Legislature(2017 - 2018)BARNES 124

04/03/2018 01:15 PM TRANSPORTATION

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01:22:58 PM Start
01:23:55 PM Presentation: Rural Aviation in Alaska by Dot&pf
02:01:00 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Presentation: Rural Airports in AK by DOT&PF TELECONFERENCED
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
            HOUSE TRANSPORTATION STANDING COMMITTEE                                                                           
                         April 3, 2018                                                                                          
                           1:22 p.m.                                                                                            
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Adam Wool, Co-Chair                                                                                              
Representative Matt Claman                                                                                                      
Representative Harriet Drummond                                                                                                 
Representative Chuck Kopp                                                                                                       
Representative Mark Neuman                                                                                                      
Representative Colleen Sullivan-Leonard                                                                                         
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Louise Stutes, Co-Chair                                                                                          
Representative David Eastman (alternate)                                                                                        
Representative Gabrielle LeDoux (alternate)                                                                                     
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
 PRESENTATION: RURAL AVIATION IN ALASKA BY DOT&PF                                                                               
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
JOHN BINDER                                                                                                                     
Deputy Commissioner                                                                                                             
Office of the Commissioner                                                                                                      
Department of Transportation & Public Facilities (DOT&PF)                                                                       
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Provided a PowerPoint on Rural Aviation in                                                               
Alaska.                                                                                                                         
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:22:58 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  ADAM  WOOL  called the  House  Transportation  Standing                                                             
Committee  meeting to  order at  1:22 p.m.   Representatives  Co-                                                               
Chair  Wool,  Representatives  Neuman, Drummond,  and  Kopp  were                                                               
present at  the call to order.   Representatives Sullivan-Leonard                                                               
and Claman arrived as the meeting was in progress.                                                                              
                                                                                                                                
^ Presentation: Rural Aviation in Alaska by DOT&PF                                                                              
        Presentation: Rural Aviation in Alaska by DOT&PF                                                                    
                                                                                                                              
1:23:55 PM                                                                                                                    
                                                                                                                                
JOHN  BINDER, Deputy  Commissioner, Office  of the  Commissioner,                                                               
Department  of  Transportation   &  Public  Facilities  (DOT&PF),                                                               
stated he would focus on the budget aspects.                                                                                    
                                                                                                                                
MR. BINDER turned to slide 2,  titled "Our People," which read as                                                               
follows [original punctuation provided]:                                                                                        
                                                                                                                                
     Sherry Cole                                                                                                                
                                                                                                                                
   • Administrative Assistant, DOT&PF, Ted Stevens Anchorage                                                                    
     International Airport                                                                                                      
   • Alaskan resident for more than 30 years                                                                                    
   • Worked in DOT&PF since 2003                                                                                                
   • Provides administrative support to the airport staff as                                                                    
     well as customer service to the traveling public                                                                           
   • Sherry has two daughters, Shantay and Taylor, who live                                                                     
     outside of Alaska with their families. She has three                                                                       
     wonderful grandchildren and enjoys every opportunity to                                                                    
     spend time with them.                                                                                                      
   • She is grateful to be a part of DOT for the better life                                                                    
     she's been able to provide for her family and her service                                                                  
     to the State is invaluable.                                                                                                
                                                                                                                                
MR. BINDER highlighted the importance  of staff to the Department                                                               
of Transportation  & Public Facilities (DOT&PF).   He highlighted                                                               
Sherry  Cole,  who   provides  the  "face"  to   the  public,  in                                                               
particular to  the airport's tenants, employees  and vendors that                                                               
come into the administrative offices.                                                                                           
                                                                                                                                
1:24:48 PM                                                                                                                    
                                                                                                                                
MR. BINDER  reviewed slide 3, titled  "Mission Statements," which                                                               
read as follows [original punctuation provided]:                                                                                
                                                                                                                              
                             DOT&PF                                                                                           
    "Keep Alaska moving through service and infrastructure"                                                                     
                                                                                                                                
                    Statewide Aviation (SWA)                                                                                  
                    "To sustain and improve                                                                                     
             the quality of life throughout Alaska"                                                                             
                                                                                                                                
MR.  BINDER  explained  that Statewide  Aviation  is  a  specific                                                               
division  within  DOT&PF  that  focuses on  the  rural  airports,                                                               
including every  state-owned and operated airport  except for the                                                               
Anchorage  and  Fairbanks  International Airports.    In  Alaska,                                                               
aviation provides the  only means of access  to many communities,                                                               
he said.                                                                                                                        
                                                                                                                                
1:25:22 PM                                                                                                                    
                                                                                                                                
MR. BINDER directed attention to  the organization chart on slide                                                               
4,  titled  "Organization/Leadership,"   noting  that  as  deputy                                                               
commissioner  he  also  serves   as  executive  director  of  the                                                               
international  airport system  and oversees  the entire  aviation                                                               
system.   He  said the  international airport  system is  a self-                                                               
sustaining enterprise system,  using rates and fees  to cover all                                                               
of its costs,  but not using any state funds  for its operations.                                                               
In turn, its revenues do not flow to the state, he stated.                                                                      
                                                                                                                                
1:25:44 PM                                                                                                                    
                                                                                                                                
MR.  BINDER turned  to slide  5, titled  "Rural System  Scope and                                                               
Scale," which read as follows [original punctuation provided]:                                                                  
                                                                                                                                
        • 240 DOT&PF owned/operated airports & seaplane bases                                                                   
        • 173 gravel & 46 paved airports; 23 Sea Plane Bases & 1                                                                
          heliport                                                                                                              
        • 20 Part 139 certificated airports                                                                                     
        • Primary access for 82% of Alaskan communities off the                                                                 
          contiguous road system                                                                                                
        • Rural System is primarily funded by GF, some revenue                                                                  
          via leases                                                                                                            
                                                                                                                                
MR.  BINDER indicated  that the  remaining 240  airports comprise                                                               
the  rural  airport system,  but  these  airports are  not  self-                                                               
sustaining  and  primarily  rely  upon general  funds  for  their                                                               
operating costs.                                                                                                                
                                                                                                                                
1:26:07 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE DRUMMOND asked whether  the municipal airports are                                                               
included in the  240 rural airports or if  the municipal airports                                                               
are outside the state system.                                                                                                   
                                                                                                                                
MR. BINDER  agreed the  municipal airports were  not part  of the                                                               
state-owned and operated airports.                                                                                              
                                                                                                                                
1:26:36 PM                                                                                                                    
                                                                                                                                
CO-CHAIR WOOL  related his  understanding that  the international                                                               
airports  consist of  airports that  have international  flights,                                                               
charge landing  fees, and  have achieved  financial independence.                                                               
He  asked whether  those  were the  distinctions  and reasons  to                                                               
separate them out from other airports.                                                                                          
                                                                                                                                
MR.   BINDER  answered   yes;  the   [Anchorage  and   Fairbanks]                                                               
International  Airports were  established  by  statute nearly  50                                                               
years  ago.   He acknowledged  that the  state could  add to  the                                                               
system or  set up  other separate  self-sustaining systems.   The                                                               
self-sustaining system drives the  rate-and-fee structure for the                                                               
two airports, he said.                                                                                                          
                                                                                                                                
1:27:40 PM                                                                                                                    
                                                                                                                                
MR. BINDER reviewed the bullet points  on slide 5.  He noted that                                                               
the 20  certificated airports  are critical to  the state.   Part                                                               
139  refers   to  the   FAA  [Federal   Aviation  Administration]                                                               
regulations,  which  requires  airports serving  a  community  of                                                               
greater  than  30-passenger  capability  aircraft  to  provide  a                                                               
higher standard  of operation and maintenance.   He characterized                                                               
these  as hubs  around  the state,  such  as Bethel,  Dillingham,                                                               
Nome, Kotzebue and other similar  airports.  These are department                                                               
staffed  airports  that must  also  have  crash and  firefighting                                                               
capabilities.  He  pointed  out  that  these  airports  are  more                                                               
expensive  to operate,  with  each  certificated airport  costing                                                               
approximately $1 million per year.                                                                                              
                                                                                                                                
1:29:02 PM                                                                                                                    
                                                                                                                                
CO-CHAIR   WOOL  asked   for  clarification   on  the   Part  139                                                               
delineation.                                                                                                                    
                                                                                                                                
MR.  BINDER  answered  that  Part 139  of  the  Federal  Aviation                                                               
Administration regulations  (FARs) provides the  requirements for                                                               
a certificated  airport.  In  further response to  Co-Chair Wool,                                                               
he explained that  in Alaska this relates to  those airports with                                                               
over 30  passenger seats on  a passenger plane; however,  for the                                                               
rest of  the country the  FARs apply  to airports with  more than                                                               
nine  passengers.    This  exception  recognizes  Alaska's  rural                                                               
uniqueness, he said.                                                                                                            
                                                                                                                                
1:29:25 PM                                                                                                                    
                                                                                                                                
MR.  BINDER  turned  to  slide  6, titled  "FY  17  Rural  System                                                               
Budget," which read as follows [original punctuation provided]:                                                                 
                                                                                                                                
     Cost:                                                                                                                  
     Regions                                                                                                                  
   •      Maintenance & Operating Cost =     $37.0M     (H&A                                                                    
     UGF)                                                                                                                       
     Statewide Aviation                                                                                                       
   •      Safety / Security /Property Mgt = $4.5M (Other)                                                                       
     Federal Funds                                                                                                            
   •      Maintenance =            $7.0M (AIP*)                                                                                 
   •      Aviation System Planning =         $725K (AIP)                                                                        
     Revenue:                                                                                                               
   • Leasing Revenue =                       $5.3M (Other)                                                                      
   • Aviation Fuel Tax =                     $4.5M (Other)                                                                      
     (Jet Fuel - $4.1M, Av Gas - $.4M)                                                                                          
       * AIP     FAA's Airport Improvement Program grant                                                                        
     funding                                                                                                                    
                                                                                                                                
MR.  BINDER said  that generally  the majority  of the  costs are                                                               
attributed to  the maintenance and  operating costs  (M&O), which                                                               
are funded through  the highways and aviation (H&A)  budget.  The                                                               
H&A component tends  to run $130-140 million per  year with about                                                               
25 percent allocated towards airports.                                                                                          
                                                                                                                                
MR. BINDER  related that  Statewide Aviation  [Division] provides                                                               
the primary liaison  between the FAA and  the TSA [Transportation                                                               
Security  Administration] for  safety and  security requirements,                                                               
including  fencing,   access,  and  passenger  screening.     The                                                               
DOT&PF's Statewide  Aviation also  includes a leasing  staff that                                                               
manages all the lease and  land agreements at the rural airports,                                                               
including  commercial carriers  who operate  at those  locations,                                                               
for  hangar rentals,  private  tenants and  tie  downs, he  said.                                                               
These agreements  generate approximately $4.5 million  in revenue                                                               
each year and  this funding is rolled back into  the airports, he                                                               
said.                                                                                                                           
                                                                                                                                
1:31:19 PM                                                                                                                    
                                                                                                                                
MR.  BINDER  stated that  the  department  has made  a  concerted                                                               
effort to use federal dollars  for maintenance whenever possible.                                                               
Federal rules  allow the  federal Airport  and Airway  Trust Fund                                                               
(AATF)  to be  used for  limited maintenance,  including the  AIP                                                               
[Airport  Improvement  Program],  the FAA's  capital  program;  a                                                               
portion  of airplane  ticket  revenue  goes into  the  AATF.   He                                                               
characterized  the   maintenance  funding  as   funding  directed                                                               
towards  fixing  cracked   ceilings,  repainting,  striping,  and                                                               
similar items.   Capital funding provides  for major maintenance,                                                               
such  as repaving,  adding taxiways,  or lengthening  runways, he                                                               
said.                                                                                                                           
                                                                                                                                
1:32:05 PM                                                                                                                    
                                                                                                                                
MR.  BINDER stated  the FAA  also allocates  about $725,000  each                                                               
year for  aviation system planning,  including master  plans that                                                               
update  drawings and  provide for  demand forecasting  and public                                                               
and  community engagement.    Leasing  revenue was  approximately                                                               
$5.3 million in FY 17  and the state collected approximately $4.5                                                               
million in  aviation fuel  taxes for aviation  gas and  jet fuel.                                                               
These  funds  flow  into  the  general fund  and  the  funds  are                                                               
allocated for aviation uses.  In  fact, the FAA requires that all                                                               
dollars  earned  at  the  airport must  be  reinvested  into  the                                                               
airport or  an airport system  and cannot  be used to  fund other                                                               
activities in the community or elsewhere in Alaska, he said.                                                                    
                                                                                                                                
1:33:41 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  DRUMMOND related  her understanding  that leasing                                                               
revenue at  Dillingham must be  spent at the airport  facility at                                                               
Dillingham.                                                                                                                     
                                                                                                                                
MR.  BINDER answered  that was  not  correct; that  the state  is                                                               
allowed to allocate the revenue  within an airport system.  Since                                                               
the state  operates a number of  airports it can pool  funding to                                                               
maintain  the  system.   In  further  response to  Representative                                                               
Drummond, he agreed funding could be  allocated to any of the 240                                                               
rural airports.   He also  agreed the two  international airports                                                               
maintain the  international airport system; however,  its funding                                                               
cannot be used for rural airports.                                                                                              
                                                                                                                                
1:34:34 PM                                                                                                                    
                                                                                                                                
MR. BINDER  turned to slide  7, titled "FY Rural  System Budget,"                                                               
which read as follows [original punctuation provided]:                                                                          
                                                                                                                                
     FY17                                                                                                                     
   •      Operating Cost (state funds) = $41.5M                                                                                 
   •      Revenue (fuel & leasing) =     $9.8M                                                                                
                              Total     $31.7M(H&A UGF)                                                                         
     20 Certificated airports ("hubs") -$22.8M                                                                                  
     220 remaining -                 ~ $42K each                                                                                
                                                                                                                                
     * Cert airports are DOT&PF staffed/operated                                                                                
     * Remaining are generally contractor maintained                                                                            
                                                                                                                                
MR. BINDER reviewed  slide 7, noting the operating  cost of $41.5                                                               
million was added  to the H&A and Statewide  Aviation costs minus                                                               
any revenue generated from aviation  fuel and leasing and totaled                                                               
$31.7  million for  FY  17  in unrestricted  general  funds.   He                                                               
reviewed the $22.8 million in  costs for the certificated airport                                                               
hubs, which left approximately $10  million to be dispersed among                                                               
the 20  airports.   Most of  the 220  airports are  small village                                                               
airports, including several strips  alongside the highway.  These                                                               
airports  are  maintained  through  contractor  relationships  in                                                               
local  communities.    These contractors  operate  the  equipment                                                               
which is  purchased with  federal dollars.   He pointed  out that                                                               
airports  along highways  fall into  a priority  IV category  for                                                               
highway maintenance.   Plowing for  those airports have  a lower-                                                               
priority  since people  in these  communities have  other options                                                               
for  transportation, he  said.   He related  that the  costs vary                                                               
from $10,000-$80,000  per year based  on the amount  of snowfall,                                                               
so  costs  in Southeast  Alaska  tend  to  be  less than  in  the                                                               
northern regions of the state.                                                                                                  
                                                                                                                                
1:36:48 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  WOOL asked  whether that  included  staffing costs  for                                                               
small rural airports or if the gravel strips were non-staffed.                                                                  
                                                                                                                                
MR.  BINDER agreed  that the  certificated  airports are  staffed                                                               
with DOT&PF personnel.  The  airport manager oversees the village                                                               
airports that  surround the hub,  with perhaps  20-30 contractors                                                               
maintaining the village  airports.  These managers  travel to the                                                               
rural airports a  few times per year to observe  the type of work                                                               
being done, he said.                                                                                                            
                                                                                                                                
1:37:19 PM                                                                                                                    
                                                                                                                                
MR.  BINDER turned  to  slide 8,  titled  "Rural System  Budget,"                                                               
which read as follows [original punctuation provided]:                                                                          
                                                                                                                                
     System Sustainability                                                                                                    
        • Cost reductions/efficiencies                                                                                          
        • Sand/Chemical optimization                                                                                            
        • Maintenance conversion to federal program                                                                             
                                                                                                                                
     Revenue generation options                                                                                               
        • Fuel Tax                                                                                                              
        • User/Registration Fee                                                                                                 
        • Landing Fees                                                                                                          
                                                                                                                                
MR. BINDER related that due to  climate change the state has seen                                                               
warming trends  across the state resulting  in additional erosion                                                               
in coastal  areas.  He  pointed out that  due to erosion  some of                                                               
the  rivers   were  closer  to   airports.    The   FAA  requires                                                               
maintaining  pavement  to  the  extent  it  requires  significant                                                               
plowing,  sweeping and  use of  sand and  chemical components  to                                                               
maintain  good  friction.    The  department  pre-treats  runways                                                               
whenever possible,  which is more  effective than trying  to melt                                                               
ice  after  it  is  already  formed.    He  reiterated  that  the                                                               
department has  been working to  convert some of  the maintenance                                                               
activities to the federal program.                                                                                              
                                                                                                                                
MR.  BINDER reviewed  revenue generation  options, which  include                                                               
fuel tax, user registration fees,  and landing fees.   Currently,                                                               
the  department has  leasing revenue  available.   The department                                                               
has  had  significant engagement  with  aviation  groups and  has                                                               
partnered  with  the  Aviation   Advisory  Board  to  investigate                                                               
reasonable  and appropriate  revenue generation  mechanisms.   He                                                               
said a  significant number of  aviation groups prefer  fuel taxes                                                               
over other  options since  it tends  to be  more equitable  - the                                                               
more the  operator flies, the  more they pay.  The administrative                                                               
burden to increase fuel taxes  was minimal since the mechanism is                                                               
already  in   place,  he  said.     Some  airports   charge  user                                                               
registration fees for aircraft on  an annual basis.  Landing fees                                                               
are  generally  used  at larger  airports,  which  are  typically                                                               
structured on a fee per every  1,000 pounds of takeoff or landing                                                               
weight.     He   reported  that   the  Anchorage   and  Fairbanks                                                               
International Airports  charge about  $2.50 per  thousand pounds.                                                               
In  further  response,  he  answered  that  these  airports  base                                                               
landing  fees on  the certified  gross takeoff  weight using  the                                                               
manufacturer's specification listing  for the aircraft regardless                                                               
of cargo or fuel.                                                                                                               
                                                                                                                                
1:40:23 PM                                                                                                                    
                                                                                                                                
CO-CHAIR WOOL  characterized it  as a  book value,  regardless of                                                               
cargo or fuel.                                                                                                                  
                                                                                                                                
MR. BINDER agreed.                                                                                                              
                                                                                                                                
1:40:28 PM                                                                                                                    
                                                                                                                                
MR.  BINDER  turned to  slide  9,  titled "Rural  System  Capital                                                               
Funding FFY'14  through FFY'17," which read  as follows [original                                                               
punctuation provided]:                                                                                                          
                                                                                                                                
       Federal Capital Funding (AIP  Airport Improvement                                                                        
     Program)                                                                                                                   
   •      Rural System AIP annual average FFY'14 -'16 =                                                                         
     $136.7M                                                                                                                    
   •      FFY'17 AIP= ~$130.6M                                                                                                  
                                                                                                                                
     Rural Airport System State Match Required                                                                                  
   • Generally 6.25% of project eligible costs                                                                                  
   • A few Essential Air Service airports in designated                                                                         
      economically distressed communities qualify for a 5%                                                                      
     match of project eligible costs                                                                                            
   • Annual airport match ~$11M                                                                                                 
                                                                                                                                
MR.  BINDER reviewed  the  FAA  capital funding.    He noted  the                                                               
department receives  from $180-$200  million per year  in federal                                                               
funding; that  it has been  as high as  $220 million in  the past                                                               
several years.   Alaska  receives these dollars  as a  state, but                                                               
some funds  are directed  to municipalities,  for example,  in FY                                                               
17,  Juneau  received  about  $19  million.    The  international                                                               
airports usually  receive about $40  million in funding  with the                                                               
remaining $140-$150 million directed to rural airports.                                                                         
                                                                                                                                
1:41:25 PM                                                                                                                    
                                                                                                                                
MR. BINDER reported that the state  obtains quite a bit since the                                                               
state matching funds requirement  has typically been 6.25 percent                                                               
but  as  low   as  5  percent  for  some  rural   airports.    He                                                               
characterized the  federal funding as  providing a 20 to  1 "bang                                                               
for the buck"  on those dollars.  Under the  federal program, the                                                               
matching funds for essential air  service (EAS) airports drops to                                                               
five percent.   He stated that the annual  airport matching funds                                                               
totals approximately $10-11 million.                                                                                            
                                                                                                                                
1:42:01 PM                                                                                                                    
                                                                                                                                
MR. BINDER  turned to  slide 10, titled  "Major Rural  System AIP                                                               
Construction Projects,"  which listed some of  the larger capital                                                               
projects  anticipated  to  be  funded   in  FY  17-18,  including                                                               
pavement  rehabilitation  for  taxi and  runway  surfaces,  rural                                                               
access related  to resurfacing or  re-lighting, and  snow removal                                                               
for buildings, as follows:                                                                                                      
                                                                                                                                
Pavement Rehab                                                                                                                
   • Bethel                                                                                                                     
   • Dillingham                                                                                                                 
   • Galena                                                                                                                     
   • Gambell                                                                                                                    
   • Haines                                                                                                                     
   • King Salmon                                                                                                                
   • Nome                                                                                                                       
   •                                                                                                                            
Rural Access                                                                                                                  
   • Aniak                                                                                                                      
   • Holy Cross                                                                                                                 
   • Kiana                                                                                                                      
   • Kivalina                                                                                                                   
   • Kotlik                                                                                                                     
   • Kwigillingok                                                                                                               
   • Newtok                                                                                                                     
   • Pilot station                                                                                                              
   • South Naknek                                                                                                               
   • Toksook Bay                                                                                                                
   • White Mountain                                                                                                             
                                                                                                                                
Buildings                                                                                                                     
   • Brevig Mission                                                                                                             
   • Buckland                                                                                                                   
   • Homer                                                                                                                      
   • Kobuk                                                                                                                      
   • Kotlik                                                                                                                     
   • Toksook Bay                                                                                                                
                                                                                                                                
1:42:42 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN asked for the total cost of the projects.                                                                 
                                                                                                                                
MR. BINDER offered to compile  the information and report back to                                                               
the committee  on the  total costs; however,  he pointed  out the                                                               
major projects for  FY 17 and FY 18 total  about $140 million per                                                               
year.                                                                                                                           
                                                                                                                                
1:43:28 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  WOOL asked  whether pavement  rehabilitation costs  are                                                               
derived from the 6.25 percent state  match [as listed on slide 9]                                                               
such that  if the Galena  airport needed  pavement rehabilitation                                                               
the funding would predominately be federally funded.                                                                            
                                                                                                                                
MR.  BINDER  answered  that  was  correct.    The  FAA  estimates                                                               
pavement should last  20 years so if the timing  is close to that                                                               
the federal funding will cover the  costs, he said.  If the state                                                               
does not  adequately maintain the airports,  the potential exists                                                               
for the FAA  to decline funding and the state  would need to pick                                                               
up  the pavement  rehabilitation  costs;  however, typically  the                                                               
projects are funded, he said.                                                                                                   
                                                                                                                                
1:44:20 PM                                                                                                                    
                                                                                                                                
MR.  BINDER  advance to  slide  11,  titled "Airport  Improvement                                                               
Program  (AIP) for  DOT&PF  Airports in  FFY'17,"  which read  as                                                               
follows [original punctuation provided]:                                                                                        
                                                                                                                                
    FAA airport capital improvement project funding program                                                                     
     (~$177.7M)                                                                                                                 
                • Cargo Entitlement ($12.8M)                                                                                    
                         • Earned by airports with more than 100                                                                
                            million pounds landed weight                                                                        
                • Primary Passenger Entitlement ($34.2M)                                                                        
                         • Earned by airports with more than                                                                    
                            10,000 passengers (enplanements) and                                                                
                            scheduled commercial service                                                                        
                • Non-Primary Passenger Entitlement ($14.5M)                                                                    
                         • Earned by airports with fewer than                                                                   
                            10,000 passengers annually                                                                          
                • State Apportionment ($22.4M total less Muni                                                                   
                  Sponsors = $22.4M)                                                                                            
                         • An area/pop. formula used after                                                                      
                            cargo/passenger entitlements                                                                        
                           calculated                                                                                           
                • Alaska Supplemental ($21.3M total less Muni                                                                   
                  Sponsors = $16.2M)                                                                                            
                         • Legislative amount based on 1980                                                                     
                            amounts                                                                                             
                • Discretionary ($111.2M less Muni Sponsors =                                                                   
                  $77.6M)                                                                                                       
                         • What remains  divided among 50                                                                       
                            states                                                                                              
                                                                                                                                
MR.  BINDER   reviewed  slide  11,  noting   several  entitlement                                                               
formulas are  included nationwide, in  part, based on  the amount                                                               
of cargo and  passengers.  He reported that Alaska  is number two                                                               
in the country on cargo.                                                                                                        
                                                                                                                                
1:44:57 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SULLIVAN-LEONARD related  her understanding  that                                                               
when  cargo is  delivered to  a  community, such  as Bethel,  the                                                               
planes return  empty.  She  recalled a  farmer in Bethel  who has                                                               
been very  successful and might  be able  to fill the  plane with                                                               
fresh produce at  very little cost.  She  asked for clarification                                                               
on the feasibility of such a process.                                                                                           
                                                                                                                                
MR.  BINDER  answered yes;  that  in  many instances  the  planes                                                               
return  to  Anchorage  with  much   less  cargo,  which  provides                                                               
opportunities for  rural communities  to return seafood  or local                                                               
produce.  The department likes  to work with local communities to                                                               
maximize those benefits, he said.                                                                                               
                                                                                                                                
1:46:31 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  DRUMMOND  asked  whether  the  cargo  entitlement                                                               
listed at over  $100 million pounds was related  to the Anchorage                                                               
and Fairbanks International Airports.                                                                                           
                                                                                                                                
MR BINDER answered yes.                                                                                                         
                                                                                                                                
REPRESENTATIVE DRUMMOND related her  understanding that the cargo                                                               
entitlement would only be spent in Anchorage and Fairbanks.                                                                     
                                                                                                                                
MR.  BINDER agreed  that the  federal dollars  would be  spent in                                                               
those  two communities;  however,  he stated  that  the state  is                                                               
allowed to  pool funding  for the  rural airports  and prioritize                                                               
its projects.                                                                                                                   
                                                                                                                                
1:47:18 PM                                                                                                                    
                                                                                                                                
MR BINDER  stated that  Non-Primary Passenger  Entitlement refers                                                               
to those  airports that  have less than  10,000 passengers.   The                                                               
state apportionment is based on  the land mass and population, so                                                               
obviously, the state  does well on the land mass,  but less so on                                                               
population.   He said that  thanks to  the late U.S.  Senator Ted                                                               
Stevens   Alaska    has   specific   supplemental    funding   of                                                               
approximately  $20 million  per year,  which  can be  up to  two-                                                               
thirds  of the  allocation for  the nation.   The  FAA bases  its                                                               
discretionary funds  on security, safety, and  capacity, he said.                                                               
Alaska  does very  well each  year on  discretionary funding,  he                                                               
said.                                                                                                                           
                                                                                                                                
1:48:19 PM                                                                                                                    
                                                                                                                                
MR.  BINDER  directed attention  to  slide  12, titled  "Aviation                                                               
Challenges   -  Future,"   which   read   as  follows   [original                                                               
punctuation provided]:'                                                                                                         
                                                                                                                                
      • Fleet Changes                                                                                                           
                • In-state changes (SAAB 2000, 737 freighter, Q-                                                                
                  400)                                                                                                          
      • Climate Change                                                                                                          
                • Increasing number of freezing rain/ice events                                                                 
                • Rural runway subsurface maintenance (thawing                                                                  
                  permafrost)                                                                                                   
                • Coastal erosion                                                                                               
      • Ever-increasing federal compliance requirements                                                                         
                • Access controls/ID management                                                                                 
                • Friction requirements                                                                                         
                • NEPA determination requirements for non-AIP                                                                   
                  development                                                                                                   
                                                                                                                                
MR.  BINDER  reviewed   slide  12,  noting  that   Penn  Air  has                                                               
implemented  the  SAAB 2000,  which  bumps  it  up above  the  30                                                               
passenger requirement so  some communities it serves  now need to                                                               
be certificated.   He characterized this as  much more beneficial                                                               
for airlines  to use the  high-performance aircraft;  however, it                                                               
does have  a cost to  the state since  the state must  provide an                                                               
additional level of service at  those locations.  Alaska Airlines                                                               
has  implemented its  freighter aircraft  when it  eliminated the                                                               
combination aircraft;  however, the aircraft size  has posed some                                                               
problems for  airports due to  the friction requirements  as well                                                               
as additional manpower to cover  additional flights, he said.  He                                                               
reported that the Q-400 aircraft have  left the state as of March                                                               
and he expressed  interest in whether the replacements  will be a                                                               
smaller jet aircraft,  he said.  The department does  try to stay                                                               
well  out in  front and  be  prepared for  whatever the  airlines                                                               
might bring to the state, he said.                                                                                              
                                                                                                                                
1:49:36 PM                                                                                                                    
                                                                                                                                
CO-CHAIR WOOL asked when a  non-certified airport gets a slightly                                                               
larger  plane  whether  it  was  the  state's  responsibility  to                                                               
certify  the airport  or  does  the airline  indicate  it can  no                                                               
longer serve the community and how that would get resolved.                                                                     
                                                                                                                                
MR.  BINDER   answered  that  the   airline  would   not  receive                                                               
authorization from  the FAA to  operate at the airport  until the                                                               
airport receives the  necessary level of service  required by the                                                               
aircraft.   He said  the conversation  becomes whether  the state                                                               
has  the money  to  fund increased  service,  which very  quickly                                                               
engages the community and the  carrier to consider other revenue-                                                               
generation  options  to   help  make  up  the   difference.    He                                                               
characterized  many   of  the   conversations  as   being  pretty                                                               
positive.   Many  communities would  like to  have the  increased                                                               
service and tend to be more willing to help provide funding.                                                                    
                                                                                                                                
1:50:51 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  WOOL related  his  understanding  that the  discussions                                                               
happen prior to the new  equipment being initiated.  He suggested                                                               
that going  from a non-certified  airport to a  certified airport                                                               
means a significant increase in  expenses.  He further understood                                                               
many communities  are willing  to bear  the cost,  likely through                                                               
increased landing fees.                                                                                                         
                                                                                                                                
MR. BINDER answered  yes; the department's position  is to convey                                                               
a willingness  to explore an  increased level of service,  but it                                                               
must be  at no additional cost  to the department.   That usually                                                               
leads  to exploring  what  the  options are  and  what should  be                                                               
considered.                                                                                                                     
                                                                                                                                
1:52:04 PM                                                                                                                    
                                                                                                                                
CO-CHAIR WOOL asked  whether an option for  increased service and                                                               
equipment  upgrades  puts the  company,  the  community, and  the                                                               
state  in a  somewhat  awkward position,  in  particular, if  the                                                               
state says it does not want to  pick up any additional costs.  He                                                               
asked  whether this  was currently  being resolved,  for example,                                                               
with the SAAB 2000 aircraft.                                                                                                    
                                                                                                                                
MR.  BINDER  responded  that  Penn  Air  has  explored  increased                                                               
service  at  several  locations and  the  communities  have  been                                                               
receptive to try to make up  the difference.  He pointed out that                                                               
when the increased  costs are factored in over a  year's time, it                                                               
usually has been a small per passenger cost per ticket.                                                                         
                                                                                                                                
1:52:59 PM                                                                                                                    
                                                                                                                                
MR. BINDER related that Alaska does  not fit the national mold in                                                               
terms  of aviation  so many  requirements  levied nationwide  are                                                               
difficult to implement  in the state; for  example, standards for                                                               
friction   control.     He  stated   that   the  NEPA   [National                                                               
Environmental Policy Act of 1969]  determination was new, and the                                                               
FAA would like  to exert some say in  private tenant construction                                                               
at airports  even though  no state or  federal dollars  are being                                                               
spent.   The state  continues to  see security  issues throughout                                                               
the world  so impacts in  terms of access controls  and perimeter                                                               
fencing at tundra locations present  challenges.  He acknowledged                                                               
that  the state  has great  local FAA  and TSA  representation in                                                               
Alaska; however, many  of these decisions are  made in Washington                                                               
D.C.                                                                                                                            
                                                                                                                                
1:54:21 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KOPP  asked whether there  has been any  change in                                                               
the lease  structure on  airport lands.   He recalled  the leases                                                               
were  50-year leases  for airport-related  properties.   He asked                                                               
whether there has been any change to the process.                                                                               
                                                                                                                                
MR. BINDER answered  that one concern the  department often hears                                                               
is how low  the lease rates are statewide,  especially since they                                                               
are often  well below  fair market  value.   Unfortunately, state                                                               
statute  prohibits an  increase in  lease rates  greater than  10                                                               
percent  per year.   He  recalled  some rates  were at  $.12-$.14                                                               
whereas the  fair market value might  range from $.80 to  $1.  He                                                               
reported that the department generally  reviews rural rates about                                                               
every  five years.    He acknowledged  that  sometimes tribes  or                                                               
boroughs are  renting the same land  at greater fees and  tend to                                                               
believe they  are being undercut  by the state.   He acknowledged                                                               
that  was  valid  in  some  instances.    As  far  as  lease-term                                                               
agreements, he  said the length  of the agreement depends  on the                                                               
amount  of the  initial capital  investment so  there is  quite a                                                               
range,  he  said.    He  stated  that  businesses  also  have  an                                                               
opportunity at  the end  of an  agreement to  reinvest additional                                                               
funding  to get  extended terms,  as well.   He  said there  were                                                               
opportunities  for  long leases  for  those  who are  willing  to                                                               
invest heavily in their location.                                                                                               
                                                                                                                                
1:56:51 PM                                                                                                                    
                                                                                                                                
CO-CHAIR WOOL  said he was  interested in landing fees  because a                                                               
bill before  the legislature [not specifically  identified] would                                                               
impose  landing fees  on a  particular  airport, but  not at  all                                                               
airports.  He  asked whether there was a  delineation between the                                                               
two international  airports and whether  it would be  possible to                                                               
carve out  different subdivisions  of airports based  on whatever                                                               
criteria the department wanted.                                                                                                 
                                                                                                                                
MR. BINDER answered yes; that is correct.                                                                                       
                                                                                                                                
1:57:26 PM                                                                                                                    
                                                                                                                                
CO-CHAIR WOOL  remarked that  he found  it interesting  that some                                                               
communities  would be  willing  to pay  the  difference in  costs                                                               
between certified and non-certified  airports.  He suggested that                                                               
if  the bill  moved  forward  that there  could  be some  further                                                               
discussions.    He  asked  whether   the  federal  standards  for                                                               
friction requirements  were changing  so airports needed  to keep                                                               
up with the new standards.                                                                                                      
                                                                                                                                
MR.  BINDER answered  yes; that  this  was the  second winter  in                                                               
which  the  state  has  implemented  national  and  international                                                               
standards  related  to  friction  measurements on  runways.    He                                                               
related  that the  department uses  several different  mechanical                                                               
devices  that  provide  a  friction  value  on  the  runway,  but                                                               
essentially it  has entailed speeding  down the  runway, slamming                                                               
on  the brakes  and  giving  a subjective  assessment  as to  the                                                               
stopping  power.    He  said  this process  makes  it  much  more                                                               
challenging  to  address the  friction  value.    It was  not  as                                                               
desirable  to  the  FAA  or the  airlines  since  something  more                                                               
precise could be  developed; in fact the FAA has  adopted a whole                                                               
new matrix that  give a specific rating scale.   However, it does                                                               
not take  into consideration  some of  the conditions  in Alaska,                                                               
for example, slush  over ice or multiple-type  contamination.  He                                                               
acknowledged that  it makes it  much more difficult to  meet what                                                               
conditions  the airlines  need  to fly  in,  especially with  new                                                               
aircraft.  He  stated that the new FAA  standards relate directly                                                               
to performance  characteristics of specific  aircraft; therefore,                                                               
a pilot  can hear  the numbers  and know,  based on  the aircraft                                                               
he/she is flying, what to expect  for performance.  It puts a lot                                                               
more requirements for those on the  ground to provide it, but the                                                               
department  will continue  to work  through those  challenges, he                                                               
said.                                                                                                                           
                                                                                                                                
1:59:33 PM                                                                                                                    
                                                                                                                                
CO-CHAIR WOOL  asked whether the  FAA's requirement was  based on                                                               
performance  or lack  of performance,  not  necessarily based  on                                                               
Alaska.   He asked whether  the FAA  has new technology  that can                                                               
measure the friction factor or if  was accident related or due to                                                               
planes spinning out of control on runways due to friction.                                                                      
                                                                                                                                
MR. BINDER answered that there  have been several national cases.                                                               
He stated that  in Alaska the runways tend to  be shorter than in                                                               
the rest of the country, so it poses some challenges in Alaska.                                                                 
                                                                                                                                
2:01:00 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Transportation Standing  Committee meeting was adjourned  at 2:01                                                               
p.m.                                                                                                                            

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