Legislature(2017 - 2018)BARNES 124
04/03/2018 01:15 PM House TRANSPORTATION
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| Presentation: Rural Aviation in Alaska by Dot&pf | |
| Adjourn |
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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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