Southwest Airlines Move Could Mean Growth at Seattle's Boeing Field

SEATTLE -- Southwest Airlines Co. began flying to Seattle-Tacoma International Airport in 1993, ushering in the "Southwest effect" of lower fares as rival airlines slashed prices in response to the new threat.

Southwest has cited increasing fees as a reason to possibly abandon Seattle-Tacoma International Airport. The airline began flying there in 1993.

Now the Dallas-based carrier is having the other kind of Southwest effect on Seattle -- the controversial kind.

It's considering moving its operations to smaller Boeing Field to lower its costs, leaving Sea-Tac behind.

Southwest's penchant for secondary airports such as Boeing Field and Dallas' Love Field has helped the airline keep its costs relatively low. But lately, the airline has grown more insistent on its small-airport preference, thrusting big cities into serious debates about regional infrastructure plans and competition.

"Same story, different airport," said airline consultant Robert Mann.

Boeing Field, officially known as King County International Airport, lies about six miles south of downtown Seattle, right next to Interstate 5. It handles more than 800 takeoffs and landings a day, including corporate jets, shippers such as UPS and Boeing 737s being delivered to customers.

Last week, a couple of colorful Southwest jets sat parked on the airfield, waiting to be picked up.

Boeing Field is, in many ways, the quintessential Southwest airport -- close to downtown and small enough to handle short spans between takeoffs and landings.

"We have very quick turns, about 25 minutes between touchdown and when the wheels go up," said Southwest spokeswoman Marilee McInnis.

"Smaller, close-in, secondary airports tend to lend themselves better to our business model."

Southwest says it's studying the idea of moving to Boeing Field and hasn't committed to it. Boeing Field airport director Robert Burke said he expects the airline to make a proposal in the next few weeks.

The potential move has been controversial in Seattle, partially because it would increase air traffic near residential areas. Sea-Tac has protested the idea, saying passenger air traffic from Boeing Field doesn't fit the region's transportation plans. Sea-Tac is building a third runway to accommodate growth, the airport noted.

Some of the funding for that runway and other major Sea-Tac improvements comes from airline fees. Southwest has cited those increasing fees as a reason to abandon the airport.

Southwest has long had a soft spot for secondary airports. Instead of flying into the major airports in Boston, New York and Washington, it opted for airports in Manchester, N.H., Islip, N.Y., and Baltimore.

But Southwest also flies into some major airports, including Sea-Tac, where it makes up about 8 percent of the airport's average 1,000 takeoffs and landings each day.

Under chief executive Gary Kelly, who took over in 2004, Southwest has begun seriously rethinking its operations. Southwest shares have stayed mired in the midteens since 2002, and Mr. Kelly wants to cut costs to lift the stock, analysts said. Shares closed Wednesday at $13.96, down 9 cents.

Southwest's labor costs have also steadily increased, said Alan Sbarra, an aviation consultant. "He can offset that by continuing to lower non-personnel operating costs," he said.

In Dallas, Southwest is battling restrictions that limit it from flying long-distance routes from Love Field, stirring up a major political fight against Dallas/Fort Worth International Airport and American Airlines Inc.

In San Jose, Calif., Southwest hinted it would leave the airport if costs got too high, so the airport scaled back its expansion plans.

Sea-Tac is spending $4.2 billion on its expansion and renovation, including the new runway, concourses, transit, security and parking.

Airline fees fund some of those capital expenditures, and per-passenger fees are on the rise at Sea-Tac. The airport expects the average cost per passenger to climb above $15 per airline in 2009 from about $10 to $11 today.

The airport has worked hard to keep costs as low as possible, said Mark Reis, the Port of Seattle's managing director for Sea-Tac. And Southwest's operating efficiencies could make its average cost much lower than that $15 figure, he said.

The passenger cost at Sea-Tac has prevented Southwest from offering cheap, short-haul flights from the airport, such as flights to nearby Portland, Ore., Ms. McInnis said. Southwest couldn't make a profit from such flights unless it cut costs, she said.

Southwest is evaluating how much its costs could go down if it moved to Boeing Field, Ms. McInnis said.

"If we did not think the cost savings would be dramatic, we would not have undertaken this step," she said.

Sea-Tac's new runway was designed to address a serious issue that often slowed traffic to the airport. Its two existing runways are so close together that air traffic controllers have to route planes in a single-file line when there are low clouds and limited visibility.

The Puget Sound Regional Council, which represents four counties, recommended the third runway in 1996 after evaluating the idea of expanding secondary airports to accommodate the area's growing travel needs.

"We, as a region, need to ensure we make the most effective use of the investment that has been made," said Mr. Reis of Sea-Tac.

While American tries to convince Southwest to move to D/FW, Seattle-based Alaska Airlines has called on Southwest to stay put at Sea-Tac. Like American, Alaska has said it will move some flights to the smaller airport if Southwest gets a competitive advantage there.

Some of Love Field's residential neighbors have worried about the noise and environmental impact caused by additional flights near their homes.

Mr. Burke of Boeing Field said he's already hearing from neighbors about Southwest. If it gets a proposal from Southwest, Boeing Field will study how the airline would affect the neighborhoods, including the impact of noise, air quality and auto traffic, he said.

Alan Rothblatt lives about a mile from Boeing Field. Last week, the physician was a passenger on one of the small airport's three passenger airlines, which make short trips in tiny planes to the San Juan Islands and other off-the-beaten-path destinations.

Dr. Rothblatt is a loyal Alaska Airlines flier, he said. But if Southwest flew from Boeing Field, and offered a fare comparable to what he could get at Sea-Tac, he'd take it, he said.

"To have something this close and this easy is phenomenal," he said.

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