Sponsor Statement for HB 210

An Act relating to the extension of contracts for the sale and delivery on in-bond merchandise at international airports.

House Bill 210 is a straight forward bill that would provide the Department of Transportation and Public Facilities (DOT/PF) with more flexibility to extend the term of a duty free concession contract at the Anchorage International Airport, if such extension would be in the state's best interests. The bill does not mandate that DOT/PF do anything; it just provides a tool that may be used to maintain the competitive position of Anchorage International Airport in the marketplace.

The duty free/general merchandise concession at Anchorage International Airport at one time generated revenues in excess of $100 million and fees to the state approaching $19 million annually. The changing nature of the international airport market (i.e., rerouting around Anchorage as a stop, opening of Soviet air space, long-haul jets) has greatly impacted the market with a resulting decline in revenues and fees to Alaska.

These revenues and fees are again increasing as the new concessionaire works to attract a broader market and as more international airlines consider Anchorage as a stop. The current concession contract is held by a group of Alaskans--the David Green Group. The concessionaire needs to make substantial additional investments in leasehold improvements to attract world-class brand merchandise. An extension of the lease term would allow the concessionaire to amortize its tenant improvements over a reasonable length of time, as well as enhance the competitive position of our duty-free concession versus New York and Hong Kong. The resulting increase in gross revenue would be in the state's best interest.

Your support of this legislation would be appreciated.

ED1:4/14/97