Legislature(1999 - 2000)
04/04/2000 01:40 PM Senate L&C
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 280-COMMON CARRIER LIQUOR LICENSE
CHAIRMAN MACKIE announced SB 280 to be up for consideration. He
said he introduced the bill on behalf of the committee at the
request of Alaska Airlines and his staff, David Gray, would tell
them what it does.
MR. GRAY said Alaska Airlines has requested that the current
licensing requirements for common carrier beverage dispensing
licenses be modified for two reasons: first to simplify the
requirements so that adding aircraft will not require an additional
new application process involving filling out the application,
supply and support exhibits, posting and publishing the application
for the license. Alaska and the Alcoholic Beverage Control Board
(ABC) agree that modifying the statute to simply obtaining
additional common carrier licenses will reduce the clerical and
administrative work for both Alaska Airlines and the Board and is,
therefore, in the public interest.
Secondly, Alaska Airlines would like the fees reduced. They
currently have 89 planes and plan to add six or more aircraft each
year. The growth of the Alaska Airlines fleet substantially
exceeds the growth of its interstate flying. Since every aircraft
must be separately licensed and every license costs them $450 per
year (a $700 biennial, plus a $200 yearly license fee), the fees
have become quite high and continue to escalate at a faster rate
than its interstate fleet will escalate.
Alaska Airlines only operates a small portion of its fleet on
interstate routes on any given day. In addition, it should be
noted that none of the other major airlines serving Alaska, with
the possible exception of Delta, obtain Alaska liquor licenses
because they don't operate interstate. Alaska Airlines believes
they pay substantially more for the common carrier licenses than
any other licensee in Alaska. It seems fair to reduce the fees to
more accurately reflect the costs to the Board of issuing licenses
and the interstate presence that Alaska Airlines actually has.
If the proposed bill becomes law, they will still pay more in fees
to Alaska than it pays to any other state.
CHAIRMAN MACKIE asked if they have 89 or 95 aircraft after this
year, if they currently have to license every one of them, even if
they are not flying in Alaska because of the way the law was
written.
MR. GRAY said that was correct. Any plane in their fleet that may
come into Alaska once within a year's time will have to have a full
license.
CHAIRMAN MACKIE commented that they were trying to bring their fees
more into line with the number of aircraft they actually have
flying in the State and asked how that would be done.
MR. GRAY replied under the bill, 10 licenses would be the full
licenses. After that, other planes would have a reduced licensure.
In other words, the whole fleet would be licensed this way.
Number 1209
MR. DOUG GRIFFIN, Director, ABC Board, said Alaska Airlines made a
presentation to the Board last summer when it met in Fairbanks
regarding this issue. He echoed Mr. Gray's comments and said the
Board was sympathetic. They also raised concerns about how
complicated it was to license all those aircraft even though the
Board had done everything they could to streamline that process.
The root of the problems is the need for a statute change. The
statutes in Alaska regarding common carrier liquor licenses reflect
needing to license every vehicle, airplanes, boats, railcars, and
those types of things. This is just a growing pains issue for
Alaska.
MR. GRIFFIN said it would be a loss of revenue for the State, but
the Board looks at the fairness issue versus what is a fairly small
loss of revenue. The draft of SB 280 was presented to the Board
when it met in February. They didn't take a position at the time
and expressed interest in trying to tie the licensing to something
versus the number ten that was picked out of thin air. They worked
with Alaska Airlines to find something that in some way would
reflect the number of planes that were actually flying within the
state, for instance, during a given day. He said the Board would
like to use a number that's used in terms of how many licenses they
have to buy at full price that reflects the actual number of craft
that fly in the State. That keeps it on par with other types of
vehicles that are operating within the State. He concluded that
they would support some kind of modification to the common carrier
provisions in Title 4.
CHAIRMAN MACKIE asked Mr. Griffin if Section 1 allows for the Board
by regulation to make some of those determinations, in terms of
numbers.
MR. GRIFFIN said section 1 by itself doesn't allow them to do that.
They talked to Mr. Irving Bertram, legal counsel for Alaska
Airlines, about taking a snapshot of a day in the life of Alaska
Airlines in the State of Alaska and how many planes they actually
had operating flying between points in Alaska on a given day. They
picked January 1, the first day of a licensing cycle. They came up
with 22 planes. The Board felt that they should license the number
of planes that actually operate up here and if they bring in
additional planes from within their fleet, it could still operate
within that 22(or so) license. They would basically be licensing
routes and the number of planes that operate on an average in the
State. The difference in money between this bill and the original
bill isn't that great.
SENATOR LEMAN said on the fiscal note, the next to the last line
says if the filing fee is waived for licenses after the first 10,
an additional $16,000 in revenue would be lost every two years and
asked if that was a discretionary action.
MR. GRIFFIN answered that they were interpreting that to mean they
would continue to pay the $200 application or renewal fee. For any
licenses in excess of 10, the application fee is actually more than
the license fee which seems a little at odds. This is assuming
they are going to continue to pay a $200 fee for each license. If
the $200 fee is also waived for any licenses greater than 10, there
would be additional cost to the State. They are not interpreting
it that way, however.
SENATOR LEMAN said if there's any possibility it might be
interpreted differently, wouldn't it make sense to clarify that.
Is that something in regulation.
MR. GRIFFIN answered that's a statutory thing. SB 280 doesn't
alter the application fee. He thought it good to put on the record
that the intent is not to have it waived.
CHAIRMAN MACKIE said that certainly wasn't the intent of the
sponsor and that's why they are talking about the other fee, not
the renewal fee.
MR. IRVING BERTRAM, Associate General Counsel for Alaska Airlines,
said he has been the party negotiating to acquire and finance
aircraft for the company for over 20 years. Alaska Airlines
currently has a fleet of 89 aircraft and because of the way they
establish routings, it's impossible for them to say with any degree
of definiteness that they can keep one of their aircraft out of the
State of Alaska or off an intrastate routing. They need to have
the operational flexibility, if they have a mechanical, to
substitute another aircraft. The result is they are continuing to
operate more and more aircraft in Alaska, because they are
acquiring more aircraft. On the other hand, the actual number of
aircraft they operate on a given day has been about 16 - 18 to
maybe 20, depending on which particular day of the year it is.
That hasn't changed a lot, although during the summer they operate
more aircraft. The intrastate routing doesn't go up as much as the
interstate routing does.
Their major competitors that serve Alaska don't really operate
intrastate. So they don't obtain liquor licenses and he thought
they avoided serving liquor on the ground and just serve in the air
and escape licensing completely. There is a little competitive
disadvantage at this point.
He felt some relief would be if they obtained a liquor license for
the company and had gone through all the application process, they
should be able to license each additional aircraft by paying a fee.
They hoped to provide the State with a reasonable amount of money
to cover the administrative duties of the Board and to recognize
their intrastate operations in Alaska where licenses are necessary.
Secondly, they wanted to keep the costs to the company down so that
as they continue to add aircraft and enhance their fleet, they can
comply and continue to offer alcoholic beverage service on
intrastate portions of their flights without being concerned that
this is going to cost them a great deal of money.
CHAIRMAN MACKIE asked where the first 10 licenses came from in
section 2 and he asked if it's more like 16 - 18.
MR. BERTRAM replied that idea behind the number was to pick one
that was high enough so Alaska Airlines would not be depriving the
State of any revenue for anyone else. They thought they had more
licenses than anyone else by quite a number and found that there
wasn't another licensee that has more than 10 vehicles licensed.
They are picking a number that is high enough to avoid providing a
benefit to anyone else.
CHAIRMAN MACKIE stated he thought they made a good case for
fairness and streamlining the ABC Board's activities.
SENATOR KELLY moved to pass SB 280 from committee with individual
recommendations. There were no objections and it was so ordered.
| Document Name | Date/Time | Subjects |
|---|