Legislature(1999 - 2000)
04/23/1999 01:55 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE CONCURRENT RESOLUTION NO. 3
Relating to use of passenger facility charges at the
Anchorage International Airport.
PETER TOKELSON, STAFF, REPRESENTATIVE JOHN COWDRY, stated
that in 1990, U.S. Congress passed a law to allow publicly
owned airports to collect user fees called Passenger
Facility Charges (PFC). The State of Alaska owns and
operates 170 airports statewide and to date has not elected
to participate in the PFC program. In contrast, the city
owned airports of Juneau and Ketchikan have each implemented
PFC's.
He noted that Passenger Facility Charges are a flat user fee
collected at the time of ticket purchase and in most cases
the fee is $3 dollars. Funds collected through the PFC
mechanism may only be used for specific, pre-approved
projects that directly benefit airport users. All major
airlines serving Anchorage International Airport support the
implementation of PFC's with the exception of ERA Aviation.
Mr. Torkelson continued, Passenger Facility Charges are
being paid now by Alaskans who travel out-of-state, to
Juneau or Ketchikan. In the case of travel outside of
Alaska, the money collected from Alaskans goes to outside
airports which collect passenger facility charges. He
suggested that Anchorage International Airport is losing up
to $10 thousand dollars per day in missed PFC revenues to
the benefit of many outside airports.
Mr. Torkelson pointed out that the expansion of the
Anchorage International Airport is a prime example of a
capital project that could benefit from the implementation
of the PFC program. While Department of Transportation and
Public Facilities does not need direct legislative approval
to implement a PFC program, HCR 3 would provide an important
step in bringing the public into PFC discussion.
In response a query by Co-Chair Therriault, Mr. Torkelson
explained that for a round trip ticket from Fairbanks to
Anchorage, the PFC charge would be $3 dollars, which would
be collected at the first two-enplanement airports, but
never the destination airport.
Vice-Chair Bunde cited that the Anchorage International
Airport could impose the PFC, however, he believed that they
were looking for a political cover. Mr. Torkelson replied
that the Department of Transportation and Public Facilities
has the authority to impose a PFC subject to strict federal
regulations. The airport must make an application and then
the Federal Aviation Agency (FAA) would need to authorize
it.
Representative G. Davis inquired if an application had yet
been submitted. Mr. Torkelson replied that it is currently
being worked on. Representative G. Davis asked the need for
the proposed resolution. Mr. Torkelson explained that there
has been discussion with Department of Transportation and
Public Facilities and that they expressed a need for public
venue and debate on this issue and how it would be benefical
to Alaska. Anchorage is the air traffic hub for the State.
Representative G. Davis indicated that he does not support
the legislation.
MARCO PIGNALBERI, STAFF, REPRESENTATIVE JOHN COWDERY, added
that the applications for the PFC's are airport specific.
In the resolution before the Committee, application applies
only to the Anchorage International Airport. Vice-Chair
Bunde noted that a maximum PFC charged would be $6 dollars
and that the Anchorage International airport is aware of
concerns.
Mr. Torkelson addressed issues for the small airports. He
advised that the PFC's would be issued only in 18 statewide
airports. Many airports would be exempted under the 1%
rule.
Co-Chair Therriault inquired if village traffic would be
exempt. Mr. Torkelson replied that would depend on the way
the ticket was written.
Representative Austerman asked if the 1% was in current law.
Mr. Torkelson discussed that was included in Section #158,
Federal regulations, which covers PFC applications. He
pointed out that Representative Cowdrey has been in contact
with Senator Steven's office in Washington D.C. regarding
the possible amendment to the PFC law. Mr. Torkelson
believed that law would not make it through the U.S. Senate
this year.
He pointed out that there are two additional standards for
aircraft exemptions:
* One is for an aircraft with 20 or fewer seats; and
* The other is for an area with a population of less
than 10 thousand and are not on a road system.
Representative Austerman asked if there was a definition of
"community" in Senator Steven's bill. Mr. Torkelson did not
know.
Vice-Chair Bunde distributed an amendment. [Copy on File].
He asked Mr. Knudson from ERA to comment on the amendment.
KIP KNUDSON, ERA AVIATION, ANCHORAGE, spoke to the PFC's
and/or passenger head taxes. He noted that ERA opposes the
implementation of a PFC at Anchorage International Airport
as it is currently being proposed. The chief concern
revolves around the exemptions that are being debated in
Washington D.C. Senator Steven's proposed exemption
language singles out ERA as the only remaining Alaska based
airline paying PFC's. With the exception of Illiamna, every
ERA destination would be subject to a PFC by virtue of the
fact that they are connected to Anchorage either by road or
the marine ferry system. The so-called "rural exemption"
that is moving forward in Federal legislation exempts
communities not connected to the National Highway System.
Mr. Knudson emphasized that this would be an inequity that
singles out both ERA and its passengers.
Mr. Knudson continued, the same Senate bill also exempts
carriers in Alaska from collecting PFC's aboard an aircraft
having a seating capacity of less than 20 passengers. ERA
currently operates 18 passenger planes and 37 passenger or
50 passenger aircraft. Passenger loads can jump in the
final hours before departure justifying an upgrade from the
18 passenger aircraft to the 37 seat aircraft. The reverse
is also true. In any case, it is not fair to have a two
tiered pricing system in common market whereby passengers
riding on the larger aircraft pay more than those on a
smaller one.
Mr. Knudson added that the proposed tax would be
disproportionate, collected both from a short trip to Kenai
or a long trip to Seattle. The same $3 dollar fee would be
collected. With respect to regional carriers in Alaska,
either all should be required to collect PFC's or all
excluded. ERA Aviation clearly prefers the latter approach.
Mr. Knudson added that the company is willing to work to
seek an equitable solution and that ERA would support HB 84
authorizing revenue bonds for the Anchorage International
Airport.
Co-Chair Therriault asked if PFC's could be structured so
that the charge was only on the down line travel. Mr.
Knudson explained that would depend on the way the
application was submitted to the FAA. He directed that a
copy of that application should be available from the
Department of Transportation and Public Facilities soon. It
could be that only Northwest Airlines down line tickets
would be charged.
Representative Austerman again asked the definition of
"community" pointing out that his community would not be
happy with this new tax. He questioned if everyone would
pay. Mr. Knudson replied that the Department would need to
define "community".
KURT PARKEN, DEPUTY COMMISSIONER, DEPARTMENT OF
TRANSPORTATION AND PUBLIC FACILITIES, voiced the
Department's support of the legislation. Mr. Parkan advised
that the Department is in the process of preparing
applications for Anchorage and Fairbanks at this time with
exceptions similar to those that Senator Stevens has
included in his legislation.
In response to Representative Austerman, Mr. Parkan noted
that the definition of a "community" is the smallest
component; the notice which the Department sent to the
airlines, would exempt "communities" as areas under a ten
thousand-population threshold, which would include Kodiak.
Vice-Chair Bunde questioned who would be responsible to
maintain the airports. Mr. Parkan replied that the State
maintains and operates these airports. The PFC's collected
would go to the Anchorage Airport and not to the destination
airports. Additionally, Mr. Parkan pointed out the
exemption in the U.S. Senate language, which would
optionally exempt to satisfy the 1% rule.
Vice-Chair Bunde believed that it would be clearer to the
public if the 60-passenger exemption remain in place. Mr.
Parkan suggested that amendment could cause problems in
those communities that are served by more than one carrier.
Mr. Parkan noted that PFC's result from the impact which
passengers have on the airport and terminal.
Representative Austerman questioned the need for the
resolution since an application has already been submitted.
Mr. Parkan advised that the Legislature was the perfect
arena discuss the PFC project. He pointed out that legally,
the Department has the ability to impose the PFC with the
current statutory authority, however, these projects would
require legislative appropriation.
Representative G. Davis inquired if the Kodiak ferry system
would be exempt. Mr. Parkan replied that the exemptions
would be those communities not connected on the land
highway.
Co-Chair Therriault believed that the U.S. House bill had
the same latitude as the Senate bill to add additional
features. Mr. Parkan agreed that HR 1000 does have similar
language. He could not speculate if it would move
successfully through the U.S. Congress. He urged that the
reauthorization bill be addressed this session.
Representative G. Davis asked if the PFC charge would be
enforced only for specific projects. Mr. Parkan stated that
was correct.
Representative Foster remarked that a user fee is a tax and
questioned why this is not called a "tax". Mr. Parkan
replied this is FAA language.
Mr. Torkelson spoke to the amendment. He reiterated that
there are 18 communities that would be exempt. He listed
the community names and reiterated Representative Cowdery's
position. He indicated that the FAA authority has commented
that it was not legal to draw a line for State residents.
Vice-Chair Bunde MOVED to adopt Amendment #1. [Copy on
File]. There being NO OBJECTION, it was adopted.
Representative Austerman MOVED to report CS HCR 3 (FIN) out
of Committee with individual recommendations and with the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CS HJR 3 (FIN) was reported out of Committee with "no
recommendation" and with a fiscal note by the House
Transportation Committee dated 3/31/99.
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