PORT OF SEATTLE 
MEMORANDUM 
COMMISSION AGENDA                      Item No.         6a 
ACTION ITEM 
Date of Meeting     September 10, 2013 
DATE:     September 3, 2013 
TO:        Tay Yoshitani, Chief Executive Officer 
FROM:    Mark Reis, Managing Director, Aviation 
Michael Ehl, Director, Aviation Operations 
James Jennings, Manager, Aviation Properties 
SUBJECT:  2013-2017 Signatory Lease and Operating Agreement between the Port and the
Airlines operating at Seattle-Tacoma International Airport ("Airport") 
ACTION REQUESTED 
Request Commission authorization for the Managing Director, Aviation Division ("Managing
Director") to(1) execute a 2013-2017 Signatory Lease and Operating Agreement ("SLOA III")
between the Port and signatory airlines for the use of facilities at the Airport and (2) to suspend
the implementation of rates and charges and other provisions of Resolution No. 3677 no earlier
than upon commencement of said SLOA III. 
SYNOPSIS 
On December 31, 2012, the 2006-2012 Signatory Lease and Operating Agreement ("SLOA II")
expired.  Due to an impasse in negotiations for SLOA III, Commission adopted Resolution No.
3677 on May 14, 2013, establishing a rates and charges methodology for the use of facilities at
the Airport  in accordance with applicable federal Department of Transportation ("DOT")
requirements.    The  Commission  further  authorized  the  Managing  Director  to  suspend
implementation of the Resolution in the event Port staff and the airlines reached agreement on a
SLOA III prior to July 1, 2013. On July 1, 2013, the Managing Director implemented the airline 
rates and charges in accordance with Resolution No. 3677. 
Subsequently, Alaska Airlines, as chair of the Airline Airport Affairs Committee ("AAAC"), and
Port staff re-engaged in lease negotiations. The following business terms associated with SLOA
III are the result of those negotiations. 
The term of SLOA III will commence on January 1, 2013, only if (a) four (4) carriers accounting
for fifty percent (50%) of the terminal rents and landing fees paid to the Port in 2012 by all air
carriers operating at the Airport execute and deliver the agreement to the Port by November 15,
2013, and (b) at least an additional six (6) other air carriers either execute and deliver the
agreement or provide the Port with written documentation recommending the agreement to their
respective boards by November 15, 2013, so that carriers accounting for sixty six and two-thirds
percent (66 2/3%) of the terminal rents and landing fees paid to the Port in 2012 by all air
carriers operating at the Airport have either executed SLOA III or provided documentation to the

Template revised May 30, 2013.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
September 3, 2013 
Page 2 of 4 
port by November 15, 2013, demonstrating their management's recommendation to do so.
Otherwise,  the  rates  and  charges  and  other  provisions  under  Resolution  No.  3677,  as
implemented by the Managing Director, will remain in effect for 2013. 
LEASE SUMMARY COMPARISON 
Provision                 SLOA II                           SLOA III 
Term                  7 Years                       5 Years 
Debt Service Coverage    Included in Airline Rate base(s)   No change. 
if overall airport debt service
coverage falls below 1.25
times. 
Revenue Sharing         None                           Port will share with airlines 50%
of net revenues in excess of 1.25x
debt service. 
Insurance                $300M aviation liability; $10M    $500M aviation liability; $10M
auto.                              auto. 
Security Deposit/        Security Fund retained by        Security Fund eliminated. If SLOA
Security Fund            Airport equal to 1/12 of          III executed in 2013, airline
revenue requirement for         revenue requirement in 2013 will
Airfield and Terminal.             be reduced by an amount equal
to Security Fund balance.
New entrants provide security    No surety required for carriers
deposit or buy into Security       operating in good financial
Fund.                            standing at the Airport for at
least 24 months. 
Cost of Vacant Space     Airport recovers full cost of all    Airport assumes cost of vacant
aeronautical space, including     space for publicly accessible
vacant space.                     offices and airline clubs. 
Majority-in-Interest      Negative MII vote requires six    Negative MII vote requires 12
(MII) Approval of         month delay.                     month delay. 
Capital Projects 
Amortization             Amortization charged to rate     Amortization charged to rate
base for aeronautical assets      base for aeronautical assets
placed in service beginning in     placed in service beginning in
2006 at 6.0%.                     1992 at rate that reflects
borrowing costs in year asset
placed in service. 
Space Categorization/    Gates & Ticket Counters (2.5)     Gates (2.0) 
Weights                Offices (1.5)                    Ticket Counters, public-accessible

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
September 3, 2013 
Page 3 of 4 
Baggage (makeup, pickup, and   offices (including VIP lounges),
FIS) (1.0)                              and baggage (makeup and
Closed Storage (0.5)               pickup) (1.0) 
Non-publicly-accessible offices
(0.5) 
Closed Storage (0.25) 
Federal Inspection       Not separate cost center.         Separate cost center, including
Services (FIS)              Discretionary use of non-airline   share of baggage system costs.
revenues to reduce revenue      Rate set to recover costs. 
requirement. 
BACKGROUND 
Port staff began negotiations with a committee of Airline representatives in November 2011.
These lease negotiations continued through June 2012 when it became apparent that the Port and
the airlines had significant, and at the time, insurmountable differences in negotiation positions.
The Port began consideration of an airline rate resolution in lieu of a negotiated agreement, and
after consultation with the Commission, analyzed this alternative between June and August 2012.
In August through October 2012, the Port and the airlines discussed the possibility of a one-year
extension to SLOA II to allow the parties additional time to negotiate.  In October, the airlines
instead demanded the Port implement rates and charges by resolution. Port staff developed and
refined rates and charges by resolution between October 2012 and February 2013.  When the
airlines saw the resolution rates, they requested to restart negotiations. Negotiations broke down
again, and the Commission authorized implementation of Resolution No. 3677 in May 14, 2013.
On July 1, 2013, Port staff issued notice to all airlines operating at the Airport of the rates and
charges to be levied under Resolution No. 3677.  In July, negotiations resumed, resulting in the
proposed SLOA III. 
The term of the agreement commences on January 1, 2013, only if both of the following
conditions are met: 
At least four air carriers execute the agreement by November 15, 2013. These air carriers
must account for at least 50% of the total terminal rents and landing fees paid to the port
in 2012 by all air carriers operating at the Airport; and 
A minimum of 6 additional air carriers must provide to the port by no later than
November 15, 2013, written documentation that their management intends to recommend 
to their boards execution of the agreement, so that that the total of air carriers either
executing the agreement or providing written recommendations to their boards to do so 
account for at least sixty-six and two-thirds percent (66 2/3%) of the total amount of
terminal rents and landing fees paid to the port in 2012 by all air carriers operating at the
Airport. 
If these conditions are not met, the rates and charges and other provisions of Resolution No.
3677, as implemented by the Managing Director, will remain in effect for 2013.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
September 3, 2013 
Page 4 of 4 

FINANCIAL IMPLICATIONS 
This lease agreement will define the methodology for setting airline rates and charges that will
amount to approximately $1.3 billion in operating revenues for the Airport during the term of
this agreement (2013  2017).  Key financial provisions include:  1) Debt service coverage
trigger: permits the Airport to include in the airline rate base debt service coverage up to 25% of
debt service as needed to bring total Airport debt service coverage up to 1.25x. This ensures that
the Airport will maintain at least 1.25x debt service coverage and 2) Revenue sharing: t he
Airport will share 50% of net revenues in excess of 1.25x debt service with the airlines.  This
permits airlines to benefit from increased Airport income through a reduction in airline fees. 
STRATEGIES AND OBJECTIVES 
SLOA III  supports the Port's Century Agenda objective of meeting the region's air
transportation needs at Sea-Tac for the next 25 years by creating a financial structure that permits
the Airport to generate adequate cash flow to maintain and invest in new facilities while also
sharing revenues with the airlines to reduce airline costs. 
It also supports the Airport strategy of reducing airline costs as far as far as possible without
compromising operational and capital needs.
ALTERNATIVES AND IMPLICATIONS CONSIDERED 
Alternative 1)  Do nothing. Resolution No. 3677 would remain in place and would control the
financial and operating relationship between the Port and the airlines. Under this alternative, it is
possible that at least two airlines, Alaska Airlines and Southwest Airlines, would file formal
complaints against the Port with the U.S. Department of Transportation.  This is not the
recommended alternative. 
Alternative 2)  Authorize execution of SLOA III. This is the recommended alternative. 
ATTACHMENTS TO THIS REQUEST 
2013-2017 Signatory Lease and Operating Agreement 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
May 14, 2013  The Commission adopted Resolution No. 3677, as amended, setting
rates and charges for Airlines operating at the Airport. 
April 23, 2013  The Commission approved First Reading of Resolution No. 3677,
setting rates and charges for Airlines operating at the Airport. 
April  2,  2013   Staff  requested  First  Reading  of  Resolution  No.  3677.    The
Commission postponed action to April 23, 2013 to allow more time for Port staff and
airlines to negotiate a lease agreement.