PORT OF SEATTLE 
MEMORANDUM 

COMMISSION AGENDA                 Item No.     6b 
Date of Meeting May 5, 2009 
DATE:    April 17, 2009 
TO:      Tay Yoshitani, Chief Executive Officer 
FROM:    David Soike, Deputy Director, Aviation 
Kazue Ishiwata, Senior Marketing Manager, Aviation 
SUBJECT:  Authorization to implement a revised incentive program for new international air service
with narrow-body aircraft, and improve facilities for Icelandair to begin operations at
Seattle Tacoma International Airport (Airport).

ACTION REQUESTED 
Request for Port Commission authorization for the Chief Executive Officer to: 1) implement a revised
incentive program for new international, narrow-body commercial air service routes at a cost of
$460,000; and 2), utilize Port staff and existing contracts to construct facility improvements at the
Airport at a cost of $275,000 to enable Icelandair to initiate air service in July 2009. The total cost is
$735,000. 
SYNOPSIS 
Icelandair recently announced they would begin direct passenger air service between Sea-Tac and
Reykjavik, Iceland with beyond connections to Oslo, Stockholm, Copenhagen, Berlin, Munich,
Barcelona, and other cities. The direct service between Sea-Tac and Reykjavik, an unserved destination, 
qualifies Icelandair to earn an incentive award from the Airport, under a revised incentive program for
narrow-body aircraft. In addition , it is necessary for the Airport to make facility improvements to enable 
Icelandair to operate efficiently. Both the incentive and facility improvements are typical occurrences
and has been provided for another airline that began similar new service to Mexico. The incentive
program for Icelandair includes a one year temporary partial waiver of landing fees and arrivals charges.
The Airport's joint marketing program funds would also apply to this new service. Facility
improvements are always necessary when a new carrier arrives and begins new service at the airport.
Facility improvements will be accomplished by Port Construction Services (PCS) crews, PCS existing
on-call contracts, and by other Port in-house employees. The financial payback to the airport for all
costs is estimated at less than 2 years.
BACKGROUND 
Incentive awards for new service routes have been established at many large airports around the country.
The Port Commission first approved the incentive program in December 2005. Incentive awards at Sea-
Tac have been earned in recent years by Air France, AeroMexico, Lufthansa, and Hainan Airlines. All
airlines require facility improvements in order to operate at an airport, and Sea-Tac is no exception.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
April 17, 2009 
Page 2 
SCOPE OF WORK 
The scope of the revised incentive plan for use of a narrow body aircraft for this new route includes a
temporary landing fee waiver of 75% of fees, and a temporary waiver of 75% of the international
arrivals charge. Both waivers would extend for the first twelve months of operation. Under the revised
incentive plan, Icelandair's new direct service qualifies to earn the same incentives approved by the
Commission on April 10, 2007, for new service to Canada and Mexico.
In addition to the incentive plan, use of the long standing joint marketing program would also apply for
the new passenger service. The initial support program would extend for the first three years of 
operation, which is a similar time frame applied to other prior new passenger service start-ups. These
marketing funds are used to advertise and otherwise support the new Icelandair route during its infancy
period in order to generate awareness about the route in the region to both the public and business
marketplace. $110,000 will be applied in the first year, while $45,000 will be applied in the second and
third year.
The facility improvements include modifying ticket counters, ticketing back walls, signage, 
communication/computer equipment, and gate hold room podiums/equipment at a total estimated cost of
$275,000.
FINANCIAL IMPLICATIONS 
Cost Estimate and Revenues 
The total costs for the incentive program plus marketing program over the first year are estimated to be
$370,000, while costs over the second and third year are estimated to be $45,000 per year. The total
facility improvement costs are estimated to be $275,000 and would occur in the first year.
The total estimated revenues over the first year are estimated to be $351,000, while the revenues over
the second year are estimated to be $674,000 and include landings, arrival charges, and other rents. It is
anticipated that the payback period for the incentive program will be less than two years.
Source of Funds 
Budget for prior incentive awards has come from either predetermined annual budgets when new service
start-ups are known prior to the annual budgeting process, or from the Airport contingency when new
start-ups are announced in the same calendar year they begin. The $110,000 joint marketing allowance
will come from the contingency fund since the new service was just announced a month ago. Projected
Cost per Enplanement (CPE) will not be affected since the contingency fund was included in the prior
approved budget. The current lease agreement with the airlines provides for the airport to provide
incentive program.
The budget for needed facility improvements will come from a combination of existing small capital or
small jobs CIPs or contingency fund depending upon the type of work. This budget was included in the
2009 capital budget and plan of finance, and, as a result, the CPE will not be affected.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
April 17, 2009 
Page 3 
COMMUNITY / CUSTOMER / ORGANIZATION IMPACTS 
Additional international air service provides new trade routes that spurs business opportunities and
thereby strengthens and diversifies the local economy. Travelers enjoy a greater number of route
options to match their needs and to help keep air service competitively priced. The airport benefits in
the near term by increasing landing and arrival fees that help drive down average airline costs at the
Airport.
PROJECT SCHEDULE 
Facility improvements will be completed by late summer, incentive awards will extend for 12 months,
while joint marketing allowances will extend for 36 months.
ALTERNATIVES CONSIDERED AND RECOMMENDED ACTION 
Alternative 1 
Do not provide an incentive award and do not improve facilities to allow Icelandair to operate at the
airport. This alternative would not enable a new customer airline to begin service, and the airline would
not be treated in an equitable manner similar to other airline customers.
Alternative 2 
Provide an incentive award for direct passenger service to an unserved international destination by a
narrow-body aircraft, and provide the necessary improvements to enable operations to be initiated in a
smooth manner. This is the recommended alternative. 
PREVIOUS COMMISSION ACTION 
The Commission has authorized, was publicly briefed or notified regarding the incentive program in 
December 2005, in February 2007, in April 2007, and in November 2007.