Alaska Airlines is asking the commission in charge of Seattle-Tacoma International Airport (Sea-Tac) to alter plans to pay for an expanded international arrivals facility mostly with Passenger Facilities Charges (PFCs). It said such a payment structure would disproportionately hurt Alaska while propping up itscompetitors.
The issue is seen as something of a proxy fight between Alaska and its newest and most fierce competitor in Seattle, Delta Air Lines. Delta has said it supports paying for the facility with PFCs, arguing that the airport needs an updated international arrivals building for its new Pacific gateway. Alaska estimates the expansion of the building, opened in 1973, will now cost slightly more than $600 million, up from an earlier estimate of roughly $350 million.
In an interview, Alaska SVP-communications and external relations Joe Sprague downplayed the Delta angle, saying the issue was fairness, notcompetition. Alaska, he argued, has more than 50% market share at Seattle, but accounts for a tiny fraction of internationalarrivals. Alaska could benefit some from carrying international traffic onward from Seattle, but Sprague said that angle was also relatively insignificant.
“Inthe case of Sea-Tac, 90% of traffic isdomesticand 10% isinternational,” Sprague said.“If 100% of theinternationalfacilities project is funded with PFCs, that means the vast majority of that project will be funded bydomestictravelerswho will rarely, if ever, use thefacility.”
Alaska worries PFCs for the international project would tie up so much money that future investments important to Alaska would not be able to move forward. “The problem is SeaTac has numerouscapitalproject needs both on the domestic side andinternationalside,” Sprague said. “If the PFC funding goes to pay forbasicallythe debt service on the newinternationalarrivalsfacility, that means that other airport costs must be paid for in some other way.”
Alaska is not entirely against using PFCs, but it would like to see them used to fund a much smaller proportion of the facility. Alaska is also asking the Port of Seattle to consider building a slightly less fancy building at a less expensive price. “Maybe 10% of the project is funded by PFCs, and the remainder by rates and charges for carriers using the facility,” Sprague said. While that would increase costs for international carriers, Sprague argues that those airlines can absorb it, as they have with the new international terminal at LosAngelesInternational Airport. “Let’s not have aninequitablecoststructurethat weakens Alaska Airlines,” he said.