7a

PORT OF SEATTLE 
MEMORANDUM 
COMMISSION AGENDA               Item No.      7a 
Date of Meeting    December 13, 2011 

DATE:    November 28, 2011 
TO:     Tay Yoshitani, Chief Executive Officer 
FROM:    Mark Reis, Managing Director, Aviation Division 
Deanna Zachrisson, Manager, Aviation Concessions Business 
SUBJECT:  Aviation Concessions Program Principles and Practices 

SYNOPSIS: 
The Airport is well-known for its award-winning concessions program. Attractive
storefronts, a good mix of shops, quality food service, great customer service and overall
high standards distinguish this program from many other airports and are the result of the
new leasing structure begun in 2005. This structure combines prime concessionaires and
direct leases with many small and independent retail and restaurant operators and
certified Disadvantaged Business Enterprises and allows both well-known national
brands and local companies to serve Airport customers. The concessions program
generated approximately $32 million in revenue to the Port in 2010, and represents the
third largest source of non-aeronautical revenue. 
In anticipation of the 2015-17 releasing and redevelopment of much of the concessions
space at Sea-Tac, staff has begun developing a series of principles and practices to guide
future strategies. In June of this year, staff initiated a stakeholder outreach process to gain
their perspectives to help inform the releasing/redevelopment program. These stakeholder
groups included prime concessionaires, labor, tenant and non-tenant local business,
small/disadvantaged operators and airlines. A total of 53 individuals representing 36
companies and organizations participated. Staff also conducted an analysis of concessions
models and practices at other airports. The purpose of this memo is to provide updated
information on the current concessions program, summarize stakeholder perspectives,
relay current research on airport best practices, articulate legal and strategic challenges,
and provide recommendations for future principles and practices. 
BACKGROUND: 
In 2005, the Port introduced a new leasing structure that combined prime concessionaire
contracts (through which one company operates four or more units) and direct leases
with many small and independent retail and restaurant operators. The multi-unit prime

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
November 28, 2011 
Page 2 of 24 

concessionaire lease agreements, illustrated below, include the majority of the Airport's
84 concession units. With the exception of duty free, these agreements are for a 12-year
term. 
Multi-unit Prime Agreements by Concessionaire 
Category    Concessionaire         Expiration  Units   Square   ACDBE   Subtenant SF 
footage   subtenants 
Food      Host International*      12/31/16   17    28,842   8        9,641 
Food      Host/Seattle Rest. Assoc.   12/31/16   7     15,035   2        2,797 
Food      Concessions International   12/31/16   5     4,687    1        1,774 
News/Gift   Hudson Group         5/31/17    22     32,018   N/A      N/A 
Duty free    HG Retail             2012      3      7,074    N/A       N/A 
Total Units                                54     87,656    11        14,212 
/Sq ft 
*Including Anthony's operated by HMSHost 
Direct lease units are primarily concentrated in the Central Terminal area. Staff has
worked since 2005 to add direct lease opportunities to the concourses as well.
Direct Lease Operators by Category 
Category            Expiration           Units              Square Footage 
Food*             5/31/15            7                7,064 
Spec. Retail**         5/31/15              7                  9,452 
Services             2012-16             5                  4,783 
Total Units/Sq ft                           19                  21,299 
*Includes Vino Volo Wine Bar expires 2017. 
** Includes Hudson Bookseller & More (former Borders) 
During the 2012-14 periods, staff anticipates opportunities to lease approximately 10
vacant or undeveloped units throughout the terminal as direct lease opportunities 
(available to both prime concessionaires as well as smaller business operators). The
performance of the program since the introduction of direct leasing has proven that
judicious leasing of single-units to meet passenger needs increases sales for all types of
concessionaires and increases job opportunities. Earlier this year, the Port Commission
authorized retention of a leasing consultant who will begin work in early 2012. We
anticipate recruiting new concessionaires and executing some new direct leases in 2012. 
In addition, staff anticipates issuance of a Request for Proposals for the Airport's duty
free business in early 2012. 
This combination of larger prime concessionaires and smaller direct leases has enabled
the Airport to introduce competition between multiple operators and, thus, brought about 
more local character, better customer service, better product quality, greater variety and
lower prices. Gross sales increased from $90 million in 2003 (the last year prior to the
opening of Concourse A, with concessions operating under the new structure) to $158
million in 2010, an increase of 75.5%. (During this same period, enplanements grew by

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
November 28, 2011 
Page 3 of 24 

only 10%). Revenue to the Port has increased 82% between 2003 and 2010. This
success has continued in the third quarter of 2011, with total Airport concession sales up
7.4% over last year. Employment in concessions businesses has grown more than 100%
(732 jobs in 2003 to 1,508 jobs in November 2011). 
AVIATION STRATEGIC GOALS: 
The concessions program supports several of the seven Aviation Division strategic goals. 
Concessions revenues represent the third largest source of non-aeronautical revenue. As
we consider what principles and practices we wish to help guide the future of the
program, it is important to understand the connection to these goals: 
Operate a world-class airport by anticipating the needs of our tenants, passengers
and the region's economy. 
The Airport's concessions program has been lauded by the airport industry and the
community for the improvements made since 2005. In fact, the concession program is,
in many independent observers' views, the single greatest contributor to Sea-Tac's
evolution to world-class airport status. Continued renewal and innovation in the
concessions program is necessary to achievement of this goal. 
Become one of the top ten customer service airports in the world by 2015. 
To a significant share of the flying public, concessions is the single most important
element of customer service. Quality, price, diversity of offerings and local flavor are
the characteristics most often cited as contributing to high quality concessions
experience.
Maximize non-aeronautical net income. 
Concessions revenues are crucial to the Airport's ability to reinvest in infrastructure and
meet the traveling public's needs (e.g., free Wi-Fi). The recent growth in concessions
income has been a critical offset to the declining parking revenue. A high quality
concessions program induces higher passenger, meeter/greeter and employee spending
and, thus, airport revenue.
Lead the airport industry in environmental innovation, and minimize the airport's
environmental impact. 
The Airport cannot fully attain its sustainability goals without the active support and
participation by concessionaires. Concessions directly and indirectly account for 70% of
waste generated at the Airport and are responsible for a significant portion of the 1,300
tons of recyclable and compostable material diverted from local landfill each year.
Concessions donate 10,000 lbs. each year in meals to local food banks, equaling 150
meals per week.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
November 28, 2011 
Page 4 of 24 

STAKEHOLDER OUTREACH: 
In order to gain the perspectives of all the constituencies which currently or could benefit
from the airport concessions program, staff initiated a concessions stakeholder outreach
process in June 2011 (Exhibit A, Summary of Stakeholder Process). The outreach has
engaged all stakeholders, including: 
Airlines 
Current independent operators 
Labor representatives 
Prime concessionaires 
Prospective local operators 
Small/Airport Concessions Disadvantaged Business Enterprises (ACDBE
businesses) 
Traveling public 
Process: At the outset, staff understood the critical importance of structuring and
executing a process with the greatest degree of impartiality possible. We retained
experienced local public involvement professionals, -- Rita Brogan, with PRR, Inc. -- to
impartially facilitate the outreach. The stakeholder groups were chosen carefully to
reflect a comprehensive, balanced reflection of interested parties. The process was also
designed to ensure that individual stakeholder groups' views would be both heard and
considered in a fair and balanced manner, regardless of the number of physical
participants. 
As a further means of assuring that all types of stakeholders would be heard with the
greatest degree of clarity, the process included both individual stakeholder group
meetings as well as a combined stakeholder group meetings. Participants were provided
with materials to be used for discussion and facilitation of the meetings in advance. The
final meeting summaries also were distributed to participants in advance of inclusion in
this memo with the opportunity to correct potential inaccuracies. 
The major elements of the process were: 
Staff workshops to develop draft principles and practices; 
Research of concessions industry best practices; 
Six meetings with individual stakeholder groups; 
Business and leisure traveler focus groups (Exhibit C, Focus Group Report); 
Compilation and integration of the input from the initial meetings; 
Two meetings with all stakeholder groups to review initial "findings", and; 
Development of a summary of prevalent and divergent views on the issues. 
We asked the stakeholders for their input regarding a set of draft principles and practices
for the concessions program (Exhibit B, Draft Principles and Practices). The draft
principles were structured into four categories: customer experience, financial
stewardship, concessionaire selection process, and social/environmental responsibility.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
November 28, 2011 
Page 5 of 24 

Areas of Agreement: The stakeholders were in general agreement on many of the draft
principles and practices discussed in the first phase of individual stakeholder group
meetings (Exhibit D, Meeting Summaries). The clearest areas of agreement were: 
There should be a mix of offerings at Sea-Tac Airport; 
Important to encourage a strong sense of place; 
"Green" practices and sustainability; 
The selection process should be efficient and fair and limit barriers to entry; 
The cost of doing business at the Airport is high and policies should reflect this 
reality. 
Areas of Disagreement: Several areas of disagreement were also identified. A
discussion of these subjects (based on the multiple perspectives articulated) was prepared
to facilitate more in-depth discussions in the second set of two joint stakeholder meetings 
(Exhibit E, Stakeholder Discussion Summary). 
The five key issues are the focus of more detailed examination below. Opinions
primarily diverged on issues related to the appropriate role of the Port as a landlord and 
lessor. Most airport stakeholders said they would like the Port to limit its role to
focusing on what it directly controls. Two key areas identified were providing facility
support to reduce operating costs, and streamlining concession build-outs to reduce high
investment costs. 
Organized labor, on the other hand, believes that the Port has a social responsibility to
elevate the living standards of workers (Exhibit F, Combined Stakeholder Meetings
Summary). 
In addition to the outreach work, Sea-Tac concessions staff led a working group of
industry professionals, both airport managers and concessionaires, in an Airport Council
International North America (ACI-NA) study of concessions industry 'best practices'. 
This work benefited the stakeholder effort by informing the stakeholder participants on
current 'best' practices with regard to contractual terms and other processes that affect
concessions business and operations. The study entailed review of industry surveys and
other secondary research available. This ACI-NA effort is still on-going, with Sea-Tac
staff in the lead, and the working group presented results at the ACI-NA Annual
Concessions Conference in Atlanta on November 7, 2011 (Exhibit G, Concessions
Industry Best Practices). 
KEY ISSUES: 
As noted above, the stakeholder process identified five significant issues. In this section,
we offer a necessarily concise statement of the issue, followed by an assessment of the
information germane to deliberation of appropriate principles and practices. That
information includes some or all of:

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
November 28, 2011 
Page 6 of 24 

Perspectives of the various concessions stakeholders 
Industry research and practices at other airports 
Implications for the goals articulated above 
Data or information from Sea-Tac concessions operations 
Legal analysis 
These key issues are: 
The balance of multi-unit operators ("prime concessionaires") and direct leasing 
Participation by small and/or disadvantaged (ACDBE) businesses 
High investment costs and other barriers to entry 
Street pricing policy 
Port requirements regarding concessionaire labor/employment practices 
ISSUE 1: How should the Port balance the mix of multi-unit operators ("prime
concessionaires") and direct leases? 
With some exceptions, stakeholders generally agree that a mix of multi-unit operators
and ACDBE/small and independent local businesses works well for the Airport. They
also agree that there needs to be a balance of concepts, and that the mix should reinforce
a "sense of place". There is disagreement, however, regarding how the Airport should 
best achieve this mix and sense of place. 
The Sea-Tac Model: The hybrid model that the Airport adopted in 2005 combined the
traditional prime airport operators with other single unit direct leases. The significant
increases in both sales and revenue are a clear indication that this infusion of new
operators into the program has had tremendous results. Prime concessionaires currently
lease and operate 64% of the Airport's 84 concessions units, or 71% as measured by the
amount of total concessions square footage. ACDBE tenants (subtenants of primes and
direct lessees) operate 16% of total square footage, with the remaining 13% operated by 
other independent direct lease tenants. 
Prime and Direct Lease Operators: Prime concessionaires play an important role in
meeting the needs of the traveling public and understand the unique challenges of
operating in an airport. In addition, these concessionaires hold exclusive licensing
agreements with some of the most sought-after brands in airports, such as Starbucks
Coffee and Brooks Brothers. There are competitive differences, however, between prime
concessionaire companies and it is critical that airports make thoughtful selection of
prime concessionaires. Chosen wisely, prime concessionaire operators of multiple units
can form the foundation of an excellent concessions program. 
Many local stakeholders believe that the concessions mix should favor familiar, locally
owned concepts, which they emphasize have a greater stake in cultivating their local
brand and providing good customer service. Local operators also believe that locally

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
November 28, 2011 
Page 7 of 24 

owned concepts in the Airport generate more local jobs and keep dollars in the local
economy. There is a body of research that suggests that this is a valid argument. In
several studies conducted by the research firm Civic Economics, in communities such as
San Francisco, Austin, Grand Rapids, and Andersonville in suburban Chicago, the local
economic return was proven to be greater as a result of consumer spending with locally
owned businesses as compared to when a company was headquartered elsewhere. The
most recent study in Grand Rapids in 2008, argued that for every $100 dollars spent at a
locally owned business, $68 stays in the local economy compared to $43 in a non-local
company. Money that leaves the local economy goes to supporting remote
administration and other non-local business services such as marketing, accounting,
architecture design, signage manufacture, etc. No such study has been conducted in the
Seattle market; however, there seems to be a general consistency in findings among the
studies that have been done. 
Prime concessionaires and labor representatives believe that local ownership is not a
requirement in order to provide passengers with local concepts. They give examples
such as Kathy Casey Dish D'lish and Anthony's, which are popular local concepts
operated under license agreements by HMSHost. In fact, prime concessionaires have
recently developed local concepts for their different markets, as airports now typically
demand local flavor in their concessions. 
Finding the Balance: Airports' strategic choices determine the nature of their
concessions businesses, for example; Denver International Airport has made the strategic
decision to favor local concepts and small operators. As a result, they solicit their
opportunities as single units in order to assure that as many kinds of operators as possible
have the ability to compete. On the other hand, Salt Lake City International decided to
group most units in packages of 10-15 units each. The result is a greater presence of the
larger national concessionaire companies.
In addition, most airports now place restrictions on the 'ownership' any one
concessionaire can hold in a concessions program. At San Diego International, no one
operator will control more than 30% of the total square footage available in its new
concessions program. At Denver International, no one concessionaire can control or
operate more than 10% of net concessions square footage. At San Francisco 
International, no operator can hold more than eight contracts at any one time.
Revenue Generation: The generation of non-airline revenue is one of the most
important factors to be considered when evaluating the choice of management approach.
In November 2011, the Airport Cooperative Research Program (ACRP) of the
Transportation Research Board published a 258-page research report about airport
concessions programs and offered comparative data from the top 35 U.S. airports on
revenue generation (Exhibit H, ACRP Report, pgs. 126-136). This study was funded by
the Federal Aviation Administration.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
November 28, 2011 
Page 8 of 24 

Airports typically measure their performance in sales per enplaned passenger (SPE).
Using this metric, the report compared the four most common management approaches
in airport concessions; private developer/manager, direct leasing, prime concessionaire
and hybrid. The private developer/manager model demonstrated the highest average
spend rate or SPE at $9.32, closely followed by the direct leasing approach at $9.14.
Eight of the 35 airports surveyed (including Sea-Tac) use the hybrid model and these
achieved an average SPE of $8.89. Airports managing only prime concessionaires
achieved an SPE of $7.59. However, sales are only one piece of the revenue puzzle. A
more complete picture is provided when SPE is paired with percentage rent to the
airport. The effective percentage rent can be calculated by dividing rent paid by sales. 
By this comparison, direct leasing results in the highest overall return on sales, followed
by private developer/manager, hybrid and prime concessionaire approaches. 
Selection Approaches: Stakeholders, with the exception of labor, did not support
targeting opportunities to specific types of operators (i.e., the creation of a percentage
goal for direct leases vs. prime operators). They feel that the Port should structure its
opportunities in such a way so all types of operators should be able to compete, and that
the best concept to meet the needs of the traveling public should be the foremost driving
factor in selection. Small businesses and local businesses also feel strongly that the Port
must make the solicitation process simpler. They do not have the staff or other resources
to respond to complicated and demanding Requests for Proposals. Prime
concessionaires do allocate generous resources to competing for opportunities and
emphasize that packages should be large enough to provide the economies of scale they
need for their operation, particularly if they are expected to have union labor. They do
not like the strategy of some airports, such as San Francisco and Denver (mentioned
above), which offer nearly all of their opportunities as individual unit solicitations. 
Labor representatives advocate for a significantly different model from the current
structure. They would like to see no more than three prime concessionaires (two food
and beverage, one retail) who employ no less than 90% of the airport's concessions
employees. The approach would require the solicitation of very large packages, perhaps
20 to 25 units in each. 
This approach has a number of significant drawbacks from the current model, aside from
the obvious constraints on competition between operators. Packages of this size
effectively limit the competition to large prime concessionaires with the capital
necessary to build out so many units. Even smaller prime concessionaires would not be
able to compete for a contract of this size. Prime concessionaires also are more likely to
launch legal protests when competing for large value contracts. If a losing proposer
faces the prospect of not having another chance at a large airport opportunity in the next
10 years, it is more likely to protest the outcome of a selection.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
November 28, 2011 
Page 9 of 24 

Additionally, so many units in one contract mean that the Airport has few other
opportunities to achieve direct ACDBE participation and, therefore, must rely on prime
concessionaires to sublease units to ACDBEs. The complications of subleasing are
discussed under Issue #2. An ACDBE joint venture for a contract of this size is
impractical because the capital investment required by FAA guidelines would be beyond
the reach of an ACDBE. 
It should also be noted that this approach would require the Airport to continue largescale
concessions transitions in which dozens of units are changing hands and being
reconstructed at the same time. These large-scale simultaneous transitions present
significant customer service, staff workload, financial and construction coordination
challenges. For example, the last unit conversion from the 2005 transition from the
master concessionaire was not completed until 2008. As noted below under Issue #3,
this is also very costly for concessionaire companies. 
Conclusions: 
Careful selection of prime concessionaires can build a solid foundation for a
concessions program, and provide sought-after brand names. The best mix for
Sea-Tac seems to be a balance of prime concessionaires with local and/or small
business operators. 
Offering future packages of units for multi-unit operators scaled to between four
and six units each could foster this balance. Larger prime concessionaires can
certainly compete for and be awarded multiple contracts, while the solicitation
still allows smaller operators an opportunity to compete. 
There are barriers to local and small business participation, such as complicated
RFP processes, that the Port should seek to reduce. Local operators, including
small business, want the opportunities to compete and do not support any
measures that constrain competition.
There appears to be validity to the idea that consumer spending with locally
owned businesses keeps a greater share of dollars in the local economy. 
Labor representatives advocate for large contracts with large prime
concessionaires. 
ISSUE 2: How should the Port maintain (or increase) participation in the concessions
program by small and/or ACDBE businesses? 
The Airport is required to provide concessions opportunities for small, minority or
woman owned disadvantaged businesses as a condition of receipt of federal Airport
Improvement Project grants. Participation by ACDBEs in an airport's concessions
program is measured by the percentage of gross sales generated by disadvantaged
operators. Currently, the Airport's goal with the Federal Aviation Administration (FAA) 
for ACDBE participation in 2011-14 is nearly 20% of gross sales. This current goal is
consistent with the gross sales achieved in 2010. In comparison to other large airports,

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
November 28, 2011 
Page 10 of 24 

the Sea-Tac ACDBE goal is modest. Dallas/Fort Worth International, Denver
International, and Baltimore Washington International airports all achieve ACDBE goals
in the range of 30-40%. 
Responsibilities for Participation: The Airport has two means of meeting its FAA
goal. The Airport may directly lease with ACDBE businesses, or require its prime
concessionaires to contract with ACDBEs in subtenant or joint venture relationships.
Historically, most airports, including Sea-Tac, burdened their prime concessionaires with
achievement of the FAA goal. In the most recent prime concessionaire contracts, these
operators are required to generate 25% of gross sales with ACDBEs. With the
introduction of direct leasing, the Airport has begun to develop its own contractual
relationships with ACDBEs to generate sales toward the goal. This has been particularly
helpful because prime concessionaires can only be required to make "good faith efforts"
to achieve their 25% goal. Of the current prime concessionaires, Concessions
International and Hudson Group fully meet their ACDBE participation requirement.
Direct lease ACDBEs are generating 29% of the total ACDBE sales and are as a group 
the largest contributor to achievement of the Airport's goal. 
ACDBEs as Subtenants to Prime Concessionaires: In the stakeholder process, nearly
all food and beverage subtenants expressed a preference for a direct leasing relationship
with the Port, rather than a subtenant relationship to a prime. Most commonly, they cited
a lack of mentoring, operational support or buying power advantages that supposedly are
the benefits of becoming a subtenant. In addition, they cited that their direct working
relationships are with Airport concessions staff, and not their prime concessionaire. Not
all airports choose to work directly with their subtenant ACDBEs, but Sea-Tac staff has 
regarded them as tenants of equal standing as any other, despite the lack of contractual
relationship with the Port. In other words, ACDBE subtenants, from a practical day-today
standpoint, are managed in the same fashion as direct lease ACDBEs or any other
tenant. 
In the stakeholder process, ACDBEs pointed out that their subtenant status has exposed
them legally to problems of their prime concessionaire. This also affects the Airport's
ability to generate ACDBE sales via subtenant arrangements. Specifically, the collective
bargaining agreement between prime tenant Host International and HERE Local 8 has
been in legal dispute for many years over the interpretation of a clause related to
requirements for subtenant lessees to employ bargaining unit workers. The other prime
food and beverage concessionaire, Concessions International, has an identical provision
in its contract. The union has sought, through binding arbitration and the courts, to force
the termination of ACDBE subtenants who fail to employ bargaining unit employees.
However, an ACDBE operator cannot use the labor of the prime concessionaire without
violating a key element of their ACDBE certification, which requires them to
demonstrate "independent control" of the business.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
November 28, 2011 
Page 11 of 24 

The ACDBE subtenant relationships under prime concessionaires also have cost the Port
significant revenue. In 2005, when the Port sought to provide rent reductions and an
extended term to ACDBE subtenants due to higher than expected investment costs, the
Port could only make these changes via amendments to the prime concessionaire
agreements. Thus, as a condition of passing on rent relief and the term extension to
ACDBEs via their subtenant agreements, the Port also had to provide rent relief and the
term extension to the prime concessionaires. 
Rent Structures for Small Scale Operators: When considering the terms of future
lease agreements, staff believes that greater use of tiered rent structures, which are
becoming more standard for the industry, will benefit both the Port and tenants in times
of uncertainty. A tiered rent structure provides that the percentage rent due the Port
increases as sales increase. This structure is in place with the Central Terminal tenants
and has been very successful. A tiered rent structure may have helped the Port avoid
lease amendments to provide relief when ACDBEs were impacted by airline relocations,
as rents would have adjusted automatically. However, a tiered rent structure for a prime
concessionaire lease would likely be different from that appropriate for an ACDBE due
to the prime concessionaires' having multiple units. As a result, separate tiered rent
structures for a large-scale prime and a smaller scale subtenant would be needed, which
adds complexity to lease agreements. 
Level of ACDBE Participation: Various stakeholders have differing views as to 
whether the Airport should strive to increase, sustain or decrease ACDBE participation -- 
and the best vehicle for that participation. 
ACDBEs point out that their ability to provide living wages and good benefits hinges on
the quality and scale of their opportunities. An ACDBE operator with several good, high
volume locations affords the ability to provide good job opportunities, and increase the
Airport's ACDBE participation at the same time. ACDBEs would like to have more
opportunities. On the other hand, labor advocates maintaining the same level or even
decreasing this participation if ACDBE businesses do not provide "living wages" and
family health care. 
Increasing direct lease opportunities for ACDBE businesses, either to sustain or increase
overall ACDBE participation, however, is not a straightforward or easy task for the Port.
Federal guidelines do not allow airports to allocate or "set aside" opportunities for
ACDBEs. Rather, the Port would need to reach out to experienced and financially stable
small restaurant and retail operators with the hope that ACDBE certification may be a
possibility for them. 
Conclusions: 
Inclusion of ACDBE operators in the Airport's concessions program has been successful 
but fraught with challenges. Based on 'lessons learned' and input from the stakeholder

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
November 28, 2011 
Page 12 of 24 

process, the Port should give careful consideration to its goals for future inclusion and
how to achieve it: 
The current participation goal in prime concessionaire contracts is 25%, but
actual achievement for the Airport is 20%. 
Greater participation would be consistent with levels achieved at other
comparable airports. 
Achieving ACDBE participation with direct leases (versus subleases) would
be less problematic for the Airport and for ACDBEs. 
However, achieving greater ACDBE participation with direct lessees will
require a more aggressive outreach commitment by the Port. 
ISSUE 3: How can the Port reduce the high costs of investment by concessionaires,
and reduce other barriers to entry? 
The issue of initial concessionaire build-out costs at Sea-Tac is well-documented. When 
a new group of tenants built out units in 2004-05, the costs were higher than anticipated,
which led to a Port relief package in which tenants were reimbursed for certain
construction and materials costs, provided rent reductions and received a two-year term
extension on 10-year leases. It is in the interest of Port as well as future concessionaires
to examine this issue before a period of greater concessions construction activity begins
in conjunction with lease transitions in 2015-2017. 
Study of Sea-Tac Costs: In 2008, the Port commissioned a study of build-out costs and
other costs relative to the sales potential of food and beverage concessionaires (Exhibit I, 
Jacobs Report, pgs. 20-22). That study showed that build-out costs for concessionaire
construction in 2004-2007 were higher than at comparable airports (30% higher than at
Denver International Airport). In the stakeholder process, concessionaires estima ted that
build-out costs are at least 100% higher than for a street location. They assert that much
of this cost stems from the lengthy Port design review process (typically at least 26
weeks) in which several departments and/or workgroups weigh in on tenant designs,
which leads to many design revisions. These extended timeframes drive up costs,
because the operators' design team must respond to Port-mandated changes. 
Unique Airport Costs: Other costs are driven by the Port's facility requirements, which
tend to be more strenuous than for a street location. As an example, international
building code requirements for sanitary waste lines stipulate cast iron, whereas the Port
requires stainless steel. The Port will typically require more extensive venting and fire
suppression systems. Sea-Tac is not unique among airports; most or all have higher 
build-out costs. Some of these costs are justifiable or unavoidable as a consequence of
the unique airport environment; however, most stakeholders believe there is significant
room for improvement in the Port's process.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
November 28, 2011 
Page 13 of 24 

Another source of increased cost in the 2004-5 transition resulted from having a newly
constructed building. Some tenants were required to bring electricity, gas, water and
communication lines to their space. By ensuring that all needed infrastructure exists at
the lease line would help to address some of the high costs. The concessionaires state 
that it would be easier to obtain bank financing if investment costs were lower and the
length of lease terms was clearly adequate for debt amortization. Labor representatives
would like to see the Port offer low-interest investment loans to smaller operators;
however, State law currently prohibits such a practice. 
Contractor Availability: Concessionaires agreed that construction costs are also high
due to a lack of balance in supply and demand for construction services. There are a
limited number of contractors that are willing to build at the Airport and they are able to
charge a premium for their services. In addition, intense periods of concessionaire
construction activity exacerbate this problem, placing concessionaires at the mercy of
this small number of contractors. The Port could make a sizable impact in this area by
engaging in outreach to increase the number of contractors willing and able to work at
the Airport, and by staggering lease term expirations to avoid huge spikes in construction
activity. 
Higher Costs, Greater Potential: The costs of operating in the airport are also much
higher than on the street. The airport facility tends to be more labor-intensive due to
extended hours of operation with some concessions open nearly 24/7. There are also
many examples of undersized or antiquated infrastructure (such as the freight elevator 
problem in the Central Terminal) to support concession operations that place additional
labor burden on operators. Concessionaires incur costs of security badging for new
employees. Onsite storage costs are high as well. Concessionaires who need significant
storage often will lease less expensive warehouse space off-site, but then be required to
make deliveries to the Airport. 
Concessionaires acknowledge that sales potential at the Airport far exceeds that of a
street side location. With nearly 32 million passengers annually, no other "retail"
location can compete with these customer volumes. At the same time, an airport is not a
risk-free environment for a restaurant or retail shop. Recent airline industry changes
such as mergers, bankruptcies, and consolidations have exposed concessionaires to
significant risk. 
Conclusions: 
The concessionaires' concerns regarding high build-out costs are legitimate.
Concessionaires cite the same issues uniformly regardless of ownership type and
airport location. 
The Port should conduct a thorough review of the tenant concession process and
determine where cost savings in time and process can be achieved without

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
November 28, 2011 
Page 14 of 24 

sacrificing safety and quality. This could entail benchmarking against other
airports with lower build-out costs. 
The Port should consider providing needed infrastructure to a concessions unit
lease line or provide tenant reimbursement for these improvements that will
remain beyond the tenant's lease term. 
Staggering lease expiration dates may help reduce construction costs by
moderating demand for construction services. The Port should evaluate the merit
of undertaking more outreach to increase the pool of available builders. 
ISSUE 4: Should the Port continue to require 'street pricing' for products and
services sold by concessionaires? 
The current street pricing policy was adopted by the Port Commission in 2002 and went
into effect with the opening of Concourse A in 2004. At that time, the street pricing
requirement and its application were relatively new for the industry. The street pricing
trend in airports was a direct result of decades of perceived "price gouging" by
concessionaires which enjoyed monopoly or near monopoly positions. 
Data on Street Pricing: In the November 2011 Transportation Research Board report
on airport concessions programs, the pricing policies of U.S. airports was a subject of
study (Exhibit J, ACRP Report, pgs 149-150). Data showed that the majority of airports
have a 'street pricing' or 'street pricing +10%' policy. Among food and beverage
programs, 43% of surveyed airports had 'street pricing +10%' and another 33% had
strict street pricing. The use of 'street prices' as the basis of pricing policies has become
the norm at U.S. airports over the last 10 years.
With the introduction of street pricing policies at other airports, there are now more
opportunities for Sea-Tac to benchmark the practical application of its policy with other
airports. Street pricing is one of the most debated policies between airports and 
concessionaires today, and there is a little empirical data to support either position that
street pricing positively impacts sales or has little impact. It has proven difficult to
isolate price from other factors such as location, quality of product and customer service
in the overall value perception of travelers. An airport's pricing policy decisions are
perhaps then more a matter of principle related to the customer experience. 
Stakeholder Views: In the stakeholder process, there was broad consensus that the
Airport needs to do a better job at marketing the street pricing policy to the community.
Many travelers still assume that prices are higher at the airport  perhaps due to historical
pricing at Sea-Tac or the customers' experience at other airports. The traveler focus 
groups generally confirmed this. 
Local Seattle businesses with Airport and street locations (e.g., Ivar's and Fireworks)
indicated that they are compelled to hold the same prices at both locations because their

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
November 28, 2011 
Page 15 of 24 

customers compare prices and find it unacceptable to pay more at the Airport. For these
businesses, there is no question that they will hold street prices. 
Many other operators, chiefly prime concessionaires and ACDBE subtenants, 
emphasized that the pricing policy needs to reflect sales volume potential and take into
account percentage rents, investment costs, wages and other costs. These groups
advocated for street pricing +10% in order to compensate for high investment and
operating costs. Uniformly, however, concessionaires agreed that it is not in the best
interest of airport businesses to charge unreasonably high prices because it will
discourage spending.
Labor representatives advocate a "street pricing plus" policy of up to 15% above street
prices if concessionaires passed on the higher margin to their employees in the form of
wages and benefits. 
Conclusions: 
Street pricing has been the policy at the Airport since 2004; however, there are
still widespread perceptions that airport prices are high. The Airport needs to
market street pricing. 
With little data to substantiate the impact of street pricing on sales, the matter of 
street pricing becomes more reflective of an airport's philosophies regarding the
customer experience for its passengers. 
The street pricing policy in future lease agreements might appropriately be
related to the Port's efforts to reduce high costs of investment and operation for
concessionaires. Those stakeholders that advocate for a percentage add-on to
street pricing cite high costs as the reason. 
ISSUE 5: Should the Port place requirements on the labor or employment
policies/practices of its concessionaires? 
The subject of labor requirements for Airport concessionaires was the subject of greatest
debate in the stakeholder process. Although such requirements would be placed on
concessions employers, the effects were acknowledged by all parties to have great
significance  positive or negative depending on the perspective  for not just current
and potential concessionaire businesses of all kinds, but also for airlines, concessions
employees, the traveling public, as well as for the Port's management of the future
concessions program. 
Worker Retention Advocacy: The Hotel and Restaurant Employees (HERE) and the
United Food and Commercial Workers (UFCW) advocate that the Port Commission
adopt a resolution regarding worker retention and labor harmony. In addition, they
advocated for state legislative requirements that Sea-Tac adopt such a requirement

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
November 28, 2011 
Page 16 of 24 

during the 2011 legislative session. The HERE proposal submitted as part of the
stakeholder process is included in the meeting summaries (Exhibit D). 
Legal Analysis: The Port's Legal Department has evaluated the various proposals that
the Port adopt a labor harmony and/or a worker retention policy. Staff believes that there
is a significant legal risk that the courts will find the adoption of a worker retention
and/or labor harmony policy as proposed by HERE/UFCW a violation of federal law and 
an act of contempt of the permanent injunction issued by Judge Barbara Rothstein in
2000 (CityIce Cold Storage Company v. Port of Seattle). Outside counsel, Rick Omata,
reviewed and concurred in advice provided to the Commission in 2010 and in 2011. Mr.
Omata, an attorney in private practice with the firm of Karr Tuttle, formerly served as a
trial attorney with the National Labor Relations Board. Labor representatives do not
agree with the Port's assessment of the legal risk associated with a labor harmony and/or
worker retention policy. 
Previous Legal Actions: In the CityIce case, Judge Barbara Rothstein instructed the
Port of Seattle not to take "any action interfer[ing], either by its actions or inactions, with
the exercise of federally protected rights of third parties using Port facilities to assign
work to their own employees". Judge Rothstein was not focused solely on future
agreements the Port might enter into with any unions, but any action of any nature,
including policies. In the September 21, 2005 order on summary judgment in the Flying
Eagle Espresso case, Judge Marsha Pechman order allowed the plaintiff's claims against
the Port of civil conspiracy, violation of 42 U.S.C. Sec. 1983, and tortious interference to
move forward to trial and revealed the court's view that there was strong legal and
evidentiary basis for the plaintiff's claims (Exhibit K, Order of Summary Judgment). 
The Pechman order also rejected the defense that the union and the Port were simply
seeking "worker preservation". Judge Pechman referred the plaintiff's claim that the
Port was in violation of Judge Rothstein's permanent injunction to Judge Rothstein for
determination. Ultimately, the Port and HERE settled with Flying Eagle Espresso and
paid monetary damages. 
Prospect of Litigation: There is a high likelihood that a Port-adopted worker retention
policy would be challenged in court. 
On July 26, 2011, an attorney representing two existing concessionaires indicated
that they believe they have grounds for such a lawsuit if the Commission adopts a
policy requiring a commitment by concessionaires that they retain workers of a
previous concessionaire for up to 180 days unless there is demonstrated cause to
terminate such workers. 
Relevant federal statutes appear to indicate that the successful party in a lawsuit
in this matter could recover attorney's fees from the losing party. This could
greatly reduce any financial concern of plaintiffs regarding such an action. 
Concessionaires and potential bidders for concessions opportunities are likely to
be unhappy with a worker retention policy for several reasons such as those

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
November 28, 2011 
Page 17 of 24 

below. The prospect of some or all of these concerns playing out could strongly
discourage small or local businesses (including ACDBEs) from participating in
Sea-Tac's concession program. In addition, these concerns could well motivate a
concessionaire  or a prospective concessionaire  to bring legal action against
the Port. 
Concessionaires are likely to view the initial 180 days as critical to their
businesses' success and will view it as important to choose whom they hire
without interference from the Port during this period. 
Due to the "successorship doctrine" (see explanation below), if a new
concessionaire must hire workers from a pool of employees who used to work for
a prime concessionaire, they will be hiring unionized employees, and could be
subject to union grievance procedures and an unfair labor practice claim  despite
not having negotiated a contract with the union. 
A new concessionaire would not be able to exercise its choice to hire workers of
its choice after the 180-day period without risk of disruption of business
operations from replacing his or her entire workforce. Such a move to replace its
workforce could prompt an unfair labor practice claim that the concessionaire
was discriminating against these employees due to their union membership.
The provisions of a worker retention policy would need to be incorporated into
the concessions lease. If a concessionaire violated such a provision, the Port
would have to find the concessionaire in default, which could lead to lease
termination. 
In addition to the potential of the claims noted above, the Port could be subject to other
claims regarding a worker retention or labor harmony policy. These lawsuits could
allege that a Port worker retention policy is preempted by the National Labor Relations
Act and that the Commission exceeded its legal authority. This latter issue arises
because the Port is a limited purpose government that does not have the power to
mandate that third party employers adopt minimum standards for employment. While
HERE believes that there is a proprietary basis for worker retention, staff can find no
facts to back up that claim. There is no data that indicate that security at Sea-Tac would
be enhanced due to worker retention and, in fact, concessionaires feel strongly that they
can provide better customer service if they are able to choose their employees without
interference from the Port. 
Successorship Doctrine: The United States Supreme Court has ruled and made it
common law that when a majority of a successor employer's workforce is comprised of
workers formerly employed by a predecessor, and the retained employees perform the
same type of work at the same location, the successor must recognize and bargain with
the union representing the predecessor's employees (NLRB v. Burns International
Security Services, Inc., 406 U.S. 272 (1972). As a result, the courts may view a worker
retention policy as having the coercive effect of requiring a successor to recognize the

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
November 28, 2011 
Page 18 of 24 

union representing its predecessor's employees as the exclusive bargaining
representative of the successor's employees.
While the draft policy resolution circulated by the Commission on July 26, 2011 stated: 
"Nothing in this policy shall be construed to imply that any Airport Concession Lessee is
required by the Port to recognize any labor organization as the representative of its
employees or to enter into a collective bargaining agreement with any labor
organization," that statement is unlikely to protect the Port from allegations of coerced
successorship and conspiracy with HERE to force recognition of the union. If the
majority of a new concessionaire's workforce is comprised of workers retained from a
predecessor concessionaire, the National Labor Relations Board will deem the new
concessionaire a successor, obligated to bargain with the union. 
Port of Seattle Concerns: The Port recognizes the right of any employee to organize
and engage in concerted activity. But the labor harmony and/or worker retention
requirements proposed by organized labor raises concerns for the Port that implementing
such requirements could significantly discourage small, local businesses from
participating in the airport concessions program, leading to less competition for
concessions and loss of concessions revenue, as well as increased expense to the Port
related to the enforcement of such requirements.
For example, disagreements regarding worker retention requirements (e.g., whether there
was demonstrated cause to terminate a worker, the facts surrounding the worker's
performance prior to termination, whether a progressive disciplinary process was
followed, or the sufficiency of documentation for the termination) could embroil the Port
in disputes between concessionaires and workers/unions over any number of issues.
If the Port found a concessionaire to be in default due to a worker retention policy
violation, the Port would lose concession revenues, have additional expenses to find a
replacement tenant/concessionaire and/or have to defend a lawsuit attacking the policy
that imposed the worker retention requirements. In addition, because the Port has twice
been sued and penalized for interfering with the labor relations of third party employers
and is subject to a permanent federal injunction enjoining the Port from interfering with
the right of lessees to assign work to their own employees, the Port could be exposed to
considerable legal risk.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
November 28, 2011 
Page 19 of 24 

Stakeholder Views: The prevalent view of the stakeholders is that the Port should not
place mandates on the employment practices of concessionaires. Businesses of all sizes
and types want control over their business decisions and the impact of those decisions on
their profit and loss statement. The majority of stakeholders believe there are and will
remain enough concessions jobs at Sea-Tac that current employees have a choice of
where they wish to work and that capable employees will not have trouble finding a new
job if their current employer cuts back or does not continue after a concessions transition.
These stakeholders believe, however, that many potential concessionaires will choose to
invest elsewhere if faced with a mandate to hire specific employees. 
Many current concessionaires indicated that they have difficulty finding capable 
employees who are willing to accept the challenges of working at Sea-Tac (e.g., remote
parking, suboptimal public transportation, badging requirements, etc.). Thus, these
employers are already highly motivated to hire experienced airport concession
employees if they meet their businesses' needs. 
The divergent view was offered by representatives of employees of current prime
concessionaires. They state that labor harmony agreements do not mandate unionization.
They also proposed that the Port limit direct leases to no more than 10% of its
concession program and that the remaining 90% be given to prime concessionaires
(almost all of which have represented employees). 
Recent Experience at Sea-Tac: The redevelopment of concessions at Sea-Tac in 2004-
05 and the concurrent transition from a single master (prime) concessionaire to the
current system of four prime concessions contracts and a variety of direct leases offers
important data to the question of whether there is a need for the Port to mandate a worker
retention mechanism. 
2004-05 Transition: As noted in the background information, Sea-Tac made major
changes in its concession program about seven years ago. From 1970 to 2004, the
airport had a single master concessionaire (HMS Host). Today we have: 
Four prime concessionaires with a total of 54 self-operated units; 
Six Disadvantaged Business Enterprise subtenants of prime concessionaires,
operating 11 units, and 
Nineteen direct leases for food and beverage, retail or service concessions. 
(The employees of the prime concessionaires are represented; the employees of all the
other concessionaires are not.) 
As a result of this change: 
Concessions employment grew from 732 in 2003 (the last year prior to the initial
changes in the concessions program) to 1,508 as of November, 2011; 
Represented employees grew by 23%; 
Sales have increased 75.5% (2003-2010);

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
November 28, 2011 
Page 20 of 24 

Revenue to the Port has increased 82%; 
Sea-Tac won two national awards for the best concessions program in the
country: 
Airports Council International Richard A. Griesbach Award of Overall
Excellence (2007), and 
Airport Revenue News Best Concessions Program (2009).
Employment Mobility: The second area worth examining relates to the mobility of
concessions employees. Concessions employment is quite transitory: concessionaires
report an average annual turnover of approximately 20%. A review of data from the
Airport Credential Office and reported by concessionaires indicates that, of the 1,508 
current concessions employees, 23% have worked at the airport for ten years or longer.
Over three-quarters of the employee base began working at the airport after the
concessions program transition, and concessionaires report than the typical employee
tenure is 2 to 5 years or less. 
Experience confirms that capable concessions employees do not have difficulty retaining
employment at Sea-Tac. As noted by the stakeholders' comments, employers are highly
motivated to retain their employees or attract a good employee from another operator. 
Two recent examples of concessions employers seeking out employees whose previous
employer has ceased operations underline this point: (1) when Borders Books, a direct
lease tenant, announced its closure, it allowed other Airport concessionaires to approach
their employees (in the bookstore during business hours) to recruit them; and (2) in
August 2011, Hudson Retail assumed the duty free business from HMSHost. HMSHost
had operated duty free at Sea-Tac for nearly 40 years but, due to changes within its
parent company, was exiting the duty free business. Although not required to, Hudson
retained all of the HMSHost employees who wished to remain at Sea-Tac. Hudson has
increased hours of duty free operation and added 18 new sales associates (all represented
by UFCW Local 21). Revenues have increased by 20%. This transition was a decidedly
positive outcome for the Port, Hudson and the concessions employees. 
Not only have concessions employees been able to find new employment if their
previous employer quit operating, they quite often are able to work for more than one
concessions operator at the same time. Twenty-four people currently employed by a
prime concessionaire also hold a job with an independent operator; nearly as many hold
two jobs with two independent employers; and five people work for two prime
concessionaires. 
In summary, the staff is unaware of instances when a capable non-management
concessions employee who wanted to continue working at Sea-Tac was unable to do so. 
Other Airport Policies: A few airports have adopted some version of a worker
retention and/or labor harmony policy, including San Francisco, Oakland, Los Angeles,

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
November 28, 2011 
Page 21 of 24 

San Diego, Phoenix and the Port of New York/New Jersey (NY/NJ). All but San Diego 
and NY/NJ are city airports and, thus, their governing body has general purpose
government powers, allowing them to articulate policies related to living wages or other
social policies. These are powers that the Port of Seattle does not have, which is relevant
to the legal analysis, above.
San Diego International Airport recently included a 'pass/fail' worker retention
requirement in the solicitations for new contracts as the airport transitions from a master
concessionaire. Proposers were required to sign a pledge to retain workers in order to
submit proposals. The means of enforcing the implementation of the requirement is still
undetermined by the airport, and the actual effect of worker retention in San Diego, or
whether it will be challenged, will not be known until the transition takes place in 2013.
Because nearly all the solicitation packages were tailored in size to accommodate prime
concessionaires, only one ACDBE operator was awarded a two-unit contract in heavy
competition with other ACDBEs. Although San Diego offered extra points for local
businesses, the number of extra points of the total possible was too insignificant to make
a difference in any outcome. It would appear that promotion of local, small businesses
was either not an objective of the solicitation or other factors discourage small businesses
interest. 
At NY/NJ, the worker retention policy does not apply at non-Port Authority terminals
(the Port Authority does not operate any terminals at John F. Kennedy International). In
addition, worker retention only applies to new concessionaires of the same "type" as the
outgoing concessionaire. This would seem to suggest that an incoming prime
concessionaire would be bound by the policy if it succeeded an outgoing prime, but an
incoming small business would not. 
Conclusions: 
Multiple factors convincingly support that the Port should not adopt an explicit worker
retention mandate as part of its concessions principles and practices. Such a policy: 
Appears to carry significant legal risk of violating federal law and the permanent
federal injunction against the Port directing its tenants to adopt specific labor
practices; 
Would likely be challenged in federal court; 
Would require a significant increase in Port staff to manage and regulate; 
Is opposed by the majority of concessions stakeholders (incl. airlines, current
independent business, prospective local business, and small/ACDBE business); 
Would very probably reduce small and local business interest in participating in
the concessions program; and 
Is unnecessary to protect the continued employment opportunities of capable
concessions workers.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
November 28, 2011 
Page 22 of 24 

It is also important to note that a worker retention and/or labor harmony policy is not
necessary to address a fundamental concern of the labor representatives. As is discussed
above under the question, "What should be the balance between concessions leases with
multi-unit operators ("prime concessionaires") and direct leasing?", a reasonable balance
of prime concessionaires and direct leases will almost surely result in the continued
employment of the represented employees of the prime concessionaires who wish to
continue working at Sea-Tac. In the Recommended Principles and Practices, below,
staff proposes a balanced approach that will ensure that all current workers of the prime
concessionaires who wish to continue working at Sea-Tac will be able to do so. 
RECOMMENDED PRINCIPLES/PRACTICES: 
Leasing Structure: 
At this time, the Port leases 123,167 square feet of concessions space. Prime
concessionaires self-operate 64% of the units and 71% of the concessions square
foot space. With their subtenants, primes hold leases on 83% of the square
footage. The other 17% of the square footage is assigned to direct lessees. 
Including the new units to be added over the next five years, Sea-Tac concessions
space will grow to approximately 136,116 square feet by 2017 (approx. 10%). 
The Airport should maintain its hybrid leasing structure with multi-unit prime
concessionaires coupled with direct leases with independent, small and/or
ACDBE operators.
By 2017, the Airport should lease approximately 50% of its concessions space in
multi-unit contracts of six units or more and 50% in small packages of three units
or less. 
Small/ACDBE Opportunities: 
The Airport should meet or exceed its current goal of 20% of gross sales by
ACDBE operators when all new leases are in place by 2017. 
The Airport should meet the 20% goal through its direct leases. 
The Airport should encourage, but not require, prime concessionaires also to
generate ACDBE sales. (FAA-approved joint ventures would be acceptable.) 
The airport should seek additional small businesses operators via the remainder
of the direct lease opportunities. 
Airport Facilities/Costs of Investment: 
The Airport should revise its tenant improvement review and approval process to
reduce the capital costs of its concessionaires. 
The Airport should conduct an efficiency analysis of Port processes that have
been identified as drivers of high investment and operating costs for
concessionaires for possible changes.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
November 28, 2011 
Page 23 of 24 

The Airport should consider a policy of providing necessary infrastructure to the
lease line and/or reimbursing tenants for improvements made outside concession
unit lease lines that provide lasting benefit to the Port and future tenants. 
The Port should seek to expand the number and, perhaps, "certify" contractors
with experience performing relevant construction work within the airport
terminal. 
Street Pricing: 
The Airport should retain street pricing as a requirement in current lease
agreements, and in new direct leases in the near term. 
Prior to the 2015-17 lease renewals, the Airport should closely study the overall
cost picture for concessionaires, including investment costs, before finalizing the
street pricing policy in future agreements. 
The Airport should develop rent structures (e.g., tiered rents) to balance the
challenges of higher upfront concessionaire costs with the potential for higher
margins as sales increase. 
Labor Requirements: 
The Airport should not adopt any worker retention or labor harmony policy that
carries significant legal risk of violating the permanent federal injunction or
federal law. 
The Port should encourage continuity of employment that is consistent with
federal law by: 
Providing to all new tenants (as well as any existing tenant with an interest) the
contact information for current employees or those whose employment has
recently ended due to their employer's ceasing operations at Sea-Tac; 
Encouraging all new concessions operators to hire employees who have lost, or at
risk of losing, their jobs; 
Provide all employees who wish it the contact information for those recruiting
employees on behalf of new concessionaires 
SUMMARY: 
The principles and practices applied to Sea-Tac Airport's concessions program will to a
very great degree define both the public image of the airport and the economic impact of
the Port of Seattle. They will determine in large part the airport's ability to: 
Improve customer service; 
Increase net income; 
Create jobs; and 
Promote small business opportunities. 
After extensive outreach to all stakeholders, research on current airport best practices,
and evaluation of recent practices at Sea-Tac, the staff believes the recommendations
articulated above will best equip the Port to achieve these goals.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
November 28, 2011 
Page 24 of 24 

OTHER DOCUMENTS ASSOCIATED WITH THIS BRIEFING: 
Attachment: Power Point 
Exhibit A: Summary of Stakeholder Process 
Exhibit B: Draft Principles and Practices 
Exhibit C: Focus Group Report 
Exhibit D: Meeting Summaries 
Exhibit E: Concessions Stakeholder Discussion Summary 
Exhibit F: Summary of Combined Stakeholder Meetings 
Exhibit G: Concessions Industry 'Best Practices' 
Exhibit H: ACRP Report, pgs. 126-136 
Exhibit I: Jacobs Report, pgs. 20-22 
Exhibit J: ACRP Report, pgs. 149-150 
Exhibit K: Order of Motion on Summary Judgment (Flying Eagle Espresso vs. 
Host International, 2005) 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS: 
July 26, 2011  Staff Briefing: Concessions Stakeholder Process 
July 13, 2010  Staff Briefing: Concessions Business Review and Future Outlook 
July 22, 2008  Staff Briefing: Concessions Program Update

Limitations of Translatable Documents

PDF files are created with text and images are placed at an exact position on a page of a fixed size.
Web pages are fluid in nature, and the exact positioning of PDF text creates presentation problems.
PDFs that are full page graphics, or scanned pages are generally unable to be made accessible, In these cases, viewing whatever plain text could be extracted is the only alternative.