Southwest Airlines today released its economic proposal, detailing the $130 million capital
investment Southwest Airlines will make at King County International Airport.
Southwest is proposing to construct facilities in order to move its airport
operation to King County International Airport, from Seattle-Tacoma
International Airport, where ever-increasing costs have become an obstacle to
growth.Southwest will use its own financial resources for the approximately
$130 million improvement of King County International Airport (KCIA).
Southwest Airlines proposes to build an eight-gate commercial airport
facility, which will include parking garage, passenger concessions, rental car
provisions, special accommodations for cruise traffic and buses, and the
necessary facilities for Southwest’s flight operations, including gates,
office space, baggage claim, and baggage screening.
If approved by King County, Southwest’s operations would start at KCIA in
2009 with 60 daily flights, and plan to grow to 85 flights. Under the terms
of the proposal, Southwest will own, manage, maintain, and operate the
terminal. Southwest will pay King County landing fees and land rental rates
stipulated by the County. After the 50-year agreement expires, ownership of
the entire facility will transfer to King County.
“We are giving King County a $130 million airport and by doing this,
preserving low fares for all the people of the Puget Sound Region,” said Gary
Kelly, Southwest’s CEO, at today’s press conference. “The long-term economic
benefits to King County and the region far exceed our initial investment. As
a result of estimated direct expenditures, taxes paid, and the preservation of
low fares, there will be a projected $1.6 billion total economic gain to the
The Puget Sound region will benefit from Southwest’s proposal.
Stimulation of low fares at KCIA also can be expected to stimulate low fares
at Seattle-Tacoma International Airport (Sea-Tac), as the result of what has
long become known as the “Southwest Effect,” a term coined by the U.S.
Department of Transportation.
One of the more significant aspects of the Southwest Effect is that
traffic doesn’t just surge at Southwest and the airport it serves; it also
stimulates traffic at other airlines and at airports in the same region that
are not served by Southwest.
For years, Southwest Airlines has initiated and maintained air service in
cities served by more than one airport, including Chicago, Dallas, Los
Angeles, Baltimore/Washington DC, the San Francisco Bay Area, and Houston. Of
the top U.S. 20 cities in terms of 2004 domestic airport passenger traffic,
Southwest served 15 of these markets—nine of which were served via
secondary airports located within the metropolitan area. According to
Airports Council International, all of the major metropolitan airports
increased passenger traffic levels in 2004, even with airfare competition from
Southwest’s operations at a secondary airport.
“The high cost of doing business at Sea-Tac has diluted the Southwest
Effect in the Puget Sound region,” Kelly said. “By moving operations to King
County International and lowering costs, the Southwest Effect can flourish to
the benefit of all passengers traveling to and from the region.”
Southwest Airlines cannot afford to operate its successful business model
and preserve low fares for consumers at high-cost airports, which is why the
airline looked for alternatives that would preserve its commitment and
investment in the Seattle market. After more than five years of articulated
concerns regarding increasing costs at Sea-Tac, Southwest looked to KCIA as a
“Southwest has a keen focus on keeping costs low, particularly in this
volatile energy environment,” said Kelly. “Southwest is fulfilling the
obligations of its current lease agreement with the Port of Seattle and we
have no plans to do otherwise. When that lease is up in December 2005, just
as any lessee would, we have the option to move.”
Southwest Airlines hopes the Metropolitan King County Council will allow
Southwest Airlines to relocate to King County International Airport. Any
permitting, design, or construction will be undertaken by Southwest only after
a rigorous environmental review by local, state, and federal agencies. The
airline believes its proposal to be consistent with the requirements of local
regulatory agencies, and noise impacts will be minimal.