05/06/2005 08:30 AM House FINANCE

HOUSE BILL NO. 237                                                                                                            
                                                                                                                                
     An Act relating to international airports revenue                                                                          
     bonds; and providing for an effective date.                                                                                
                                                                                                                                
8:49:08 AM                                                                                                                    
                                                                                                                                
MICHAEL  BARTON, COMMISSIONER,  DEPARTMENT OF  TRANSPORTATION                                                                   
AND PUBLIC FACILITIES,  explained that HB 237  would amend AS                                                                   
37.15.410  to  increase  the   cumulative  authorization  for                                                                   
international airport  revenue bonds from the  current $524.5                                                                   
million  dollars to  $812.5 million  dollars.   The  increase                                                                   
allows  the  sale  of  up to  $288  million  dollars  in  new                                                                   
international  airport  revenue   bonds  to  support  capital                                                                   
improvement programs  for fiscal  years 2006 through  2009 at                                                                   
the  Ted  Stevens Anchorage  International  Airport  and  the                                                                   
Fairbanks   International  Airport.     Those  two   airports                                                                   
together  comprise the  Alaska  International Airport  System                                                                   
(AIAS).   AS 37.15.410 clarifies  the cumulative  bond amount                                                                   
authorized since  the creation  of the international  airport                                                                   
revenue-bonding  program,   including  those   already  fully                                                                   
retired.    It   does  not  reflect  the  dollar   amount  of                                                                   
outstanding bonds at any given time.                                                                                            
                                                                                                                                
8:50:40 AM                                                                                                                    
                                                                                                                                
Vice-Chair  Stoltze  asked  the   position  of  the  Aviation                                                                   
Advisory  Board position  on the  legislation.   Commissioner                                                                   
Barton indicated that they had  not taken a "formal position"                                                                   
on it.   He acknowledged  that they  had not been  officially                                                                   
notified.   Vice-Chair  Stoltze  encouraged the  Board to  be                                                                   
consulted.                                                                                                                      
                                                                                                                                
8:51:35 AM                                                                                                                    
                                                                                                                                
Commissioner   Barton   agreed,    acknowledging   that   the                                                                   
Department consults with them often on projects.                                                                                
                                                                                                                                
Representative   Weyhrauch  asked   how  many   international                                                                   
airports there  are in Alaska.   Commissioner  Barton replied                                                                   
two that are State owned.                                                                                                       
                                                                                                                                
8:52:12 AM                                                                                                                    
                                                                                                                                
Representative  Weyhrauch asked  if  Ketchikan's airport  was                                                                   
municipality owned.   Commissioner Barton explained  that the                                                                   
City of  Ketchikan operates  the airport but  it is  owned by                                                                   
the State.   The Alaska International System  is comprised of                                                                   
the  Anchorage  and Fairbanks  airports;  there  is a  formal                                                                   
agreement with all airlines at those two airports.                                                                              
                                                                                                                                
8:53:03 AM                                                                                                                    
                                                                                                                                
Representative Weyhrauch noted  that the airport in Ketchikan                                                                   
is called the Ketchikan International  Airport.  Commissioner                                                                   
Barton  replied it  is called  that but  is not  part of  the                                                                   
Alaska International  Airport system.   He added  that Juneau                                                                   
is a municipally  owned airport.  The formal  "trigger" to be                                                                   
considered an international airport  is if the airport offers                                                                   
customs and immigration services.                                                                                               
                                                                                                                                
8:53:38 AM                                                                                                                    
                                                                                                                                
Representative  Joule  asked how  revenue  bonds are  repaid.                                                                   
Commissioner  Barton clarified they  would be repaid  through                                                                   
rates  the  airlines pay  to  operate  in the  Anchorage  and                                                                   
Fairbanks  airports.   Important  sources  of revenue  result                                                                   
form  landing  fees  from  either  cargo  and/or  passengers.                                                                   
Eighty percent of  that revenue comes from cargo  and landing                                                                   
fees.                                                                                                                           
                                                                                                                                
8:54:22 AM                                                                                                                    
                                                                                                                                
Representative  Joule inquired  the cost adjustment  expected                                                                   
to a passenger's ticket.  Commissioner  Barton responded that                                                                   
the  Department  has nothing  to  do  with how  the  airlines                                                                   
establish their ticket prices.   If it were assumed on a 120-                                                                   
passenger level, the cost would be $.72 cents each.                                                                             
                                                                                                                                
Representative Joule voiced concern  how the cost of fuel and                                                                   
the landing fees will affect ticketing costs.                                                                                   
                                                                                                                                
8:55:33 AM                                                                                                                    
                                                                                                                                
Co-Chair  Meyer asked  if ticket  prices would  be raised  to                                                                   
offset  some of  the  proposed  costs.   Commissioner  Barton                                                                   
reiterated  that he did  not know  and reminded members  that                                                                   
was a function  of the airlines.   To pay off all  bonds only                                                                   
through  the landing  fees would  make a  difference of  $.72                                                                   
cents on  each ticket.   Co-Chair Meyer  thought it  could be                                                                   
added to  the cost of freight.   Commissioner  Barton agreed,                                                                   
noting  that  fuel  and  labor  are the  big  costs  for  any                                                                   
airlines.                                                                                                                       
                                                                                                                                
8:56:30 AM                                                                                                                    
                                                                                                                                
HB 237 was HELD in Committee for further consideration.                                                                         
                                                                                                                                
8:57:23 AM