6c memo
COMMISSION AGENDA MEMORANDUM Item No. 6c ACTION ITEM Date of Meeting January 9, 2018 DATE: December 31, 2017 TO: Dave Soike, Interim Executive Director FROM: Michael Ehl, Director Airport Operations Wayne Grotheer, Director Aviation Project Management Group SUBJECT: Zone 3 Common Use Ticket Counter Conversion Project (CIP #C800925) Amount of this request: $1,650,000 Total estimated project cost: $1,700,000 ACTION REQUESTED Request a single Commission authorization for the Executive Director to: (1) proceed with design and construction of the Zone 3 Common Use Ticket Counter project at Seattle-Tacoma International Airport; (2) execute a contract to purchase common use equipment; and (3) use Port crews to complete the project. This single authorization is for a total cost of $1,700,000. EXECUTIVE SUMMARY This project responds to the continued growth in Airport traffic and airline operations. It improves the efficiency and flexibility of the ticket lobby, and thus improves the passenger experience at the Airport. This project is necessary to provide additional common use ticket counters for new airline entrants that have announced the start of service to Seattle beginning the summer of 2018. There is currently not enough capacity at the current common use ticket counters to accommodate these new airlines as these counters are fully subscribed at peak times. The project adds common use ticketing capacity in the Zone 3 Ticket Lobby between Delta Air Lines and Southwest Airlines creating 10 new common use ticket counter positions. It also adds 8 Common Use Self Service (CUSS) kiosks in the lobby area. Zone 3 is located adjacent to the passenger security checkpoint that provides the most direct access to international departure gates. Virgin America, Inc., through the merger with Alaska Airlines, will be vacating the space in April 2018. This single authorization request will allow the project team to proceed quickly as this project has been deemed a "hot project." Airline operations are impacted by the current lack of ticket counter capacity that this project will address. Template revised September 22, 2016. COMMISSION AGENDA Action Item No. _6c___ Page 2 of 4 Meeting Date: January 9, 2018 JUSTIFICATION This project supports the Century Agenda Goal to advance this region as a leading tourism destination and business gateway: make Sea-Tac Airport the West Coast "Gateway of Choice" for international travel and double the number of international flights and destinations. DETAILS This project will add common use ticketing capacity in the Zone 3 Ticket Lobby between Delta Air Lines and Southwest Airlines creating 10 new common use ticket counter positions. It also adds up to 8 Common Use Self Service (CUSS) kiosks in the lobby area. Total project costs are estimated to be $1,700,000. Recurring hardware license and maintenance costs will be budgeted within the Aviation Maintenance department's operating budget. Scope of Work This project adds ticketing capacity in Zone 3 by creating 10 new common use ticket counter positions and adding 8 CUSS kiosks. (1) Repurpose 6 existing Virgin America ticket counter positions for common use (2) Add 4 ticket counter positions in Zone 3 (3) Add 6 new bag scales to replace previous proprietary scales (4) Purchase and install Common Use (CUSE) ticket counter equipment, including bag scales and overhead display monitors required for 10 positions (5) Purchase and install 8 Common Use Self Service (CUSS) kiosks Schedule Activity Design start 2018 Quarter 1 Construction start 2018 Quarter 1 In-use date 2018 Quarter 3 Cost Breakdown This Request Total Project Design $276,000 $276,000 Procurement $722,000 $722,000 Construction $701,000 $701,000 Total $1,700,000 $1,700,000 ALTERNATIVES AND IMPLICATIONS CONSIDERED Alternative 1 Lease the vacated Virgin America ticket counters to another airline Cost Implications: $0 Pros: (1) This is the least expensive option. Template revised September 22, 2016; format updates October 19, 2016. COMMISSION AGENDA Action Item No. _6c___ Page 3 of 4 Meeting Date: January 9, 2018 Cons: (1) This option does not provide the common use capacity needed to support new entrant carriers. This is not the recommended alternative. Alternative 2 Replicate the adjacent Delta Air Lines flow-through ticket counter "islands" by building out a third check-in island as a Port sponsored capital project using the vacated Virgin America ticket counters along with the next door vacant former airline ticket office space to create 17 flow-through passenger check-in positions (8 common use positions, 9 common use kiosks). Cost Implications: $4,300,000 Pros: (1) Additional common use check-in counters for new entrants would be established. (2) Passenger queueing and circulation in Zone 3 would see improvement. Cons: (1) This alternative will not meet the timeline required for new entrants in summer of 2018. (2) This alternative would cost more than Alternative 3. This is not the recommended alternative. Alternative 3 Convert Virgin America's existing check-in counters to 10 common use positions. Purchase and install 8 CUSS kiosks. Cost Implications: $1,700,000 Pros: (1) Allows flexibility with 10 common use positions which can be configured to meet airline needs on-demand. (2) Can be constructed to meet summer deadline for new entrant carriers. Cons: (1) Location of construction area will have some impact on Delta operations; will require coordination with Delta to mitigate impacts. This is the recommended alternative. FINANCIAL IMPLICATIONS Cost Estimate/Authorization Summary Capital Expense Total COST ESTIMATE Original estimate $1,700,000 $0 $1,700,000 AUTHORIZATION Template revised September 22, 2016; format updates October 19, 2016. COMMISSION AGENDA Action Item No. _6c___ Page 4 of 4 Meeting Date: January 9, 2018 Previous authorizations $50,000 $0 $50,000 Current request for authorization $1,650,000 $0 $1,650,000 Total authorizations, including this request $1,700,000 $0 $1,700,000 Remaining amount to be authorized $0 $0 $0 Annual Budget Status and Source of Funds The Zone 3 Common Use Ticket Counter Conversion (CIP# C800925) was not included in the 2018-2022 capital budget and plan of Finance. The budget was transferred from the Aeronautical Allowance (CIP #C800753), resulting in no net change to the capital budget. The funding source for this project will be future revenue bonds. Financial Analysis and Summary Project cost for analysis $1,700,000 Business Unit (BU) Terminal Building Effect on business performance NOI after depreciation will increase (NOI after depreciation) IRR/NPV (if relevant) N/A CPE Impact Less than $0.01 in 2018 Future Revenues and Expenses (Total cost of ownership) The space will continue to be used as ticket counter space. The capital cost of this project will be incorporated into the airline rate base and recovered through terminal rents and common use fees. ATTACHMENTS TO THIS REQUEST Presentation slides PREVIOUS COMMISSION ACTIONS OR BRIEFINGS None Template revised September 22, 2016; format updates October 19, 2016.
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