It's a new year, time to review finances

As we enter the new calendar year, it’s always a good time to consider your overall financial plan. Any review should include the four primary sections in every financial planner’s book: investment, insurance, retirement and estate. InvestmentThe latter part of 2000 provided a great reminder of what it means to have good, solid financial planning that includes discipline and diversity. Since October 1987, when the market crashed and then recovered instantly, stock return expectations have been out of whack.Not only do investors who lived through that ’80s cycle believe that a downturn is an opportunity to buy because the market immediately turns around, but the last five years have convinced investors that stock returns should grow 15-26 percent per year.Such returns don’t remotely resemble the historical average return for equities over a long period. Of course, a big part of this perception is a result of young investors who have experienced a market that had only gone up. Not only did the up-market cause normally conservative money managers to put more of their wealth into stocks, but also larger percent allocations in the sectors that seemed to have no upside boundary -- volatile technology stocks.There was no "plan" basis for this type of investing, just greed or "herd mentality." Re-evaluate your holdings, set realistic expectations for returns that provide a source of funds to meet future needs and stick with the plan.InsuranceReview your property, health and life insurance. Insurance should cover the catastrophe. Do you have every item insured that, if lost, would cause undue stress on your financial well being? Specifically, do you still need collision on your automobile and is the deductible right for your financial situation? Will insurance cover the replacement of your home?In the health area, I recommend coverage for the major situations, unless premiums are less than the cost of medications and/or doctor visits. Health insurance is one area that an annual review of benefits compared to costs can save you money.Check life insurance coverage. Has your situation changed in the past year -- an addition to family, change in job, change in cost of living, earnings capacity or net worth? Don’t forget to consider disability insurance. You are much more likely to become unable to perform your current job than to lose your life. How would your loss of income affect family lifestyle?RetirementYou are never too young to be considering your plans for this stage of life, even if currently it only pertains to setting aside earnings in a 401(k) or individual retirement account. Under what conditions would you like to leave your profession and when? Do you want to continue earning income in some capacity in this profession or another? Where would you like to live? What kind of lifestyle would you like?What amount of income will provide you the ability to do what you want to do? Are you closer to your retirement goal at yearend? If not, why not? What adjustments should be made?Estate planningThe one area of planning most likely to be neglected, but likely to have the greatest consequence on your family fortune is the estate plan. If you have a will that has been updated in the past few years based on your current family situation, you are more prepared than most. Be sure your family and the executor know where to find the will. Send a copy to a close relative, as well.If your estate exceeds the unified tax credit of $675,000 this year, including life insurance proceeds, or you have real property in more than one state, then you should consider having a trust, as well. If you don’t have a will, contact an estate attorney and get one. An estate attorney will meet with you to discuss your needs, and will quote you a price to provide the service required.The financial planning exercise requires some effort on your part to be effective. Begin by collecting information about your current situation. I would suggest completing a balance sheet for starters so you can see what you own, what you owe and your net worth.At the very least, bundle up your balance sheet, three years of tax returns, your current will and any trust documents, retirement account statements and insurance policies and go see a financial planner. Remember, if you don’t do anything, nothing will change.There are a number of certified financial planners in Anchorage that will assist you in your review. Some work for a fee, some make commission on selling you financial instruments and some do both. Interview each with an eye toward experience in their field, what others say about them and your comfort in talking with them.Ron Kukes is president of First Interstate Bank of Alaska.

State scientists urge federal Steller plan go back for improvement

Go back to square one and come up with a better plan, is the recommendation Alaska scientists are making to federal fish managers. At issue is the hotly disputed BiOp or biological opinion, on Steller sea lions, which states that commercial fisheries jeopardize recovery of the endangered animals. The document proposes "reasonable and prudent alternatives" that drastically curtail pollock, Atka mackerel and Pacific cod harvesting in the Bering Sea and Gulf of Alaska. The protective measures were scheduled to take effect this month, but last-minute congressional action delayed them by six months. "I’ve not read a document generated by an agency like the National Marine Fisheries Service before that had as many shortcomings as this BiOp," said state biologist Gordon Kruse, head of the Alaska Steller Sea Lion Restoration Team. In its six recommendations, the scientific review team states that the alternatives outlined in the BiOp are "not justified based on the data and analysis provided." The group notes that fishing closures in many areas were based on historical data that goes back three decades and recommends that contemporary data on present-day fisheries should be included in this analysis. The restoration team recommends delaying the implementation of an experimental management plan until "a better one has been developed," and states that any regulations in 2001 should be considered temporary. The NMFS has released its proposed emergency rules to the North Pacific Fishery Management Council in order that the fisheries can open on schedule. The basic rules would: * Prohibit all directed groundfishing within three miles of sea lion haul-outs. * Modify previous rules to allow up to 60 percent of the catch of pollock and cod to take place in the winter, rather than 40 percent. This is important because the valuable roe fishery takes place in the winter. * Reduce the Gulf of Alaska pollock catch quota by 10 percent. * Limit Bering Sea pollock catches within the conservation areas to the levels they were in 2000. * Close the critical habitat areas defined in the BiOp as of June 10, rather than immediately. This will provide more time to review the science behind the fishery closures and permit the NPFMC to suggest modifications. Fish and Alzheimer’s A new study in the U.S. journal "Lipids" claims that eating fish might ward off Alzheimer’s disease and other forms of dementia. The study, done on 70 test subjects at the University of Guelph at Toronto, found that Alzheimer’s sufferers all had lower levels of docosahexaenoic acid in blood samples than did elderly subjects with normal cognitive functioning. DHA and other omega-3 fatty acids are found in high concentrations in many fish species, including tuna, salmon and trout, and have been found to lower incidences of cardiovascular disease, depression and attention deficit disorder. "Our research suggests that the need to increase fish, fish products or other sources of omega-3 fatty acids in the diet of both the population at large and the elderly seems prudent. We should all be eating more fish," said team leader Julie Conquer. Fish shop attacked The Independent of London reported that fish and chips shops have become the latest target of animal rights activists. A letter bomb packed with nails exploded at a shop in North Wales, and it’s suspected that the perpetrators are members of the Animal Liberation Front. Previous targets have included animal testing laboratories. Robin Webb, spokesman for the ALF, said: "When one looks at the meat industry in this country ... there is what is supposed to be humane slaughter. With the fishing industry, there is no such thing. They are dragged out of the water into an alien environment in which they slowly die. There is no pretense of humane slaughter."  

Commission spends $40 million on utilities, economic projects

The Denali Commission, a state and federal agency formed to coordinate funding for rural Alaska infrastructure improvements, approved $40.5 million in projects at its Jan. 18 quarterly meeting in Juneau. The commission will have $65 million to spend overall this year. That is up from $40 million last year and $20 million the year before. Approved Jan. 18 was $18 million to Alaska Village Electric Cooperative, a utility serving small rural communities in Western Alaska, for improvements to electrical generation, bulk fuel storage and related equipment, as well as $7 million to the Alaska Energy Authority, a state agency, for utility and bulk fuel upgrades in other rural communities. Previously, money for rural energy and bulk storage projects was channeled through AEA, a commission spokesman said, but the direct grant to AVEC was made with the state’s agreement because the state energy agency has reached capacity in its ability to administer the projects. About $10 million was appropriated for improvements to rural health facilities. The money will be allocated according to a rural health primary needs assessment that was completed last year. Whether projects can get under way this summer will depend on whether permits and approvals from local communities can be secured. It’s possible that 10 rural health projects could be going this summer, either new construction or major upgrades. Two regional health facilities on the list are at St. Paul, in the Pribilof Islands, and at Metlakatla, an Indian reservation in Southeast Alaska. In both cases money from the Denali Commission will "jump-start" construction, allowing work to get under way so that other federal funds can be tapped. The commission also approved $4.5 million for rural economic development projects and $1 million for emergency medical equipment. Jeff Staser, federal co-chairman of the commission, said the group’s work is concentrated on nuts-and-bolts infrastructure in rural communities. "The work we’re doing is carrying out the vision of Sen. (Ted) Stevens, (R-Alaska), in creating the commission, that Alaskans work together to find the right solutions in creating rural infrastructure," Staser said. Stevens formed the commission through congressional action to coordinate federal program money for rural Alaska. It is modeled on the successful Appalachian Commission, which coordinates federal programs in poverty-stricken eastern U.S. states.  

This Week in Alaska Business History January 28, 2001

Editor’s note: "This Week in Alaska Business History" revisits events that shaped our past. "Those who cannot remember the past are condemned to repeat it." -- George Santayana, 1863-1952 20 years ago this week Anchorage Times Jan. 28, 1981 Prudhoe revenue estimated to be more than $1 trillion By John Knowlton Times Writer The oil and gas that will flow from Prudhoe Bay in its 36-year life span will cause a whopping $1.1 trillion to flow into the coffers of Alaska, say the federal government and the oil companies that own and produce the hydrocarbons. Nearly one-third of that mind-boggling sum, $327 billion, will go into Alaska’s treasury in the form of oil industry income taxes, severance taxes and royalties. By way of comparison, that would be about $817,500 per man, woman and child in Alaska if the state were to pass the money directly to residents. The $327 billion figure also is enough to operate state government for more than 100 years at the level proposed for next fiscal year by Gov. Jay Hammond. Anchorage Times Jan. 29, 1981 Greater role urged in marketing state seafood The Associated Press JUNEAU -- Alaska’s fish harvest has more than doubled over the past six years, but marketing efforts have not kept pace with the increased production, lawmakers were told Wednesday. Marketing problems are the single biggest handicap facing the state’s fishing industry, Rodger Painter, executive director of the United Fishermen of Alaska, told the Senate Resources Committee during a briefing on fisheries. State investment in fish marketing is a wise investment, Painter said, because fish will be around until long after the state’s oil wealth is depleted. The seafood industry is now the state’s largest private employer, added Painter, who heads the state’s biggest fisherman’s organization. ... Pointer strongly urged long-term legislative financing of the Alaska Marketing Institute, which is now working under a $1.2 million loan from the Alaska Renewable Resources Corp. to develop markets. 10 years ago this week Alaska Journal of Commerce Jan. 28, 1991 Oil giants list plans for 1991 By the Alaska Journal of Commerce BP Explorations (Alaska) Inc. has earmarked a capital budget of slightly more than $575 million for 1991, for plans including a much-accelerated well-fracturing program, a top BP official says. Most of the budget increase, up about $150 million from 1990, is due to preliminary work on GHX-2 and to add a fourth drilling rig at Prudhoe and a second at Kuparuk, said Julian R. Darley, president of BP Exploration (Alaska) Inc. "It’s difficult to be precise at this point of the year, but it appears we’ll be spending between $250 million and $300 million of our capital budget in Alaska, with drilling being the biggest single component," Darley said Jan. 19 in a speech before the "Meet Alaska" conference sponsored by Alaska Support Industry Alliance. Alaska Journal of Commerce Jan. 28, 1991 Dock gets closer look By the Alaska Journal of Commerce A multipurpose dock planned for the end of Ship Creek Point will get more scrutiny from Anchorage officials after a study that seriously questions the economic feasibility of the dock. "Based on cost estimates and additional engineering that had to be done, we have found there is a significant increase in that part of the project," said Ed McMillan, head of the city’s department of public works. "If we can go ahead, we are going to have to appropriate additional money, and from what the report has told us, I seriously doubt we are going ahead with that portion of the project." Three years ago, city residents approved a $7.5 million bond issue to help finance the project. -- Compiled by Ed Bennett.  

Babbitt postpones Beaufort Sea Lease Sale 176

Former Secretary of the Interior Bruce Babbitt announced Jan. 18 that he has deferred proposed oil and gas Lease Sale 176 in the Beaufort Sea with one day left before he was to leave office. The sale originally was scheduled for early 2002.The decision to defer the lease sale was based upon insufficient time to complete a thorough review of an environmental analysis, Babbitt said. Areas under consideration for Lease Sale 176 are adjacent to the Arctic National Wildlife Refuge, near Teshekpuk Lake and in areas of Alaska Native interest.Potential impacts to these sensitive areas need a thorough scientific review, Babbitt said. According to the Department’s current 5-year leasing plan, the environmental analysis process needed to conclude prior to June 30, 2002.Although this planning area will not be included in the current schedule, it will be available for leasing consideration by the incoming administration in its preparation of a new 5-Year Program for the period beginning July 2002 and ending July 2007.

Movers & Shakers January 28, 2001

Alaska Association of Housing Authorities’ members have elected Blake Kazama as president. Kazama is executive director of the Tlingit-Haida Regional Housing Authority of Juneau. Kazama will serve a one-year term as head of the professional organization that represents the state’s 14 housing authorities. Max Garner has become a member of the firm of Birch, Horton, Bittner & Cherot. Garner joined the firm as an associate in 1999 and has been practicing law in Alaska since 1990. Garner’s practice focuses on commercial and construction litigation. Peter Nosek has joined Birch, Horton, Bittner & Cherot as an associate. Nosek has been practicing law in Anchorage since 1995. Nosek’s practice focuses on general litigation with emphasis on representation of management in employment-related matters. The 2001 Special Olympics Alaska board of directors has elected Paul Landes, vice president of marketing for General Communication Inc., as president. Other members elected to the 2000 executive committee include: president-elect, Mike Flanigan, director of sales and marketing for the Hotel Captain Cook; treasurer, Cynthia Matson, associate vice chancellor of budget and finance for the University of Alaska Anchorage; secretary, Rebecca Logan, owner of O’Brady’s Burgers & Brew; and immediate past president, Scott Miller, a partner of KPMG LLP. Newly selected directors include: Mary Jane Michael, chief executive of Anchorage Neighborhood Housing Services; Michael Porcaro, owner of Porcaro Communications; Michael Koropp, orthodontist; and Kathleen Shepro, administrative coordinator for the UAA College of Arts and Sciences. Landye Bennett Blumstein LLP has hired Kevin J. Anderson as a new associate at its law firm’s Anchorage office. Anderson has more than 14 years of experience, and has spent five years as an attorney with the Federal Deposit Insurance Corp. in San Francisco and Washington, D.C. Anderson’s practice focuses on business formations and transactions, real estate acquisition and development, and bankruptcy, collections and foreclosures. The Challenger Learning Center of Alaska has chosen Steve Horn as its first executive/program director. Horn will oversee the dissemination of Challenger programs statewide including the Alaska Distance Learning Program. Horn most recently was employed by Wells Fargo Home Mortgage and has more than 20 years experience working in the private and public sectors. The Anchorage Estate Planning Council has elected Allen Bingham president. Bingham, a certified public accountant with Mikunda, Cottrell & Co., is an accredited estate planner. Other officers include vice president, Brian Durrell, attorney; treasurer, Tonja Woelber, attorney and Jill Reitz, trust officer at First National Bank. Jay-r Kalugin has joined SprocketHeads as animator and text designer. Kalugin is spearheading the firm’s new animation and text design department. Kalugin most recently worked as technical director and animator for Technoids, and previously worked for Aadland Advertising as a production artist. Era Aviation has hired Philip Bray as its director of fixed wing operations. Bray will oversee all fixed wing aircraft and flight crew operations for Era. Bray retired from the U.S. Army and since November 1997, has held positions in the aviation industry similar to his new appointment. Chester Troxel has been promoted to director of maintenance, rotor wing division. Troxel has 19 years experience in aviation maintenance and has worked for Era since 1989. Realty Executives, an Anchorage-based company, has added Jeff Glaser to its commercial real estate staff. Glaser has a background in advertising and marketing, including nine years of sales experience and eight years in various management positions. Kyle W. Parker of Patton Boggs LLP has been elected to the partnership. Parker is a member of the public policy practice group and concentrates his practice in environmental law and litigation. Parker formerly served as State of Alaska assistant attorney general of the oil, gas and mining section.  

Lowe's to add South Anchorage store

Officials from Lowe’s Home Improvement stores have purchased property in South Anchorage and plan to begin building the retailer’s second Anchorage store this spring. The Wilkesboro, N.C.-based chain completed its acquisition Jan. 9 of 21.5 acres at the southwest corner of the Old Seward Highway and O’Malley Road, said company spokeswoman Suzanne McCoy. "We anticipate construction could begin in May," she said. The store is expected to open in January 2002, she said. A new $15-million Lowe’s store should total about 150,000 square feet, including 28,000 to 30,000 square feet for a lawn and garden center, McCoy said. Stores of this size typically employ 175 to 200 people with 85 percent of those employees working full time, she said. Loyal customers at the current store prompted the company to consider a second store in the market, she said. This store will be the first Alaska Lowe’s designed after company models, she noted. Lowe’s acquired Eagle Hardware and Garden, including its Midtown Anchorage store, in April 1999. After the acquisition, Lowe’s made alterations to Eagle stores. "For Lowe’s it’s an opportunity to have a Lowe’s prototype store in the market," she said. Lowe’s prototype stores are designed to look less like a warehouse store and feature wide aisles and bright lights, McCoy said. The stores also include a home decor section with specialists who can assist in design, she said. Competitor Home Depot, based in Atlanta, also plans to build its second Anchorage store this year in East Anchorage. Construction could begin this year and the store could open in late 2001. The new Anchorage retailer will weigh in at 133,000 square feet and include a 15,000-square-foot garden center. Alaska Sales and Service buys Wasilla dealership Anchorage-based car dealership Alaska Sales and Service has purchased Valley Pontiac /GMC in Wasilla. The deal, completed Jan. 1, allows the 56-year-old dealership to build a presence in the fast-growing Matanuska-Susitna valleys market, company officials said. "We’re the oldest dealership in Alaska, and we have many customers in the Valley," said Alaska Sales and Service general manager Diana Pfeiffer. "It is going to allow us to work more closely with customer relationships we do have as well as develop new ones." The purchase permits Alaska Sales and Service to sell Pontiac and GMC vehicles in the Wasilla area, she said. Terms of the deal were not disclosed. The acquisition includes a three-acre lot at Mile 38.5 of the Parks Highway, plus assets and inventory. Alaska Sales and Service plans to continue employing existing staff, Pfeiffer said. Existing personnel at the Wasilla dealership total 30 full-time staff, said Lynn Harriman, general sales manager in Wasilla. "As we grow the business we’ll probably have more employees," said Harriman, who has worked 20 years for Alaska Sales and Service. Valley Pontiac/GMC now operates as Alaska Sales and Service Inc. - Wasilla.  

Japan interested in Alaska's natural gas, tourism, official says

Alaska’s relationship with Japan, the state’s largest trading partner, holds much promise for the future, but also some areas of concern.Consul-General Yoshinori Tsujimoto of Japan offered that assessment Jan. 10 at an international forum of the World Trade Center Alaska. Tsujimoto, who is completing three years as Japan’s consul-general in Alaska, said the state’s natural resources continue to offer important trade opportunities, but maximizing those opportunities will require mutual trust and understanding.Japan is now coming out of an economic tailspin it entered during the 1990s, particularly in its financial and construction industries. Looking ahead to 2010, Tsujimoto said Japan faces serious challenges, including a slowly recovering economy, a rapidly aging society and a declining population. In 2015, for example, 25 percent of Japan’s population will be 65 or older. That compares with only 12 percent of the U.S. population entering that age group that year.For Japan to resume growing at a projected 2 percent average annual rate, most economists say there is no quick fix. Instead, the country must use technology and deregulation to enhance its competitiveness and increase productivity, Tsujimoto said."In much the same way, Alaska must become proactive in promoting its economic growth," he observed.The existing Japan-Alaska trade relationship cannot be taken for granted, the consul-general explained. Japan is Alaska’s largest trading partner, purchasing 51 percent of the state’s exports. But Alaska products represent only 0.4 percent of Japan’s overall imports, which means Alaska is one of many trade options for Japan, he said.Alaska’s large trade sectors of seafood and timber appear to be losing ground for various reasons, including competition from farm-raised fish and regulations that restrict or prohibit harvesting. Alaska’s energy, minerals and tourism sectors, however, have potential for significant growth, Tsujimoto said.Japan needs to reduce its 87 percent dependence on Middle East crude oil imports, and natural gas could be substituted as a cleaner, more efficient energy source, Tsujimoto said."Developing Alaska natural gas is important to Japan," he said. He noted that an international consortium is now working on a trans-Alaska natural gas pipeline project that would export gas as liquefied natural gas, and a Japanese trading company is a member of that consortium.Tsujimoto also said the route following the Alaska Highway that Gov. Tony Knowles recently endorsed for construction of a gas pipeline to ship raw gas to the Lower 48 "doesn’t seem to conflict" with the consortium’s plans to market Alaska gas as liquefied natural gas in Asia.That’s because a spur could be built to transport natural gas to Valdez or Nikiski, where it would be converted into LNG and exported to Asia."In 2010, if Alaska natural gas is to be exported to Japan, it could have nothing but a positive effect on the Japan-Alaska relationship," Tsujimoto said.In hard-rock mining, Tsujimoto said Sumitomo Ltd. has invested in the Pogo gold mine southeast of Fairbanks. "The success of Pogo could encourage additional mineral development in Alaska," he said.Tourism also should continue to flourish because "Alaska’s beautiful wildlife and landscapes are fascinating to the Japanese people," Tsujimoto said. "Direct flights between Anchorage and Japan will play a key role in making Japan-Alaska tourism flourish," he said. "Direct flights could double existing numbers of visitors by 2010."Because interpersonal relationships are a fundamental part of Japanese society, Japan-Alaska trade can flourish only if ongoing cultural interaction between members of both communities are nurtured.Toward that end, the Consulate General of Japan announced the formation of the Japan-American Society of Alaska in November 2000. The society is a private, nonprofit, nonpartisan organization established to improve communications and enhance commercial, educational and cultural relations between Japan and Alaska.

HeathSouth hosts Games clinic

HealthSouth’s diagnostic center in Anchorage will host a medical care clinic for the 2001 Special Olympics World Winter Games. The clinic at 4001 Lake Otis Parkway will be staffed around the clock Feb. 28 through March 12.The event runs March 4-11, drawing an expected 2,750 athletes and coaches from 69 nations for several winter events.The Games Organizing Committee also will offer a communications network for sharing medical information between the venues and the clinic. A base radio, telephone and fax will allow the clinic at HealthSouth to maintain constant communication with the sites. Computers at the clinic and venues will have access to the network with instant access to all athlete medical records.HealthSouth and Providence Alaska Medical Center are donating medical supplies for the event.About 600 medically-trained volunteers will donate more than 20,000 hours during the event. Medical stations at 10 athlete villages will be staffed 24 hours a day, and medical personnel will be on site at all competition and non-competitive venues.

Visitors have record economic impact

Tourism in Anchorage hit record marks in 2000 with bed taxes totaling $10.8 million, up from $9.9 million in 1999, according to the Anchorage Convention and Visitors Bureau.The group presented its results for 2000 during a Jan. 18 luncheon at the Egan Civic & Convention Center. ACVB officials also outlined priorities for 2001, including a push for a new convention center by 2005.RIM Architects in Anchorage was chosen in November to complete a study on a possible larger center, said Bruce Bustamante, ACVB president and chief executive. The firm is working with a business that specializes in designing convention centers, LMN Architects of Seattle, and a report is due May 25, he said.The first public meeting on a proposed new convention center is set for 4-8 p.m. Feb. 21 at the Egan Center, he said.About $5 million from the 2000 bed tax collected is contributed to the city’s general fund, ACVB officials said.The year of record-setting results included $82.3 million in economic impact from conventions in Anchorage last year, said Bob Neumann, vice chairman of the ACVB board of directors. For figures from 2000 ACVB has started using a new formula from the International Association of Convention and Visitors Bureaus to figure the economic impact of conventions.The new formula lists delegate spending at $405.39 for a state delegate; $839.53 for national, international or regional delegates or $1,044.32 for a trade show delegate over an average of 3.59 days.Using the old formula, 2000 would have recorded $70.8 million in economic impact, ACVB reported. In 1999 total economic impact from conventions was $51.4 million, down from $59.1 million in 1998.In 2000 ACVB serviced a total of 778 conventions, compared with 492 in 1999 and 472 in 1998.One important annual event and the city’s largest convention is the Alaska Federation of Natives meeting in October, he said."The state market continues to be our No. 1 source for conventions in Anchorage," said Neumann, owner of Grizzly’s Inc., a downtown retailer.Competition for state meetings is on the rise due to an increase in hotel beds, he said.For example, this summer 362 new hotel rooms are due to come on line.ACVB also books conventions for upcoming years, and in 2000 ACVB booked conventions totaling an estimated $70.3 million in economic impact using the new formula.Using the previous formula for deriving economic impact of conventions, 2000 would have registered a $60.1 million economic impact compared to $70.2 million in 1999.ACVB also tallied a high in tourism sales for 2000, Neumann said. In 2000 tourism sales were $80.6 million, up from $77.1 million in 1999. However, tourism sales includes only visitor business tracked by ACVB and not the total impact of leisure visitors to Anchorage, he said.Membership at the marketing organization reached 1,394 last year, up from 1,384 in 1999.Anchorage tourism this year should be buoyed by current hotel renovations, as well as the upcoming Special Olympics World Winter Games March 4-11."The opening ceremonies of the Special Olympics World Winter Games provides an opportunity to showcase Anchorage to a watching world as athletes, coaches, family and friends head to Anchorage, Alaska, for the largest event that has ever been hosted by our city," Neumann said.ACVB officials also listed the group’s goals for 2001, which include increasing tourism and convention revenue, and marketing the city as a year-round visitor destination. The group also aims to boost the community’s awareness of the benefits of the visitor industry.

Yute name flies again in service to North Slope

Yute Air, which calls itself "The Wings of the People," has risen from the dust of a cloudy reputation o serve a different sector of Alaska, and as such, is positioned to take advantage of a North Slope oil field construction boom."We are doing business as Yute Air in name only. Everything else about the company has changed," said Skip Nelson, vice president and chief operating officer of Yute Air-Flight Alaska Inc.According to Nelson, the company is using the Yute name but the company is incorporated as Flight Alaska Inc., a division of Flight International Group Inc."This is great news that Yute is back," said former Yute vice president of marketing, Ron Pye. "This is a very conservative but sound move for an Alaska-based airline. It sounds like they are in the perfect position to increase their market share on the North Slope."Pye left Yute in early 1998. He is currently vice president of marketing, sales and public relations for Chautauqua Airlines Inc., the fastest growing feeder or commuter airline in the United States according to an airline trade publication."Yute is a good name to trade with," added Nelson. "It is our goal to restore the name’s reputation and to rebuild a bigger, safer organization."Yute’s reputation is due mainly to a 1999 Chapter 11, later changed to a Chapter 7 bankruptcy filing that found Flight International Group Inc. purchasing Yute’s FAA Part 135 certificate and filing for their U.S. Department of Transportation 401 status to carry U.S. mail.Despite its financial woes, Yute maintained a safety record that stands today: It has not injured a passenger in the history of the company.Yute was originally started as Bob Harris Flying Service in the mid-50s, serving the Bristol Bay region from Dillingham. In 1974 the name was changed to Yute, a derivative of Yuut, the Yupik word for "the people."According to Nelson, parent company Flight International Group of Newport News, Va., purchased Yute in 1999 and downsized the company in April 2000.As part of the new operation, the U.S. Bankruptcy Court gave it a test run for a few months, before slowly allowing the company to apply for other assets and certificates needed for the airline business.Flight Alaska Inc. started its Alaska operation with nine employees and has now grown to 60 people: 39 are from the former Yute Air Inc.Yute also has new challenges in its chosen area of operations."Clearly, this is the most challenging and harsh environment that any air carrier can experience," Nelson said. "Blowing snow, cold temperatures and a lack of facilities, and the requirements of the companies, makes operations more difficult."He said another challenge is the distance from Yute’s Anchorage base at Ted Stevens Anchorage International Airport to Deadhorse, where it operates a contract for service for Phillips Alaska Inc."Our operations on the Slope are like the distance from Phoenix to Chicago. That’s a long way for any carrier from their home base," Nelson said.But despite the challenges, Yute, which operates two Casa 212s, and a twin engine Piper Navajo, transports workers to and from Deadhorse to the Kuparuk and Alpine oil fields. The company also makes flights to Nuiqsut for villagers who work on the North Slope.The company’s North Slope operations are next to Carlile Transportation and about 200 yards from the Prudhoe Bay Hotel at Deadhorse."Carlile is turning our loads up there. We have a real good relationship with them," said Nelson. "In fact, on the whole, the group up there has an unusual air of cooperation among all the contractors on the Slope."Yute recently invested in a hangar for its aircraft by placing a 7,200-square-foot Alaska Coverall Corp.-built hanger with heat at the Deadhorse Airport ramp.Nelson is impressed with the conditions on the Slope, both by logistics and the general environmental operation."Phillips is really doing it right. They are a quality organization," Nelson offered. "Alpine is like the oil rig of the future. Everyone is absolutely scrupulous in maintenance, environmental and ecological issues. The conditions up there are like a hospital operating room -- if you even spill a drop of oil, they shoot your hands off," Nelson said, laughing.Nelson said not everyone understands that."We flew up to Deadhorse for business and overheard some young environmentalist who upon looking out the aircraft window, said, ’It’s just like the oilmen to cut down all of the trees on the North Slope.’ We laughed, but that illustrates a misconception about the industry on the Slope."Although Yute’s executive is impressed with the conditions, more impressive to him is the professionalism of the work force and the dedication of the workers, which triggers more work."The construction of Alpine and DS1 caused a dramatic increase in the operations tempo," Nelson said. "Now with DS2 more construction and more traffic is inevitable." DS1 and DS2 are oil rigs."We feel that with our relationship with Air Cargo Express, Carlile and others, that we are in a perfect position to what may be a new mini-boom on the Slope," Nelson added.But what of the other statewide markets and Yute’s long range plans?"We feel that there is a market for every season, but we will not enter into service until a market demands it," Nelson said.Are there any other areas that Yute is eyeing for passenger service?"We will not offer passenger service with any piston aircraft until we have the fleet we need with turboprops. But the Anchorage-Homer/Kenai dynamics are interesting."Nelson a former Navy pilot who taught at Top Gun schools, says that the company is operating under a strict plan: "Safety first and financial reward will come later."

Lawmakers weigh in on gas pipeline

State legislators in Juneau are making their first moves to influence decisions on a planned $10 billion North Slope natural gas pipeline. Rep. Scott Ogan, R-Palmer, who chairs the House Special Oil and Gas Committee, introduced a bill Jan. 19 that would require developers of a gas pipeline to ensure their project would meet a "reasonably foreseeable in-state demand" for gas. Gov. Tony Knowles and Rep. Joe Green, R-Anchorage, have introduced bills that amend the state’s Stranded Gas Act, a law that allows a developer to negotiate special tax arrangements to include gas pipelines and gas-to-liquids projects. But Ogan’s bill is the first to tackle the controversial question of which route the gas pipeline would follow. Ogan stops short of mandating a "southern," or Interior Alaska, route for a pipeline, but that route would meet the requirements set out in Ogan’s bill. An alternative "northern" route being considered by North Slope producers for a pipeline directly east from Prudhoe Bay to Canada would be unlikely to meet Ogan’s requirements. Meanwhile, a prominent member of the Legislature’s Democratic minority, Rep. John Davies, D-Fairbanks, said the state should consider owning part or all of a proposed natural gas pipeline from the North Slope to ensure the line is built with enough capacity to put Alaska gas in several markets. "Having an equity interest in the project is the only way we can really control how the project is built and to ensure our citizens receive indirect benefits like jobs and a supply of natural gas," Davies told Juneau Democrats at a lunch meeting Jan. 18. Davies thinks it would be in Alaska’s interest to have a system that can deliver gas both to domestic markets in the Lower 48 via a gas pipeline through Canada and to have a spur line to southern Alaska to ship liquefied natural gas to markets in Asia. "We shouldn’t have all of our eggs in one basket," in terms of markets, he said. A burst of new gas exploration activity in the Lower 48 will inevitably bring new supplies into the market, Davies said. There’s also talk in the incoming Bush administration and Congress about reversing previous federal decisions on a moratorium on offshore drilling. Geologists estimate areas of the federal Outer Continental Shelf where exploration is now banned could hold up to 200 trillion cubic feet of gas. "That could swamp the domestic market," Davies warned. "Our best friends could be the environmental groups working to keep those areas closed. It would also serve our interest in keeping that gas out of the market." A spur line to southern Alaska would not only bring North Slope gas to communities there but would allow exports of LNG to Asia, creating more diverse markets for Alaska’s gas. "I wouldn’t rule out shipping LNG to California either," Davies said. Under current law, the state’ principal mechanism for negotiating with the producers is the state Stranded Gas Act, which allows builders of a gas project to renegotiate state and local taxes on a project. The state would be in a stronger position if it had an equity interest in the project, Davies said. The idea isn’t new. In 1971 former Gov. William Egan proposed that the state finance and build the trans-Alaska pipeline system. Others have proposed the state own a portion of the pipeline equal to its one-eighth share of royalty oil not only to ship its own oil, as the other producers do, but to be able to influence pipeline decisions as an owner. In the early 1980s British Petroleum offered to sell a share of the oil pipeline to the state, but former Gov. Jay Hammond was cool to the idea. HEAD:Lawmakers weigh in on gas pipeline BYLINE1:By Tim Bradner BYLINE2:Journal Reporter State legislators in Juneau are making their first moves to influence decisions on a planned $10 billion North Slope natural gas pipeline. Rep. Scott Ogan, R-Palmer, who chairs the House Special Oil and Gas Committee, introduced a bill Jan. 19 that would require developers of a gas pipeline to ensure their project would meet a "reasonably foreseeable in-state demand" for gas. Gov. Tony Knowles and Rep. Joe Green, R-Anchorage, have introduced bills that amend the state’s Stranded Gas Act, a law that allows a developer to negotiate special tax arrangements to include gas pipelines and gas-to-liquids projects. But Ogan’s bill is the first to tackle the controversial question of which route the gas pipeline would follow. Ogan stops short of mandating a "southern," or Interior Alaska, route for a pipeline, but that route would meet the requirements set out in Ogan’s bill. An alternative "northern" route being considered by North Slope producers for a pipeline directly east from Prudhoe Bay to Canada would be unlikely to meet Ogan’s requirements. Meanwhile, a prominent member of the Legislature’s Democratic minority, Rep. John Davies, D-Fairbanks, said the state should consider owning part or all of a proposed natural gas pipeline from the North Slope to ensure the line is built with enough capacity to put Alaska gas in several markets. "Having an equity interest in the project is the only way we can really control how the project is built and to ensure our citizens receive indirect benefits like jobs and a supply of natural gas," Davies told Juneau Democrats at a lunch meeting Jan. 18. Davies thinks it would be in Alaska’s interest to have a system that can deliver gas both to domestic markets in the Lower 48 via a gas pipeline through Canada and to have a spur line to southern Alaska to ship liquefied natural gas to markets in Asia. "We shouldn’t have all of our eggs in one basket," in terms of markets, he said. A burst of new gas exploration activity in the Lower 48 will inevitably bring new supplies into the market, Davies said. There’s also talk in the incoming Bush administration and Congress about reversing previous federal decisions on a moratorium on offshore drilling. Geologists estimate areas of the federal Outer Continental Shelf where exploration is now banned could hold up to 200 trillion cubic feet of gas. "That could swamp the domestic market," Davies warned. "Our best friends could be the environmental groups working to keep those areas closed. It would also serve our interest in keeping that gas out of the market." A spur line to southern Alaska would not only bring North Slope gas to communities there but would allow exports of LNG to Asia, creating more diverse markets for Alaska’s gas. "I wouldn’t rule out shipping LNG to California either," Davies said. Under current law, the state’ principal mechanism for negotiating with the producers is the state Stranded Gas Act, which allows builders of a gas project to renegotiate state and local taxes on a project. The state would be in a stronger position if it had an equity interest in the project, Davies said. The idea isn’t new. In 1971 former Gov. William Egan proposed that the state finance and build the trans-Alaska pipeline system. Others have proposed the state own a portion of the pipeline equal to its one-eighth share of royalty oil not only to ship its own oil, as the other producers do, but to be able to influence pipeline decisions as an owner. In the early 1980s British Petroleum offered to sell a share of the oil pipeline to the state, but former Gov. Jay Hammond was cool to the idea.  

AACA chief off to fast start

The board of directors for the Alaska Air Carriers Association has chosen a new executive director with a background in aviation, training and fund-raising who hopes to help the Alaska aviation industry with safety and insurance issues."I hit the ground running. There are a lot of details to explore in this business," said Karen Casanovas, who became executive director of the association Jan. 16.By her third day on the job, Casanovas had met with members of her 16-person board and a Federal Aviation Administration regional safety program manager, had set up appointments with the Anchorage Economic Development Corp. transportation director, and drafted ideas for the Alliance for Safety Program."I intend to help the membership by learning more about statewide aviation issues and to promote aviation on many levels and bring greater understanding to the public about the industry," Casanovas said.Casanovas and staff members Jill Warburton, Mary Hewitt and K.C. Wilson are making arrangements for the AACA’s 35th annual conference and trade show, Feb. 28-March 3 at the Hotel Captain Cook.The conference, "2001: Raising the Bar," will feature recent aviation insurance decisions in Alaska, system safety inspections, election of new officers, a Capstone update and breakout sessions on hot topics from professionals in the industry.Last year’s conference saw 318 participants, a figure that the new AACA director would like to raise.As part of the new director’s AACA agenda, Casanovas hopes to bring safety and systems training to the carriers as part of the AACA’s function."As the accident rate goes up for aviation in Alaska, so do the insurance rates. I hope to provide a forum for the carriers, and then act on their needs for training," she said.Casanovas’ experience stems from working for Wien Air Alaska and Alaska Airlines. While with Alaska Airlines for 12 years, she worked in Anchorage, Fairbanks, Nome and traveled statewide. She has lived in Fairbanks, Nome and Anchorage. Most recently, while living in the Anchorage area, she has worked for and with Alaska Pacific University and the Career Academy to achieve fund-raising and training goals.Casanovas hopes to take her knowledge of Alaska, specifically that of rural Alaska’s dependence on air travel, and use it to help inform the public about issues the industry is facing."I’ve known Karen since 1982 when she worked for Alaska Airlines in Nome," said Michael Kean, with the Anchorage Economic Development Corp. "She has excellent professional skills and knows many people statewide. She is an excellent choice for the position."The AACA director is also interested in other aviation sectors as well as commercial passenger service."I am also really interested in the helicopter industry," she said. "I have only flown once in a helicopter and would like to know more about the issues that operators face."Casanovas would also like to continue to foster a closer relationship with the general aviation community so that the AACA will know all sides of complex statewide aviation issues."I think that the general public sees a need for improvements in air travel," she said. "With today’s atmosphere of mergers and acquisitions, like American and TWA, labor negotiations, and media focus on safety issues, there is a mistrust of the companies. Often there is no documentation to support this uncertainty and is a perception only. We would like to become the voice for aviation issues, both for general aviation and the carriers, to be a conduit between the government agencies and the operators, to disseminate the information throughout the aviation community."In addition to getting out the industry and AACA members’ message, Casanovas plans to update the association’s Web site and include links to provide Web support for the organization’s upcoming push to implement the Medallion safety program.The Medallion is a five-point awareness program that will advance safety among statewide carriers who will be rewarded with a marketing network and hopefully lower insurance rates.The AACA introduced the Medallion program at last year’s conference, and getting it funded and running is one of Casanovas’ main objectives.

When fast-food business treats workers like customers they reap the profits

The service and food industry probably has the lowest retention and highest turnover of all the industries in the United States. The reasons for this are varied, but a lot of it can be attributed to low pay, long hours and a work force that is perceived to be low caliber and/or low skill. Rightly or wrongly, this leads to an industry facing constant turnover and managers who find themselves frustrated, and in some cases reluctant to make fundamental changes in the way they manage people. However, one company clearly stands above the others. La Rosa’s Pizza Co. is a national chain of 53 outlets consisting of 3,000 employees with more than $100 million in sales each year. La Rosa practices the art of leadership and takes the science of quality management to its highest form. The first major difference between this company and other food businesses is they consider their employees their internal customers. Putting their people first is like the law of physics: For every action there is an equal and opposite reaction. In this case, the reaction is a higher level of customer service provided to their external customers, which in turn generates higher profits. In most businesses the human resources department is responsible for people issues. Unfortunately, in some cases, most of these departments do not have the power or respect to make change. The power to make change rests with the people who have the authority. The philosophy is different at La Rosa’s. Their chief executive, Tillman Hughes, says, "The soft stuff needs to become the hard stuff." They eliminated their human resources department and created a chief people officer. They did more than merely change names. Now the responsibility, authority and the power for the internal customers rests with the top executives. Most businesses play lip service when it comes to taking care of their employees. However, it goes from lip service to reality when you actually measure it. This puts a company in a powerful position to make improvements and hold people accountable. At La Rosa’s they use several different measurement methods. * Managers meet with newly hired workers for the first four weeks and conduct a new hire survey about 30 days after they have been on board. They ask questions like "How do you feel about working here and how is training going?" * They do a cultural audit, similar to an internal climate assessment, once a year, which measures feelings about pay and benefits, care and recognition and so forth. This gives them a quick pulse on how employees feel about how they are being treated. * Employees evaluate their bosses twice a year. A bottom-up internal customer satisfaction index is conducted twice a year with all employees. The index asks the employees to give their managers a letter grade from A to D in four categories: communication, accountability, quality and professionalism. After the index is completed and the comments have been tabulated, the chief executive has the managers come in and talk about the results. They address specific behaviors and come up with action plans for improvement that can be tracked daily. The meetings are held in an open and trusting environment so as not to cause any fear of retaliation. They also discovered that leadership training is key to their success. At one time they sent their managers to those public, one-day leadership courses downtown. They found it was hard to reach critical mass this way because everyone came back with different ideas, a different philosophy and a different language of what leadership meant. La Rosa now sends all their managers to the same six-week training program. Gregory P. Smith is the president of a management consulting firm, Chart Your Course International, in Conyers, Ga.  

Letter to the Editor

Dear Editor: The issues surrounding the farming of shellfish in Alaska have been the subject of a number of recent articles and opinion pieces published in several Alaska newspapers. Contrary to the claims made in some of these articles, the Alaska Department of Fish and Game has been, and will continue to be, supportive of responsible aquatic farming in Alaska. The Legislature passed the Aquatic Farm Act in 1988. Since that time, the department has issued 176 aquatic farm permits, permit amendments, or permit renewals. The reported value of the products from these permitted farms continues to grow each year. As is the case with most resource-based industries, there have been successes and failures, and new challenges to face as the industry evolves. While the Aquatic Farm Act provided basic guidance for developing aquatic farms using suspension techniques, such as hanging nets or rafts for growing oysters, the act did not address "on-bottom" farming of species like littleneck clams and geoducks. In recognition of the unique challenges involved with on-bottom farming and the need to gather additional information to properly administer the suspended or floating farm industry, the department has recently released new draft aquatic farming regulations for public review. The comment period on these proposed regulations is open until Feb. 12. A critical issue addressed in these draft regulations is how naturally occurring clams and other species are to be managed in relation to aquatic farming. A number of people applied for farm sites to gain exclusive use of these valuable common property resources in order to subsidize their farming activities. The Alaska Constitution and a number of provisions of Alaska law do not allow the exclusive use of our resources. The applicants were offered and refused permits with conditions that reflected Alaska’s constitutional and statutory mandates. Several of the applicants, whose proposed farm sites are estimated to contain more than $5 million of naturally occurring geoducks, have filed suit against the state for failure to grant them exclusive rights to harvest this public resource. We believe that an equitable balance should be reached between all Alaskans wishing to use existing wild stocks. Farming, the developing commercial dive fisheries, subsistence and personal use must all be considered in developing plans and regulations for responsible resource use. The department believes that aquatic farming means either growing new product on a farm site or enhancing productivity beyond naturally occurring levels on a farm site. It does not mean providing permits to exclusively harvest valuable common property resources under the guise of a farm. I urge all those with an interest in these issues to look beyond the rhetoric we have seen of late and assist the department in continuing to develop the aquatic farming industry in a manner consistent with the law and good public policy. Sincerely, Frank Rue Commissioner Alaska Department of Fish & Game  

Cargo volume builds

Despite increased costs to users, the Alaska International Airport System is posting double-digit increases in cargo landed weight for the peak shipping season months at Fairbanks International Airport and mid-single-digit growth at Ted Stevens Anchorage International Airport"This is standard growth for Anchorage," said Bill O’Leary, comptroller for the AIAS system. "Growth for the whole system also reflects standard predictions."Fairbanks weighed in with a 9.52 percent increase for international landed cargo with 318.5 million pounds from September through November 2000, compared with 290.7 million pounds during the same period of 1999. Anchorage landed 5.6 billion pounds during the peak fall season in 2000 compared to 5.3 billion pounds in 1999.Both airports showed a double-digit increase in international freight deplaned, enplaned and in transit, but the Anchorage numbers are suspect due to the double counting of transit and enplaned cargo, according to industry accountants.Fairbanks doesn’t transload cargo from aircraft to aircraft so its numbers do not include transit cargo double reporting.Airports Council International, a worldwide cargo organization that monitors the international air cargo industry, lists Anchorage with an asterisk to clarify that Anchorage has a unique counting method.Anchorage showed a total of 1 billion pounds enplaned, deplaned and in transit during the peak season in 2000, a 17.05 percent increase from 1999. Fairbanks showed an 11.46 percent growth with 74 million pounds moved in 2000 compared with 66.3 million pounds in 1999."We currently are proud to support 32 intercontinental wide-body landings per week, or 130 monthly," said Dave Carlstrom, marketing director for the Fairbanks Industrial Development Corp. "We have experienced some growth with the big jets over the months of September through November of 2000 with an increase to 388 flights."Air France, Lufthansa Cargo, and Cargolux are Fairbanks International’s core group of carriers. The increase is due to Cargolux’s increased activity as loads between Europe and Asia increase, said Carlstrom.As the AIAS grows, so has the cost of doing business in Alaska. Touted as one of the cheapest airport systems in the world to do business, the system recently went from around 50 cents in 1998 to 89 cents per landed pound of cargo in fiscal 2001.A new airport operating agreement will include increases in every category including landing fees, leases and fuel flowage, according to AIAS officials. The agreement, which has not been signed, has been in negotiations for more than a year by the airport users and state Department of Transportation and Public Facilities officials.Other factors that will increase the cost of doing business in the AIAS will be the increase in the fees due to capital improvements to the system’s infrastructure and the terminal renovation debt service.AIAS fees still rate comparatively low, and very low by international standards. A standard Boeing 747-200 that weighs an average of 830,000 pounds would generate a $738.70 landing fee at both Anchorage and Fairbanks.According to an American Association of Airport Executives comparison of fees for medium U.S. hub airports -- which includes Anchorage -- the average landing fee for a signatory air carrier in 1998 was $1,281 for a Boeing 747-200 aircraft.On the international scale, for example at Japan’s Narita Airport, the average landing fee for a B-747-200 is $10,000.

Alaska to fly to Red Dog

Cominco Inc. Red Dog Mine officials, worried about the beleaguered condition of Reeve Aleutian Airways Inc., have given the contract for the mine’s crew-change flights to Alaska Airlines."After Reeve announced that they were liquidating the airline, we had to do something," said Jerry Koon, supervisor for materials management and surface operations at the mine.Alaska Airlines will serve the mine, nestled in the hills north of the Noatak River in Northwest Alaska, with three flights weekly starting Jan. 23. Tuesday flights will be for passengers only, using a Boeing 737-200 aircraft with 111 seats. The two other flights will be in a combination freight and passenger configuration."It’s a delight to have the contract back," said Joe Sprague, statewide sales manager for Alaska Airlines. "Red Dog has a very bright future, and we are glad to partner with such a fine company."Alaska Airlines had the contract for weekly flights but lost out to Reeve in 1997 over a lower bid for services. Reeve operated the year to year contract since 1997, and RAA officials were under the impression that they would operate the contract for 2001.During Reeve’s tenure as Cominco’s carrier the mine site airport was approved by the Federal Aviation Administration for global positioning system approaches, which were pioneered by RAA. The airport also has distance measuring equipment to assist in traditional instrument flight rule landings."Reeve gave us excellent service, and we really enjoyed our relationship with their folks, but it wasn’t coming together with their management," Koon added.The contract for service was put out for bid late last year, according to Koon, before Reeve announced its intentions to curtail scheduled flights and liquidate the airline.Reeve officials could not be reached by the Journal."Alaska came in with a good package and we are really happy that they have the aircraft to make as many flights as we may need due to weather conditions up here," Koon added.Koon, responsible for warehouse, maintenance, surface transportation and barge operations at the mine, is also the airport manager for Red Dog’s 6,000-foot gravel airstrip, "Pilots tell us this is the best gravel strip in Alaska," Koon said.After working with Reeve for several months in an effort to create an aviation department by buying RAA’s two Boeing 727-200 combi aircraft, Cominco officials were unable to work out a solution with Reeve. "We couldn’t find an airline operator to take over maintenance and technical details, so we dropped the idea of buying their jets and decided to contract with Alaska Airlines," Koon said.Reeve’s two Boeing 727 aircraft are not Stage Three equipped, for noise abatement, and cannot be flown in the continental United States, Canada or Europe on scheduled service, limiting their use to Alaska or Third World countries.Red Dog mine has 775 people connected with operations and construction of a $100 million upgrade to enlarge the mine and its facilities. The mine has 420 employees that change shifts weekly, along with NANA/Lynden and NANA Management Inc. employees and other construction contractors.Northern Air Cargo and Lynden also frequently operate freight and oversize cargo flights to the mine, according to Koon. The Alaska Airlines contract may affect NAC’s frequencies to the mine, but Lynden, which lifts unusual and large shipments, will not be affected, he said.Reeve officials had earlier indicated that they would continue to operate weekly flights to the Red Dog Mine and to Shemya on charter flights after curtailing scheduled service in December 2000."It’s a shame to see this happen but due to their announcement, they left us no choice," said Koon.

Era considers Russian Far East service; Evergreen eyes Adak flight

Business travelers and their companies may soon have an alternative for flights to the Russian Far East from Alaska, but not before local companies carefully survey the possibility for new business."We are going to make a business decision on this, but it will have to stand on its own," said Paul Landis, vice president of fixed wing operations at Era Aviation.Landis engaged Zoomerang, an online marketing clearinghouse, to conduct a market survey from late December through mid-January on the possibility of Era offering service to the Russian Far East.The survey was prompted by the discontinuation of scheduled flights by Reeve Aleutian Airways Inc. for service statewide and flights to the Russian Far East, according to Landis.Reeve officials indicated they were experiencing some growth on their Russian Far East flights shortly before the company suspended flights just before Christmas.Era stated in the survey’s preface that it has a long history of service to the oil industry and has the capability of inter-island and helicopter service on Sakhalin, but that it was moving ahead cautiously based on the experience of other carriers that are no longer serving the industry there.In the meantime, Evergreen International Aviation Inc. is also considering adding a DC-9 jet for cargo to Adak and perhaps on to the Russian Far East as well. Local company officials indicate that the decision will be made on the corporate level.Mavial or Magadan Airlines, a Russian carrier based in Magadan, has also voiced an interest in the additional routes in the Russian Far East, according to state of Alaska officials. Those officials, who spoke on a background basis, told the Journal that Mavial operated four charter flights in December after discontinuing its monthly scheduled service between Anchorage and Magadan during December and January.Era’s Zoomerang Web survey starts out with a catchy, "Perhaps it is time for a new era in aviation support for Sakhalin. We are interested in your opinion." Logical air carrier questions about frequency, seat demand, price and choice of departure airports are interspersed with personal opinion questions to be answered by the respondents.Era currently operates three main types of aircraft in its fixed wing fleet: the Convair 550, the Dash 8 and the deHavilland Twin Otter -- none of which have the necessary range for flights to Yuzhno-Sakhalinsk or Petropavlovsk.What Era does have on hand is former Reeve chief pilot Philip Bray, who pioneered the Russian Far East routes for Reeve. Bray, now the director of operations for Era’s fixed wing operation, did not return calls from the Journal. He joined Era in November before Reeve’s announcement to curtail scheduled service.When asked about what equipment the airline would use if it decides to serve Sakhalin oil projects from Anchorage, Landis said that the decision would also be influenced by the survey and refused to discuss options.Era officials will make the decision sometime in the spring, according to Landis."We are inclined to lean toward contract charter services for flights," added the Era vice president. "This will help underwrite the cost of the service."The departure of Reeve has forced Russian Far East passengers and freight forwarders to use a very long and expensive route from Japan through Korea that ends up with a connection to Yuzhno-Sakhalinsk on Korea-based Asiana Airlines."This is ridiculous. I have to fly four days to do three days of work," said Keith Burke, president of Natchiq/ Sakhalin LLC.Reeve was also providing lift for local forwarders Lynden Air Freight and Panalpina, both of whom specialize in oversize industrial cargo."This caught us completely by surprise," said Jeff Berliner, trade specialist with the state’s International Trade and Market Development office. "We knew that Reeve was in negotiation with investors, but we were not prepared for this. We are currently having discussion with state, federal and private sector on how to respond to this challenge."Berliner added that in addition to Mavial having an interest, Aeroflot officials have reportedly surfaced and may be rethinking their decision to pull their Russian Far East flights out of Anchorage in December 1999."There are more than just college students traveling between Anchorage and the RFE. There are also professionals here working on the Magadan oil and gas lease sales," Berliner said. "And if that takes off, we could be the staging grounds for that, too."Berliner also indicated that the trade division is doing surveys and has hired research analysts to aid the private sector in making a decision to regain Alaska as a Russian gateway."Going to the RFE through Korea is not what we would want. We want Alaska to be the staging ground for the RFE," Berliner said.

Legislature doesn't see need for tax breaks to build gas pipeline

JUNEAU -- Leading Democrats and Republicans oppose state tax and royalty concessions for developers of a natural gas pipeline, disagreeing with Gov. Tony Knowles that such a break might be needed to make the $10 billion project viable. But that might have been the only broad point of agreement between the parties as they reacted to Knowles’ State of the State address. Knowles chose the Jan. 8 opening of the 22nd legislative session to highlight the natural gas issue, and he made it a major theme of his annual address Jan. 10. The governor earned applause from legislators by saying: "I believe Alaskans can be on the working end of a shovel building a natural gas pipeline within two years. After two decades of false starts and broken dreams, the economic and political stars are finally aligned in our favor. Natural gas is the fuel of the 21st century." Among his requests to the Legislature, Knowles wants authority to negotiate with North Slope producers on a revenue package that might defer some state royalties and taxes in order to "backload" project costs and ensure viability of the project. The Legislature would have to approve such a package, said Revenue Commissioner Wilson Condon. Commercialization of the gas eventually is expected to yield about $200 million to $400 million in state revenues annually. Although natural gas prices have skyrocketed recently, Knowles said Jan. 8 that a tax break is still needed for the natural gas pipeline, which he called marginal. North Slope producers haven’t yet requested a negotiated deal on state revenues, but the governor said there is need to lower upfront costs due to the length of time for construction and the likelihood of lower prices over the long term. While there is broad agreement on the desirability of the project, legislators are saying they doubt that pipeline developers would need the additional incentive of a break on state royalties and taxes. There also was discontent in the Legislature a year ago about the tentative deal Knowles brokered with BP Amoco concerning its merger with Atlantic Richfield Co., which was seen as less favorable than the arrangement ultimately approved by the Federal Trade Commission. Senate President Rick Halford, a Chugiak Republican, said that if the pipeline to the Lower 48 is otherwise feasible, state tax breaks wouldn’t make a difference and would amount to giveaways. House Finance Co-Chairman Eldon Mulder, an Anchorage Republican, said he might be open to deferring some state revenue, but said the Republican position is "don’t sell the farm or give it away." "I would prefer for there not to be inducements," said Senate Minority Leader Johnny Ellis, an Anchorage Democrat.  

Around the World January 21, 2001

STATEJobs jump 1.5 percentJUNEAU -- The state Department of Labor reported jobs increased by 4,300 -- or 1.5 percent -- in October over the same time the previous year.The job growth didn’t come from any one industry, but came from small gains in numerous industries statewide, according to a report in the January 2001 Alaska Economic Trends.Statewide, the biggest gainers for the year ending in October were the services and miscellaneous industries with an increase of 2,400 jobs, 1,000 of which were in health services and 700 in the mining sector.Statewide unemployment for October rose half a percentage point to 5.5 percent, but dropped 0.2 percentage points when compared with the same period the previous year.Villages get EPA grantsWASHINGTON -- Seven Alaska Native villages are getting a total of more than $500,000 in grants from the Environmental Protection Agency for continuing work on environmental programs.Communities receiving grants under the Indian Environment General Assistance Program include:* $90,000 for the Native Village of Chignik* $90,000 for the Native Village of Savoonga* $90,000 for the Native Village of Port Heiden* $82,740 for New Stuyahok Village* $52,000 for the Wrangell Cooperative Association* $65,218 for the Ninilchik Traditional Council* $75,000 for the Kenaitze Indian tribeAquatic farmers file suitANCHORAGE -- A group of aquatic farm applicants has filed a lawsuit against the state charging that the Department of Fish and Game changed its policies preventing them from obtaining permits.The lawsuit was filed in Ketchikan District Court by seven aquatic farmers who claim that Fish and Game is preventing them from operating geoduck clam farms in southern Southeast Alaska. At issue is whether farm applicants are entitled to harvest geoducks already on their farm sites, Amy Miller of Coastalaska radio reported.Scott Thomas, one of the plaintiffs, said some of the farmers intentionally chose sites that had populations of geoducks because the law requires it."What the Department of Fish and Game did, is after we applied for these permits, they went out and did surveys," Thomas said. "They wanted to see what was there. And they found that there was lots of Geoduck clams in some of these areas. And they said, ’this is a bunch of clams, and you guys are going to make a bunch of money, and we don’t think that you guys should be able to do that.’ And we said, ’well this is exactly what the law says we have to do.’ We have to apply for areas that are suitable for the species that we are intending to cultivate."According to the state attorney general’s office, state law doesn’t require that a proposed site have an existing stock.Lawmaker wants new CapitolJUNEAU -- An Anchorage Republican has reintroduced a bill calling for a new building for the state Legislature.The bill by Rep. Norm Rokeberg would direct a panel of lawmakers to write specifications for construction of a new legislative hall by Dec. 15, 2001.Rokeberg has said the Capitol is unsafe because corridors are obstructed by copiers and other equipment too large to store in already cluttered offices.The measure also says the building’s wiring is inadequate, its heating system is antiquated and chambers and public galleries are too small.Rokeberg offered an identical measure last session, but it died in committee.NATIONConsumer sales slumpWASHINGTON -- Inflation at the wholesale level remained tame in December despite a record surge in natural gas prices, but shoppers’ caution translated into a weak rise in holiday retail sales.Supporting the view that the economy has slowed significantly, the Commerce Department said Jan. 12 that retail sales in December rose by just 0.1 percent. Overall activity was held back by a big 0.6 percent plunge in sales at department stores, reflecting a disappointing Christmas season as falling consumer confidence dampened shopping.In addition to reporting weak December activity, the government revised down its estimate of sales in the previous two months, showing an even steeper 0.5 percent plunge in October.Mortgage rates fallWASHINGTON -- Mortgage rates declined last week with rates for 30-year and 15-year mortgages hitting their lowest levels in 21 months.The average interest rate on 30-year fixed-rate mortgages fell to 6.89 percent, down from 7.07 percent earlier.A year ago, the rate on 30-year mortgages stood at 8.18 percent and was rising. In mid-May, rates on 30-year mortgages hit a five-year high of 8.64 percent.Fifteen-year mortgages, a popular option for refinancing, declined to 6.49 percent, down from 6.74 percent. A year ago, 15-year mortgages averaged 7.78 percent.The 30-year mortgage rates were the lowest since April 23, 1999, when they averaged 6.88 percent. The 15-year rates were the lowest since April 16, 1999, when they averaged 6.47 percent.WORLDBP Amoco to sell 2 unitsLONDON -- BP Amoco PLC plans to sell two chemicals businesses in a move away from product manufacturing, the oil and gas company announced Jan. 11.The U.S.-based fabrics and fibers unit and the Europe-based plastic fabrications unit are to be sold by the end of the year, BP Amoco spokesman David Nicholas said."This move is all about our chemical strategy," Nicholas said, adding that the two units do not fit with a plan to limit the company’s focus to producing fossil fuel-related materials.The businesses, which have a combined annual turnover of about $1 billion, produce a range of products, primarily from polyethylene and polypropylene.Compiled from business wire services.

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