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 4 th day of October , 2013



### ORDER REQUESTING PROPOSALS

Summary

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

E ssential A ir S ervice (“EAS”) at Kalaupapa, Hawaii

, for a new contract term

, beginning January 1, 201 4 , with or without subsidy. Air c arriers should file their proposals no later than

October 31 , 2013

. (See Appendix A for a service area map.)

Background By Order 2011

- 1 1

- 27, issued on November 22 , 2011, we selected Schuman Aviation Compan y Ltd. d/b/a Makani Kai Charters (Makani Kai) to provide subsidized EAS at Kalaupapa for a two

year period starting when the carrier started service through the end of the 24 th month thereafter.

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

date of December 31

, 2013

. That service consist ed of 12 nonstop round trips a week between Kalaupapa and Honolulu, and 18 nonstop round trips a week between Kalaupapa and Molokai,

util izing nine

- seat Cessna Grand Caravan s, 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

- OST

2000

- 6773 ” in the “SEARCH for: Rules, Comments, Adjudications or Supporting Documents :”

field.

R equest 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 c arriers should file their proposals no later than

October 3 1

, 2013

. A fter that date, our s taff 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. S hortly thereafter, we will provide a summary of the proposals to comm unity

Essential Air Service at

KALAUPAPA, HAWAII

Under 49 U.S.C. 41731 et seq

. Docket DOT

- OST

- 2000

- 67732

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 t heir 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 mak e 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 communit y and the Department. 2

The Department ex pect s proposals that ar e consistent with what the community currently receives, including service to a suitable hub airport that offers access to the national air transportation system. The communit y and air carriers are encourag ed 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 requirement s 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 servi ce 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 re venue 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 withou t 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) whethe r 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 sel ecting 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 gov erning 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.3

recent calen dar 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

shoul d 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 carrier s 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 shoul d 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 commu nity and State are welcome to submit comments at any time. We encourage prospective appl icants to contact the community before they submit their proposals so that they

c an tailor them to the community’ s needs, as the y 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 the ir final comments shortly thereafter

.

This O rder is issued under authority delegated in 49 CF R Part 1.25a(b) and re

- delegated to the Director, Office of Aviation Analysis.

ACCORDINGLY,

1. We request that air carriers interested in providing E ssential A ir S ervice at Kalaupapa,

Hawaii , submit their proposals, with or without subsidy requests, no later than October 3 1 , 2013

. The proposals should be e

- mailed to: EAS@dot.gov with the title “Proposal to Provide EAS at Kalaupapa, Hawaii ; ” 6

2

. Th is docket will remain open until further order of the Department; and

3 See Appendix B for historical traffic data. Enplanement s represent one

- half of total origin

- and

- destination traffic, and average enplanements per day are based on 3 13 weekdays and weekends a year.

4 The regulations applicable to these area s 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 re ceiving 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 requirement s for drug

- free workplace (grants).

5 The certifications are available online under “Reports and Publications” at http://www.dot.gov/policy/ aviation

policy/small

- community

- rural

- air

- service/essential

- air

- service

. 6 Questions regarding filings in response to this O rder may be directed to Scott Faulk at (202) 366

- 9721 or scott.faulk@dot.gov

.4

3

. We wil l serve copies of this O rder 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 O rder 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 O rder.

This O rder 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.govAppendix A



# AREA MAPAppendix B

Pass e n ger Traffic and Annual Essential Air Service Subsidy at Kalaupapa 1

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 Sourc e: Bureau of Transportation Statistics: Schedule T

- 100Appendix C

E xample of G e n e r a l T e r m s a nd C ondi t ions f or Es s e n t i a l A ir Se r v i c e

The air c a rr i e r un d er st a nds t h a t it m a y f o rfe it its c omp e ns a tion f or a n y f li g hts th a t it do e s not op era te in c o n f o r m a n c e with the t er ms a nd stipul a tions of the ra te Order

, i n c luding

the s er vi c e pl a ns outlin e d in the Order a nd a n y oth e r s i g ni f i c a nt e l e m e nts of the re qui re d

s er vi ce , without p r ior a p p r ov a l. The air c arr i e r und e r st a nds th a t a n a i r cr a f t t a k e

- o f f a nd

l a nding a t its s c h e du l e d d e stin a tion c onstitut e s a c ompl e t e d f li g ht; a bs e nt a n e x pl a n a tion

suppo r ting subsi d y e li g i b ili t y f o r a f l i g ht th a t h a s n ot b ee n c ompl e t e d, su c h a s cer t a in

w ea th e r ca n ce ll a tions, o n l y c ompl e t e d f li g hts a r e c onsid ere d e l i g ible f or su b si d y

. I n

a ddition, if the air carr i e r d o e s not s c h e dule or o p era t e its f li g hts in f ull c on f o r m a n c e with

the Order f o r a s i g ni f i ca nt p e r iod, it m a y j e op ar di z e its e nti r e subsi d y c l a im f or t he p er iod in qu e stion. I f the air c a rr i e r c ont e mpl a t e s a n y su c h c h a ng e s b e y ond the s c ope o f the

Order du r ing the a ppli ca ble p e r iod of th e se ra t e s, it must f i r st noti f y the O ff i c e of

Avi a tion An a l y sis in w r iti n g a nd r ece ive w r itt e n a pp r o v a l f r om the D e p a r tm e nt to be

e nsu re d o f f ull c omp e ns a tion. S hould c i rc umst a n ce s w arr a n t , the D e p ar tm e nt m a y l o c a te

a nd s e l e c t a re pl a ce m e nt air c arr i e r to p r ovide s er vi c e on th e se r out e s. The air c a rr i e r

must c ompl e te a ll f li g hts th a t ca n b e s a f e l y op era t e d; f l i g hts th a t ov e rf l y points f o r l ac k of

t r a f f ic will not be c omp e ns a t e d. I n d e t er m i ning wh e t h e r subsi d y p a y m e nt f o r a d e v i a ting

f l i ght should be a djust e d or dis a llow e d, t he D e p a r tm e nt will c onsid e r the e x t e nt to whi c h

the g o a ls of the p r og ra m a r e m e t a nd the e x t e nt of acce ss to the n a tion a l a ir t ra nspo r t a tion

s y s t e m p r ovid e d to the c ommuni t y

.

I f the D e p ar tm e nt unil a t e ra l l y
, e ith e r p a r ti a l l y or c ompl e t e l y , t er min a t e s or re du ce s

p a y m e nts f or s e r vi c e or c h a ng e s s er vi c e r e qui re m e nts a t a sp ec i f ic lo c a tion p r ovid e d f or und e r this Order, th e n, a t the e nd of the p e r iod f or whi c h the D e p ar tm e nt d o e s m a ke

p a y m e nts in the stipul a t e d a mounts or a t the stipul a t e d s er vi c e l e v e ls, the air c a rr i e r m a y

cea se to p r ovide s er v i c e t o th a t sp ec i f ic lo c a tion without re g a r d to a n y r e qui re m e nt f or noti c e of su c h c e ss a tion. Those a djustm e nts in the l e v e ls of subsi d y a nd/or s er vi c e th a t

ar e mutu a l l y a g r ee d to in w r iting b y the D e p ar tm e nt a nd air ca r r i e r do not c on s titute a

tot a l or p ar ti a l re d u c tion or ce ss a tion of p a y m e nt.

S ubsi d y c ont r a c ts ar e su b j ec t to, a nd in c o rpo r a te b y r ef e re n c e
, r e l e v a nt st a t ut e s a nd

D e p ar tm e nt r e g ul a tions, a s th e y m a y be a m e nd e d fr om time to tim e . How e v er
, a n y su c h

st a tut e s, r e g ul a tions, or a m e ndm e nts th ere to sh a ll not op era te to c ont r o v er t the f o r e g oi n g

p ar a g r a ph.

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 bey ond [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 clai ms, 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 31 st ; August claims must be submitted by

November 30 th , and so on.