Order 2013-10-3

Served: October 4, 2013 

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 4th day of October, 2013

ORDER REQUESTING PROPOSALS

Summary

By this Order, the Department is soliciting proposals from air carriers interested in providing 

Essential Air Service (“EAS”) at Kalaupapa, Hawaii, for a new contract term, beginning 

January 1, 2014, with or without subsidy. Air carriers should file their proposals no later than 

October 31, 2013. (See Appendix A for a service area map.) 

Background

By Order 2011-11-27, issued on November 22, 2011, we selected Schuman Aviation Company 

Ltd. d/b/a Makani Kai Charters (Makani Kai) to provide subsidized EAS at Kalaupapa for a twoyear period starting when the carrier started service through the end of the 24th month thereafter. 

Makani Kai inaugurated service to Kalaupapa on December 10, 2011, thus setting an expiration 

date of December 31, 2013. That service consisted of 12 nonstop round trips a week between 

Kalaupapa and Honolulu, and 18 nonstop round trips a week between Kalaupapa and Molokai, 

utilizing nine-seat Cessna Grand Caravans, with a first-year subsidy rate of $932,772, and a 

second-year subsidy rate of $923,509.

The complete public file for EAS at Kalaupapa may be accessed online through the Federal 

Dockets Management System at: http://www.regulations.gov by entering “DOT-OST2000-6773” in the “SEARCH for: Rules, Comments, Adjudications or Supporting Documents:” 

field.

Request for Proposals

As the end of the current contract period approaches, we are here requesting proposals from air 

carriers interested in providing service at Kalaupapa, with or without subsidy, for a new contract

beginning January 1, 2014. Air carriers should file their proposals no later than 

October 31, 2013. After that date, our staff will then docket proposals, thereby making them 

public, and direct each air carrier to serve a copy of its proposal on the civic parties and other 

applicants. Shortly thereafter, we will provide a summary of the proposals to community 

Essential Air Service at

KALAUPAPA, HAWAII

Under 49 U.S.C. 41731 et seq.

Docket DOT-OST-2000-6773
2

officials and ask them for their final comments. We will give full consideration to all proposals 

filed in a timely manner.1

Interested air carriers should prepare their proposals with every expectation that their initial 

proposals will represent their final and only proposals. However, we retain the discretion to 

negotiate proposals with air carriers when we deem it desirable; in such cases, of course, we will 

give all applicants the same opportunity. We also retain the discretion to reject outright all 

unreasonable or unrealistic proposals and re-solicit a new round of proposals. However, 

negotiation or rejection are only an occasional exception to the rule.

We are here providing interested air carriers with some basic information to serve as guidance 

when they prepare their proposals, but we will not prescribe a precise format for their proposals. 

We expect proposals to adequately describe the service being proposed and the annual amount of 

subsidy being requested. The applicants can make their own judgments as to the level of detail 

they wish to present; however, we recommend that they include information concerning 

proposed schedules and projected block hours. In addition, applicants are urged to provide 

financial data supporting their subsidy requests, including information on their projected 

expenses and revenues. We strongly encourage clear, well-documented proposals that will 

facilitate their evaluation by the community and the Department.2

The Department expects proposals that are consistent with what the community currently 

receives, including service to a suitable hub airport that offers access to the national air 

transportation system. The community and air carriers are encouraged to work together in 

advance of the due date for proposals to craft a service pattern that is desirable to the community 

and meets the operational needs of the airlines. Air carriers are also welcome to propose more 

than one option, if they choose; they need not limit themselves to those requirements if they 

envision other, potentially more attractive service possibilities -- different hubs, frequency or 

equipment, for example -- with subsidy requirements that remain competitive. As always, we 

will formally solicit the community’s views on any service options we receive before making a 

long-term carrier selection decision.

Service and Traffic History

Proposals should provide sufficient capacity to accommodate historical levels of traffic. In order to 

assist air carriers in developing traffic and revenue projections for their proposals, we have provided 

a summary of historical passengers in Appendix B. During the calendar year ended 2012, the most 

 1 Air carriers should not expect the Department to accept late filings. In cases where an air carrier proposes to 

provide EAS without subsidy and we determine that basic EAS as required by 49 U.S.C. § 41732 can be reliably 

provided without such compensation, we typically do not proceed with the carrier-selection case. Instead, we 

simply rely on that carrier’s subsidy-free service as proposed.

2 In selecting a carrier to provide subsidized EAS for an eligible place not in Alaska, 49 U.S.C. § 41733(c)(1) 

directs us to consider five factors: (1) service reliability; (2) contractual and marketing arrangements with a larger 

carrier at the hub; (3) interline arrangements with a larger carrier at the hub; (4) community views; and (5) whether 

the carrier has included a plan in its proposal to market the service. In addition, Consolidated Appropriations Act, 

2012, Public Law 112-55, and continued by the Full-Year Continuing Appropriations Act, 2013, Public Law No. 

113-6, provides that when selecting a carrier to provide EAS, the Department may consider the relative subsidy 

requirements, thus codifying a factor that we have considered since the inception of the program. Interested air 

carriers should also be aware that our general provisions governing Essential Air Service will be included in the 

selection Order as part of our authorization of subsidy for the selected service. Appendix C of this Order contains 

those general provisions.
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recent calendar year period for which data are available, Kalaupapa enplaned 3,209 passengers,

or 10 a day.3 

Filing Requirements

Air carrier proposals should be submitted to the Department with all materials merged into a 

single document. The document will be published on www.regulations.gov and each page 

should be formatted to be viewed online. 

Other Carrier Requirements

The Department is responsible for implementing various Federal statutes governing lobbying 

activities, drug-free workplaces, and nondiscrimination.4 Consequently, all air carriers receiving

Federal subsidy for EAS must certify that they are in compliance with Department regulations 

regarding drug-free workplaces and nondiscrimination, and those air carriers whose subsidies 

exceed $100,000 over the life of the rate-term must also certify that they are in compliance with 

the regulations governing lobbying activities. Because the Department is prohibited from paying 

subsidy to air carriers that do not submit these documents, all air carriers that plan to submit 

proposals involving subsidy should be aware that the selected air carrier will be required to 

complete the required certifications. Interested air carriers requiring more detailed information 

regarding these requirements should contact the Office of Aviation Analysis at (202) 366-5903.5

Community and State Comments

The community and State are welcome to submit comments at any time. We encourage 

prospective applicants to contact the community before they submit their proposals so that they 

can tailor them to the community’s needs, as they will not be able to amend them after the due 

date. As noted earlier, we will provide a summary of the proposals to the civic parties and ask 

them to submit their final comments shortly thereafter.

This Order is issued under authority delegated in 49 CFR Part 1.25a(b) and re-delegated to the 

Director, Office of Aviation Analysis.

ACCORDINGLY,

1. We request that air carriers interested in providing Essential Air Service at Kalaupapa, 

Hawaii, submit their proposals, with or without subsidy requests, no later than October 31, 2013. 

The proposals should be e-mailed to: EAS@dot.gov with the title “Proposal to Provide EAS at

Kalaupapa, Hawaii;”6

2. This docket will remain open until further order of the Department; and

 

3 See Appendix B for historical traffic data. Enplanements represent one-half of total origin-and-destination traffic, 

and average enplanements per day are based on 313 weekdays and weekends a year.

4 The regulations applicable to these areas are: (1) 49 CFR Part 20 -- restrictions on lobbying; 

(2) 49 CFR Part 21 -- Nondiscrimination in federally-assisted programs of the Department of Transportation --

Effectuation of title VI of the Civil Rights Act of 1964; 49 CFR Part 27 -- Nondiscrimination on the basis of 

disability in programs and activities receiving or benefiting from Federal financial assistance; and 14 CFR Part 382 -

- Nondiscrimination on the basis of disability in air travel; and (3) 49 CFR Part 29 -- Government-wide debarment 

and suspension (non-procurement) and government-wide requirements for drug-free workplace (grants).

5 The certifications are available online under “Reports and Publications” at http://www.dot.gov/policy/aviationpolicy/small-community-rural-air-service/essential-air-service.

6 Questions regarding filings in response to this Order may be directed to Scott Faulk at (202) 366-9721 or 

scott.faulk@dot.gov.
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3. We will serve copies of this Order on the Mayor and Airport Manager of Kalaupapa, Hawaii, 

and the service list for this Docket.

Persons entitled to petition the Department for review of this Order under the Department’s 

Aviation Economic Regulations, 14 CFR Part 385.31(a), must file such petitions within seven (7) 

days after the date of service of this Order.

This Order will be effective immediately, and the filing of a petition for review shall not 

preclude its effectiveness.

By:

TODD M. HOMAN

Director

Office of Aviation Analysis

(SEAL)

An electronic version of this document is available at

http://www.regulations.gov
Appendix A

AREA MAP
Appendix B

Passenger Traffic and Annual Essential Air Service Subsidy at Kalaupapa1

Kalaupapa

Year Ending Total 

Enplanements

Total 

Deplanements Total Traffic

December 31, 2010 895 884 1,779

December 31, 2011 685 700 1,385

December 31, 2012 3,186 3,232 6,418

 1 Source: Bureau of Transportation Statistics: Schedule T-100
Appendix C

Example of General Terms and Conditions for Essential Air Service

The air carrier understands that it may forfeit its compensation for any flights that it does 

not operate in conformance with the terms and stipulations of the rate Order, including

the service plans outlined in the Order and any other significant elements of the required 

service, without prior approval. The air carrier understands that an aircraft take-off and 

landing at its scheduled destination constitutes a completed flight; absent an explanation 

supporting subsidy eligibility for a flight that has not been completed, such as certain 

weather cancellations, only completed flights are considered eligible for subsidy. In 

addition, if the air carrier does not schedule or operate its flights in full conformance with 

the Order for a significant period, it may jeopardize its entire subsidy claim for the period 

in question. If the air carrier contemplates any such changes beyond the scope of the

Order during the applicable period of these rates, it must first notify the Office of

Aviation Analysis in writing and receive written approval from the Department to be

ensured of full compensation. Should circumstances warrant, the Department may locate

and select a replacement air carrier to provide service on these routes. The air carrier

must complete all flights that can be safely operated; flights that overfly points for lack of

traffic will not be compensated. In determining whether subsidy payment for a deviating

flight should be adjusted or disallowed, the Department will consider the extent to which 

the goals of the program are met and the extent of access to the national air transportation 

system provided to the community.

If the Department unilaterally, either partially or completely, terminates or reduces 

payments for service or changes service requirements at a specific location provided for 

under this Order, then, at the end of the period for which the Department does make 

payments in the stipulated amounts or at the stipulated service levels, the air carrier may 

cease to provide service to that specific location without regard to any requirement for 

notice of such cessation. Those adjustments in the levels of subsidy and/or service that 

are mutually agreed to in writing by the Department and air carrier do not constitute a

total or partial reduction or cessation of payment.

Subsidy contracts are subject to, and incorporate by reference, relevant statutes and 

Department regulations, as they may be amended from time to time. However, any such 

statutes, regulations, or amendments thereto shall not operate to controvert the foregoing 

paragraph.

Funds may not be available for performance under this Order beyond [DATE]. The 

Government’s obligation for performance under this Order beyond [DATE], is subject to 

the availability of funds from which payment for services can be made. No legal liability 

on the part of the Government for any payment may arise for performance under this 

Order beyond [DATE], until funds are made available to the Department for 

performance. If funds are not made available for performance beyond [DATE], the 

Department will provide notice in writing to the carrier. 

All claims for payment, including any amended claims, must be submitted within 90 days of 

the last day of the month for which compensation is being claimed. For example, claims for 

service provided in July must be filed by October 31st; August claims must be submitted by 

November 30th, and so on.