CAWG Postgame: Regional Airport System?

Peter Kirsch explains how three separate airports could act like one

This week’s Commercial Aviation Work Group meeting made clear that this is not a second airport committee. The main event was a presentation by Peter Kirsch. You can believe what Mr. Kirsch says because, in addition to being a principal at one of the largest airport law firms in the nation, he was, in the dim past, also the main lawyer for the AAC during the Third Runway.

The theme: the possibility of developing a regional airport system.

If you cannot build a new airport, what are the options? Optimization. All the airports are doing it–not only Sea-Tac with the SAMP. But planners have made it clear for a long time: no amount of individual optimization–even at Sea-Tac–will be enough.

But what if there was a regional system, one that not only shares an airspace, but also governance? This is fairly common among U.S. airports. So, the question isn’t whether a single agency can operate multiple airports–it’s how that provides more capacity. It implies a shared strategy which is illegal under federal law.

This presentation, and the Q&A over JBLM, are must-see TV and should put to rest many of the questions we get over and over again.

The baseline: airports have to take all comers Federally obligated airports have to make their field available to any type of aeronautical activity on reasonable, non-discriminatory terms. Airports and the governments that own them can’t sit down and jointly decide which passenger or cargo operators go where. That’s collusion.

Informal cooperation is already legal — and already happening But as Mr. Kirsch explains, airports do cooperate. The current balance of 100% commercial at Sea-Tac and only corporate/GA at Boeing Field was no accident. It’s what happens when each airport decides, hangar by hangar and lease by lease, what gets built where. No airline was told to go anywhere. The building does the telling.

The actual lever: money, spent inside a “system” Federal law lets an airport spend its own money to promote a local airport system — peak-hour pricing, fee waivers, lease terms, facility planning that nudges traffic toward whichever field has room. No new state law is required to use it. A legislative declaration that Puget Sound is a system would make the antitrust protection more solid but the tool already exists today.

In Kirsch’s example: move general aviation out of Boeing Field, which frees space for the cargo currently parked at Sea-Tac, which frees space at Sea-Tac for more passenger gates. He called it a shell game and was careful to say it wasn’t a recommendation — just an illustration of what the tool could do.

The catch: none of this moves an airline that doesn’t want to move As Kirsch pointed out, Southwest’s flirtation with Boeing Field years back was never a real relocation plan — it was leverage against Sea-Tac’s rates. In California, Ontario grew after it broke free of LA’s ownership and cut its own costs, not because a regional plan told carriers to go there. A system buys room to try. It doesn’t buy demand.

JBLM: the white whale stays a white whale The joint-use airfield idea that resurfaces every few years is, in the chair’s own words, on the list of things that aren’t going to happen.

So what is CAWG actually doing Not hunting for a second airport. Instead it’s trying to find out how much more capacity can be squeezed out of the three airports already here. Whether that adds up to enough is still an open question.

Sea-Tac is often portrayed as ‘the evil empire’. But in the absence of sincere cooperation from its peers, it has no choice but to do what it can to maximize availability. None of the existing airports, including BFI or PAE, have ever expressed an interest in the sort of arrangement Mr. Kirsch imagined. You see the lack of will on their airfields, and on the connecting roads and rail that never got built.

Local governments want more aviation capacity about as much as they seem to want ‘data centers’. The increased efficiencies Mr. Kirsch mused about would require exactly the kind of courage the State could not find to site a new airport. Why should this be any different?

Peter Kirsch Presentation & Q&A

[9:07] Mark (consultant team): Thank you. Thank you, Evan, I appreciate that. And so as Evan alluded to, we talked about — we’re going to have a presentation by Peter here on the system considerations for operating. What that could do to kind of the optimization, management of airports, and what can be done, what can’t be under current constraints — just try to have a better understanding of that. So with that, let me switch my sharing here, get it over to Peter, and we’ll have him jump right in.

[10:14] Mark: Sorry about that, I was doing two things at once — but Peter, the stage is yours. You’re on mute, Peter.

Evan Nordby: That’s always the best way to hear a lawyer — unmuted.

Peter Kirsch: Anyway — let me know if there’s any sound problems, somebody earlier today said there were — but, well, good morning. Much as I am reluctant to make this a presentation, I think it is important here to lay the groundwork for a conversation which, to some extent, is a little bit of the elephant in the room issue we have been speaking around for a long time.

If you go to the next slide, please — we need to make a distinction. We need to look very carefully at airport capacity and demand in the Puget Sound region. They are not the same, and they’re not the same at every airport. So we need to be very careful and thoughtful about how to look at this as a system.

If we can go to the next slide, please — just a couple of slides of background, and I know that you folks have seen these, or permutations of these, many times — but there are 17 of the busiest commercial airports in Washington state, and if you look over on the right-hand side, we’re not making any secret of the fact that, at least in Western Washington, there are only three commercial airports that have enough traffic that they can, in fact, be considered to be part of the problem in Western Washington. That’s not in any way to take away from the importance of the other airports — each of which is critical to each other’s communities, and are critical feeds into Western Washington in certain instances. But if we’re looking at problems of airport capacity, we need to first start with where the problem is and where the problem can be solved.

We can go to the next slide, please. You earlier saw this slide showing the catchment areas, and the reason I’m putting this back up again is to emphasize not only that the catchment areas in certain cases almost overlap — or do overlap, in the case of Tri-Cities and Spokane — but that the catchment areas are important for understanding where people are willing to go if they are traveling. I mean, to put a sort of silly example: people in Spokane are not going to drive to Portland to an airport — they don’t have to. Tri-Cities are not going to drive to Yakima to an airport — they don’t have to. But when we look at Western Washington, you see that the SEA catchment area encompasses an awful lot of the more populated parts of Puget Sound, not including Bellingham, and obviously the southern parts of Western Washington — Longview, Chehalis, and so on.

But it’s important to keep this in mind, because we need to be practical. If we can go to the next slide — what I want to focus on today is three of the largest Puget Sound commercial service airports: SEA, Boeing Field, and Seattle Paine Field. And we focus on these for a couple of reasons. One is they represent the largest of the commercial service airports in Puget Sound. Number two, they have the greatest potential — by changing their activity levels — to change what’s going on statewide. In other words, they have the most influence.

So we can go to the next slide. I think one way of looking at airport capacity, and the opportunity for growth we’re solving for here, is to say, for these three airports, which of them has capacity. And I don’t think I’m saying anything that’s a surprise to anybody here — that SEA really has very limited capacity for commercial passenger traffic, and very limited available capacity for commercial cargo. That’s not zero — there is opportunity — but they’re most limited. Seattle Paine Field does have capacity for both commercial passenger and commercial cargo, and Boeing Field may have capacity for commercial passengers in certain instances, but probably does not have capacity for commercial cargo.

So with that basic background, let’s go to the next slide and talk about cooperation here — and by that I mean, is it possible for these three airports to work together to address growth and capacity in a way that either of them by themselves cannot?

Next slide. Now we’re going to get into the more technical legal stuff, and I’m not going to apologize for this — though lawyers usually do — because I think it’s really important that we all understand the technical issues on whether it is possible for airports to cooperate when it comes to issues of capacity and demand.

A couple of key points here. Number one: all airport proprietors that are federally obligated are required to make their airports available for public use on reasonable terms, without unjust discrimination — and anybody in the airport business can say these things in their sleep, those are the standards that govern access to airports. And they must make them available to all types, kinds, or classes of aeronautical activities. Phrased another way: an airport can’t say “we are a cargo airport, we want no passengers,” or “we’re a passenger airport, we want no cargo.” An airport can’t do that. An airport sponsor can’t deny access to an air carrier simply because they don’t have existing facilities — the sponsor must make arrangements for accommodations if it is reasonably possible. And this point is really important, because what is reasonably possible at these airports may not, in fact, be comfortable — may in fact be undesirable — but it may be possible, and it’s a relevant factor in what airlines are going to what airports, and what cargo is going to what airport, if there is capacity available.

All that being said, airport sponsors do have considerable flexibility to cooperate informally with each other. The question of whether that informal cooperation can turn into a formal matter is a much more complicated legal issue — in part because antitrust issues exist. While they’re not insurmountable, especially with state legislation, airports can’t conspire to say “this airline, we’re going to encourage to go to this airport,” or “this cargo operator, we’re going to encourage to go to another airport.” Those are technical issues we can get into, for sure, later on, in the discussion session — but I think it’s important to understand there are constraints on airport sponsors’ ability [to cooperate].

And so the first question that we’re going to start having conversations about — I want folks to think about — is: is it necessary or desirable for the airports in Puget Sound formally to cooperate? Is that something we think we should be pursuing, in order to achieve a better balance of the capacity and the demand?

If we can go to the next slide — here it’s relatively straightforward, which is that airport proprietors cannot generally impose restrictions on aircraft that can use their airport, except as needed for safety reasons. So again, Sea-Tac can’t say “we want all aircraft except [a particular carrier]” — can’t say “we want all aircraft except [a particular aircraft type].” Can’t do that. Restrictions generally require FAA consent, or a statutory or regulatory mandate, to allow this to happen.

There are a couple of exceptions, and we can get into the exceptions proving the rule — LaGuardia, Reagan National, Chicago O’Hare all have FAA-imposed restrictions on traffic. They are imposed by the FAA, and the reason I emphasize that is that you lose local control when the FAA decides to impose restrictions. And this has happened most recently in Chicago, earlier this year, when the FAA determined that Chicago did not have capacity to handle the level of traffic that the carriers wanted at that airport, and the FAA took control over the capacity of the airport in a way that many in the industry believe was relatively heavy-handed — but maybe necessary in this circumstance — but it deprived Chicago of much control.

So one question we also want to talk about is: given the capacity problems in Western Washington, are restrictions necessary for optimal traffic allocation? What about incentives — [as opposed to] handing the problem over to the FAA and letting them decide what to do next?

We can go to the next slide. A corollary to the question of restrictions is the use of money. Can the airports use money to either incentivize or penalize operations at one or another airport? And the answer is pretty straightforward, which is: for the capital and operating costs of the airport, or the local airport system, or other local facilities owned and operated by the owner operating the airport, which are directly and substantially related to actual air transportation — and noise mitigation is an exception outside the normal operations of an airport — those are where airports can use their money. Because airport proprietors generally use their money only on their own airport. But federal law does allow airports to work and use their money promoting a local airport system. And I think that’s going to be really the key for the remainder of this conversation.

If we can go to the next slide, please. So with that very basic legal and practical background, let’s talk for a minute about tools that might be available in Western Washington to address airport capacity.

Permissible joint actions are, in fact — if they want to address capacity, they can provide incentives for new service. They can adopt pricing mechanisms during peak hours to encourage or discourage aircraft from operating at times that are most busy. They could have pricing differentials generally, and penalties that are disguised as incentives are sometimes possible. And I use these as examples of things that airports together can agree on, in a way that may reallocate traffic in the marketplace, so that capacity problems can be addressed on a regional basis.

There are some impermissible actions — I won’t say you clearly can’t do them, but they’re going to be very, very difficult. One is restrictions on access — the kinds of examples I used before: “no cargo may use SEA,” or “no passengers may use Boeing Field.” That’s not permissible. And a prohibition on certain types of operations is also impermissible. While airports try to do this — for example, large airports, Chicago tries very, very hard to prohibit general aviation traffic. It doesn’t, in fact, prohibit it, because that would be impermissible under the law. But they can do things that make it less comfortable for smaller aircraft, or general aviation aircraft, to use the busiest airports. But that gets very quickly, legally, complicated.

So let’s talk — if I can go to the next slide — about what is a local airport system. I put up on the slide a couple of moments ago the three principal commercial service airports in the Puget Sound region, and the question is: is that a local airport system? Well, the good and the bad news is: there’s no definitive statutory, regulatory, or even universally accepted definition of what a local airport system is. [It could be defined by] airports operated by the same airport proprietor, or airports serving the same geographic area, or those that are complementary in serving regional traffic — we’ll leave our airports as another example of airports in a system. The FAA has no definition, the statute has no definition — and we’re going to come back to this in a moment, because one of the things I think we want to talk about is, is it desirable to think about the Western Washington airports as a system, and take advantage of provisions in federal law that allow cooperation within an airport system? Because federal policy encourages local airport system planning, and allows, with some limits, airport systems to have formal cooperation opportunities. So if we decide that there’s a system, are there things we can do?

We can go to the next slide, please. So how would one go about creating an airport system, given that there is no universally accepted definition? These are just examples of how you might do that — and I think we can talk about this in much more detail in the discussion section. But one is to designate — that may seem pretty obvious — designate a local airport system. That is, simply to decide, as a matter of policy, we are going to treat these airports as a system, and define the scope of the cooperation and coordination among them. What decision-making protocol for how matters relating to capacity and growth and allocation of traffic is going to be handled amongst them. Define the limits of that cooperation, consistent, obviously, with the federal requirements that I talked about a moment ago. And then there’s certainly going to have to be limits on an airport system, given the antitrust laws.

So one question to think about as we move forward is: what regional political imperative should inform an airport system? And I’ll take an obvious example that probably should be off the table — that is, should COG recommend that the state of Washington take over all the airports in Western Washington and run them themselves? I think that’s likely to be dead long before arrival, for all kinds of good political reasons and policy reasons. But there are things less than that that may, in fact, be worth talking about.

So we can go to the next slide, please. Let’s talk about some of the formal and informal airport systems around the country, because I think there are some examples that we can draw from here that will both be helpful, and frankly, bad case studies that are unhelpful.

Let’s go to the next slide. I want to walk around the country a little bit here and talk about where airport systems have and have not worked. So we have Southern California — most of these airports that I’ve listed here, six of them, are owned by different entities. The only exception is Los Angeles International and Van Nuys, both owned by the city of Los Angeles. These airports do not cooperate much at all — in fact, to a large extent, they’re competitors.

Or let’s go to Minneapolis, where the main commercial service airport, MSP, and six general aviation airports, are all owned by the same entity — and as you might imagine, a great deal of cooperation and coordination of traffic amongst those. Or we can take Houston, where Intercontinental and Houston Hobby, owned by the same entity, do in fact cooperate a great deal in terms of their [operations]. Or Chicago, where O’Hare and Midway are owned by the same entity, and Gary, Indiana is partly owned by the city of Chicago as well.

The other extreme, in South Florida — Palm Beach International, now called [renamed], Fort Lauderdale International, and Miami — are all owned by different entities, and they compete intensely for traffic, and that introduces any number of issues.

In Washington [D.C.], again a bit of a hybrid — Washington Dulles, Washington National are both owned by the same entity, BWI and the brand-new Manassas are [owned separately]. JFK, LaGuardia, and Newark are all owned by the Port Authority of New York, and cooperate in many cases under the mandate of the federal government. Westchester County and Islip do not.

So there are lots of different ways that airports have structured this. If we can go to the next slide — some of which are good models perhaps to think about in Western Washington, some of which were not. One is the single-ownership model of the whole system — that’s Minneapolis. But Minneapolis only has one commercial service airport of any [size]. There’s informal cooperation that exists — New England, among the New England airports, there’s a great deal of cooperation among the Boston airports, Providence, Western Massachusetts airports — again, very informal, nothing formal. There is informal competition in South Florida — that is a system that says “we don’t want to talk to each other, we don’t like each other” — informal, maybe too neutral a word there, they in fact compete very aggressively. Formal cooperation exists in Dallas, exists in the Washington [D.C.] area to some extent as well — by “formal” I mean the roles of those airports are defined pretty definitively in law, and therefore there are defined parameters for [cooperation]. And the last aviation system model, which is probably the least of a system, is Los Angeles, where the airports are completely independent of each other.

Let’s go to the next slide — solutions. So let’s talk for a moment, with this background, about what solutions might exist within the tools to create an airport system. First, you can, in fact, formulate by statute an authorized airport system, and as you’ve heard in some of these cities, that exists by law — they are required to cooperate, or required to take certain roles in the airport system. Formal intergovernmental agreements exist in some places, whereby the airports get together and decide their respective roles — that’s unusual, but not unheard of. Informal memoranda of cooperation exist — this is much more the model that exists in New England — or creation of a single consolidated entity that may not be part of the state, but may be a separate entity, and that of course exists to some extent in New York City and a couple other areas.

But the question, I think, is: what would a Puget Sound airport system look like, given the range of options that exist around the country — for COG, in thinking about, if we want an airport system, what would it look like, what would work best for us?

So let me end — the next slide, if I can — with some options to stimulate brainstorming. And I put these on the table not because I think any of them are good or bad, necessarily, but just to begin to get members of COG thinking about how might we use an airport system, how might we decide to create an airport system as a good idea, and how could that affect capacity in the short term, and the ability to grow in the medium term, at these airports.

So here are some things: look at peak-period pricing — a program that charges users more to land at the busiest times of day at congested airports — or promotional fee waivers at other airports. That is, to use the power of the purse to encourage users to go to airports that have excess capacity, and to avoid airports where capacity is a particularly serious crunch. And if we go back to one of my earlier slides, you recall that, with respect to passenger service, there is capacity available to some extent at both Boeing Field and Paine Field, and relatively little available at SEA. And so peak-period pricing might be used to encourage operations to shift to one of those airports.

You could also structure rates at the three airports so that aeronautical users are incentivized to spread traffic among airports. As I talked about earlier, once you have defined an airport system, [the] finances are such that one airport can use money to encourage operations at another airport within the system. You have to be careful not to turn this into a penalty, which should be impermissible — but incentives are certainly possible, and it’s remarkable how little money is needed to incentivize airlines to change operations within a region.

You can use airline leases to incentivize use of alternate airports. This is a much longer-term issue, because, of course, airline leases are not things that are done day-to-day — they last for very many years. But the airline lease mechanics can be adapted so that they are coordinating with each other.

And cooperative planning for facilities at all three airports is possible — so that the facilities are complementary, not duplicative. So one airport, for example, may be best served by facilities for long-haul or for international [service]. Another may best serve — because of facilities — for all-cargo aircraft, or general aviation, and so on. And that is a tool that’s used to a great deal by airports in a region, even without a lot of formal cooperation. And I cited Chicago before as strongly discouraging general aviation traffic, and encouraging the development of general aviation at some of the outlying airports in the Chicago metro area — and that sort of thing can be very effective.

So the last slide here — what I’ve tried to do here is just lay out some principles of airport systems: what they are, what they can do, and how you might think about the three largest commercial airports in the Puget Sound region as a system, and how you may be able to use the available capacity at one to complement the unavailable capacity at another.

And with that, I think, if we have time, Mr. Chair, happy to throw it open to questions, discussion, whatever is the desire of the group.

Evan Nordby: Thank you, Peter. Appreciate that. And, yeah — Evan, if you have any comments, or other members of our colleagues —

Q&A

Evan Nordby: Mr. Brookman has his hand raised already, and Mr. Wirt, so I’ll call Mr. Brookman first.

Ben Brookman: Peter, thank you — I’ll probably have more questions throughout this, but I was curious about examples of cooperation domestically that you’ve seen, other than facility planning. I know that managing systems — as far as segmenting types of traffic, GA versus cargo versus passenger, for example — is a really interesting idea. But what other levels of coordination have you seen around the country that’s been effective?

Peter Kirsch: Most of this has been relatively informal, and it has tended to be the general aviation versus commercial distinction. So, for example, in New England — which is probably the best example — [Boston] coordinates relatively closely, or has historically coordinated, with Providence, which is not one of their airports, and to some extent with Manchester, New Hampshire, which did not — [encouraging] the non-core commercial service operations at those airports.

Another good example that one could argue has been either unsuccessful or successful is Gary and O’Hare. Chicago purchased a large portion of Gary Airport, in cooperation with the city of Gary and the state of Indiana, to encourage more cargo operations out there. That has not been particularly successful, but it’s been an attempt. So there are attempts —

Ben Brookman: Thank you, and just one quick follow-up before we move on to others — when you look at Puget Sound specifically, much of the challenges we’re facing are solving for commercial traffic, less so on the GA and cargo side. So, given that SEA is already the primary passenger airport, and it’s also the one that is most constrained — what are some things that the Puget Sound system could look at that would help solve the region’s specific [problem]?

Peter Kirsch: Let me give you a good example — not because it’s good from a policy perspective, but a good illustration. Boeing Field has a great deal of airfield capacity — it does have a lot of space dedicated to small general aviation, T-hangars, small hangars, and tie-downs for general aviation. If you look at this real estate from a purely real-estate perspective — if that real estate could be made available for cargo operations, there’s already a lot of cargo there — many more cargo operations could shift to Boeing Field from SEA. You need to see a little bit of a shell game here, right, and — to be clear, I am not recommending this, I just use this as illustration — suppose you took the small general aviation, you incentivized them to move somewhere like, say, Auburn. Thereby opening up real estate at Boeing Field, then some of the all-cargo operations at SEA would be more amenable — would it be easier for them to move their operations to BFI.

The same, to a lesser extent, exists — the same problem, to a lesser extent, exists at Paine Field. That is, the small general aviation takes up a fair amount of real estate at that airport, and that’s not [currently] been a problem — they have plenty of airfield capacity. But there may come a time when it is desired in the region to put more passenger or cargo facilities at Paine Field, and that would necessitate trying, in an orderly fashion, [to relocate some GA] — to another nearby airport. If you have to do this, those sorts of things require a great deal of political poise. You don’t want to simply kick out operations or make operations untenable, but I think that’s part of the challenge with the system, is trying to make it attractive for everybody.

But there are, I’d think, been a number of opportunities to look at the available runway capacity and compare it to the real estate, particularly at BFI and Paine Field. But let’s talk about what happens then at SEA. Suppose, for example, you were able to move some of the larger cargo — not the belly cargo, but the all-cargo — out of SEA. That would then free up real estate at SEA, which is a serious constraint, that could be available for a new terminal or for more passenger service. So, as I say, it’s a bit of a shell game moving things around, but each of these airports has opportunities [tied to the others].

Evan Nordby: Yes — thanks, Peter, for that presentation. I actually have two questions, and I think you answered kind of one of them, which is: why do you say that Boeing Field has passenger [capacity, given] the limited real estate there — because of general aviation parking and T-hangars and that sort of thing?

Peter Kirsch: That’s right — I mean, cargo requires a lot of real estate.

Evan Nordby: Yes. And if I’m an airport director, I am ambivalent about cargo, because the amount of real estate it needs as a proportion of number of operations is a little off. But you went on to say that Boeing does have additional passenger capacity, and I don’t know how much that would be, because as you look at that terminal building and the available real estate around there, it’s not much.

Peter Kirsch: [It would not be] half of SEA’s capacity — you’re not going to be able to achieve that in any facility. But could you take a significant percentage — 10 percent, 15 percent, 20 percent of the growth — off? And the answer is that at an airport like BFI, the availability of land for passenger service is easier than the available land for cargo today. If you were to make shifts in general aviation real estate at BFI, then both of them would have greater capacity — for both passengers and cargo.

Mark (consultant): And yeah, sorry, Gary — and I think, just to add to that, right — that’s part of understanding the system, looking, if we are to look at things as a system in an optimized way, what does that actually do to capacity, right? And furthering that understanding with regard to some of this, to get to the details of the question that you’re asking.

Evan Nordby: Okay, thanks. My second question, Peter — and actually it’s an observation more than a question — on your slide that had to do with the catchment area. I don’t know if you can pull that up easily or not, but basically you do not show Yakima [in Sea-Tac’s catchment area]. I kind of question why you don’t include Yakima in SEA’s catchment area, because there’s like four buses daily, round trip, between Yakima Airport and SEA Airport, and there is a significant amount of traffic on those buses — I have been on them numerous times.

Peter Kirsch: [Fair point about being] in SEA’s catchment area, unless there’s some reason not to. Let me ask Steve Van Beek — do you want to, I know your folks prepared those catchment slides, do you want to address that question?

Steve Van Beek (consultant): Yeah, this was focused on drive time of single-passenger automobiles. We’re happy to wrap in other modes and other options, Evan — and in fact, we’ll be talking about that a little bit in October, when we focus a bit more on the surface connections to airports. Happy to include the Yakima buses in that as well.

Evan Nordby: Yeah, the outfit is called Bel Air Shuttle, and you could probably inquire to them, Steve, about what their ridership is between Yakima and Seattle. They also pick up Ellensburg, which is a college town, so I think there’s a significant amount of ridership out of Ellensburg too, but I’m sure they could [confirm].

Evan Nordby: Thank you. All right, Mr. Wirt.

Gary Wirt: Yeah, thank you — thank you, Peter, for that presentation. I guess — as Steve Van Beek said at the last meeting, this is not an easy topic. Nothing here is easy. I reserve the right to change my mind on several things that I’ve talked about in the past, and I’ve come back and looked at a few things. I’m not going to rehash those.

But as a system — this is one of the chapters of what we’re putting together here to look at now — we’ve got to look at everything you presented. You talk about a lot of legal challenges with the FAA and whether the local airports can cooperate. The airports don’t cooperate — the airport managers are competitive, they work for their community, and they do that. I worked for the city of Houston — I worked there back in the ’90s, a long, long time ago — and, you know, the airlines don’t like to compete with themselves, so Continental, which doesn’t exist anymore, didn’t want to serve Intercontinental and Hobby. I’m sure Ben Brookman’s got some talking points on, you know, how many of these airports can we serve.

So this system approach is something to be looked at, but it’s one of those alternatives we weigh over time. A long time ago, I looked at — when I was first in this business, an old airport engineer said, “You know, when you’ve seen one airport, you’ve seen one airport.” So a system for Chicago, or a system for New York, is going to be different than a system for the Puget Sound regional area — we’ve got the Puget Sound on the west and we’ve got the Cascades on the east, so we’re different. So there may not be one set of parameters throughout the country that meets all of what we’re looking at — so we need to pick the best of what we can find and see where that falls out, as we move down this process over the next months and years.

Last thing — I think you kind of touched about it, but when we turn — hypothetically, this is just a hypothetical, something to look at — if we throw Paine and Boeing Field in there as helping us with our capacity challenges at Sea-Tac, they have a load of general aviation, corporate aviation. It’s got to be displaced somewhere if we go there, because — you know, the 800-pound gorilla in the room is the airlines when it comes down to this. I’ll say Alaska, Delta, American, FedEx — they’re going to be the ones that decide, in the future. So we’ve got to keep the corporate world and the general aviation world in perspective when we look at our alternatives down the road, and how we displace them. I certainly appreciate the work you’re doing. Thank you.

Peter Kirsch: [Airlines’ general] lack of interest in splitting their operations — you’re actually raising this — [it is] unusual. There are examples, and Ben knows of one in Seattle, where airlines do serve two airports in the same region — and that’s certainly true in Los Angeles. But it’s also important to recognize that in a region you may have airports with different passenger demand profiles. So, for example, in Dallas and in Houston, Hobby and Love Field both serve much more regional demand, whereas Intercontinental and DFW serve international traffic.

And so, it used to be — 20 years ago — sort of common wisdom that everybody wanted to be at the same airport. And as those airports have gotten bigger, the secondary airports have proven to be very, very successful, both because they split up the kind of traffic, but also because passengers have voted with their feet to say — and I don’t mean to say anything unkind about DFW, because we have some former DFW people here on the call — that they don’t want to deal with the hassle of DFW, the complexity, the parking, and so on — they go to Love Field. And that’s certainly true between Midway and O’Hare as well.

And so I think one of the real keys here is trying to find distinctive characteristics. If you want to split your passenger traffic between two airports, they really have to be distinctive places. And you’ll hear that in any of the cities that have multiple airports — people have a favorite airport, for a particular reason. And we need to explore that — why would people want to fly out of Paine Field instead of SEA? Why are they going to fly out of Boeing Field instead of Paine Field, and so on?

[Speaker unclear — possibly Gary Wirt]: If I might add something in there — if you look at Los Angeles, when Ontario was part of the LA system, it was treated like — and it’s part of the same [group] that we ran out for — it was a part that was treated as a stepchild, and didn’t have much [service]. The carriers didn’t want to go out there for exactly that reason — they didn’t want to split their operations, they did not care if somebody drove from Ontario into LAX. Once they got two carriers out there that started making money, all of a sudden — that’s it — it became the fastest growing airport in Southern California.

Peter Kirsch: And that’s a really good case study of a “lousy to better” airport becoming a competitor — and let’s explore, I think we need to look at how — why is Ontario so successful today, and why wasn’t it 20 years ago?

[Speaker unclear]: Part of it was that LA — the city of LA — didn’t want them to be successful. That’s when it became its own independent authority and wanted to grow — that’s where it happened.

Peter Kirsch: I couldn’t agree more — [there was] a major change in the cost structure of Ontario after they became independent.

[Speaker unclear]: A number of years ago, when LA was thinking of getting rid of Ontario, people laughed — “who wants Ontario, give me a break.” Well, of course now it’s very successful, and it has proved to take a lot of growth out of the other airports. So I think there are a lot of lessons to learn for us there.

Peter Kirsch: I think they’d still like to get rid of Palmdale — but that’s not going to happen in the near future. Palmdale talks about becoming an airport every couple of years or so.

[Public participant, unidentified]: Hi — thank you for the very, very good presentation. As a regular resident, non-airport professional — just a couple of small comments. I used to be on the King County International Airport Advisory Committee for the Master Plan, and there was consideration of a large plot of land to the south of Boeing Field. It would be very important to have John Parrott start [being invited] to these discussions, because he may be able to offer some wonderful [perspective] on what makes travel comfortable. I see a really excellent value for us supporting the light rail toward Paine Field. Thank you.

Peter Kirsch: I think you touch on a point which I didn’t address, which I think it needs to be in the mix — which is the question, what would make a secondary airport attractive? And it’s not just — I use the comparison of the inconvenience of DFW and the convenience of Love Field — but it also is surface access. Is it really easy to get there? Is it easier to go there than another airport? And I certainly think that’s a significant factor.

Evan Nordby: All right, Representative Dent.

Rep. Tom Dent: Thank you, appreciate that — it’s a very interesting presentation. So earlier — and I forget who brought it up — but we hadn’t included Yakima in this scenario, and I also feel that we should have included Olympia, as well, as the capital city of the state of Washington. And as a member of the Legislature, it’s a little bit embarrassing when people can’t fly to Olympia, when we compare to the other states.

[On] this capacity issue that we have — short term, is going to be [to] include as many outlying smaller airports as possible, and take some of the load off, as we move forward. Having been engaged in this issue for about 11 or 12 years now, I just see where we’re going, and it’s not — we are not making headway, we aren’t going to get a huge-capacity airport like Sea-Tac, or larger, like Denver did — it’s not going to happen. But we’re going to have to find smaller airports, and I would — I’ve heard some really interesting information here today, but I also believe that when we look at what it takes to increase these smaller [airports], that’s part of the solution. So it’s just my comments for the day. Thank you.

Evan Nordby: Thank you. I have a bit of a technical question, as we’ve started talking about Boeing Field. My understanding always, historically, was that because of Boeing Field’s proximity to SEA — that especially in bad weather, BFI really wasn’t a good place to grow a lot of traffic, [because the] landing pattern for SEA is essentially right over BFI, and they conflict on the approaches over the city in bad weather, and so that wasn’t a good option. When we start talking about the system, and we started talking about perhaps incentivizing cargo [to move there] — is this basically just few enough flights that that’s really not going to be an issue, and the issue is essentially the real estate availability next to the runway there?

Peter Kirsch: A couple of answers to that. Airspace is a huge issue all over Puget Sound. BFI and SEA are good examples, but if you look at other airports nearby — Auburn — that’s part of the mix as well, and Paine Field is not that far away. So I don’t want to minimize the airspace problems, because they’re very significant, but they haven’t really been studied to the extent that we need, as to what happens if you replace some of the general aviation aircraft with cargo aircraft. For the reason that you pointed out, Evan — is that one cargo [flight has a much bigger footprint than several GA operations] — so the question is, were you to shift the role, for example, of Boeing Field to be more cargo and less general aviation, would that, in fact, increase or decrease the number of operations? Don’t know the answer to that. So it may not, in fact, be an airspace problem, but that requires a level of really complex modeling that’s beyond what we’ve done so far. Very valid question to think about. Peter?

Steve Van Beek (consultant): Yeah — thanks. One is [that] the FAA is currently taking a new look at the Seattle region on air traffic. And when you think of air traffic in a region, it’s much like thinking about a system of airports — the airspace itself can be thought of as a system. And the FAA has to navigate flights at multiple airports in congested airspace all over the Northeast — the New York airports, depending on weather conditions, [face this too] — which limits capacity. Obviously, San Francisco and Oakland, being right across the bay, have similar issues on arrivals and departures during certain conditions. So it’s not optimal to have airports that are in the same airspace and that are growing, and you’re trying to figure out — particularly during [peak periods] — again, this whole exercise we’re in right now is about managing and optimizing the system we have, and trying to leverage the investments that airlines, that users, the federal government, the localities have made in an airport. So, as Charles [Riordan] said, it’s about squeezing the juice out — because I think, before we look at, you know, much larger greenfield solutions, or high-speed rail to more remote areas, I think the public’s going to ask: have you guys really looked at everything you can do to get all the capacity out of the investments that we’ve made? And I think, between Peter’s comments and next month, where we’ll be looking at surface transportation connections — those are the first things that we have to do, and this is part of that.

Ben Brookman: All right — just to [add], I strongly agree with that last comment. Peter, I wanted to shift gears just slightly and address a point that you made earlier on differentiated rate structures. I think I agree with you, certainly, that — I probably do not have as full a picture as you might on where it’s been applied in the past, [but] I would just say, while I think it is effective at generating revenue for airports, it’s not necessarily an effective way of impacting behavior for airline capacity. And I don’t need to go into [detail] — it’s hard to get enough differentiation in the rate structure to affect behavior for airlines around peak hours versus off-peak hours.

Peter Kirsch: I agree with you, by the way, Ben — I think we need to make a couple of distinctions. Sometimes it is the last little bit that can make the difference for a carrier that is already thinking of shifting operations — that [makes] it slightly more cost-effective via one airport than [another]. There’s no question — I’ll use your airline as an example, Alaska Airlines is not going to move all its operations to BFI. That’s just not going to happen, no matter what the cost is, for a whole bunch of good reasons. But if an airline is thinking of a two-airport operation — if an airline says, “at one airport we can’t grow, we have real constraints here, our only way of growing is [elsewhere]” — [rate structure could be] the last straw, if you will, or maybe in a positive way, the last incentive. So I wouldn’t dismiss it, but I also wouldn’t suggest it’s going to be a critical factor.

Ben Brookman: I agree — I think there’s plenty of tools in the toolbox.

Peter Kirsch: Yeah, and it’s a tool, and I think the point I want to make here, Ben — and I should, I assume you agree — is that this is not going to be a one-tool effort.

Ben Brookman: I agree — it’s going to require everything on the table.

Peter Kirsch: And so the question — to pick on you, for example, Ben — okay, what would get you to increase or decrease operations at one or another airport, and let’s look at that as a package. And those conversations are, to say the least, extraordinarily delicate.

Ben Brookman: Yeah, I wouldn’t expect Alaska Airlines to share with the public what their considerations are — that would not be appropriate.

Peter Kirsch: So I think it’s really hard — and we’ve seen this, for example, when airports try to attract new service. A good example is when St. Petersburg, Florida wanted to steal — I believe it was [a particular airline] — out of Tampa. Those were pretty delicate, complicated conversations that took place outside the public realm. They were ultimately successful. How that worked is highly confidential, but I think it’s an example of the fact that these things can work — they’re just very delicate.

Evan Nordby: Great. All right, Mr. Wirt.

Gary Wirt: Thanks. Peter — back to the Boeing Field situation. You said that it had the potential for passenger capacity. A few years ago, some of you folks on this call may remember that Southwest Airlines attempted to move over to Boeing Field, and they didn’t. As I recall, there — [it doesn’t seem] logical to expect that we would have more passenger service when it’s been tried before. [Can you] put some light on that?

Peter Kirsch: I’m really glad you raised your hand — [let me] put some light on that. Southwest never intended to move. I know that from the Vice President who said that word — that was never their intention. It was to put some pressure on Sea-Tac, and they would have never moved. And you can take that — the [talk] of Southwest talking about rates and changes — Southwest told me at one time they wouldn’t ever serve an airport where the cost was over five dollars per airplane passenger. In L.A. they’re paying something like sixteen now, probably going to go to thirty, and they’re still there.

Gary Wirt: Well — and thank you, or if you were more blunt than I would’ve been — I think, Gary, the Boeing Field example is how you can do everything wrong if there had been any real desire — that might have been possible. I’m speaking purely hypothetically —

Peter Kirsch: But it was done — and [I’ve been] told this, and I can repeat it — it was done as a leverage move, not because anybody seriously thought that Southwest would move through, and leveraged through all kinds of different levels. And so one of the lessons, I think, from Southwest and Boeing, is this has to be done very carefully.

Ann Richart: Okay. I would agree with all of what was just said. I do want to just state, though, that there are airspace considerations that would need to be looked at very closely, and that was a while before I was in my role today [at WSDOT] — [I understand this refers to Alaska], so I can’t speak to the history as well as Peter or [Gary] can — [but] expect there’d be shared airspace [issues] between Boeing Field and SEA, and they would [need to] work as a system as far as that goes. So it would just be something to take into consideration as we think about how BFI might help resolve some of Seattle’s issues.

Evan Nordby: So I’m going to call on Mr. Wirt, but then we are bleeding slightly into our next block of time — and then, so, I think we’ll have to have this be the last comment here, we’ll go to the next section, and then we will just adjust our break slightly, I think. So, Mr. Wirt.

Gary Wirt: Yeah, thank you. I was just going to ask the question — just following up on, like, Ontario and the other airports throughout the nation that, you know, didn’t have the same airline serving [them] — was that because of a low-cost carrier coming in first, and then the major airlines decided that, well, we’ve got to compete there too, so we’re going to build up there, we’re going to move in there too? Obviously, I’m not asking Ben to divulge any proprietary information, but historically — did that kind of thing happen, where a low-cost carrier started serving that community, that airport, because it’s all one large system — a community — and then, once they started service there, the existing legacy airlines said, we’ve got to be there too?

[Speaker, possibly Ben Brookman or Peter Kirsch — name unclear]: I think I can answer for Ontario, because I was there at the time this happened. Western Airlines served there, and Delta decided that they should put some money there, so we’ve had two airlines — it had nothing to do with [low-cost carriers] — they found out how many passengers [there were] and they could fill every airplane out of there, and it wasn’t any low-cost carriers, because the low-cost carriers were all still coming to LAX. So they really built up — not because of low-cost carriers, but because the larger carriers saw that this was a place they could make money and do well, and so that’s why they grew — it wasn’t any [low-cost carrier] getting them [there] first. Some of the smaller airports have gotten some low-cost carriers in and have done very well, but at Ontario, it was simply the majority of the mainline carriers who came there.

Peter Kirsch: I think there’s a bit of an urban myth around this topic — that at secondary airports, low-cost carriers come in, and then the larger carriers say [we need to follow]. Every instance has unique circumstances — so we could look at Bellingham, where low-cost carriers went in — Southwest, went in — anyway, long story there. But there are other [cases] — you can take New Haven, which has only ever had low-cost carriers, and no mainline carriers have come in since those low-cost carriers started there — or other examples. So I think we’ve got to be very careful about assuming that you start services at a secondary airport with low-cost carriers, and then, after that, the mainline carriers come.

[Speaker unclear]: I agree — if anything, there’s some history that might suggest the opposite in New England, where the secondary airports in that region have actually lost low-cost carrier service, as the LCCs have consolidated into the larger airports.

[Speaker unclear]: Yeah, it goes back in part to Oris’s comment. I remember — being from Denver — Southwest said under no circumstances would they ever serve Denver International Airport. They would go out of business before they would — and now I believe it’s their second-largest hub. So, you know, things change.

Evan Nordby: All right, well, thanks — I’m going to call on Mark to present the next [item], I think.

Antitrust Follow-Up — Peter Kirsch (approx. 2:35:00 in original file)

Evan Nordby: So I’d like to look back to Peter, and my question that came up earlier, about antitrust and airport planning.

Peter Kirsch: So, let me — without digging too deeply into the law — Evan, you and I can have a separate conversation on this, I suppose — but the basic principle is this: local governments and subdivisions, and other public entities below the state level, are subject to federal antitrust laws, and federal antitrust laws prohibit collusion, and prohibit joint activity for the purpose of limiting competition.

There’s a very important exception: that they are not subject to antitrust laws to the extent that the actions by these government entities constitute the action of a state in its sovereign capacity, or that their actions are in furtherance of, or an implementation of, clearly articulated state policy.

Now, we think that there’s a very good argument that airport sponsors — including Port of Seattle, King County, Snohomish County — are immune from antitrust laws, because they’re implementing a clearly articulated state policy set forth in a number of policy documents and state laws. That can be made clearer if the state legislature were to explicitly authorize — for example, let’s go back to our conversation about systems — if the state legislature were to specifically authorize, or even more directly [mandate], the creation of an airport system, that would, if properly worded, exempt that effort entirely from the antitrust laws. As I say, I don’t believe that is necessary, but it certainly would be [a way to strengthen] the argument that antitrust [immunity] could [cover] what we’re doing.

Evan Nordby: That strikes me as a very concrete and specific recommendation to put in the annual report, for example.

Peter Kirsch: I think the point is — if I could just go one step further here — the creation of an airport system, if this system is doing so at the direction or advice of the state legislature, the FAA and the regulators will give enormous respect to that. And so, to the extent that the legislature says, for example, “we believe that we should create a system of commercial service airports in Puget Sound,” the FAA is likely to be quite supportive of that effort. And I think it will get both cover — legally and politically — to any efforts to coordinate.

Evan Nordby: I think it’s something that the COG could certainly recommend, and it’s sort of low-hanging fruit, if you will, in terms of what the state legislature could do.

Peter Kirsch: All right, well, thank you for that — it’s exactly the question I had about [this]

JBLM / Military Airspace Follow-Up

[approx. 2:08:18] Gary Wirt: Just a comment about the Annual Report. In the legislation — there’s a statement, I have to remember exactly — it has to do with we shall not do anything that interferes with military operations. And along that line, there’s also numerous comments that have been made that we should use McChord, for example, as a partial relief. But — do we still have some follow-up action to do on that, or is there anything we should say in the annual report about what we haven’t done, or what we’re going to do, about considering military airports? I’m not sure if we’ve closed that out, I guess, is my point.

Evan Nordby: So, the short answer is no. The slightly longer answer is — on a couple of occasions there’s been some attempts to contact the Air Force, and the Navy actually worked together somewhat on Western Washington airspace issues. And so, at one point our contact changed, and it had been one and — [there are really two threads here]: the train routes and airspace related to train routes, and then the other is the idea that keeps getting brought up of a joint-use facility using the runway that’s currently McChord Field. The airspace concern is real and live, and it would be great if we could get someone to speak [to it]. The joint-use airport using McChord field is one of those, you know, white whales out there — I think it’s probably on the list of things that aren’t going to happen. It’s probably not going to happen the most, but barring — when we wake up tomorrow and they decide to close [JBLM], right, who knows, future things — stranger things have happened. So I think we should re-up our efforts to try to get a discussion going on the airspace issue, and I don’t know where that stands.

[Speaker unclear — likely Gary Wirt]: Yeah.

Mark: There’s two things on that note, Evan — one, we’ve had ongoing email contact, discussion, or a connection going with a liaison to JBLM, just to talk through and put some things to bed there. That person was on vacation through the end of August, so that’s on my list of people to be checking in with. And then, just the overall airspace redesign issue — I do think that’s been on the running list of things and topics, as that gets going, to understand — and perhaps, if we could — maybe that’s a December meeting, but it would be more about talking to them about when they’d have something meaningful to share with the COG, and how that might implicate anything that we’re talking about.

[Speaker unclear — likely Gary Wirt or Oris Dunham]: Yeah, Mark — there was, maybe before you guys were hired as our consultant, there was a comment from an Air Force Lieutenant Colonel, I believe, a lady who gave us, you know, basically guidance on who to contact in the Pentagon on this issue.

Mark: Okay. So — and I’d have to go back and look at the recording to see who that really was. Remember that? Anybody?

[Same speaker as above]: I think you probably do, but that would be my advice — is to figure out — I don’t remember her name, it’s probably in the recording.

[Speaker unclear — possibly Evan Nordby]: Actually, I remember that she spoke online, but it wasn’t clear that she was representing the military — she was just in the military — so, I remembered that, yes, she spoke up, but she didn’t clarify who — when she was, you know, an officer, or a listed person, or — or just speaking.

Mark: Yes — no, that’s good context. And like I said, I still have a follow-up from this most recent email communication, and then I’ll be able to report back by the October meeting where that stands.

Evan Nordby: All right.

[The discussion then moved briefly to Oris Dunham correcting the record on member reappointments, and a motion to send a letter to the Governor’s office about outstanding appointments — omitted here, see the full meeting summary.]

[approx. 2:14:38] Maria Batayola: Yeah, I just wanted to answer the question about JBLM. That is a requirement in the legislation — that this group addressed that issue. And so we do have a contact at JBLM, and I have put the consultants in touch with them. [The goal would be to have them] make a presentation to the group and have a chance for thorough Q&A, so that this group has some information to base their recommendations on, on that issue. So that would be great if that could be done for this annual report, but it seems like we’re running out of time, so it might not happen. But I just wanted to flag that that is a future agenda item that’s been identified.