This time of year, the Alaska Legislature receives plenty of guests on “fly-in” receptions. Groups like the Alaska Chamber of Commerce and the Bristol Bay Borough arrive by jet, stopping in Juneau for a few days to talk with Legislators about the issues that matter to them most.
Last week, one group arrived with the name of their organization emblazoned on the side of a jet.
For Alaska Airlines, one of the biggest issues is the state’s planned hike in fuel taxes, something that would significantly affect the company’s operations in Alaska, said Joseph Sprague, Alaska Airlines’ vice president of communications and external affairs.
“We are very concerned with (House Bill 249),” he told members of the Alaska House Transportation committee, which is considering the measure.
That bill would raise the state’s tax on jet fuel from 3.2 cents per gallon to 10 cents per gallon. The tax on aviation gas would rise from 4.7 cents per gallon to 10 cents per gallon. Also within HB 249 are increases to the state’s gasoline taxes, but those are rising to a lesser degree than the taxes on aviation.
Combined, the tax increases will raise about $49 million per year to help close the state’s annual deficit, which is between $3.5 billion and $4 billion per year.
The aviation tax increase is at least partially the work of the state’s aviation advisory board, which favors a larger tax increase in place of a smaller increase and a rise in the landing fees charged at some state airports.
Alaska Airlines and the state’s larger airlines — Delta and UPS each sent letters of opposition — disagree with that strategy.
“Beyond the exceedingly high increase,” Sprague told the committee, “our calculations suggest Alaska Airlines alone would pay 30 percent.”
“Whether you would take action on fuel tax or not — and again, our hope is that you won’t … our view is that action is going to have to be taken across the various levers that are available to the Legislature,” he said.
Meeting with the Empire editorial board, Sprague said it’s “hard for us to say no, don’t do it” even as it advocates a prompt solution to the state’s budget problems.
“We’re looking at ways we can bring our costs down … so we can bring our fares down,” Sprague said. “A fuel tax that would be pretty targeted at aviation … it puts us in sort of an awkward position.”
Sprague said the company is “open to looking at different solutions” and is considering joining one or more of the business and nonprofit coalitions pushing the Legislature for action this year.
Marilyn Romano, Alaska Airlines’ regional vice president for the 49th state, said, “We feel like this may be the time that Alaska Airlines should step up as a leader in the state and encourage whatever (fix) that may be.”
The fly-in wasn’t completely devoted to the gas tax issue. Speaking to the Empire, Sprague and others said the company is planning a series of changes in the coming years that will be visible to travelers.
Last week, Alaska Airlines unveiled a new branding scheme and simplified logo that will be installed in Juneau’s airport this year. Larger projects are also coming in the next few years. The airline operates 11 terminals at airports across the state — Barrow, Wrangell, Yakutat and Kodiak are examples — and it will be spending tens of millions to upgrade those terminals in the near term.
In Anchorage, the airline expects to build a new maintenance hangar. The company is also phasing out its “combi” aircraft — the half-freighter, half-passenger Boeing 737s used on rural routes in Alaska. Those will be replaced by full-freighter 737s new off the Boeing assembly line, Sprague said.
And in response to the perennial question about whether Alaska will be bought out by a larger airline, Sprague had a simple answer: “No. Alaska likes its place as an independent, Seattle-based airline, and that’s the way we want to stay.”
