SB1697

SECTION 1. The legislature finds that the worldwide fleet of airline aircraft is projected to double by the year 2022, with nearly six thousand new planes being delivered to the fast growing Asia-Pacific region. As a result, more than two hundred fifteen thousand new airline pilots are likely to be needed during this period with at least sixty thousand of them hired by airlines in the Asia-Pacific region.

Unlike the United States, which has a well-developed general aviation market and hundreds of flight schools to provide pilots to that market, countries with little or no general aviation activity must contract-out training for new pilots to flight schools in other countries. The People's Republic of China, Japan, Malaysia, South Korea, Thailand, and Taiwan are examples of Pacific Rim countries that currently outsource the training of new pilots to flight schools in the United States, Australia, and Europe.

The legislature also finds that a unique opportunity exists to establish Hawaii as a preferred source of training for new airline pilots in the Asia-Pacific region. In October 2004, the University of Hawaii, Alteon Training L.L.C., a wholly owned subsidiary of the Boeing Commercial Airplane Company, and Global Flyers Corp. entered into a memorandum of understanding setting forth their intent to establish, in Hawaii, the world's first integrated airline training program for ab initio pilots – those with no prior flight experience – and commercial pilots. Under the memorandum of understanding, Alteon Training L.L.C. could build a major airline training facility in Hawaii - provided certain preconditions are met. Alteon Training's investment would be contingent upon contracting a minimum number of student pilots and the State's or other partners' co-investment in the facility. The University of Hawaii will provide training facilities and necessary equipment at Kalaeloa airport, Global Flyers Corp. will produce required courseware and manage implementation of new training programs, and Honolulu community college will sponsor the program as a not-for-profit research and training activity, working in partnership with the research corporation of the University of Hawaii.

The legislature also finds that Hawaii is ideally situated to take advantage of this opportunity because of its central-Pacific location, the presence of ideal flight training weather, excellent training facilities already in existence at Kalaeloa airport, participation by Alteon Training L.L.C. (the largest provider of airline flight simulator training), integrated courseware from Global Flyers Corp. which reduces training time and cost while also improving student success rates, the availability of experienced airline training managers to operate the program, and a unique cultural environment that will be comfortable for pilot trainees from the Asia-Pacific region.

By 2010, the integrated airline training center is projected to generate one hundred forty-six new direct and indirect jobs, total payroll of $7,800,000, and total output to the State of $32,900,000. Locating the world's finest airline preparatory academy in Hawaii will also provide Hawaii residents with a major educational advantage and opportunity to qualify for well-paid, skilled employment in the airline industry. Additionally, Honolulu community college's training facility will be one hundred per cent Hawaii-owned, ensuring that investment capital and the returns thereon inure to the benefit of Hawaii and its citizens. Finally, local Hawaii airlines will be able to utilize the new training center for initial and recurrent pilot, mechanic, dispatcher, and security training. Cost savings to the carriers will be substantial.

The legislature understands that the parties to the memorandum of understanding will be seeking $10,000,000 in prepaid funding and support from Taiwan and will be meeting with representatives in Taiwan in February 2005. As part of the development costs, the parties are also seeking $2,000,000 in state funds for start-up and bridge financing to cover the program until it becomes profitable (within two and one-half to three years from start-up). From that point on, there will be a positive revenue flow based on the business plan.

The purpose of this Act is to fund start-up operations of an integrated airline training center. This includes but is not limited to aircraft purchases and leases, personnel training, curriculum design and development, general program marketing, obtaining Federal Aviation Administration authorizations, insurance expense, day-to-day management expense, facility overhead expense, and purchase of flight training devices (desktop and small simulation devices), aircraft parts, fuel, computers, and furniture.

SECTION 2. There is appropriated out of the general revenues of the State of Hawaii the sum of $2,000,000, or so much thereof as may be necessary for fiscal year 2005-2006, for the costs of starting up the operations of an integrated airline training center.

SECTION 3. The sum appropriated shall be expended by the department of business, economic development, and tourism for the purposes of this Act.

SECTION 4. This Act shall take effect on July 1, 2005.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	1697
TWENTY-THIRD LEGISLATURE, 2005
STATE OF HAWAII