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' I ,•· ,\,· •' .· · . \ , I . ' ( . I. .:. t ·. ~· ·1,1• ... FINAL REP·ORT Aviation Transportation in Iowa Study Committee Legislative Service Bureau January 2000 MEMBERS / Senator Derryl Mclaren, Co-chairperson Representative Libby Jacobs, Co-chairperson Senator Richard Drake Representative Frank Chiodo Senator JoAnn Johnson Representative Bill Dotzler Senator John Judge Representative Willard Jenkins Senator Matt McCoy Representative Steve Kettering AUTHORIZATION AND APPOINTMENT The Aviation Transportation in Iowa Study Committee was established by the Legislative Council for the 1 999 Interim , ~,~~.s oYe ~:~~ o:. , :'.. ·,.. f1:i·:¥(Bt::ti!- ..; ·i\~!~ f and provided the following charge: '!!. ' ',{_ C()[nmittee . Pro~~7di~g$ '. , .. ·.': ··· · P~ 2 · II Review all issues concerning aviation (II . L ~Il> July . Meeting .. , ~ · ~: .•- . · • ·· :· ·~ . ··~·· ·· •.·' p ~ 3 . transportation in Iowa. The study shall .~' :~.~~~~~:'~=~d~~;cit~~~: : ;;~;;:: .::: ;:::, ~ ; ~ ·, include proposals for establishing an Iowa ~yi.: t ' Materials on File iqt8~ Legislativ~ ' office of aviation and a Governor's council · · .: :· :service Bt!reau .. ~ . ·. .. : .. :. ·.·.·; .. : ...... ~·· p ~ 9 · for air service development to provide leadership concerning aviation service in staff :c()niacts :. this state. II .·· Tim McDermott, Legai . Cqu~s .el ·_: (515) 28 .1 .~ 3444 ' · tmcd~rm@legis : state.ia : us Nico-le Haatvedt, Legal Counsel (515) 281 ~6329 ' . [email protected] ··.· Aviation Transportation in Iowa Study Committee I. Overview. The Aviation Transportation in Iowa Study Committee was established following the 1 999 Session of the General Assembly during which concerns were raised regarding the quality of commercial air service available to the citizens of the State. In April 1999, Senate File 4 76 was introduced. Senate File 4 76 relates to financial assistance for air transportation expansion and infrastructure. The bill appropriates to the Department of Economic Development for the 1 999-2000 fiscal year $10 million from the Iowa Comprehensive Petroleum Underground Storage Tank Fund for purposes of providing financial assistance in the form of loans to meet air transportation expansion and infrastructure needs in the State. The bill provides that an initial round of air transportation infrastructure financial assistance disbursements shall be made by the department in installments of $3 million on or after July 1, 1999, and $3 million on or after January 1, 2000, provided that certain criteria are met by an applicant. The bill provides that a second round of air transportation infrastructure financial assistance disbursements totaling not more than $4 million may be made in any number of installments at any time after January 1, 2000, by the Department of Economic Development only after a determination of necessity has been made by the Department of Management and the Legislative Council. The bill provides that the Department of Economic Development shall report to the Department of Management and the Legislative Council quarterly in an effort to provide the Department of Management and the Legislative Council with information necessary to make a determination of necessity. The bill provides that moneys appropriated from the Iowa Comprehensive Petroleum Underground Storage Tank Fund that remain unencumbered or unobligated at the close of the fiscal year shall not revert. Under Senate File 4 76, one of the required criteria is that an applicant for financial assistance be an Iowa-based airline company with immediate expansion and infrastructure needs. At the time the bill was introduced, there were only two major Iowa-based airline companies - AccessAir and Great Lakes Aviation. The Senate passed Senate File 4 76 on April 26, 1999. The 1999 Session of the General Assembly adjourned before the House of Representatives was able to debate Senate File 4 76 on the floor. II. Committee Proceedings. The Aviation Transportation in Iowa Study Committee met on July 20, 1999, and September 16, 1999, in order to receive testimony and make recommendations. Page 2 January 2000 Aviation Transportation in Iowa Study Committee Ill. July Meeting. The first meeting of the Aviation Transportation in Iowa Study Committee was held on July 20, 1999, in the auditorium of the Iowa Historical Building in Des Moines, Iowa. The testimony received by the Committee is summarized as follows: A. Department of Economic Development. Bob Henningsen, Business Development Division, Department of Economic Development, discussed the importance of air transportation in recruiting and retaining businesses in Iowa. He discussed the common perceptions that Iowa is a remote location for many businesses and that the availability of air transportation in the State is fair to poor. Mr. Henningsen discussed how these perceptions, particularly regarding the lack of adequate air service, adversely affects Iowa's ability to recruit and retain businesses. Mr. Henningsen stated that improvements in air service in other communities have provided direct benefits to those communities. He explained that Iowa stands to gain significant benefits from improving commercial air service in the State, including direct cost savings for individuals and businesses stemming from greater competition and lower fares. Iowa would also benefit from enhanced competitiveness for economic development. Mr. Henningsen also discussed the importance of air infrastructure to both large and small communities and how infrastructure that allows communities to bring in corporate jets is vital to economic development in the area. Mr. Henningsen stated that the Department of Ec,onomic Development supports AccessAir because of the company's sound business strategy, the possibility of more affordable air fares in the State due to increased competition, the company's goal of serving key markets, and the possible statewide impact of AccessAir, including increased competition and a direct effect on costs and the level of service in other areas of the State. B. Chambers of Commerce. Des Moines Chamber. Doug Siedenburg, Chair of the Air Service Council, Des Moines Chamber of Commerce, discussed issues regarding air service and its impact on businesses in Des Moines and the State in general. Mr. Siedenburg explained the chamber's role in encouraging more affordable air fares to the State and explained that the chamber has been active on both the federal and state levels to resolve the State's air service situation. Mr. Siedenburg proposed a state commercial aviation system plan which would provide for increased annual funding for the 10 commercial center airports, including significant funding for noninfrastructure use such as marketing and passenger incentives. Forty-five percent of the funding would be divided equally among the 1 0 commercial center airports, 45 percent would be distributed based on passenger enplanements, and 1 0 percent would be distributed based on air freight tonnage. In addition, Mr. Siedenburg proposed that the State create a $20 million Commercial Aviation Economic Development Fund that private-public partnerships could use to create new opportunities in their air service markets. January 2000 Page 3 Aviation Transportation in Iowa Study Committee Siouxland Chamber. Debi Durham, Siouxland Chamber of Commerce, explained that there has been a significant reduction in air service and passenger enplanements at Sioux Gateway Airport that does not correspond with the robust economic growth of the Siouxland region. She stated that passenger leakage to other airports has increased from 25 percent to 60 percent in the last 10 years. Ms. Durham discussed the Sioux City Chamber's efforts to increase air service in the region over the last several years, especially to Chicago. She suggested the creation of a state Department of Aviation to focus state efforts in the areas of aviation capital improvements, carrier improvement and retention, and air service marketing. C. Airports. Fort Dodge. Rhonda Chambers, Fort Dodge Regional Airport, discussed issues regarding the current status of air service in the Fort Dodge area. Ms. Chambers discussed the customers served by the Fort Dodge Regional Airport and the importance of the airport's relationship with the only major air carrier at the airport, Northwest Airlines, in maintaining and improving air service at the airport. She stated that, although the airport saw a decline in enplanements in 1996 with the loss of Vanguard Airlines, it is doing extremely well and she hopes