PORT OF SEATTLE 
MEMORANDUM 
COMMISSION AGENDA               Item No.      6b 
ACTION ITEM 
Date of Meeting      June 14, 2016 
DATE:    June 6, 2016 
TO:      Ted Fick, Chief Executive Officer 
FROM:   Michael Ehl, Director Aviation Operations 
Kazue Ishiwata, Senior Manager Air Service Development 
Tom Green, Senior Manager Air Cargo Operations and Development 
SUBJECT:  Revised New Air Service Incentive Program 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 as
described below for new international service, new domestic and short-haul international service,
and new international freighter service. 
SYNOPSIS 
The purpose of this action is to revise and enhance the Airport's incentive program for new air
services in order to be more competitive in attracting new air services to Seattle. The program
provides participating airlines with temporary waivers of landing fees and certain facility charges 
as well as joint promotional support for the new service for a period of one to two years. 
The Port's existing incentive program has proven to be an effective final inducement for carriers
considering new service to Seattle. However, the market has become significantly more
competitive since the program was last reviewed in 2011 (with the exception of the addition of
Small Community Air Service Incentives in 2015). As the Airport seeks to attract new services
further afield where carriers prefer to operate lower frequency service, the eligibility
requirements of the current program appear unnecessarily onerous and not comparable to other
airports' programs 
The proposed changes to the incentive program simplify and enhance the existing incentives for
medium- and long-haul international services, while adding modest incentives for new services
to unserved domestic/short-haul international markets and for new freighter services. These
proposed changes will bring the Airport's program in line with programs at other airports, and
will help the Airport achieve its Century Agenda goals of advancing the region as a leading
tourism destination and business gateway and to triple the volume of air cargo to a target of
750,000 annual metric tons. 

Template revised May 30, 2013.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
June 6, 2016 
Page 2 of 8 

BACKGROUND 
Efficient air service is vital to Washington State's economy, benefiting the regional community
as a whole in facilitating business transactions for corporate travelers and stimulating the state's
tourism industry. Air cargo services, whether by freighter or with cargo carried by passenger
aircraft, link Washington State producers and consumers to global markets emphasizing speed of
delivery. New air services generate additional economic and employment benefits to the region,
and provide the Port of Seattle with direct, incremental revenues. An international long-haul
flight, for example, provides the Port with over $1.5 million in annual terminal rents and charges,
and generates over $75 million annually to the regional economy. 
The launch of a new air service requires significant investment risk on the part of an airline. For
example, the cost to operate a daily long-haul international flight with a Boeing 777 aircraft is
over $100 million annually, depending on many variables such as fuel price, flight distance,
operating carrier's base cost, etc. With airlines having grown increasingly risk-averse since 9/11,
it has become a commonly-held practice for airports, including Sea-Tac, to offer incentive
programs as a way to partially mitigate these risks. 
The Port of Seattle Commission authorized implementation of the Airport's new air service
incentive program initially in December 2005, and subsequently granted revisions to modify it
through several additional action items in 2007, 2009, 2011, and 2015. The incentives are
comprised of a combination of fee waivers and/or joint promotional funds, depending on the
category of service. The current program is primarily focused on new medium- and long-haul
international services, which may qualify for one of four categories (A-D) based on the length of
the new route and whether the market is already served by another carrier at the Airport. The
program also has an additional category (E) for new service to unserved small communities in
Washington, Oregon, or Idaho. However, the current program does not provide any incentives
for new domestic markets or for new freighter services. 
PROJECT JUSTIFICATION AND DETAILS 
Project Objectives 
The proposed changes to the incentive program will allow the Airport to compete more
effectively in negotiating with prospective carriers in attracting new air services. The increased
activities and resultant revenues brought by new air services produce a long-term reduction of
overall airport costs, which benefits existing carriers. 
Scope of Work 
The tables below detail the proposed additions and changes to the Airport's New Air Service
Incentive program. In summary, the proposed program:

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
June 6, 2016 
Page 3 of 8 

Enhances the existing program for new medium- and long-haul international flights by
modestly increasing incentives and relaxing the eligibility requirements to include lower
frequency services. 
Creates new incentives for new domestic or short-haul international flights to unserved
markets. 
Creates new incentives for new international freighter service to help the Airport achieve
the Century Agenda goal to triple the volume of air cargo. 

Proposed Changes to New International Service Incentive Program 
Landing Fee     IAF Fee     Promotional
Waiver       Waiver        Funds 
Year  Year  Year  Year   Year   Year
Category          Eligibility              1      2      1      2      1      2 
Unserved city >6,000 
Category A:     >4,000 miles 
100%   100%   100%   100% 
Unserved Long-Haul  5x 2x week min, year-round                           $500,000 
Int'l Markets     Unserved city 4,000-5,999                              $455,000 
75%   75%   100%   75% 
(previously Cat. A & B)   miles 
2x week min, year-round 
Category B: 
Unserved Medium-  Unserved city 2,000-4,000
100%        100%          $300,000 
Haul        miles                        n/a           n/a 
75%        75%          $200,000 
Int'l Markets     3x 2x week min, year-round 
(previously Cat. C) 
Category C: 
Competitive Medium-  Served city >4,000 >2,000 
& Long-Haul Int'l   miles                 n/a     n/a     n/a     n/a   $200,000   n/a 
Markets      3x 2x week min, year-round 
(previously Cat. D)

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
June 6, 2016 
Page 4 of 8 

Proposed Incentives for New Domestic and Short-Haul International Services 
Ticket Counter
Landing Fee              Promotional
& Gate Fee
Waiver                  Funds 
Waivers 
Year  Year  Year  Year  Year   Year 
Category           Eligibility               1     2     1      2      1      2 
Category D: 
Unserved city in Washington,                          $12,000 $12,000 
Small Community Air
Oregon, or Idaho           100%   100%   100%   100% 
Service 
5x week min, year-round                                $25,000 
(previously Cat. E) 
Category E:     Unserved city in the U.S.
Unserved Domestic &  (excluding WA, OR, and ID)
Short-Haul Int'l           -or-            n/a    n/a     n/a     n/a       $25,000 
Markets      Unserved city <2,000 miles 
(new category)     5x week min, year-round 

Proposed Incentives for New International Freighter Services 
Landing Fee         Promotional 
Waiver         Funds 
Category                    Eligibility                           Year 1   Year 2    Year 1   Year 2 
Category F: 
New service to markets with no
Unserved International                                              up to 
existing freighter service              100%     100% 
Freighter Markets                                               $100,000 
2x week min, year-round 
(new category) 
Category G: 
New service to markets with existing
Competitive International                                           up to
freighter service                      n/a       n/a               n/a 
Freighter Markets                                            $25,000 
2x week min, year-round 
(new category) 

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). However, the carrier does not have to be a signatory carrier to be eligible
for the incentive program. 
FINANCIAL IMPLICATIONS 
Financial Analysis and Summary 
Even during the incentive period, new air services generate direct revenues to the Port, in
addition to contributions to the regional economy. Below are two examples of the fee waiver

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
June 6, 2016 
Page 5 of 8 

structure based on the proposed incentives for passenger and cargo services. These examples do
not include joint promotional funds of up to $500,000. 
Example A: Estimated Charges and Incentives for Boeing 787-8 service 3x/week to
Category A market 
(Note: this service would not be eligible for ultra long-haul incentives under the current
program) 
Annual Cost paid by
Estimated     Waived
Rate/Charge                              Carrier (Port
Annual Charges    Amount 
revenue) 
Landing Fee                 $ 211,600    $ 211,600                - 
Ramp Tower Fee             $ 1,200         -        $ 1,200 
Apron Fee                  $ 26,100          -         $ 26,100 
Passenger loading bridge fee       $ 5,500           -         $ 5,500 
Common use gate fee           $ 165,700          -         $ 165,700 
FIS Facility Fee                $ 169,800     $ 169,800                 - 
Common use ticket counters       $ 55,800          -         $ 55,800 
Baggage Makeup Device        $ 131,100          -        $ 131,100 
Annual Cost paid by
Estimated     Waived
Rate/Charge                                      Carrier (Port
Annual Charges     Amount 
revenue) 
Baggage Makeup System        $ 53,600         -        $ 53,600 
BMU Equipment Charge        $ 69,800         -        $ 69,800 
Office Space Lease             $ 44,800           -         $ 44,800 
Annual Total                   $935,000     ($381,400)           $553,600 
2-year Total                   $1,870,000     ($762,800)          $1,107,200 
Assumptions: 
2016 rates and charges for SLOAIII signatory carrier. 
236-seat Boeing 787-8 aircraft at 80% load factor; 1.5 bags per passenger 
300 ft2 office space 
Example B: Estimated Charges and Incentives for Boeing 747-8F 2x/week freighter
service to Category F market 
Annual Cost paid by
Estimated     Waived
Rate/Charge                              Carrier (Port
Annual Charges    Amount 
revenue) 
Landing Fee                 $ 283,300    $ 283,300                - 
Ramp Tower Fee             $ 800         -          $ 800 
Cargo Operations Area fee         $ 18,200          -           $ 18,200 
Annual Total                   $302,300     ($283,300)            $19,000 
2-year Total                     $604,600     ($566,600)             $38,000 
Assumptions: 
2016 rates and charges for SLOAIII signatory carrier.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
June 6, 2016 
Page 6 of 8 

STRATEGIES AND OBJECTIVES 
This project supports the Century Agenda objectives to advance the region as a leading tourism
destination and business gateway by making Seattle-Tacoma International Airport the West
Coast "Gateway of Choice" for international travel. It also supports the Century Agenda
objective to triple the volume of air cargo. 
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  Eliminate New Air Service Incentive Program 
Cost Implications: Joint promotional funds have averaged $511,000 annually over the past five
years, and would be retained by the Port were the program eliminated. The elimination of fee
waivers would also potentially save money. 
Pros: 
(1)  The Port could save money through the elimination of joint promotional funds. 
(2)  The Port may gain additional services even without an incentive program. 
Cons: 
(1)  The Port would be at a disadvantage with regards to peer airports with incentive
programs. 
(2)  The Port could lose revenue from services that decide against Seattle because of a
lack of incentives 
(3)  The Port could lose revenue from services that may have accelerated their decision
to serve Seattle had incentives been in place. 
This is not the recommended alternative. 
Alternative 2  Status Quo (maintain existing Incentive Program with no changes) 
Cost Implications: The Port has spent an average of $511,000 in annual joint promotional funds
over the past five years. However, this money has been more t han offset by the additional
revenue generated by new services. 
Pros: 
(1)  The Port would not increase incentive program expenditures. 
(2)  The Port will receive the full amount of landing fees and other charges for any new
air services that begin service but that are not eligible for incentives under the
current program.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
June 6, 2016 
Page 7 of 8 

Cons: 
(1)  Competing airports are aggressively pursuing similar services with even more
generous programs, thereby strengthening their positions as well as their working
relationships with carriers. 
(2)  Carriers may decide against beginning new services that would not qualify for
incentives, or would begin services later than they otherwise might have. 
This is not the recommended alternative. 
Alternative 3  Implement Proposed Revisions to Incentive Program 
Cost Implications: Under the proposed incentive program, more services will be eligible for fee
waivers and joint promotional funds. The single largest increase in costs under the proposed
program would be joint promotional funds available to qualifying new freighter services, which
would be eligible for up to $100,000. 
Pros: 
(1)  Increases opportunities to gain more challenging routes by presenting better risk
mitigation to the carrier. 
(2)  Increases competitiveness with peer airports while meeting FAA compliance
requirements. 
(3)  Inclusion of unserved domestic/short-haul international incentives closes "gaps" in
the current program. Currently no incentives are available for unserved markets that
fall between the existing small community criteria (current Category E) and
medium-haul markets over 2,000 miles (current Category C), or for freighter
services. 
Cons: 
(1)  Port will receive reduced fees during the duration of the incentive program. 
This is the recommended alternative. 
ATTACHMENTS TO THIS REQUEST 
Proposed New Air Service Incentive Program 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
March 10, 2015  The Commission authorized revisions to the incentive program to
enhance incentives for Small Community Air Service. 
September 27, 2011  The Commission authorized revisions 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.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
June 6, 2016 
Page 8 of 8 

May 5, 2009  The Commission authorized revisions 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 eliminating the previously defined per-year usage limit for Joint
Promotional funds, allowing greater flexibility within the existing cost and timeline
restrictions. 
April 27, 2007  The Commission authorized the implementation of a Small Community
Air Service Incentive Program. 
April 10, 2007  The Commission authorized revisions to the incentive program to create
a new category for trans-border commercial air service routes. 
February 16, 2007  The Commission authorized modifications to the incentive program
raising the maximum benefits to an air carrier. 
December 13, 2005  The Commission authorized the first request for implementing a
New International Air Service Incentive Program.