HB 354-AK CAPSTONE AVIONICS REVOLVING LOAN FUND    3:21:16 PM CHAIR OLSON announced that the first order of business would be HOUSE BILL NO. 354, "An Act relating to eligibility for loans from the Alaska capstone avionics revolving loan fund." 3:21:42 PM MATTHEW JOHNSON, Staff, Representative Wes Keller, Alaska State Legislature, presented an overview of HB 354. In 2008, the Capstone Avionics Loan Program was established in Alaska. The impetus for the program was a Federal Aviation Administration (FAA) pilot program that confirmed the substantial value and effectiveness of the new avionics technology. The results of the pilot program revealed that it reduced accident rates in the trial area by 47 percent. The FAA estimates that full implementation of the program will result in 33 percent fewer fatalities statewide. The program was intended to provide loans for in state operators and carriers to upgrade their avionics. However, an unforeseen gap exists and those carriers who lease their aircraft are not eligible for the program. This bill, HB 354, would correct that problem. It would amend the Alaska Capstone Avionics Revolving Loan Fund program to allow a lessee of an aircraft that logs a substantial percentage of flight hours in the state to qualify to apply for loans to purchase Capstone Avionics equipment. The effect of the change will be to open up the program funds to lessees of aircraft. 3:23:46 PM CATHY JEANS, Systems Branch Manager, Division of Investments, Department of Commerce, Community, & Economic Development (DCCED), stated that the division manages the Alaska Capstone Avionics Revolving Loan Fund program. As Mr. Johnson mentioned, the change would allow individuals that have leased an aircraft to qualify for loans to purchase and install Capstone Avionics equipment in aircraft operated in Alaska. The current law only allows aircraft owners to qualify. Lessees of aircraft would still need to meet all of the program requirements, including collateral, credit, and capacity for repayment. The Division of Investments (DOI) anticipates a small number of additional loan requests with passage of HB 354. The Alaska Capstone Avionics Revolving Loan Fund program has adequate resources to handle the requests and will not need additional operating funds to administer the change. The DOI supports the bill as it should increase safety for the Alaskan flying public. 3:25:25 PM REPRESENTATIVE BUCH recalled that this proposed bill would have a small impact in Alaska. He related his understanding that enhancing the program would allow more people to qualify for the program loans. MS. JEANS agreed. This bill would allow lessees of aircraft to apply for loans to install Capstone Avionics in leased aircraft. Currently, this program is limited to owners of aircraft. 3:26:12 PM REPRESENTATIVE CHENAULT asked whether any liability issues will result with passage of HB 354. MS. JEANS stated that she is unaware of any liability issues created by installing Capstone Avionics equipment in aircraft. She offered to check with the FAA and report back. CHAIR OLSON remarked that one result would be to reduce liability insurance premiums and hull coverage, as well. 3:27:06 PM MONTE GATES, Peninsula Airways, stated that a large portion or 7 of 10 SAAB 340 aircraft Peninsula Airways are leased. Peninsula Airways would like to install new equipment, but must install the equipment in the whole fleet, which would mean they must rewrite all the lease agreements for seven aircraft. The alternate method of amending the statute would allow a more direct approach for eligibility for the Capstone Avionics Revolving Loan Program. 3:28:27 PM CONSTANCE JOY JOURNEAY, Executive Director, stated that the Alaska Air Carriers support this change. More than half of the carriers lease portions of their fleet and this bill would allow their aircraft to be eligible for the program. 3:29:24 PM CHAIR OLSON, after first determining no one else wished to testify, closed public testimony on HB 354. REPRESENTATIVE NEUMAN moved to report HB 354 out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, HB 354 was reported from the House Labor and Commerce Standing Committee. The committee took an at-ease from 3:29 p.m. to 3:31 p.m. 3:31:29 PM