## Swanson , Bria

n tos-n , T.^T^o^r^Zeoe-i^f-' S From : ' • l-^jFilAlKswanson . Bria n (OST ) Sent : . M 0!'bl^^i?j-&y , Ma y 20 , 201 1 3:2 5 P M To : 'glenn.okimoto@hawaii.gov' ; 'loretta.fuddy@doh.hawaii.gov' ; 'Steve_Prokop@nps.gov ' Cc : , •. , 5 n z: } ^.B.-Stewart';'richard@makanikai.com';'Pacifi c Wings , Gre g Kahlstorf";'Sovereig n Air , Bo b

' ' ' ^^ ^ Karns;'AIan_Yamamoto@inouye.senate.gov';'Margaret_cummisky@appro.senate.gov ' Subject : Solicitin g Comment s o n HA S proposal s at Kaiaupapa , Hawai i - Du e Jun e 15 , 201 1 M l ; I woul dlik

e t o updat e yo u on th e Essentia l Ai r Servic e (EAS ) carrier-selectio n cas e fo r Kalaiipap aan dgiv e yo u a n opportunity t o submi t

comments , i

f yo u wish . A s you ar e aware , o n Decembe r 6 , 2010 , Pacifi c Wings , LL C (Pacifi c Wings) , th e incumben t EA S carrier , file da90-day noticco f it s intentio n t o suspen dit s subsidy-fre e servic e a t Kalaupapa , effectiv e Marc h 6 , 2011 . Consequently , th e U.S . Departmen t

o f Transportatio n (DOT) , by Orde r 2010-12-3 0 issue dDecembe r 23 , 2010 , prohibite dPacifi c Wing s from suspendin g servic e an dsolicite dproposal s fromcarrier s t o provid e reliabl e EAS , wit h subsid y suppor t

i f necessary , a

t Kalaupapa . Carrier s wer e directe dt o fil e thei r proposal s n o late r

tha n Januar y 27 , 2011 . Shortl y befor e proposal s from intereste dcarrier s wer e due . Pacifi c Wings , on Januar y 25 , 2011 , withdre w it s notic e of inten t t o en dit s subsidy-fre e EA S a t Kalaupapa . O n Januar y 27 , 2011 , Schuma n Aviatio n Compan y Ltd . d/b/ aMakan i Ka i Ai r Charter s (Makan i Kai ) an d SeaPort Airlines , tnc . submitte dproposal s t o provid e subsidize dEA S a t th e community . I n case s wher e acarrie r

propose s t o provid e EA S withou t subsid y an dw e determin e tha t servic e can b e provide dreliabl y withou t subsidy , w e typicall y d o no t procee dwit

h acarrier-selectio n case . However , afte r carefu l consideratio n of

" communit y concerns , an darevie w of enplanemen t

level s an dflight

completio n percentage s b y Pacifi c Wing s a

t Kalaupapa , w e determine dthai i t wa s i n th e publi c interes t

t o procee dwit

h th e carrier-selectio n case . B y Orde r 2011-4-7 , w e solicite dasecon droun do f proposal s for

EA S a t th e community . I

n respons e t

o that Order , w e leceive dproposal s fro mfour carriers : Pacifi c Wings ; Abov e I t All Inc . d/b/ aMoloka i Ai r an dlolan i Ai r

(Abov e I t All) ; Makan i Kai ; an d Sovereig n Air , Inc . (Sovereign) . Th e nex t ste p i n thi s proces s i s t o provid e intereste dperson s an dth e affecte dcommunity wit h a n opportunit y t o commen t o n th e variou s carrie r

proposals . For

you r convenience , w e hav e summarize deac h earner' s proposa l below . Before summarizin g eac h carrier' s propo.sal , we woul dlike t o poin t ou t severa l importan t

statutor y requirement s impose d on th e EA S program . Whe n Congres s establishe dth e EA S progra mi n 1978 , i t establishe dcertai n minimu mstandards . "Basi c essentia l ai r

servic e provide dunde r

[4 9 U.S.C ] sectio n 4173 3 of thi s titl e i s schedule dai r transportatio n of passenger s an dcargo... " 4 9 U.S.C . § 4173 2 (emphasi s added) . I n orde r t o provid e schedule dai r transportatio n unde r

th e EA S program , carrier s mus t hol d(1 ) th e necessary operatin g authorit y fromth e Departmen t o f Transportatio n t o conduc t schedule d?i\

x transportatio n an d(2 ) th e necessary safet y authorit y fro

mDOT' s Federa l Aviatio n Administi-atio n (FAA ) consisten t wit h th e carrier' s operatin g authority . Schedule doperation s mean s "an y commo n carriag e passenger-carryin g operatio n fo

r compensatio n o r

hir e conducte dby a

n ai r carrier...fo r

whic h th e certificat e holde r o r it s representativ e offer s i n advanc e th e departur e location , departur e time , an darriva l location . It doe s no t includ e any passenger-carryin g operatio n tha

t i s conducte da s apubli c charte r operato r unde r [1 4 CFR ] [P]ar

t 380... " I4CF R139.5 . \ n selectin g acarrie r

t o provid e subsidize dessentia l ai r service , th e Departmen t

i s require dt o conside r

four factors : (I ) servic e reliability ; (2 ) contractua l an dmarketin g arrangement s wit h alarge r carrie r a t th e hub ; (3 ) interlin e arrangement s wit h alai*ge r carrie r a t th e hub ; an d(4 ) communit y views . 4 9 U.S.C . § 41733(c ) (1) . I n addition , th e Consolidate d Appropriation s Act , 2008 , Publi c Law 110-161 , provide s tha t whe n selectin g acarrie r

t o provid e EAS , th e Departmen t ma y conside r

th e relativ e subsid y requirements , thu s codifyin g afacto r that w e hav e considere dsinc e th e inceptio n o f th e program . Th e absenc e o f a n applicant' s requisit e operatin g authoritie s doe s no t disqualif y tha t carrie r fro mconsideratio n o r ultimat e selection , contingen t upo n it s receivin g al l th e necessar y DO T an dFA A approval s prio r t o startin g service . Th e Proposals :Pacifi c Wing s woul dcontinu e t o serv e Kalaupap ao n asubsidy-fre e basi s wit h 9-seat Cessn aGran dCaravan s an dprovid e a

t leas t tw o roun dtrip s aday , six day s aweek . Th e carrie r curtentl y provide s tw o dail y nonsto p roun dtrip s (1 4 aweek ) t o Honolul u an don e dail y nonsto p roun dtri p ( 7 aweek ) t o Moloka i (topside) . Abov e I t Al l submitte daproposa l t o provid e tw o nonsto p roun dtrip s aday , si x day s aweek , betwee n Kalaupap a an dHonolul u an dtw o nonsto p roun dtrip s ada y betwee n Kalaupap aan dMoloka i (o r "topside") , fo

r a n annua l subsid y rat e of

$686,400 . Abov e I

t Al l woul dprovid e servic e utilizin g 9-seat Pipe r Chieftain s an dprovid e back

u p servic e utilizin g 8-sea t Gippslan dAirvans . Th e carrie r doe s no t currentl y hav e th e requisit e operatin g authoritie s fro meithe r

th e DO T o r

th e FA A t o provid e schedule dai r service , althoug h it

state s that

i t i s i n th e proces s o f

submittin g applications . Makan i Ka

i propose s t o provid e tw o dail y nonsto p roun dtrip s betwee n Kalaupap aan dHonolul u an dthre e dail y nonsto p roun dtrip s betwee n Kalaupap aan dMoloka i (o r "topside") , utilizin g 9-seat Cessn aGran dCaravans , fo r afirst-yea r subsid y rat e of

$932,7 1 J , an dasecond-yea r for $932,509 . Th e DO T ha s foun dth e carrie r fi t t o provid e schedule dpassenge r servic e operatin g a s acommute r ai r carrier . However , th e catrie r ha s no t ye t provide dth e necessary informatio n t o make it s commute r authority effective , includin g acop y o f th e Ai r Carrie r Certificat e an dOperation s Specification s fro mth e FA A (Se e Orde r

2010-8-1 , issue dAugus t 6 , 2010) . Sovereign' s proposa l comprise s tw o options , bot h wit h aKalaupapa-Mblokai-Honolul u routin g an dutilizin g 7

- seat Cessn a41 4 aircraft . Th e firs t optio n consist s o f

2 2 roun dtrip s awee k

fo r a n annua l subsid y o f

$618,831 . Th e secon doptio n consist s of tw o roun dtrip s ada

y Monday-Saturda y ( ) 2 roun dtrip s aweek wit h n o Sunday service ) fo

r a n annua l subsid y of

$452,886 . Th e cartie r

note s tha t 2 roun dtrip s on Sunday s can b e adde dt o Optio n # 2 for

a n additiona l $124,56 6 i

n annua l subsid y <o

r fo r $577,45 2 i

n tota l annua l subsidy) . B y Orde r 2011-2-3 , Februar y 3 , 2011 , th e Departmen t dismisse dth e applicatio n of Sovereig n for

Commute r

Ai r Carrie r Authorizatio n an dtherefor e th e earne r doe s no t currentl y hav e th e requisit e operatin g authoritie s t o provid e schedule dai r

servic e fromeithe r

DO T o r FAA . Th e propo.sal s an dentir e publi c docke t regardin g EA S a

t th e communit y ma

y b e acces.se donlin e throug h th e Federa l Docke t Managemen t

Syste ma

t http://www.rcgulations.gov , throug h asearc h o n Docke t Numbe r DOT-OST-2000-6773 . Pleas e not e that

th e averag e passenge r

fare s show n i

n th e proposal s d o no t

necessaril y reflec t

th e far e that passenger s woul dactuall y pay , but , rather , ar e estimate s for subsidy-calculatio n purposes . Mos t passenge r

trave l beyon dth e hu b destinatio n o n anothe r

airlin e an dth e passenger s ful l throug h fare i s prorate dbetwee n th e EA S carrie r an dth e large r carrie r fo r servic e beyon dth e hub . Also , th e fare show n i s ne t of certai n charge s suc h a s Federa l transportatio n security fees , excis e o r

ticke t taxes , an dPassenge r

Facility Charges . Base do n th e cos t element s incorporate di

n th e carriers ' computatio n summary , th e carrie r woul dhav e t o realiz e passenge r fare s comparabl e t o th e average s show n i n ihei r proposal s i

n orde r t o achiev e break-eve n or profitabl e operation s withou t subsidy . Yo u shoul dals o note tha

t th e earners ' schedule s ma y chang e t o reflec t

changin g condition s (t'.^. , t o bette r mee t shiftin g connectin g ban k

time s a t th e hub) . Th e Departmen t doe s expec t

subsidize dcarrier s t o maintai n well-time dan dwell

space dflight s i

n orde r t o ensur e ful

l compensation . W e reques t

tha t yo u submi t

an y comment s yo u ma

y hav e a s soo n a s po.ssible , but i n an y ca.s e n o late r

tha n Jun e 15 , 2011 . Pleas e sen dyou r

comment s by fa

x t o 202-366-763 8 o r

by emai l t o bot

h (:lcnnis.dcvany(£!\iot.go v an d hhan.swanson@dot.gov . Ou r rule s requir e that

yo u sen dyou r

comment s t o th e concerne dcarrier s a s well . I f you hav e any questions , o r

nee dmore lim e t o reply , pleas e feel free t o contac t Brian Swan.so n o f

m y staf f a t 202-366-5392 . Sincerely ,

Denni s J . DeVan y Chief , Essentia l Ai r

Servic e Division . X-5 3 Offic e of Aviatio n Analysi s