.  Term of agreement  number of years. 
5.  Airline participation in capital approval process  majority-in-interest provisions (MII) for
dollar amount and any exclusions or modifications. 
6.  Revenue sharing  percent of net airport revenues to share with airlines above 125% of
annual debt service (currently share 50%).
7.  Sustainable aircraft fuels (SAF or Biofuels)  language in agreement permitting Port to
use non-airline revenues up to a specified annual limit. 
8.  Basis of gate hold room charges  common charge for all gates (SLOA III method), or
based on actual square footage of each hold room.  The Port would collect the same
Template revised September 22, 2016. 
Template revised September 22, 2016.

COMMISSION AGENDA  Briefing Item No. 7a                                  Page 3 of 5 
Meeting Date: September 12, 2017 
total  revenues,  but  the  amount  collected  from  individual  carriers  could  vary
substantially. 
Progress has been made on most of the issues above, with the exception of SAF. On this issue
the Port has a strong interest in including SAF language in SLOA IV. The airline view is equally
strong in opposition. This has created an impasse that must be resolved in order to reach an
agreement. 
ALTERNATIVES FOR SAF ISSUE FOR SLOA IV AND IMPLICATIONS CONSIDERED 
The following alternatives relate to courses of action to resolve the SAF issue for SLOA IV: 
Alternative 1  Port sticks with current position to include language as drafted relating to SAF.
This language as proposed provides the Port with the option to use up to $7 million per year of
non-airline revenues towards a SAF program if such a program is developed, and if the state
and federal legal concerns can be addressed.
Pros: 
(1) Preserves Port's option to contribute to SAF program if state and federal legal issues can
be resolved. 
(2) This could be seen an important market signal for a prospective local SAF producer. 
Cons: 
(1) The airline position, as communicated by Airlines for America (A4A) in letter to the Port
on August 25, 2017, is that such a provision does not belong in an airport lease
agreement.
(2) Airline representatives on the SLOA IV negotiations team have indicated they could not
sign SLOA IV with this language included.  This would likely preclude the possibility of
reaching agreement on SLOA IV in 2017. 
Alternative 2  Port modifies proposed language in to include a statement of joint support for
furthering progress towards a SAF program without specific financial commitments. 
Pros: 
(1) Would demonstrate support for furthering SAF program at Sea-Tac. 
(2) The Port and the airlines (per A4A letter) appear to share an interest in making progress
on SAF, so agreement on this "softer" language may be possible. 
(3) Port may be able to contribute to a SAF program regardless of language in SLOA IV if
state and federal legal concerns can be addressed. 
Cons: 
(1) May not be seen as a sufficiently strong market signal to stimulate local SAF
development. 


Template revised September 22, 2016. 
Template revised September 22, 2016.

COMMISSION AGENDA  Briefing Item No. 7a                                  Page 4 of 5 
Meeting Date: September 12, 2017 

Alternative 3  Agree to remove SAF from SLOA IV and strive to achieve Memorandum of
Understanding (MOU) with major airline fuel user at Sea-Tac. Approval of SLOA IV would be
dependent on reaching agreement on this MOU. 
Pros: 
(1) Demonstrates partnership and mutual commitment to moving forward with SAF. 
(2) Could be an important signal to market 
(3) Allows Port to press other corporations and airlines as SAF program gets underway in
future. 
(4) Port may be able to contribute to SAF program regardless of language in SLOA IV if state
and federal legal concerns can be addressed. 
Cons: 
(1) If SLOA is dependent on the MOU, may stall or delay SLOA IV. 
(2) Missed opportunity to include SAF in SLOA IV. 
Alternative 4  Agree to remove SAF language from SLOA IV. 
Pros: 
(1) Could likely reach agreement on other SLOA IV terms by September 21st, which would
permit implementation by January 1, 2018. 
(2) Could still pursue MOU with major airline fuel user at Sea-Tac as a way to send a market
signal. 
(3) Avoids "fight" on an issue that will require partnership to realize long-term success. 
(4) Port may be able to contribute to SAF program regardless of language in SLOA IV if state
and federal legal concerns can be addressed. 
Cons: 
(1) Missed opportunity to include SAF in SLOA IV 
(2) No MOU with major airline fuel user at Sea-Tac in near term. 
ALTERNATIVES FOR SLOA AND IMPLICATIONS CONSIDERED 
The Port's approach to the SAF issue is impacting the ability of the negotiating team to reach
agreement on the key business terms of SLOA IV. If agreement on SLOA IV cannot be reached,
the Port has two alternatives: 
Alternative 1  Extend SLOA III on month-to-month basis, continue negotiations on SLOA IV 
Pros: 
(1) Provides more time to negotiate over SAF. 
(2) Port is satisfied with terms of SLOA III in near term. 


Template revised September 22, 2016. 
Template revised September 22, 2016.

COMMISSION AGENDA  Briefing Item No. 7a                                  Page 5 of 5 
Meeting Date: September 12, 2017 
Cons: 
(1) SLOA IV, as currently proposed, includes agreed upon new gate definition and new gate
allocation methodology  would not be able to implement in 2018. 
(2) Uncertainty over future lease terms and rates and charges provisions from external
perspective (e.g., holders or prospective buyers of Port revenue bonds). 
(3) Port staff and airline representatives will continue to spend significant time on SLOA
negotiations, precluding progress on other issues. 
Alternative 2  Port Implements rates by resolution 
Pros: 
(1) Avoids need for holdover month-to-month for SLOA III. 
(2) No revenue sharing with airlines. 
(3) No MII for capital approval. 
(4) Port has previously implemented rates by resolution (5 months in 2013).  Could be
implemented again. 
Cons: 
(1) Higher airline costs could trigger frequent lobbying by multiple airlines to port leaders
for various changes. Most major airport hubs have lease agreements. 
(2) We know from 2013 experience that major airlines at Sea-Tac do not like terms of
resolution.
(3) Will be seen as a public indication that Port and airlines are at impasse on key issues. 
(4) Lack of agreement on SLOA could interfere with progress on other initiatives. Long-term
success for implementing the Sustainable Airport Master Plan (SAMP) and SAF each
requires airport and airline partnership. 
(5) Cost per enplaned passenger (CPE) will increase (no revenue sharing). 
Staff seeks commission guidance on the SAF alternative to pursue.
ADDITIONAL BACKGROUND 
None 
ATTACHMENTS 
None 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
September 13, 2013  Authorized Managing Director, Aviation Division to execute SLOA III and
suspend resolution 3677 if signatory threshold is met by November 15, 2013 (it was) 
May 14, 2013  Commission passed resolution 3677 establishing the methodology for rates and
charges 

Template revised September 22, 2016. 
Template revised September 22, 2016.