Legislature(2001 - 2002)

02/21/2002 08:02 AM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 300-PROCUREMENT OF TRAVEL SERVICES                                                                                         
                                                                                                                                
Number 1305                                                                                                                     
                                                                                                                                
CHAIR COGHILL  announced the next  order of business,  HOUSE BILL                                                               
NO. 300,  "An Act relating  to the procurement of  certain travel                                                               
services."                                                                                                                      
                                                                                                                                
Number 1296                                                                                                                     
                                                                                                                                
REPRESENTATIVE  HAYES,  sponsor of  HB  300,  explained that  the                                                               
proposed legislation would allow businesses  in the state to have                                                               
equity.   Currently,  the state  executive  branch doesn't  allow                                                               
travel agencies to  charge a fee to certain entities  such as the                                                               
court, transportation, and administration.                                                                                      
                                                                                                                                
REPRESENTATIVE  HAYES  explained  that [prior  to  the  terrorist                                                               
activities] of  September 11, 2001,  airlines were  paying travel                                                               
agencies approximately  5 percent  for each  ticket sold.   After                                                               
September  11, 2001,  that price  [was capped  at] $10-$20  for a                                                               
one-way or roundtrip airfare, respectively.   Because of the cap,                                                               
it became  necessary to request  that the state actually  pay for                                                               
the services it receives.                                                                                                       
                                                                                                                                
REPRESENTATIVE  HAYES noted  that currently  the travel  agencies                                                               
have to sign  a waiver saying they won't charge  the state a fee,                                                               
in   order   for   state  agencies   to   use   their   services.                                                               
Representative  Hayes said  it  seemed  unacceptable because  the                                                               
agencies  are providing  a service  to the  State of  Alaska and,                                                               
therefore, should be paid for those services.                                                                                   
                                                                                                                                
Number 1145                                                                                                                     
                                                                                                                                
REPRESENTATIVE HAYES  indicated two letters.   The first,  from a                                                               
travel agency in Fairbanks, read in part:                                                                                       
                                                                                                                                
     The  state  should  not  be   exempt  from  paying  for                                                                    
     services  from any  business.   We  provide a  valuable                                                                    
     service.   I  do not  want to  see our  public servants                                                                    
     wasting  time and  money trying  to  be travel  agents,                                                                    
     when a call to professional  and efficient travel agent                                                                    
     can  have  a  state  employee off  the  phone  and  the                                                                    
     Internet in minutes.                                                                                                       
                                                                                                                                
     Currently,  the state  does not  pay for  a service  of                                                                    
     ticket  deliveries,  or  the  additional  cost  if  the                                                                    
     ticket has to be changed and reissued.                                                                                     
                                                                                                                                
REPRESENTATIVE HAYES pointed out the  final paragraph of a letter                                                               
[dated August 29, 1991] from  [then-Representative] Fran Ulmer to                                                               
then-Governor  Walter  Hickel,  which  read  in  part,  "While  I                                                               
applaud your  efforts to find  efficiencies, it is no  benefit to                                                               
Alaskans   to   pinch   pennies    while   taking   away   jobs."                                                               
Representative Hayes said while he  also applauds efforts to find                                                               
efficiencies, the result  has been to hurt  the [travel] industry                                                               
in Alaska.  He stated his  belief that [the legislature] needs to                                                               
find ways to  pay for the services that the  industry provides to                                                               
the state and its citizens.                                                                                                     
                                                                                                                                
Number 1045                                                                                                                     
                                                                                                                                
REPRESENTATIVE WILSON  mentioned "that waiver that  they signed."                                                               
She said in  [Wrangell] the agency gets paid.   She asked why the                                                               
agency would get paid in one town and not another.                                                                              
                                                                                                                                
REPRESENTATIVE  HAYES replied  that  the  university, the  Alaska                                                               
Railroad [Corporation],  and the  state legislature can  pick and                                                               
choose which agencies to use.  He continued:                                                                                    
                                                                                                                                
     We,  in  effect,  subsidize the  other  part  of  state                                                                    
     government, because  we pay for those  services and the                                                                    
     State of Alaska  executive [branch] does not.  ... I do                                                                    
     believe  in  1988,  when this  was  actually  put  into                                                                    
     place,  ... all  the officers  received a  memo stating                                                                    
     that we should  use travel agencies that  do not charge                                                                    
     the  State of  Alaska.   And a  lot of  our legislators                                                                    
     were upset by  this, and they'd say, "I  will prefer to                                                                    
     ... use whatever travel agency  I've always used."  So,                                                                    
     they couldn't enforce the provision  on us, so we could                                                                    
     use  whatever  travel  agency  we   choose  to  use  as                                                                    
     legislators.   But for the  executive branch  - courts,                                                                    
     administration,  corrections -  (indisc.) they  did not                                                                    
     have that purpose.                                                                                                         
                                                                                                                                
Number 0925                                                                                                                     
                                                                                                                                
REPRESENTATIVE WILSON referred to  the fiscal note and questioned                                                               
whether the amount paid will be  only $8 a ticket, instead of the                                                               
$10, $15, or $20 being charged.  She requested an explanation.                                                                  
                                                                                                                                
Number 0882                                                                                                                     
                                                                                                                                
REPRESENTATIVE HAYES said that was  the amount the administration                                                               
determined would be fair and equitable.                                                                                         
                                                                                                                                
CHAIR  COGHILL  suggested  that  there  were  people  present  to                                                               
testify who might be able to  answer the question [of whether the                                                               
$8 on the fiscal note is for a one-way or roundtrip ticket].                                                                    
                                                                                                                                
Number 0752                                                                                                                     
                                                                                                                                
REPRESENTATIVE FATE  asked Representative  Hayes to  clarify that                                                               
this  doesn't speak  to  the  charges of  the  travel agent,  but                                                               
solely to the availability.                                                                                                     
                                                                                                                                
REPRESENTATIVE HAYES  replied that he  didn't think that  was the                                                               
case.   He  stated  that the  purpose of  the  legislation is  to                                                               
exempt  travel  agencies  from  the  procurement  code,  so  that                                                               
individual agencies  can choose which [travel]  agency they would                                                               
like to use.   By doing so, he explained,  those [state] agencies                                                               
would have to pay a [fee]  to those travel agents.  Currently, he                                                               
reminded the  committee, the  work done  is subsidized  by "other                                                               
portions of state government."                                                                                                  
                                                                                                                                
REPRESENTATIVE  FATE  remarked  that  his  interest  in  this  is                                                               
because over the  last several years there has  been a "pullback"                                                               
on the  amount of travel  agents' commissions from  the airlines.                                                               
He asked if that commission  would be standardized throughout the                                                               
entire industry,  including the  State of  Alaska administration,                                                               
for  example, or  whether there  will be  a surcharge  on top  of                                                               
that.  He suggested it is  a huge question because of the current                                                               
charging practices of the agencies.                                                                                             
                                                                                                                                
REPRESENTATIVE  HAYES suggested  that  question  might be  better                                                               
answered by the representatives from travel agency.                                                                             
                                                                                                                                
Number 0660                                                                                                                     
                                                                                                                                
REPRESENTATIVE STEVENS  asked Representative  Hayes if  "we" were                                                               
experiencing  any difficulty  finding  travel  agents willing  to                                                               
take on the responsibilities of  making arrangement for the State                                                               
of Alaska.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  HAYES  responded that  he  did  not know  of  any                                                               
[difficulties in  that regard] previous [to  September 11, 2001];                                                               
however, after  that date, and  after the airlines  reduced their                                                               
fees  from 5  percent of  the total  ticket to  [$10 to  $20], he                                                               
said, "You're looking at businesses  that ... are working on very                                                               
thin margins."  He continued:                                                                                                   
                                                                                                                                
      By the airlines' reducing that margin even more, ...                                                                      
     what I fear is that we're going to run businesses out                                                                      
     of business in ... Alaska,  all over the point that ...                                                                    
     [there  is]  $285,000  that   travel  agents  would  be                                                                    
     receiving  from the  State of  Alaska  for providing  a                                                                    
     service  that  they  currently provide  to  the  state.                                                                    
     And, again, my  ultimate problem with this is:   If you                                                                    
     receive a service, you should  ... pay for that service                                                                    
     that  you're receiving.   And  that's ultimately  why I                                                                    
     brought this forward.                                                                                                      
                                                                                                                                
Number 0554                                                                                                                     
                                                                                                                                
GAYLE  PAUL  JANECEK,  Accounting Supervisor,  ABC  Travel  Time,                                                               
Inc.,  testifying via  teleconference,  told  the committee  that                                                               
company has  been serving  Alaska for 24  years, with  offices in                                                               
Palmer  and  Wasilla.   She  surmised  that  the days  of  travel                                                               
agents' being paid airline commissions  will soon be over, partly                                                               
because    airlines   are    "operating    on    the   edge    of                                                               
[impoverishment]."   Ms. Janecek told  the committee that  on the                                                               
national  level,  almost  all  remaining  agencies  are  charging                                                               
service fees or  reservation processing fees to  their clients in                                                               
order  to continue  providing "a  reliable,  nonbiased source  of                                                               
travel information."                                                                                                            
                                                                                                                                
MS. JANECEK  noted that in  her 14  years with [ABC  Travel Time]                                                               
she has tracked several loyal,  local Alaskan state employees who                                                               
rely on  the agency to "go  the extra distance" for  their travel                                                               
arrangements and who  pay the agency's service fees  out of their                                                               
own pockets.  She said, "Doing  business on a local level assures                                                               
them  that   they  are  trusted   people  who  can   quickly  and                                                               
efficiently handle the state's routine or problem travel."                                                                      
                                                                                                                                
MS.  JANECEK   said  she  could  understand   the  difficulty  in                                                               
reconciling the  state's travel-credit-card account  to determine                                                               
which charges align with which  state employees for what dates of                                                               
travel, for example.  She  suggested perhaps the process could be                                                               
streamlined by  e-mailing the information as  transactions occur,                                                               
thereby  alerting   the  "finance  department"  of   the  pending                                                               
charges.   Denying  economic opportunity  to serve  the State  of                                                               
Alaska  because  of  "reconciling   problems,"  she  said,  seems                                                               
discriminatory  against small,  local  businesses.   Ms.  Janecek                                                               
urged enactment of  this legislation.  She indicated  this is not                                                               
a handout or  monetary relief as a result of  September 11, 2001,                                                               
but  is  about  being  paid   for  work  performed  and  services                                                               
rendered.                                                                                                                       
                                                                                                                                
CHAIR COGHILL told Ms. Janecek he appreciated her testimony.                                                                    
                                                                                                                                
Number 0325                                                                                                                     
                                                                                                                                
DAVID BERG, Representative,  Viking Travel, Petersburg, testified                                                               
via  teleconference.    He informed  the  committee  that  Viking                                                               
Travel has represented  the State of Alaska  for approximately 20                                                               
years and  presently has  a contract  to provide  travel services                                                               
for  state  agencies in  Petersburg.    The contract  allows  the                                                               
agency  to charge  modest service  charges to  cover its  cost of                                                               
doing  business, "in  light of  reduced  airline commissions  and                                                               
caps."  Mr.  Berg said the experience of [Viking  Travel] is that                                                               
many state agencies refuse to  pay service charges.  He remarked,                                                               
"When  agency employees  use our  services,  the agency  requires                                                               
that the employee pay services charges out of their own pocket."                                                                
                                                                                                                                
MR.  BERG  explained that  under  its  existing contract  [Viking                                                               
Travel] is  paid by the  state to provide the  lowest-cost travel                                                               
arrangements for  the employee.   He said, "If the  traveler does                                                               
not decide to use the contract  agent, the state has no guarantee                                                               
or impartial source of information  that travel is being obtained                                                               
at  the  lowest cost  to  the  state."   He  opined  that a  bill                                                               
proposing  that state  agencies  procure  travel services  should                                                               
contain language requiring state  agencies to use contractors for                                                               
travel where contracts are in place,  to ensure that the state is                                                               
getting the lowest-cost travel services in the market.                                                                          
                                                                                                                                
CHAIR COGHILL said he thought  the state would be considering how                                                               
it might take advantage of Internet  bookings.  He asked Mr. Berg                                                               
whether that  is an issue  of concern  for travel agents  and, if                                                               
so, how it is being addressed.                                                                                                  
                                                                                                                                
MR. BERG replied  that he sees almost daily  examples of airlines                                                               
"telling you  what they want  to" on their  web sites.   He noted                                                               
that there are  mistakes in pricing of transactions.   He said he                                                               
has known individuals who have  bought tickets from Petersburg to                                                               
Sitka, for  example, and  the airline  system will  not (indisc.)                                                               
the connections  that are necessary; consequently,  the ticket is                                                               
issued at  twice the  value of  the appropriate  pair.   Mr. Berg                                                               
stated his  belief that until  these problems are  addressed, the                                                               
state needs an  impartial judge, which is what  the travel agents                                                               
can provide.                                                                                                                    
                                                                                                                                
Number 0085                                                                                                                     
                                                                                                                                
KIM  GARNERO,  Director,  Division   of  Finance,  Department  of                                                               
Administration, told  the committee that  while she is  no expert                                                               
on  procurement  issues,  she   is  familiar  with  the  business                                                               
relationships between the State of Alaska and travel agencies.                                                                  
She testified as follows:                                                                                                       
                                                                                                                                
     State government  has a  long history  of relying  on a                                                                    
     private  sector   for  professional   travel  services.                                                                    
     Until  a few  years ago,  these services  were provided                                                                    
     for free  to travelers, because travel  agencies relied                                                                    
     on commissions  from travel providers such  as airlines                                                                    
     and hotels.   Because  no public  funds were  spent for                                                                    
     these services,  each state  office was  able to  use a                                                                    
     travel  agent of  their  choice,  and strong  loyalties                                                                    
     developed.                                                                                                                 
                                                                                                                                
     In October 1999, airlines  cut travel agent commissions                                                                    
     from 8 to  5 percent.  This 37.5  percent reduction was                                                                    
     an  early  step in  a  trend  that continues  to  place                                                                    
     severe economic pressure on travel  agents.  With ever-                                                                    
     declining  commissions  from  airlines, more  and  more                                                                    
     travel agencies  are responding by initiating  fees for                                                                    
     their services.                                                                                                            
                                                                                                                                
     When fees are introduced  to travel services, the issue                                                                    
     of  competitive  procurement  arises.    The  State  of                                                                    
     Alaska  spends  over  $16 million  a  year  on  airline                                                                    
     tickets,  so a  fee  as  low as  1  percent results  in                                                                    
     $160,000 a year spent for these services.                                                                                  
                                                                                                                                
[The  end  of  the  tape  cut off  a  portion  of  Ms.  Garnero's                                                               
testimony;  however,  the  content  was  later  provided  to  the                                                               
secretary  and  read  as  follows:     "Current  procurement  law                                                               
requires  formal competitive  bids  for purchases  of this  size.                                                               
The result is that all state  travel purchases are then made from                                                               
the successful bidder."]                                                                                                        
                                                                                                                                
TAPE 02-15, SIDE A                                                                                                              
Number 0001                                                                                                                     
                                                                                                                                
MS. GARNERO continued as follows:                                                                                               
                                                                                                                                
     Our  policy has  been to  obtain travel  agent services                                                                    
     without  paying fees  wherever possible.   Toward  that                                                                    
     end, the Department of  Administration has maintained a                                                                    
     web  site  listing  travel agents  willing  to  provide                                                                    
     services  free  of charge  to  state  agencies.   State                                                                    
     agencies may use any of  the listed travel agencies, or                                                                    
     any  other  travel agency  willing  to  waive fees  for                                                                    
     their service.                                                                                                             
                                                                                                                                
     But  in  communities  where   no  travel  agencies  are                                                                    
     willing  to  provide  free services,  we  competitively                                                                    
     established a travel agent  contract in accordance with                                                                    
     the  procurement code.   This  has resulted  in single-                                                                    
     award   contracts  for   the  communities   of  Juneau,                                                                    
     Wrangell,  Petersburg,  Haines,  Cordova,  Seward,  and                                                                    
     Dillingham.   Fees  paid  under  these contracts  range                                                                    
     from $5 to $20 for an airline ticket.                                                                                      
                                                                                                                                
Number 0098                                                                                                                     
                                                                                                                                
MS.  GARNERO  informed  members  that  she  was  responsible  for                                                               
writing  the fiscal  note.   She  explained that  the  $8 is  not                                                               
necessarily "reasonable" amount, but  rather an assumption "based                                                               
on what we've  seen in these contracts we've picked  out so far."                                                               
She continued as follows:                                                                                                       
                                                                                                                                
     If  the  legislation  passes,  travel-related  services                                                                    
     would be exempted  from the procurement code.   In that                                                                    
     case, the  Department of Administration will  meet with                                                                    
     industry representatives to  establish a reasonable fee                                                                    
     schedule, which  would become  the benchmark  for doing                                                                    
     business with the state.   Any travel agency willing to                                                                    
     provide  services at  or below  the benchmark  would be                                                                    
     eligible  to  do business  with  the  state, and  state                                                                    
     employees could then choose to  use any eligible travel                                                                    
     agency.                                                                                                                    
                                                                                                                                
     But to  sum up,  passage of HB  300 will  eliminate the                                                                    
     requirement  for competitive  procurement  in order  to                                                                    
     pay  fees, but  it would  not prevent  establishing [a]                                                                    
     future  travel  agency  contract  when  that's  in  the                                                                    
     state's best interest.  It  also will have no effect on                                                                    
     our existing  ... travel  agency contracts,  since they                                                                    
     are preexisting and legally binding.                                                                                       
                                                                                                                                
MS. GARNERO offered to answer questions.                                                                                        
                                                                                                                                
Number 0207                                                                                                                     
                                                                                                                                
REPRESENTATIVE  STEVENS  asked  what  benefits  exist  to  travel                                                               
agents to provide services free of charge to the state.                                                                         
                                                                                                                                
MS.  GARNERO answered  that  the travel  agents  still receive  5                                                               
percent from the  airlines; she mentioned that  she thinks hotels                                                               
and rental car  agencies are paying them.  She  admitted that she                                                               
doesn't  fully understand  the travel  agency revenue  structure.                                                               
She said there are still  commissions left; however, she referred                                                               
to previous testimony regarding  the inevitable trend of reducing                                                               
commissions.                                                                                                                    
                                                                                                                                
REPRESENTATIVE  STEVENS   asked  if   Ms.  Garnero   was  finding                                                               
disinclination  on the  part of  travel agents  to continue  this                                                               
arrangement with [the state] at no charge.                                                                                      
                                                                                                                                
CHAIR  COGHILL commented,  "I think  the testimony  to a  bill is                                                               
pretty resounding."                                                                                                             
                                                                                                                                
MS.  GARNERO mentioned  the  October 1999  reduction.   She  said                                                               
after  that  reduction, [the  department]  wrote  letters to  170                                                               
travel agencies around the state,  asking if they were willing to                                                               
waive fees for  their service, "after we first put  that web site                                                               
together."   Noting  that perhaps  more than  80 travel  agencies                                                               
were  listed  at that  time,  she  said  many  have gone  out  of                                                               
business, and the number is now  40.  She mentioned the following                                                               
numbers of  travel agents currently  listed:  13 in  Anchorage, 9                                                               
in Fairbanks, and "1 or 2 shops around the state."                                                                              
                                                                                                                                
Number 0344                                                                                                                     
                                                                                                                                
REPRESENTATIVE  WILSON indicated  the  fiscal note  and asked  if                                                               
[the $8] reflected [a fee] for one-way or roundtrip travel.                                                                     
                                                                                                                                
MS. GARNERO  answered that  her intention at  the time  she wrote                                                               
the fiscal  note was that  [the $8]  was for a  roundtrip ticket.                                                               
She reiterated that she didn't know  if that was reasonable.  She                                                               
said  [the determination]  would  come from  discussion with  the                                                               
travel industry representatives.                                                                                                
                                                                                                                                
Number 0400                                                                                                                     
                                                                                                                                
REPRESENTATIVE FATE asked if his  understanding - that this would                                                               
take out  procurement and open  the door to agency  competition -                                                               
was correct.                                                                                                                    
                                                                                                                                
MS. GARNERO  replied, "I'm  not sure  that it  opens the  door to                                                               
agency  competition,  because what  we're  speaking  of doing  is                                                               
setting some  benchmark at which we  would pay, and I  don't know                                                               
that we would get many that would charge us less than that."                                                                    
                                                                                                                                
REPRESENTATIVE FATE noted  that there are many  factors which are                                                               
hurting  the   [travel]  agencies,   including  the   cutback  of                                                               
commissions and  the increasing acceptance of  Internet ticketing                                                               
and  electronic ticketing.   He  asked what  would happen  to the                                                               
system when, inevitability,  several of these agencies  go out of                                                               
business for one reason or another.                                                                                             
                                                                                                                                
MS. GARNERO responded  that her mother owned a  travel agency for                                                               
20 years,  which closed 2 years  ago; so she herself  is aware of                                                               
what is  going on in the  industry.  She explained  that when she                                                               
procured the information  for the fiscal note, 23  percent of the                                                               
tickets  bought last  year were  purchased  directly from  Alaska                                                               
Airlines.   She added  that she  was certain  many of  those were                                                               
purchased over the  Internet.  She said she didn't  have data for                                                               
early years,  but was  sure the  numbers for  next year  would be                                                               
higher than 23 percent.                                                                                                         
                                                                                                                                
MS. GARNERO noted  that the macroeconomics of  travel agencies is                                                               
changing because  of the consolidation  of smaller  agencies into                                                               
bigger ones, for  example, and because many  agencies are closing                                                               
their doors.                                                                                                                    
                                                                                                                                
REPRESENTATIVE FATE  asked if  that would  make ticketing  by the                                                               
state more difficult.                                                                                                           
                                                                                                                                
MS. GARNERO answered as follows:                                                                                                
                                                                                                                                
     Last year in Juneau, our  last few travel agencies that                                                                    
     were waiving fees  for us said they could  no longer do                                                                    
     it.  We did a procurement.   We had several bidders and                                                                    
     ended  up  with  a  contract  with  a  large  statewide                                                                    
     agency.  We're paying ...  $5 for a ticket to Anchorage                                                                    
     roundtrip,   and  $8   for  a   ticket  anywhere   else                                                                    
     roundtrip, on  that contract.   I would imagine  in our                                                                    
     larger  urban areas,  procurements would  yield similar                                                                    
     results.                                                                                                                   
                                                                                                                                
MS. GARNERO noted, "The only community  we were not able to get a                                                               
contract in - that wouldn't waive fees - was Bethel."                                                                           
                                                                                                                                
CHAIR COGHILL commented,  "With this law, it would  allow us some                                                               
flexibility  in discussing  things with  travel agencies,  but it                                                               
would not mandate it.  I mean,  we could look for other areas for                                                               
cost savings if we had to."                                                                                                     
                                                                                                                                
MS.  GARNERO said  yes.   She added  that it  would also  put the                                                               
choice back in state agencies, which she said they like.                                                                        
                                                                                                                                
Number 0758                                                                                                                     
                                                                                                                                
KARA ALTMAN, Owner, Kara's Cruise  and Travel, told the committee                                                               
she is  a lifelong Alaskan and  a Juneau resident who  has worked                                                               
for  most of  the  last 15  years  of her  career  in the  travel                                                               
industry  at Southeast  Executravel.   She  noted that  Southeast                                                               
Executravel was  forced to close  its doors on December  8, 2000;                                                               
eight employees  lost their jobs  that day, with about  two days'                                                               
notice.   She  said  this  was a  direct  result  of the  state's                                                               
refusal  to compensate  the travel  agency for  work done  on its                                                               
behalf.                                                                                                                         
                                                                                                                                
MS.  ALTMAN said  no agency  in  town could  absorb eight  agents                                                               
suddenly out  of work;  some of those  out-of-work agents  had to                                                               
rely upon state  public assistance to provide  for their families                                                               
- yet another cost to the state.   She recounted that she and her                                                               
colleague [Cyndi Isaak] had set  up home-based travel agencies at                                                               
their own  expense.   Not charging  a fee would  be the  death of                                                               
their businesses and livelihood, she emphasized.                                                                                
                                                                                                                                
MS. ALTMAN said  she knows of no other professional  in the world                                                               
that  offers services  at no  charge.   She  explained that  [the                                                               
travel  agency] was  able to  do  that when  commissions were  10                                                               
percent, but  they have  been cut  to 5  percent over  the years,                                                               
which  means a  50 percent  cut  in pay.   In  regard to  capping                                                               
tickets  at   a  $20  maximum,   she  said  it  costs   an  agent                                                               
approximately $35  in overhead costs; therefore,  the agents lose                                                               
$15 minimum for each ticket issued.                                                                                             
                                                                                                                                
MS.  ALTMAN  referred  to  an  aforementioned  comment  regarding                                                               
[commissions paid] on  cars and hotels.  She  told the committee,                                                               
"Cars generally do pay us 10  percent, but not for the state; for                                                               
the state, we only get 5  percent."  Hotels, she said, will often                                                               
say  that  government  fees  are  non-commissionable,  after  the                                                               
travel agent has  made a long-distance phone call  at his/her own                                                               
expense to book the reservation.                                                                                                
                                                                                                                                
MS.  ALTMAN  said  the  $8  charge  is  per  ticket,  whether  "a                                                               
roundtrip to Timbuktu  or a one-way to Anchorage,"  no matter how                                                               
many segments are in the itinerary.   She noted that when booking                                                               
travel for "regular citizens," many  agencies charge $20, but she                                                               
said, "Our fee is $10."  She  pointed out that charging $8 to the                                                               
state would  be, in  effect, giving  the state  a discount.   She                                                               
added  that [travel  agents] can  and  always have  been able  to                                                               
issue electronic tickets, so that is not an issue of concern.                                                                   
                                                                                                                                
Number 1020                                                                                                                     
                                                                                                                                
CHAIR COGHILL asked  Ms. Altman to describe some of  the areas in                                                               
which her work can "overrule the e-ticket world."                                                                               
                                                                                                                                
MS.  ALTMAN  replied  that  a  travel agent  has  access  to  all                                                               
airlines, cars,  and hotels at once,  and can get the  client the                                                               
best rates.  A person can  e-mail the travel agent and spend very                                                               
little time working on travel plans.   She said all [agents] know                                                               
that for  the State  of Alaska,  Avis Car  Rental Agency  has the                                                               
contract, for example.  If an  employee has to go on the Internet                                                               
or hold on the phone with  an airline, the airline will give that                                                               
person  its rates,  but not  the rates  of other  airlines.   She                                                               
mentioned  the time  involved in  making  one's own  reservation.                                                               
She said,  "You're going to pay  your state employees for  one or                                                               
two hours booking  their own travel, when you could  pay a travel                                                               
professional a -  in my opinion -  miniscule $8 to do  it for you                                                               
and have it done."                                                                                                              
                                                                                                                                
CHAIR COGHILL  said he was looking  for that answer and  told Ms.                                                               
Altman she'd done a good job in representing her industry.                                                                      
                                                                                                                                
Number 1103                                                                                                                     
                                                                                                                                
CYNDI  ISAAK,   Owner,  Cyndi's  Cruise  and   Travel,  told  the                                                               
committee she'd  previously worked for 12  years with [Southeast]                                                               
Executravel and "saw  what happened with that agency."   A mother                                                               
of two who'd worked  out of her home for the  last six years, she                                                               
said  that   when  her  employer's   business  folded,   she  was                                                               
encouraged by her large clientele to open her own business.                                                                     
                                                                                                                                
MS.  ISAAK noted  that she  has run  her own  agency since  April                                                               
2001.  When  she opened her business, she offered  to make travel                                                               
arrangements  for the  state at  no charge  because she  knew the                                                               
state wouldn't pay  a fee for the large clientele  who wanted her                                                               
to continue  her services.   She  added that  she did  charge her                                                               
"other"  customers fees  [to  avoid the  same  fate as  Southeast                                                               
Executravel].    She  remarked,  "When  the  state  went  out  to                                                               
contract, I actually  was not included on  that contract, because                                                               
the person  who put out  the bid used the  old phone book."   She                                                               
clarified  that it  wasn't  to say  that she'd  have  bid on  the                                                               
entire  State of  Alaska, because  she'd  have had  to hire  more                                                               
employees and probably have a storefront agency.                                                                                
                                                                                                                                
MS. ISAAK said she has "extended  that" to a few other agents who                                                               
want  to work  out  of their  homes  in order  to  be with  their                                                               
children.    She  noted  that  although  she  doesn't  have  high                                                               
overhead, rents, and  salaries, the fee is still  necessary.  She                                                               
told  members, "If  you read  all the  travel agency  trade, they                                                               
will eventually  go to zero.   I mean,  we have been  forced into                                                               
this position."                                                                                                                 
                                                                                                                                
MS.  ISAAK said  she  guessed  she was  before  the committee  on                                                               
behalf of  her clients who  don't like  being in a  contract with                                                               
one agency in town and don't have a choice.  She continued:                                                                     
                                                                                                                                
     I have some who say,  "I'm a little rebellious; I don't                                                                    
     want to use them, I want  to use you."  They can't even                                                                    
     use  me if  they  want  to pay  the  fee  out of  their                                                                    
     pocket.   I  had  somebody try  yesterday, and  because                                                                    
     they have a contract with  another agency in town, they                                                                    
     can't, even  if they  want to  pay the  fee themselves.                                                                    
     So,  what  they're  doing  is   using  state  time  and                                                                    
     spending  hours on  the Internet  trying to  figure out                                                                    
     their own travel.                                                                                                          
                                                                                                                                
MS. ISAAK  recalled that one of  her clients had booked  the same                                                               
flight  that  she  herself  was   booking,  while  on  the  phone                                                               
together, and  the price quoted  to the  client was higher.   She                                                               
said [a travel  agent's] job is to search for  the greatest rates                                                               
[from immediately  available sources]  and that it  is imperative                                                               
to charge "the little fee."                                                                                                     
                                                                                                                                
MS. ISAAK said  because the airlines have capped  "us," she would                                                               
agree to the  state's saying, "Okay, we will use  you if you only                                                               
charge us  $8, or $10,  or whatever it turns  out to be."   Then,                                                               
she noted, there would be the  flexibility to say "yes" to taking                                                               
on the state.   She told members it isn't fair  for one agency to                                                               
be able to  "have the entire State of Alaska."   Furthermore, not                                                               
all  the little  agencies that  exist now  can handle  the entire                                                               
state.   In conclusion,  she said,  "I'd love  to have  my people                                                               
back, and I know that they would like their choice, as well."                                                                   
                                                                                                                                
Number 1317                                                                                                                     
                                                                                                                                
RAMONA OXENDINE, Vagabond  Travel, testifying via teleconference,                                                               
told  the committee  she thought  [travel agents]  had been  well                                                               
represented [by the previous testimony].   She said all she could                                                               
add  is, "Ditto,  ditto, ditto,  ditto."   Stating her  hope that                                                               
[the committee] could see the  writing on the wall, she remarked,                                                               
"I do not think the Internet is  your friend."  If the time comes                                                               
when [travel  agents] are gone  - which will happen  unless there                                                               
is a realization  that the fees are necessary -  people will be a                                                               
captive  audience  with  the airlines,  Ms.  Oxendine  said,  and                                                               
airlines  will give  people [only]  the  information online  that                                                               
they want people to see.                                                                                                        
                                                                                                                                
Number 1409                                                                                                                     
                                                                                                                                
YULANDA   JOHANSEN,  Northern   Lights  Travel,   testifying  via                                                               
teleconference,  concurred that  everyone had  spoken well.   She                                                               
said, "I  do hope  the state realizes  the valuable  service that                                                               
we, as travel agents - professionals  - do offer."  She asked the                                                               
committee to consider the bill.                                                                                                 
                                                                                                                                
Number 1447                                                                                                                     
                                                                                                                                
SHANNON  WILEY,   Manager,  Goldbelt  Family  Travel,   told  the                                                               
committee  she  has   worked  in  the  industry   in  Juneau  for                                                               
approximately  15 years,  formerly  with American  Express.   She                                                               
pointed  out that  the  airlines' move  to  cut commissions  has,                                                               
basically, "put the  consumer on peg there, to have  to carry the                                                               
cost  of the  distribution,"  which she  explained,  is "what  is                                                               
happening with  the fee structure  that most companies  have come                                                               
up with."   Ms.  Wiley noted that  travel agencies  don't provide                                                               
services solely  to the  State of Alaska  and its  employees; the                                                               
wide range of  services includes those for  the tourism industry,                                                               
"the third-largest economic  factor" in the state.   It hurts the                                                               
entire industry when so many  agencies are going out of business,                                                               
she concluded.                                                                                                                  
                                                                                                                                
Number 1622                                                                                                                     
                                                                                                                                
REPRESENTATIVE HAYES moved  to report HB 300  from committee with                                                               
individual  recommendations  and  the accompanying  fiscal  note.                                                               
There being  no objection, HB  300 moved  out of the  House State                                                               
Affairs Standing Committee.                                                                                                     

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