PORT OF SEATTLE 
MEMORANDUM 
COMMISSION AGENDA             Item No.      6b 
ACTION ITEM             Date of Meeting    June 5, 2012 

DATE:    May 29, 2012 
TO:     Tay Yoshitani, Chief Executive Officer 
FROM:    Wayne Grotheer, Director, Aviation Project Management Group 
James R. Schone, Director, Aviation Business Development 
Mike Ehl, Director, Airport Operations 
SUBJECT:  South Satellite Concessions Project (CIP #C800412) and South Satellite
Additional Gate Lobby Project (CIP #C800466) 
Amount of This Request:  $3,115,700      Source of Funds: Airport Development Fund 
Est. State and Local Taxes: $195,600       Est. Jobs Created: 27 
Est. Total Project Cost:    $3,879,700 
ACTION REQUESTED: 
Request Commission authorization for the Chief Executive Officer to: 
A: For CIP #C800412, (1) advertise for construction bids and execute construction contracts and
(2) execute contracts to purchase furnishings and casework for the South Satellite
Concessions Project at Seattle-Tacoma International Airport (Airport). This authorization is
for $2,185,700 of a total estimated project cost of $2,535,700; and, 
B: For CIP #C800466, (1) advertise for construction bids and execute construction contracts and
(2) execute contracts to purchase furnishings and casework for the South Satellite Additional
Gate Lobby Project at the Airport. This authorization is for $930,000 of a total estimated
project cost of $1,344,000.
The total combined authorization request for both projects is for $3,115,700 of a total combined
estimated project cost of $3,879,700. 
SYNOPSIS: 
The South Satellite, which was first constructed in the early 1970s, and improved most recently
in the 1980s, is antiquated and unable to adequately serve the needs of the traveling public. In
the past three years, the number of domestic and international airlines using the South Satellite
has increased dramatically, and the facility needs to expand passenger seating, duty free/retail
shopping and food and beverage to meet the increased demand. These two combined projects
represent together a rare opportunity to accomplish a number of desirable outcomes for the Port

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
May 29, 2012 
Page 2 of 9 
and the millions of annual passengers at the South Satellite and solve two critical deficiencies in
the current space allocation. 
The two projects will upgrade the use and experience of the west end of the South Satellite by
removing inadequate seating capacity in gate holdrooms used by international carriers and
replacing it with 1,500 square feet of new passenger seating in a more pleasant environment and
providing reconfigured space for a new full-service restaurant and a new duty free/retail operator
to build out to their own requirements. By demolishing underutilized restrooms and an unused
former smoking lounge and re-purposing the space to meet current needs, these improvements
will enhance customer service and increase non-airline revenues by expanding usable space for
operations and concessions. While the costs are segregated into two CIPs to clearly distinguish
the aeronautical costs from the non-aeronautical costs and to provide clarity on the cost/benefit
justification for each, the projects are inextricably linked and will be managed as one. Both
projects were included in the 2012-2016 capital budget and plan of finance. 
BACKGROUND: 
In the past three years, both international and domestic operations at the South Satellite have
increased dramatically. In mid-2009, Delta Air Lines consolidated operations to the South
Satellite in a merger with Northwest Airlines. This change, along with welcome additions to
direct international service, is causing a strain on the ability of the South Satellite to adequately
serve both airlines and their passengers. The west end of the South Satellite gate lobby area is
used by international carriers such as Asiana Airlines, Korean Air, Hainan Airlines, Emirates
Airlines, EVA, British Airways and Icelandair. Challenges presented by the increased passenger
volumes include inadequate gate lobby capacity, inadequate food and beverage service and a
lack of duty free/retail shopping expected by travelers at a large, international airport. 
The west end of the concourse level of the South Satellite will be reconfigured to create a new, 
efficient space for both airline and retail operations. The project entails modification to the gate
lobbies adjacent to Gates S10, 11, 12, 15 and 16, as well as the creation of two new concessions 
locations. The project would create one large contiguous hold area for wide-body gates S10  
S16. This configuration adds nearly 1,500 square feet of seating capacity and allows for more 
efficient and comfortable use of the space by passengers. (See Exhibit A) 
New duty free/retail and food and beverage concessions will serve a growing number of
travelers, as well as capture the new revenue opportunities available to the Port. A slightly 
expanded duty free location, with a broader storefront faade and better visual sight line, is
expected to increase revenues. The anticipated growth in international traffic will benefit from a
duty free offering that meets passenger expectations. Food and beverage service is an even more
pressing need as there is a current shortage of capacity to serve increased passenger levels.
Existing South Satellite restaurants have no available footprint for expansion.  (The new full
service restaurant will be part of a food and beverage Request for Proposal in 2013 and is not
expected to open until 2014.)

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
May 29, 2012 
Page 3 of 9 
Operational Benefits Analysis: 
Currently, the floor plan of the west end of the South Satellite is divided into small
"pockets" of space created by an unusable former smoking lounge, and underutilized
restrooms. All of these conditions result in a lack of efficiency and passenger comfort for
seating or standing.
Gate lobby capacity at the South Satellite is constrained. The International Airline
Transportation Association (IATA) rates airport gate lobby capacity (grade A to E: A is
best, E is worst) based on the square footage available per passenger. The proposed new
space will be rated a grade "C" for passenger to square foot ratio, compared to a grade
"E" rating for most of the current divided holdrooms. 
Airlines gain greater ability to board passengers efficiently by moving the gate podiums
in direct proximity to the passenger loading bridge doors. 
A new escalator is being installed under another project to resolve safety and reliability
concerns. This project would eliminate the interference of the new escalator with the
current nearby duty free store. One entrance to the existing duty free store has already
been rendered useless by the escalator installation and passenger throughfare in front of
the store is blocked. 
Concessions Benefits Analysis: 
When evaluating any space for potential concession use, a number of considerations are taken
into account. These considerations include: impact on operations, projected revenue to the Port,
impact on other concessions, as well as passenger and airline expectations. Specific to the South
Satellite, these considerations included: 
Impact on Operations 
For passenger holdroom capacity, the South Satellite is undersized for current demand. Without
creating new usable space, concession space cannot be added at the expense of operations space.
The project increases existing usable space for operations, thus allowing for the addition of
concession space. 
Revenue to the Port (percentage rent/anticipated sales) 
Percentage rent revenue to the Port varies for retail (10 to 14%), service (13 to 15%) and food
service uses (12 to 18%). The highest percentage rent in the South Satellite is projected to be in
the duty free store. As a reference point, the current duty free contract garners 18-20% of gross 
sales from all duty free sales to the Port. Also, a full-service restaurant which serves alcohol (as
included in this plan) would pay a higher percentage rent than a quick serve/fast food outlet
without alcohol. Improved offerings coupled with enplanement activity will bolster concessions
sales and revenue to the Port. 
Existing Concession Capacity 
Adequate concession capacity does not exist in the South Satellite, which reduces the concern of
new concessions cannibalizing existing offerings. As a means of comparison, the North Satellite
has 6,832 square feet of food service capacity to support approximately 3 million annual
enplanements (2.27 square feet/1000 enplanements). The South Satellite has 4,170 square feet of

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
May 29, 2012 
Page 4 of 9 
food service capacity to support about 2.5 million enplanements (1.67 square feet/1000
enplanements). On this measure, the South Satellite has 26% less restaurant capacity than the
North Satellite. With an eye towards expanded international service, enplanements also are
expected to continue to grow at the South Satellite. 
Customer Expectations/Feedback 
Customers will complain only a fraction of the time after a negative experience. Nonetheless,
complaints to airlines, concessionaires and the Airport about long lines and/or a lack of food
service in the South Satellite are fairly commonplace. The long dwell times for international
passengers, coupled with the remoteness of the satellite, place particular strain on the capacity of
existing concessions. 
Airline Expectations/Feedback 
Air carriers expect airports to provide a variety of services to passengers in the dwell time prior
to boarding. In the year since Delta's main operations moved to the South Satellite, airline
representatives have voiced their concern about the lack of adequate food service in the satellite,
which strains the meal availability aboard the aircraft. Additionally, carriers with international
service expect that the Airport will offer sufficient retail, news/gift and duty free to meet their
customers' pre-boarding needs. 
Based on these criteria, and the financial analysis, Port staff believes that adding capacity in the
two categories of concessions (duty free/ retail, and restaurant), along with improving the
operational standard of the facility, is the highest and best use of the overall space. 
The new 3,600 square foot duty free store would not be large by industry norms, but it would be
larger than the current space and more able to accommodate most duty free operators "store
within a store" merchandising for luxury brand goods and cosmetics, as well as effective
showcasing of duty free tobacco and alcohol. In combination with a new updated space, Port
staff believes that the duty free store can increase sales to at least $10 million in its first full year
of operation as compared to $8.5 million in 2011. At the c urrent percentage rent level (18%),
this represents more than $270,000 in additional revenue to the Port. Staff expects that the
current duty free/specialty retail tender will garner a higher rent offer than 18%. 
The new South Satellite restaurant would mirror the configuration of the North Satellite with its
newer 1,774 square foot restaurant (Bigfoot Food & Spirits). In 2011 , this North Satellite
restaurant achieved $3 million in sales without cannibalizing sales at the other full-service
restaurant. A full-service restaurant commands a higher percentage rent than a fast food concept,
roughly 15.5%. This suggests that the South Satellite restaurant, assuming an appealing concept
and skilled operator, should be able to achieve sales of approximately $2.2 million in its first full
year, providing about $340,000 in new revenue to the Port. 
PROJECT JUSTIFICATION: 
Project Objectives: 
Add approximately 1,500 square feet of useable additional passenger gate lobby space
at Gates S10, S11, S12, S15 and S16

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
May 29, 2012 
Page 5 of 9 
Improve the passenger flow by removing glass panels, reconfiguring podiums and
improving the circulation in this area 
Improve airline operations by placing gate podiums closer to the doors 
Provide an improved location for duty free/retail offerings to serve passenger needs and
increase revenue to the Port 
Provide another food and beverage location to serve passenger needs and increase
revenue to the Port 
PROJECT SCOPE OF WORK AND SCHEDULE: 
Scope of Work: 
The two combined projects will modify the gate lobbies at Gates S10, S11, S12, S15 and S16 in
order to improve operational efficiency and reduce passenger crowding. The projects will
relocate gate podiums, demolish underutilized restrooms, construct a new duty free shell space,
demolish the existing duty free store, upgrade the finishes throughout the gate lobby areas,
modify existing infrastructure to accommodate the change in use, and create a food and beverage
shell for future build out by a tenant. The South Satellite Concessions project also includes 
scope for regulated materials remediation and demolition of exit stairs. These last two
components will be charged to expense.
Schedule: 
Commission authorization for Bid                                June 2012 
Advertise                                              June 2012 
Award                                         August 2012 
Notice to Proceed                                       September 2012 
Open New Duty Free                                    June 2013 
Construction Complete                                   October 2013 
Open new Food and Beverage                             February 2014 
Additional time for final tenant build-out of the duty free and food and beverage locations are 
included in the schedule. 
FINANCIAL IMPLICATIONS: 
The total estimated cost of both projects is $3,879,700, and is divided between CIP #s C800412,
C800466, and expense as shown below: 
Budget/Authorization Summary: C800412         Capital       Expense    Total Project 
Original Budget                         $1,872,739       $326,261     $2,199,000 
Budget Increase                          $147,461       $189,239       $336,700 
Updated Budget                       $2,020,200      $515,500     $2,535,700 
Previous Authorizations                     $350,000           $0       $350,000 
Current request for authorization               $1,670,200       $515,500      $2,185,700 
Total Authorizations, including this request        $2,020,200       $515,500      $2,535,700 
Remaining budget to be authorized                 $0           $0           $0 
Total Estimated Project Cost                $2,020,200       $515,500     $2,535,700

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
May 29, 2012 
Page 6 of 9 
Project Cost Breakdown:                   This Request       Total Project 
Construction                              $1,540,400         $1,540,400 
Construction Management                    $303,000         $303,000 
Design                                      $0         $262,000 
Project Management                        $180,200        $268,200
Permitting                                  $16,500           $16,500 
State & Local Taxes (estimated)                  $145,600          $145,600 
Total                                    $2,185,700         $2,535,700 
Budget Status and Source of Funds: 
The capital budgeted for this scope of work was included in the 2012-2016 capital budget and
plan of finance under CIP# C800412 in amount of $1,872,739. The capital budget increase of
$147,671 will be transferred from the Non-aeronautical New Projects Allowance CIP
(C800152), a business plan prospective project, resulting in no net change to the Aviation capital
budget. The expense component consists of $440,000 for regulated materials remediation and
$75,500 for demolishing the exit stairs. The 2012 Operating Budget included $387,000 for the
regulated materials remediation. The additional expense of $128,500 will be absorbed within the
division contingency or savings from other regulated materials projects. The funding source will
be the Airport Development Fund. 
Financial Analysis and Summary: 
The financial analysis below is based only on the costs directly associated with the new
concessions. 
CIP Category             Revenue/Capacity Growth 
Project Type              Business Expansion 
Risk adjusted discount rate     9% 
Key risk factors             Delay in realized revenues due to construction or other
schedule delays. Achieving sales targets. 
Project cost for analysis        Duty free: $1.47 million 
Food and beverage: $1.07 million 
Total $2.54 million 
Business Unit (BU)          Aviation Business Development/Concessions 
Effect on business performance  New duty free revenues (first full year): $416,000/year 
New food and beverage revenues (first full year):
$340,000/year 
IRR/NPV             Duty Free:     Food/beverage:  Total: 
NPV $800,000   NPV $1.1M    NPV $1.9M 
Payback 5 years  Payback 5 years  Payback 5 years 
IRR 12%     IRR 15%     IRR 13% 
CPE Impact             N/A

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
May 29, 2012 
Page 7 of 9 
Lifecycle Cost and Savings: 
The project will not install outside wall finishes to the concessions shells, but rather place this
responsibility on the future tenant as part of their architectural design. 
Budget/Authorization Summary: C800466         Capital       Expense    Total Project 
Original Budget                         $1,257,000           $0     $1,257,000 
Budget Increase                           $87,000           $0       $87,000 
Updated Budget                       $1,344,000          $0     $1,344,000 
Previous Authorizations                     $414,000           $0       $414,000 
Current request for authorization                $930,000            $0       $930,000 
Total Authorizations, including this request        $1,344,000            $0      $1,344,000 
Remaining budget to be authorized                 $0           $0           $0 
Total Estimated Project Cost                $1,344,000           $0     $1,344,000 
Project Cost Breakdown:                   This Request       Total Project 
Construction                               $820,000          $820,000 
Construction Management                     $52,000         $145,000 
Design                                      $0         $159,000 
Project Management                            $0        $162,000
Permitting                                  $8,000           $8,000 
State & Local Taxes (estimated)                   $50,000           $50,000 
Total                                     $930,000         $1,344,000 
Budget Status and Source of Funds: 
The budgeted cost for this scope of work was included in the 2012-2016 capital budget and plan
of finance under CIP# C800466. The budget increase of $87,000 will be transferred from the
Aeronautical New Project Allowance CIP (C102165), a business plan prospective project,
resulting in no net change to the Aviation capital budget. The funding source will be the Airport
Development Fund. 
Financial Analysis and Summary: 
CIP Category             Revenue/Capacity Growth 
Project Type              Business Expansion 
Risk adjusted discount rate     N/A 
Key risk factors             N/A 
Project cost for analysis        $1,344,000 
Business Unit (BU)          Terminal 
Effect on business performance  Increase NOI 
IRR/NPV             N/A 
CPE Impact             Less than $.01, but no change to business plan forecast
as this project was included.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
May 29, 2012 
Page 8 of 9 
Lifecycle Cost and Savings: 
Material and fixture choices were made during design to minimize forthcoming replacement
costs as part of a greater refurbishment of the facility.
STRATEGIC OBJECTIVES: 
Provide a first class customer service experience and comfort to the traveling public with
adequate gate lobby space and the quality concession offerings expected in a large 
international airport 
Offer the expected facilities in order to retain and attract new air service critical to the
economic vitality of the Puget Sound region 
Maintain the current employment of approximately 70 duty free shop employees as well
as create the potential for new jobs in the future duty free store 
Create employment opportunity for up to 35 new food and beverage workers in the future
full-service restaurant 
Provide the Port with critical non-airline revenue to support the maintenance and
development of the Airport for the benefit of both residents and visitors 
ENVIRONMENTAL SUSTAINABILITY: 
Upgrades will be constructed using carefully chosen materials, considered for lifecycle
sustainability, including energy efficient LED lighting and durable finish surfaces.
BUSINESS PLAN OBJECTIVES: 
These projects support a strategic objective to operate a world-class airport that can attract and
keep direct international air service to the Puget Sound region.
The projects also support the strategic goal of maximizing non-aeronautical operating income. 
TRIPLE BOTTOM LINE SUMMARY: 
These projects will increase the long-term ability of the Airport to serve a growing number of
both passengers and airlines. Long-term vitality of the Airport benefits the regional economy,
the local environment and the nearby communities. The projects will improve customer service,
increase non-airline revenues, and generate new jobs for concessionaires.
ALTERNATIVES CONSIDERED AND THEIR IMPLICATIONS: 
1.  Make no modifications to the South Satellite. The South Satellite is an antiquated facility
that does not meet the current needs of the traveling public, and cannot be expected to
support future growth in passenger traffic. This is not the recommended alternative. 
2.  Modify the existing duty free store to accommodate the new escalator, which has blocked
one entrance and eliminated passenger thoroughfare in front of the store. Modifying the
existing duty free to mitigate the impact of the new escalator would reduce the size of the
store (by pushing the storefront back approximately six feet) to approximately 2,900
square feet. The current 3,400 square foot duty free store is considered small by industry
comparison. A small duty free store would limit the Airport's ability to meet passenger
demand for duty free and retail merchandise. It also would cause the duty free operator to

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
May 29, 2012 
Page 9 of 9 
work out of temporary units during construction. Significant loss of sales would result
from this alternative. B) Remove only the restrooms but do not install the upgrades or
create the new space for a restaurant. While removing the restrooms creates new square
footage, it is not made available in such a configuration as to be fully useful for passenger
needs. This is not the recommended alternative. 
3.  For alternative #3 above, move forward with one CIP but not the other. While the scope
of work is divided into two CIPs in order to segregate the aeronautical and nonaeronautical
components, the two projects are inextricably linked and will be managed as
one project. This is not the recommended alternative. 
4.  Move forward with the construction of the South Satellite Concessions and Additional
Gate Lobby Projects. A) Construct a new duty free shell space to maximize revenue
potential and improve passenger service. Build a shell space for a future 1,500-square
foot full-service restaurant. B) Demolish the restrooms and provide upgrades to the gate
lobby space that will help alleviate overcrowding for passengers and provide a more
comfortable experience prior to boarding. Complete this work in a phased manner that
allows for the current duty free store to continue to serve passengers and generate
revenue while the new shell space is being built. This is the recommended alternative. 
OTHER DOCUMENTS ASSOCIATED WITH THIS REQUEST: 
Exhibit A: Power Point 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS: 
November 2, 2010  Commission authorized the execution of an IDIQ professional
services contract for design services in the amount of $400,000 in support of
anticipated capital improvement projects related to South Satellite Concession and Gate
Lobby Projects at Seattle-Tacoma International Airport. No funding was associated
with this authorization. 
January 25, 2011  Commission authorized both design services and the use of Port
crews in support of the Additional Gate Lobby Project at the Seattle-Tacoma
International Airport (CIP # C800466). This authorization was for $414,000 of a total
estimated project cost of $1,257,000. 
March 8, 2011  Commission authorized design services in support of the South
Satellite Concession Project (CIP # C800412) at Seattle-Tacoma International Airport.
This authorization was for $350,000 of a total estimated project cost of $2,199,000. 
March 27, 2012  Staff briefing about plans for interim concessions leasing (2012  
2014), including Requests for Proposal for a new duty free operator and new fullservice
restaurant.