Order 2013-4-17

Served: April 25, 2013

UNITED STATE OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 25th of April, 2013

Ninety-day Notice of Pacific Wings 

Airlines, Inc., to terminate service at: 

Kamuela, Hawaii

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

Docket DOT-OST-1997-2833

ORDER PROHIBITING SUSPENSION OF SERVICE 

AND REQUESTING PROPOSALS

Summary

By this order, the Department prohibits Pacific Wings, LLC (Pacific Wings) from 

terminating its subsidy-free service at Kamuela, Hawaii, at the end of the 90-day notice 

period, effective June 12, 2013, and for successive 30-day periods until a replacement 

carrier has been selected and begins service. We are also requesting proposals by May 22

from carriers interested in providing replacement Essential Air Service (EAS) at 

Kamuela.

Background

On March 14, 2013, Pacific Wings filed notice of its intent to terminate its subsidy-free 

service at Kamuela, Hawaii, effective June 12, 2013. According to Sabre Airline 

Solutions, the following service, all nonstop, was provided to Kamuela with 9-seat 

Cessna Caravan aircraft when the carrier filed its notice: 

Time Weekly

AL FLT ORG DST Departure Arrival EQP Departures

LW 211 MUE OGG 1030 1110 CNA 7

LW 299 MUE OGG 1520 1555 CNA 5

12

LW 210 OGG MUE 930 1010 CNA 7

LW 298 OGG MUE 1420 1455 CNA 5

12

Source, Sabre Airline Solutions
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Hold-In

Pacific Wings’ proposed termination of service at Kamuela would leave it with no 

scheduled air service. Thus, the Department must prohibit the carrier from terminating 

such service at the end of its 90-day notice period, i.e., June 12, 2013.1 We will require 

Pacific Wings to provide 12 nonstop round trips per week at Kamuela for 30 days beyond 

June 12, 2013, and to maintain that level of service for successive 30-day periods until we 

have completed processing the carrier-selection case and the selected carrier has actually 

started service.

Request for Proposals 

Carriers interested in filing proposals for Kamuela -- with or without subsidy -- should 

e-mail them to our staff at EAS@dot.gov, no later than May 22, 2013. Our staff will then 

docket the proposals, thereby making them public, and direct each carrier to serve a copy 

of its proposal on the civic parties and other applicants. Shortly afterwards, we will 

provide a summary of the proposals to the community officials and ask them to submit 

their final comments. We will give full consideration to all proposals filed in a timely 

manner.2 

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

proposals will also be their final and only proposals. We retain the discretion to negotiate 

proposals with 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 solicit a new round of proposals. 

We are here providing interested 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, they might want to 

include proposed schedules and routings 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 community 

and the Department.3 We are requesting 12 nonstop round trips per week. Service 

should be to a medium or large hub. 

 1 The FAA Reauthorization Act (P.L 112.95) capped the EAS program, but specifically excluded Alaska 

and Hawaii from that ceiling.

2 Carriers should not expect the Department to accept late filings. In cases where a carrier proposes to 

provide EAS without subsidy and we determine that service can be provided reliably 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.

3 In selecting a carrier to provide subsidized EAS, 49 U.S.C. §41733(c)(1) directs us to consider four 

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; and (4) community views. 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. Interested carriers should also be aware that our 

general provisions governing EAS 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-

As always, staff will work with the carriers to ensure that service and subsidy are

reasonable. However, we would not dismiss any proposal out of hand without first 

consulting with community officials. We encourage any proposal that would 

simultaneously satisfy the community’s needs and minimize taxpayer expenditures. 

Carriers are also welcome to propose more than one service option, if they choose. They 

need not limit themselves to the current service pattern if they envision other, potentially 

more attractive service possibilities -- different hubs or lengths of term -- with subsidy 

requirements that remain competitive. 

In order to assist carriers in making their passenger and revenue forecasts, we have 

included historical passenger data in Appendix B. We note that Kamuela’s traffic is 

among the lowest in the EAS program. We understand that Pacific Wings did not operate 

its service unless passengers called ahead to reserve a flight, and that fares when service 

was provided were high. 

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 

Regulations.gov, 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 

carriers receiving Federal subsidy to support 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 certify that they are in compliance with the regulations governing 

lobbying activities. All carriers that plan to submit proposals involving subsidy should 

submit the required certifications along with their proposals. Interested carriers requiring 

more detailed information regarding these requirements, as well as copies of the 

certifications, should contact the Office of Aviation Analysis at (202) 366-5903. The 

Department is prohibited from paying subsidy to carriers that do not submit these 

documents.5 

 4 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 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 governmentwide requirements for drug-free workplace (grants).

5 The certifications are also available at :

http://www.dot.gov/policy/aviation-policy/small-community-rural-air-service/essential-air-service.
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Community Comments

The community and the State are welcome to submit comments on the proposals at any 

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

and State and ask them to submit their final comments shortly after May 22, the due date 

for carrier proposals.

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

ACCORDINGLY;

1. The Department requests proposals from carriers interested in providing essential air 

service, with subsidy if necessary, by May 22, 2013. Proposals should include all the 

data required by section 204.4 of the Department’s Regulations (14 CFR 204.4). 

Proposals should be emailed to EAS@dot.gov and be entitled “Proposals to Provide 

Essential Air Service at Kamuela, Hawaii.” Service should be consistent with that 

discussed in the body of the order and shown in Appendix C. Questions regarding filings 

may be directed to Kevin Adams at 202-366-1047 or Kevin.Adams@dot.gov;

2. The Department prohibits Pacific Wings Airlines, LLC., from suspending its subsidy-free

service at Kamuela, Hawaii, at the end of its 90-day notice period and requires it to maintain at 

least 12 nonstop round trips a week with 9-seat or larger aircraft for an additional 30-day period 

through July 12, 2013, or until a carrier capable of providing reliable essential air service 

actually begins service, whichever comes first;6

3. The Department directs Pacific Wings Airlines, LLC, to retain all books, records, and other 

source and summary documents to support subsidy claims for payment 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

 6 In accordance with 49 U.S.C. 41734(c), we will extend the carrier’s service obligation for successive 30-

day periods as necessary until replacement service actually begins. 
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5. The Department will serve a copy of this order on the mayor of Kamuela, Hawaii; the Hawaii 

Department of Transportation; and on the carriers in our service list. 

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
Appendix A

Kamuela, Hawaii (MUE)

Nonstop Great-Circle Miles from Kamuela

Kona (KOA) 30

Hilo (ITO) 45

Kahului (OGG) 79

Honolulu (HNL) 172
Appendix B

Pacific Wings, Scheduled Service, Kamuela (MUE)

T-100 Market Report T-100 Segment Report

Passengers Departures

Year Month Origin Dest O&D Scheduled Performed

2010 2 6 6 12 52 11

2010 3 1 1 52 2

2010 4 1 3 4 50 3

2010 5 0

2010 6 1 1 50 1

2010 7 1 1 52 2

2010 8 3 3 6 52 3

2010 9 2 2 4 50 3

2010 10 5 2 7 52 2

2010 11 3 4 7 50 3

2010 12 4 3 7 52 2

2011 1 9 9 52 1

YE 1/31/11 35 24 59 564 33

2011 2 7 7 14 48 5

2011 3 2 1 3 54 1

2011 4 0

2011 5 1 1

2011 6 0

2011 7 1 1 52 4

2011 8 3 4 7 54 2

2011 9 3 1 4 52 2

2011 10 0

2011 11 0

2011 12 1 1 2 53 1

2012 1 1 2 3 53 4

YE 1/31/12 18 17 35 366 19

2012 2 2 2 50 1

2012 3 0

2012 4 1 1 2 51 2

2012 5 1 1 54 2

2012 6 0

2012 7 1 1 2 53 2

2012 8 1 1 54 0

2012 9 0 50 0

2012 10 2 2 54 2

2012 11 0 52 0

2012 12 8 8 52 2

2013 1 4 2 6 54 5

YE 1/31/13 8 16 24 524 16
Appendix 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 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 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 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 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 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 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 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 solicitation beyond [DATE]. The 

Government’s obligation for performance 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 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 carrier will receive notice in writing from the Department.

All claims for payment must be submitted within 60 days of the last day of service 

provided under this order