HOUSE BILL NO. 354                                                                                                            
                                                                                                                                
     "An Act relating to eligibility for loans from the                                                                         
     Alaska capstone avionics revolving loan fund."                                                                             
                                                                                                                                
REPRESENTATIVE WES  KELLER, SPONSOR,  explained that  HB 354                                                                    
upgrades  the  Capstone  Avionic  Loan  Program  to  include                                                                    
aircraft operators  in Alaska that lease  their aircraft. He                                                                    
spoke highly  of the Capstone  Program. He related  that the                                                                    
two pilot programs  had had great success  in decreasing the                                                                    
number  of accidents  by  40 percent.  The  FAA covered  the                                                                    
majority of  the cost of  the program. The state's  part was                                                                    
to get aircraft in the air with the equipment in place.                                                                         
                                                                                                                                
9:35:53 AM                                                                                                                    
                                                                                                                                
Senator Thomas  understood that the  bill would  help leased                                                                    
planes  in  commercial   operations.  Representative  Keller                                                                    
agreed. He explained  that the cost to  private pilots would                                                                    
be  extreme, so  this  legislation  would affect  commercial                                                                    
operations.                                                                                                                     
                                                                                                                                
Senator Olson asked  how many of the  loans were delinquent.                                                                    
Representative Keller didn't know.                                                                                              
                                                                                                                                
Senator Olson  recognized that  the thrust  of the  bill was                                                                    
for  leased  aircraft.  He  wondered  what  happens  to  the                                                                    
Capstone equipment  if the aircraft was  leased from outside                                                                    
the state and was  returned to another state. Representative                                                                    
Keller replied  that it  would stay  with the  airplane, but                                                                    
the  debt  would remain  with  the  company that  owned  it.                                                                    
Senator Olson  summarized that that the  avionics would stay                                                                    
with  the  plane  when it  left  the  state.  Representative                                                                    
Keller offered to find out.                                                                                                     
                                                                                                                                
9:38:27 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman  noted  one  zero  fiscal  note  from  the                                                                    
Department    of   Commerce,    Community,   and    Economic                                                                    
Development.                                                                                                                    
                                                                                                                                
GREG WINEGAR, DIRECTOR,  DIVISION OF INVESTMENTS, DEPARTMENT                                                                    
OF COMMERCE,  COMMUNITY AND ECONOMIC  DEVELOPMENT, addressed                                                                    
Senator Olson's  question and reported that  the delinquency                                                                    
rate on the loan program is zero.                                                                                               
                                                                                                                                
Co-Chair Stedman  asked how  many loans  have been  made and                                                                    
when  the  program  began. Mr.  Winegar  reported  that  the                                                                    
program began  in 2008 and a  total of nine loans  have been                                                                    
made  totaling  about  $613,000. There  are  currently  five                                                                    
loans on the books.                                                                                                             
                                                                                                                                
Co-Chair Stedman  asked if the  program was  successful. Mr.                                                                    
Winegar  thought  it  was. Co-Chair  Stedman  asked  if  the                                                                    
department supported the bill. Mr. Winegar said it did.                                                                         
                                                                                                                                
9:40:15 AM                                                                                                                    
                                                                                                                                
MONTY GATES, PENNINSULA  AIRWAYS (via teleconference), spoke                                                                    
in support of HB 354.                                                                                                           
                                                                                                                                
DANNY   SEYBERT,    PRESIDENT,   PENINSULA    AIRWAYS   (via                                                                    
teleconference), spoke  of the need for  the Capstone system                                                                    
for flying  in the Aleutians.  He testified in favor  of the                                                                    
lease option.                                                                                                                   
                                                                                                                                
Senator  Olson   commented  that  Capstone  has   shown  its                                                                    
effectiveness in decreasing the  number of accidents and air                                                                    
carriers are definitely in favor of it.                                                                                         
                                                                                                                                
Representative Keller  noted the FAA has  projected that the                                                                    
death rates  from flying  will decrease  by 33  percent with                                                                    
this system in place.                                                                                                           
                                                                                                                                
HB  354  was  heard  and   HELD  in  Committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
9:43:21 AM