7. Aircraft traffic servicing-loading, unloading:

Since this is military labor, it is considered a sunk cost. The estimated cost, however, for the pay of the military personnel involved in loading and unloading the C-130s is $120,735 for the 45 days of this operation.

8. General overhead and administration: Depot maintenance overhead is included in the aircraft related factor of $189 per flying hour. Other overhead costs are considered sunk costs. In addition, the Air Force accounting systems do not provide for the separate identification of such costs for mission operations. BASING FOR C-130's

Senator STEVENS. Where were those C-130's based?

General MOORE. Two are assigned to the 17th Tactical Airlift Squadron at Elmendorf AFB, Alaska; three are assigned to the 36th Tactical Airlift Squadron at McChord AFB, Washington; four are assigned to the 314th Tactical Airlift Wing at Little Rock AFB, Arkansas; two are assigned to the 317th Tactical Airlift Wing at Pope AFB, North Carolina; and three are assigned to the 463rd Tactical Airlift Wing at Dyess AFB, Texas.

FLYING HOURS TO GET AIRCRAFT TO ALASKA

Senator STEVENS. What is the total estimated flying hours to get these aircraft to Alaska?

General MOORE. The actual total flying time for the twelve aircraft deployed from CONUS to Alaska was 114.9 hours.

PILOTS FOR AIRCRAFT

Senator STEVENS. Who piloted these aircraft-reserve or active military pilots? General MOORE. The twenty-eight original crews were all active duty personnel; however, on 20 October 1975, the Air Force Reserve provided one crew to participate in employment operations.

COST OF FERRYING C-130's

Senator STEVENS. What was the cost of ferrying the C-130's to Alaska?

General BLANTON. From an out-of-pocket cost standpoint, the cost of ferrying the C-130's to Alaska only includes per diem for the crews. This cost is estimated at $1,500. The flying hours were training hours and therefore the aircraft flying cost would have been incurred anyway. The cost would be estimated at $793 per flying hour for 114.9 hours for a total aircraft cost of $91,116. These hours were included in the estimated military airlift flying hours and in the cost comparison of military versus commercial airlift.

COST TO GOVERNMENT IF BARGES USED

Senator STEVENS. If the ice pack had permitted transit of the barges to their destination, what would have been the cost to the Government?

General STARR. If the ice pack had permitted transit of the barges to their destination, the lump-sum cost to the Government would have been $1.7 million based on the tonnage forecast stated in the contract.

FUNDS FOR SHIPMENT OF CARGO

Senator STEVENS. Are the funds for the shipment of this cargo provided annually out of Operations and Maintenance funding?

General BLANTON. Yes, sir, the shipment of this cargo is funded from the Second Destination Transportation account of the Operations and Maintenance Appropriation.

AF FUNDING OF MSC

Senator STEVENS. Which activity in the Air Force normally funds the Military Sealift Command for the annual movement of these supplies?

General BLANTON. Sir, the annual Air Force resupply of Alaska DEW Line sites is Cool Barge funded in the Second Destination Transportation account in Major Force Program VII.

FUNDING FOR AIRLIFT

Senator STEVENS. Since the barges were unable to reach their destination, how will the airlift be funded?

General BLANTON. Sir, the airlift will still be funded from the Operation and Maintenance Appropriation, specifically from Major Force Program IV, Airlift

Forces. The C-130s are utilizing flying hours already funded within the annual training program. There will be additional costs for temporary duty per diem and prepositioning of support personnel and material.

COST INCREASE FOR AIRLIFT

Senator STEVENS. Is it correct to assume that there will be increased costs for the airlift and the military personnel, and Operations and Maintenance accounts? Specifically, will the aircrews be paid per diem and if so, how will the Air Force fund this additional cost?

General BLANTON. Sir, there will be no additional costs incurred for either the airlift flying hours or for military personnel.

The total additional cost to the Air Force is $337 thousand, all of which will be from the Operations and Maintenance Appropriation. These costs are for per diem paid to support personnel and Special Assignment Airlift Missions (SAAM) and for the prepositioning of support personnel and material.

The cost of per diem, $156 thousand, will be provided by the Commands to which the support personnel are assigned.

The cost of the SAAM flights, $181 thousand, for the prepositioning of support resources in the staging areas will be provided by the Air Defense Command as its responsibility to insure the resupply of its bases on the northern slope of Alaska.

ADDITIONAL MAINTENANCE AND SPARES COSTS

Senator STEVENS. In as much as the airlift will probably require higher utilization rates on the aircraft in order to complete the airlift in a minimum of time, what is the anticipated additional cost for spare parts and maintenance?

General MOORE. Aircraft utilization rates are computed using the annual flying program for a specified aircraft and the average number of operating active (AOA) aircraft. For example, the C-130 daily utilization rate equals the annual flying hours per AOA aircraft divided by 360 days. The planned daily utilization rate will be realized at the end of the fiscal year as long as the annual flying hours and the AOA aircraft remain the same. A high utilization rate for a specific exercise is normally offset by decreased activity some time during the remainder of the year.

The FY 76 budget program for maintenance, which includes materiel (spare parts) costs, is based on the allocated flying hours for each aircraft. The relationship between the annual flying hour allocation and the budget program allows for different utilization rates during the year. Therefore, on an annual basis, no additional cost for spare parts and maintenance is anticipated. The Air Force does not keep the type of detailed records required to differentiate maintenance costs at different utilization levels or for specific exercises.

ADDITIONAL FUNDS REQUIRED/HOW PROVIDED

Senator STEVENS. If additional funds are required for the flying hours for the airlift, how does the Air Force propose to provide such funds?

General BLANTON. No additional funds are required for the airlift flying hours, they will be accommodated within the budgeted C-130 training flying hour program.

NONDEPARTMENTAL WITNESSES

STATEMENT OF HON. MIKE BRADNER, SPEAKER OF THE HOUSE OF REPRESENTATIVES, STATE LEGISLATURE, STATE OF ALASKA

Senator STEVENS (presiding). Mr. Mike Bradner, Speaker of the House of Representatives, State legislature of the State of Alaska. Mr. BRADNER. For the record, I am Mike Bradner, Speaker of the House of Representatives of the State of Alaska.

Mr. Chairman, I think the entrance of the military into the sphere of Alaska commercial transportation has caused a deep concern and frustration within both the Alaska business community and the policymaking sector.

The military has encroached upon and bypassed the availability of Alaska transportation systems-systems which, as a matter of policy, the State has strived to build and reinforce.

I am deeply concerned, and I can assure you my concern is shared by my colleagues in the House, the Senate, and the executive government.

ALASKAN EMPLOYMENT SITUATION

The actions of the military strike both at basic transportation and economic goals of the State, and at our short run economic needs as pipeline impact whipsaws employment back and forth. In the short run the military airlift within the State comes at a time when unemployment in Alaska is already approximately 11 percent, and when pipeline layoffs and showdowns are already underway. The Alaska rate of unemployment can be expected to skyrocket in the next several months, and precisely in the areas of transportation activity being usurped by the military airlift.

The military airlift strikes Alaska at a time when the transportation industry clearly has the capacity to deliver the freight quickly and safely, since that industry is familiar with and has the expertise to deal with the difficult climatic conditions of arctic flying and trucking. Alaska is a State dependent on transportation, especially air transportation, dependent to an extent beyond the comprehension of most other States. Almost all Alaska communities depend on air freight and passenger transportation, scores of those communities are served only by air, while scores more are served only by air and water transportation, and fewer yet have the good fortune to be served by a road transportation link.

STATE TRANSPORTATION SYSTEMS

One of the primary goals of the State has been to develop and to stabilize its transportation systems, both public and private. The State operates in some cases its own transportation system, the State

ferry system, and uses that system to complement and reinforce the private trucking operator. The State directly operates, at State expense, literally hundreds of small, medium, and large airfields across the State, and in recent years the State has increasingly pondered the issue of reinforcing the heavy air transportation system in some manner in order to be sure the airlift capacity is present to meet both the regular and emergency needs of relatively isolated Alaska communities.

Public policy in Alaska must be concerned with the health of its transportation operators, and especially its air operators.

FREQUENCY OF EMERGENCY SITUATIONS

In the last year these operators have dealt with public emergency situations not unusual in Alaska. Emergencies of burned out schools, of delivering food and supplies to places like Nome after a flipped over barge lost that community's winter supplies. It was emergency airlift capacity that delivered emergency generators to Nome after their disastrous flood last year, as well as other food and supplies for communities in the area, and several years ago when the Bureau of Indian Affairs' ship was locked out by early ice it was heavy airlift capacity, private capacity, that delivered freight to those stranded communities.

Such situations in Alaska are not unusual, almost to the extent the emergency is not an emergency but indeed the norm, and such is the case for communities both within Alaska's giant landmass and along a coastline that equals 60 percent of the entire coastline of the United States.

The goal of the State of Alaska has been to develop its private transportation systems into such a pattern as they contribute_substantially to the maximum turnover of money within the State. Alaska has suffered from weak dollar turnover as ancient transport systems dropped cargoes at isolated coastal points and carried dollars back outside to contribute almost nothing to the Alaskan economy. Today the growing Alaska-based transportation industry is drawing freight efficiently through the commercial centers of the State and increasing dollar turnover and therefore steadily increasing its contribution to Alaskan economic health.

Additionally, the place of flexible heavy aircraft has a most critical place in Alaskan development beyond the present emphasis of the Alaskan economy on oil and gas. It has its place in the scattered growing development of Alaska village communities under the benefits of native corporation developments.

PUBLIC POLICY

We in the public policy sector in Alaska are not only concerned with the military incursion because of its immediate negative economic impact during our current slowdown, but because it strikes at the heart of our public policy and, as I have pointed out, in Alaska transportation is not just another addendum item in public policy, it is at the center of public policy.

We see today the military stepping in to do a job that few Alaskans doubt could be accomplished by more experienced commercial opera

tors under the guise of military training. I would suggest that such training with heavy loads might be confined to the unhealthy prospect of green pilots landing with heavy loads under rather difficult climatic and landing conditions. I would predict the record of aborted flights will bear this out, with each one of those aborted flights being somewhat in the prospects for continued health of the military crewsbut at a considerably added cost to the airlift.

We are concerned with the entrance of the military into what we feel should be private activity. What are we to see next, the military building its own highways, airfields, buildings? I am sure beforethe-fact estimates can make such projects appear cheaper, while postproject accounting generally had held the converse.

SATURN OUT OF STATE CONTRACT

Second, we are concerned that the military moved to contract to private interests outside the State for movement of a portion of the freight when experienced operators existed within the State, who had equipment on the scene, and which we might have expected the military to utilize in order to gain efficiency and contribute to the growth and continued availability of such capacity.

For years Alaska has struggled to spring free of dependence on government, of dependence on narrow and inflexible transportation routes, and the Congress from the very act of statehood would appear to be expressing that hope of growing independence and economic good health within the State. We would hope the military would give reasoned recognition to our public policy, and to the tender needs of our developing economy and transport systems. In the end those developing systems and capacity are to the military's benefit also.

Yet we find the military flying private cargo for oil operators under the rationale that they are operating within the confines of the Navy patroleum reserve. Presently I would point out that Alaska's benefits from Navy Pet-4 development would come almost strictly from the contribution it makes to the Alaskan business economic sector but the present example of air lifting for Husky Oil does not breed confidence that there will be much contribution at all.

The entry of the military's private carrier from outside the State concerns us as a matter of policy. The CAB has determined that the freight is in "interstate" shipment and therefore the nonresident carrier does not need an Alaskan certificate. Hence, it would appear that any nonresident air operator could fly into Fairbanks or Anchorage and pick up freight destined for bush Alaska points, thus eroding all our State efforts to build up our own freight capacity on which we are so dependent presently, and on which we pin a great degree of our future development hopes.

CONCLUSION

In conclusion, I must restate that the current airlift is an extremely negative contribution to our economy in Alaska coming in the midst of pipeline layoffs, and is a threat to our policy of building up and maintaining our heavy air cargo within the State.

It is a precedent, and it is one that breeds uncertainty.