(The following story by Kristen Millares Young appeared on the Seattle Post-Intelligencer website on August 20.)
SEATTLE — As the economy goes, so goes the port.
The Port of Seattle’s containerized trade has dropped along with the spending habits of the Midwestern consumers to whom Asian manufacturers send their goods.
The Seattle seaport is budgeting for up to 5 percent less containerized trade next year compared with 2008 expectations — despite its anticipation that trans-Pacific imports and exports will grow 3 percent and 10 percent, respectively.
The port expects its cruise business to be flat the next year after five years of booming popularity because “the economy and fuel prices have caught up to that business as well,” said Mike Burke, the port’s director of cargo and cruise services.
His staff is trying to strike long-term agreements with the cruise lines at the new facility expected to open at Interbay’s Terminal 91 by April 2009. Cruise lines generally sign up for a year of service at a time, allowing them to play ports off one another while keeping their routes flexible.
The Port of Seattle made $8.9 million before depreciation on its cruise business from 2005 to 2007, but lost $3.8 million during that time when depreciation is taken into account. In 2008, the port expects to make $4 million on its cruise business before depreciation; after depreciation, it expects to lose $56,000 on $8 million in revenue.
Even as the airline industry is sucked into the vortex of skyrocketing fuel prices, staggering losses and mounting bankruptcies and mergers, Sea-Tac Airport continues to fare better than the majority of its competitors by holding onto more of its scheduled flights than others have been able to retain.
“Sometimes, it is better to be lucky than good,” the port’s aviation division managing director, Mark Reis, said after he presented to the port’s five-member board of elected overseers on Tuesday. Though airlines’ winter schedules and cost cutting slashed service nationwide, competition among Sea-Tac Airport’s largest passenger tenant, Alaska Airlines, and Virgin America and Northwest Airlines has helped bolster domestic business for the airport.
Reis and his staff are being cautious, describing the current airline business climate as the worst since deregulation in 1978. “We really don’t know what enplanements” — or the number of passengers embarking on flights from Sea-Tac Airport — “will be in 2009, but we expect it not to be good, so we’ll cut everything we can cut, and we’re not going to start any new initiatives,” Reis said.
Sea-Tac’s scheduled fourth-quarter capacity is down 0.6 percent compared with fourth-quarter 2007, but it is still unknown how much the airlines will tinker with their capacity and whether demand will keep up with capacity and prices.
“Frankly, the airlines have already thrown overboard everything they can,” Reis said.
The two things the airlines can’t throw overboard? Passengers and fuel. As a result, Reis said, the airlines are planning to reduce their capacity in the face of steady demand so that fare prices will go up and, along with them, profits.
The airport staff tracks passenger airline costs per enplanement as a useful measure of the overall burden that capital projects will create for Sea-Tac Airport’s tenants. For the second year in a row, the staff expects cost per enplanements to drop.
Regardless, Reis said he would present the commission with a staff-recommended list of projects to be delayed or suspended, including environmental initiatives, in late September.
Since the end of 2007, eight U.S. airlines have shut down and another, Frontier Airlines, has filed for bankruptcy. Though U.S. jet fuel prices have soared nearly 217 percent since 2000, the average fare to fly 1,000 miles domestically has dropped 0.5 percent in that time.