Order 2010

- 12

- 30

Served: December 23 , 2010



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 23 rd day of Dec ember , 20 10

ORDER PROHIB ITING SUSPENSION OF SERVICE AND

REQUESTING PROPOSALS

Summary By this order, the Department is prohibiting Pacific Wings L.L.C. (Pacific Wings) from suspending service at Kalaupapa, Hawaii, and requesting proposals from carriers interested in providing essential air service (EAS) at the community for a two

- year period

, with or without subsidy. (See Appendix A for a service area map )

. Carriers should file their proposals no later than January 27

, 20 11

.

Background Pacific Wings has provided subsidy

- free EAS at Kaluapapa since April 1, 2007. O n December 6

, Pacific Wings filed a 90

- day notice of its intention to s uspend its subsidy

free service at Kalaupapa , effective March 6, 2011

. Pacific Wings currently provides 21 weekly one

- stop (at Molokai) and nonstop round trips between Kalaupapa and Honolulu

with 9

- seat Cessna Caravan aircraft. A copy of the Pacific Wings ’ filing may be accessed online through the Federal Docket Management S ystem (FDMS) at http://www.regulations.gov/ by doing a search on Docket DOT

- OST

- 2000

- 6773

.

Decision

Pacific Wing s ’ proposed termination of service would leave Kalaupapa with no scheduled service. Thus, the Department must prohibit the carrier from terminating such

service at the end of its 90

- day notice period , and require it to maintain 12 nonstop round trips per week to Honolulu using its 9

- seat Cessna Caravan aircraf t. We will also require Pacific Wings to continue to maintain that level of service at the community for

successive 30

- day periods until we have completed processing the carrier

- replacement case and the selected carrier has actually started full EAS. Essential Air Service at

KALAUPAPA

, HAWAII

Under 49 U.S.C. 41731 et seq

. D ocket DOT

- OST

- 200 0

- 6 773- 2

-

Request for Proposals

C arriers interested in providing service at Kalaupapa

, with or without subsidy, should file their proposals no later than January 27

, 20 1 1

. Staff will then docket proposals, thereby making them public, and shortly afterwards will pro vide a summary of the proposals to the community and ask them for their final comments. We will give full consideration to all proposals filed in a timely manner. 1

Interested carriers should prepare their proposals with every expectation that their initi al proposals will represent their final and only proposals. However, we retain the discretion to negotiate proposals with carr iers when we deem it desirable . We also retain the discretion to reject outright all unreasonable or unrealistic proposals and r e

- solicit a new round of proposals. However, negotiation and rejection are only occasional exceptions to

the rule.

We are here providing interested carriers with some basic information to serve as guidance when they prepare their proposals, but we will n ot 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, they might want to include proposed schedules as well as supporting data for their subsidy requests, such as projected block hours, revenues and expenses. We strongly encourage clear, well

documented proposals that will facilitate their evaluation by the affected communit y and the Department. 2

The Department expects proposals that are co nsistent with what the community currently receives (12 weekly round trips with nine

- seat aircraft) . We encourage proposals that meet those requirements in an efficient manner. Carriers are also welcome to propose more than one service option, if they choose; they need not limit themselves to those requirements if they envision other, potentially more attractive service possibilities

-- different hubs, f

or example

-- with subsidy requirements that remain competitive. The community and air carriers are encouraged to work together in advance of the due date for proposals to craft service patterns that are desirable to the community and meet the operational requirements of the airline.

1 Carriers should not expect the Department to accept late fillings. In cases where a carrier proposes to provide essential air service without subsidy and we determine that service can be reliably provided without such compensation, we do not proceed with the carrier

- selection case. Instead, we simply rely on that
carrier’s su bsidy

- free service as proposed.

2 In selecting a carrier to provide subsidized essent ial air service, 49 U.S.C. 41733(c) (1) directs us to to consider four factors: (a) scheduled service reliability; (b) contractual and marketing arrangements with a larger carrier to ensure service beyond the hub; (c) interline arrangements that the applic ant has made with a larger carrier at the hub; and (d) community views, giving substantial weight to the views of the elected officials representing the users. In addition, the Consolidated Appropriations Act, 2008, Public Law 110

- 161, 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.- 3

-

New Filing Procedures Carrier proposals should be submitted to the Department with all materials merged into a single document. In addition, because the document will be published on http://www.regulations.gov/ , each page should be formatted to be viewed online and for easy printing

.

Service and Traffic History Pacific Wings has served Kaluapapa sin ce 1998

. In order to assist carriers in making their passenger and revenue forecasts, we have provide historical passenger traffic in Appendix B. During the year ended December 31, 2009

, Kaluapapa averaged 6.7 enplanements a service day , a decrease when contrasted with the previous two calendar

year s

.

Other Carrier Requirements The Department is responsible for implementing various Federal statutes governing lobbying activities, drug

- free workplaces, and nondiscrimination. 3 Consequently, all carriers receiving Fe deral subsidy for essential air service must certify that they are in compliance with Department regulations regarding drug

- free workplaces and nondiscrimination, and those carriers whose subsidies exceed $100,000 over the life of

the rate

- term must also c ertify that they are in compliance with the regulations governing lobbying activities. Because the Department is prohibited from paying subsidy to carriers that do not submit these documents, all carriers that plan to submit proposals involving subsidy sh ould be aware that the selected carrier will be required to complete the required certifications. Interested carriers requiring more detailed information regarding these requirements should contact the Office of Aviation Analysis at (202) 366

- 5903. 4

Community and State Comments The community and State are welcome to submit comments at any time. We encourage prospective applicants to contact the communit y before they submit their proposals so that they can tailor them to the communit y ’ 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 after January 27

, the deadline for carrier proposals.

This order is issued under authority delegated in 49 CFR 1.56a(f).

3 The regulations applicable to these areas are: (1) 49 CFR Part 20

-- New 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 ba sis 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 (n on

- procurement) and government

wide requirements for drug

- free workplace (grants).

4 The certifications are also available on the web at http://ostpxweb.dot.gov/aviation/index.html.- 4

-

ACCORDINGLY,

1

. The Department prohibits Pacific Wings L.L.C. from suspending service at Kaluapapa, Hawaii, at the end of its 90

- day notice period and requires it to maintain at

least 1 2 nonstop round trips per week between the community and Honolulu, Hawaii,

with 9

- seat Cessna Caravan aircraft through April 5 , 2011, or until a carrier capable of providing reliable air service begins full service, whichever comes first; 5

2 . We request that carriers interested in providing essential air service at Kaluapapa, Hawaii, submit their proposals, with or without subsidy requests, no later than January 27

, 2011. The proposals should be e

- mailed to: EAS@dot.gov with the title “Proposal to Provide Essential Air Service at Kaluapapa, Hawaii, Docket DOT

- OST

2000

- 6773. ”; 6

3. The Department directs Pacific Wings L.L.C. to retain all books, records, and other source and summary documentation to support claims for pay ment, and to preserve and maintain such documentation in a manner that readily permits its audit and examination by representatives of the Department. Such documentation shall be retained for seven years or until the Department indicates that the records may be destroyed, whichever comes first. Copies of flight logs for aircraft sold or disposed of must be retained. The carrier may forfeit its compensation for any claim that is not supported under the terms of this order;

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

5 . We will serve copies of this order on the community and the parties listed in Appendix D.

By:

SUSAN L. KURLAND Assistant Secretary for Aviation

and International Affairs

(SEAL)

An electronic version of this document is available

at http://www.regulations.gov

5 In accordance with 49 U.S.C. 41734(c), we will extend Pacific Wings’ ser vice obligation for successive

30

- day periods as necessary until full replacement service is provided.

6 Questions regarding filings in response to this order may be directed to Brian Swanson at (202) 366

- 5392

or brian.swanson@dot.gov

.Appendix A



## AREA MAPAppendix B

Historical Enplanements 1
Kaluapapa, HawaiiAppendix C

Example of General Terms and Conditions for Essential Air Service

The 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 carrier under stands 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 f lights are considered eligible for subsidy. In addition, if the 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 ca rrier 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 compensati on. Should circumstances warrant, the Department may locate and select a replacement carrier to provide service on these routes. The carrier must complete all flights that can be safely operated; flights that overfly points for lack of traffic will not b e 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 sy stem 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 carrier may cease to provide service to that specific location without regard to any requirement for notice of such cessation. Those adjustment s in the levels of subsidy and/or service that are mutually agreed to in writing by the Department and 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 are not currently available for performance unde r this solicitation beyond [DATE] . The Department’s obligation for perform ance under this solicitation beyond [DATE] is contingent upon the availability of appropriated funds from which payment for services can be made. No legal liability on the part of the Department 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 carrier will receive notice in writing by the Department.

All claims for payment must be submitted within 60 days of the last day of se rvice provided

under this order.Appendix D

SERVICE LIST

Air Greco/Wings Air Frontier Airlines, Daniel Shurz OST, Renee Williams

Air Sunshine, Inc. Frontier Flying, Bob Hajducovich Pacific Aviation Group, Craig Garrick

Air Sunshine, Mirmohammad Adili Frontline Aviation Pacific Aviation Group, Ron Rye

Air West, Inc., John Raatz Gem Air, Dan Schroeder Pacific Wings, Frank Ford

Air Wisconsin, Annette Daly Gem Air, JoAnn Wolters Pacific Wings, Greg Kahlstorf

Air Wisconsin, Jim Rankin Great Lakes Airlines, Chuck Howell Penn Air, Danny Seybert

Airline Associates, Bill Mishk Great Lakes Airlines, Doug Voss Penn Air, Scott Bloomquist

Alaska Airlines, Jeff Cole Gulfstream, Dave Hackett Pinnacle Airlines, Jennifer Gammill

Alaska Airlines, Sandy Sinick Gulfstream, Mickey Bowman Pinnacle Airlines, Megan Rosia

Allegiant Air, Brian Davis Gulfstream, T. Cooper Pinnacle Airlines, Phil Reed

American Airlines, Carl Nelson Homeland Security, Bill Ragan Planemasters, Inc., John Kessler

American Eagle, Jeff Hartz Homeland Security, David Bernier Planemasters, Inc., Paul Berliner

Atlantic Southeast, Jon Lindlief Horizon Air, Dan Russo Planemasters, Inc., Todd DeSimone

Atlantic Southeast, Roger Weston Horizon Air, Jennifer Thompson Raytheon, Mike Schiedt
Aviation Technologies/Charter Air Transport, Jim Gallagher Horizon Air, Mike McQeen Saab Group, Polly Prelinger

Bemidji Aviation, Arlen Rinkenberger Horizon Air, Jeff Cole Scenic, Mary Schneider

Bemidji Aviation, Cori Rude ICEPR, Luis Irizarry Scenic, Mitzi Daines

Cape Air, Andrew Bonney Intrepid Internatl Air, Rick Eyk Seaborne Airlines, Shawn Lewis

Cape Air, Dan Wolf Island Air Charters, Linda House Seaport, Daniel Helland

Cape Air, J. Flaherty Jet Air, Daniel Wolford SeaPort Airlines. Jim Day

Classic Aviation, Tony Henderson Kenmore Air, Tim Brooks SeaPort Airlines, Nate Vallier

Colgan Air, Kevin Scott McCall Aviation, Dan Scott SeaPort Airlines. Rob McKinney

Colgan Air, Mike Colgan McCall Aviation, Michelle Shuttle America, Jerry Balsano

CommutAir, Andy Price Mesaba, John Spanjers SkyWest, Brad Rawson

CommutAir, Joel Raymond Mesaba, Max Shemesh SkyWest, Eric Christensen

Consultant, Robert Silverberg Midstar Airlines, Jeffrey Fonner SkyWest, Michael Thompson

Continental, Bruce Keiner Midwest Airlines, Greg Aretakis Sovereign Air, Bob Karns

Continental, Dan Weiss MN Aviation, Jose Maldonado Sovereign Air, Lois R. Barton

Continental, Lorry Halloway Multi Aero, Darnea Tatonduk, Robert Everts

Delta Air Lines Anthony Canitano Multi Aero, Shane Storz Tatonduk, Robert Ragar

Delta Air Lines, Dan Shuman Northern Air Cargo, David Karp Tradewind, Eric Zipkin

Delta Air Lines, J eff Morgan Northern Air Cargo, Eric Van Andel Transport Azumah, Joel Anabilah

Azumah
Delta Air Lines, Joe Esposito Northwest Airlines, Aaron Murray Trans States, Fred Oxley

Delta Air Lines, Sascha Vanderbellen Northwest, Tim McDonald Trans States, Gerry Wigmore

Delta Air Lines, Karen Zachary NYDC, Henok Araya United, Alicia Gabriel

Delta Air Lines, Kristal Murphy OST, Brian Swanson United, James Starnes

Dorado Jets OST, Dennis DeVany US Airways, Benjamin Slocum

Dorado Jets, Mark McKenna OST, Kevin Adams US Airways, Howard Kass

Era Aviation, Lori Goodman OST, Kevin Schlemmer US Airways, Jason Reisinger

Executive Airlines, Kate Soled OST, Michael Martin Warbelows Air Ventures, Art

Warbelow Administrator, Hawaii Department of Transportation, Airport s Division Administrator, Department of Health,

State of Hawaii