Playing tough on airport costs, Southwest Airlines says it will leave Seattle/Tacoma airport and build its own terminal at the little-used Boeing Field across the city.
Competitors and local officials claim the move will cripple Seattle/Tacoma’s International’s $4.2 billion expansion, a price tag that Southwest cites as its reason for moving and one that rivals say will only get higher without Southwest to share the costs.
Courtesy of Port of Seattle
Complaining of “the high cost of doing business at Sea-Tac”, Southwest chief executive Gary Kelly says the airport is the most expensive of the 61 it serves. He says it has steadily complained as costs of the plan have doubled since it was conceived. Southwest spends about $5 for an average enplanement across its network. Seattle/Tacoma costs will be $23 per passenger by 2009, Kelly says.
The pledge to transform Boeing Field into King County International airport by building its own $130 million terminal marks a more aggressive stance by Southwest, which is already locked in a battle to lift restrictions on its Dallas Love Field home base. That campaign has taken on national dimensions, and as airport operators themselves battle more publicly to control expansion costs, the move sets the stage for a larger debate.
The debate will certainly offer a lesson in practical economics. Seattle’s home-town carrier, Alaska Airlines, estimates its share of Seattle/Tacoma costs would be about $11 million a year if Southwest leaves. Along with Horizon Air, its regional unit, Alaska would move some flights to Boeing Field to stay competitive with Southwest. That would spread the costs onto a smaller base, raising fares across the board, says Mic Dinsmore, chief executive of the Port of Seattle, the operator of Seattle/Tacoma airport, which handled 28.7 million passengers last year.
Dinsmore defends the plan to raise Seattle/Tacoma’s capacity to 48 million annually and upgrade the airport. “This has been no spending spree. We didn’t just recently begin cost containment,” he says, adding that any job gains at the smaller airport would merely be a transfer of jobs within the region.
Kelly insists his plan is no idle threat and that the airline is prepared to move in 2009, when its Seattle/Tacoma terminal lease is up. He says that Southwest’s Boeing 737-700s used on Seattle routes would have minimal noise impact on Boeing Field neighbours, who have already begun protests at any expansion of their local airfield.
DAVID FIELD/WASHINGTON
Source: Airline Business
