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PUBLISHED: 11:30 AM on Wednesday, June 18, 2008
State reconsiders airport lease increases over fuel cost
A number of rates and fees that were to go into effect on July 1 at state-owned airports is being reconsidered due to surging increases in fuel costs to aviation businesses statewide.

"We want to make sure our businesses stay in business," said Christine Klein, deputy commissioner of aviation for the Alaska Department of Transportation and Public Facilities. "So we are going to reconsider the implementation of the lease increases."

The suspensions were effective May 30 for both rural Alaskan airports and the International Airport System, which includes Lake Hood leases.

Klein, who took over as the deputy commissioner of aviation in February, said DOT would hold public meetings in the fall to address the concerns of leaseholders that are bound by regulations that were amended after a four-year public process.

Many leaseholders were faced with retroactive lease increases that could go back as far as five years and would need to be paid immediately.

"At a time when air taxi operators have booked their whole season, to receive a retroactive lease increase on top of fuel costs would put several operators at Lake Hood out of business," said Dee Hanson, executive director of the Alaska Airmen's Association.

The suspension came after DOT officials accepted a petition that asked the department to look at 12 issues before implementing the amended regulations, Klein said.

Klein, originally from Southeast Alaska and a graduate from the University of Alaska Fairbanks, recognized that the new regulations may need some tailoring before charging ahead.

It's a complicated issue, said Kline.

"Some of the lease contracts state that no increases can be made for five years, but can be assessed later," Klein said. "This is really something that we need to review again. Reconsidering this will allow us some time to sit back and analyze this."

The amended version of the state's Title 17 regulations, guidelines and pricing for airports statewide, were set to increase on a 10 percent per year schedule, Klein said.

Leases, concessions fees and other charges were set to increase after the amendments passed in March. John Torgerson, a former deputy commissioner of aviation for DOT, earlier stated that market study rates in 2007 were much higher that what DOT officials had settled on in the amendments.

"We did a market study on 28 airports and determined our prices based on this study," said Torgerson. "The rates suggested were much higher than what we settled on."

DOT used Affiliated Appraisers of Alaska, which recommended that the fair market value of leases, tie-downs and rents should be 140 percent greater than current rates.

DOT's aviation leasing department decided on an increase in the neighborhood of 50 percent, according to one official.

"We looked at the fair market value and decided on something in the 50 percent higher range after reviewing the market study," said Ron Stroman, a former leasing officer with DOT.

Title 17 was set to be amended and passed in 2006, but was held up in the legal department well past the deadline for public comment. DOT had to re-write the amendments for rural Alaska airports. A public comment period closed the end of April and the International Airport System comment period that closed May 30.

Klein said letters to all leaseholders would go in the mail about up coming public hearings on the Title 17 amendments or implementation of the regulations.

Rob Stapleton can be reached at rob.stapleton@alaskajournal.com


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