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BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

________________________________________________ 

 )

Essential Air Service at )

 )

SILVER CITY/HURLEY/DEMING, NEW MEXICO ) Docket OST-1996-1903

 )

Under 49 U.S.C. §41731 et seq. )

________________________________________________) 

MOKULELE FLIGHT SERVICE INC., dba MOKULELE AIRLINES

PROPOSAL TO PROVIDE ESSENTIAL AIR SERVICE TO THE COMMUNITY OF 

SILVER CITY/HURLEY/DEMING, NEW MEXICO

Correspondence with regard to this document should be addressed to:

Ron Hansen

CEO

Mokulele Airlines

73-350 U’u Street

Kailua-Kona, HI 96740

Telephone: 808-840-9002

Fax: 808-326-1266

Email: ron.hansen@mokulelehawaii.com

Mokulele Flight Service Inc., dba Mokulele Airlines (hereafter Mokulele) hereby proposes the following 

response to DOT Order 2014-7-6 to provide Essential Air Service to the community of Silver 

City/Hurley/Deming, New Mexico (hereafter Silver City). Mokulele is pleased to offer one option for service.

Service Proposal

Mokulele proposes to operate two roundtrips each weekday between Silver City and the Albuquerque 

International Sunport Airport in Albuquerque, New Mexico Should Mokulele be chosen to provide this service, 

it would establish a maintenance and operations base in Albuquerque. All Mokulele crewmembers would be 

based in Albuquerque as well. This schedule would be supported by a dedicated aircraft. A single roundtrip

would be offered on Saturday and Sunday. These proposed flights would be operated on the dependable, 9 seat, 

Cessna Grand Caravan Aircraft. The attributes of which is detailed in the text below. 

Additionally Mokulele proposes to lower air fares in the Silver City marketplace. This proposal is based on an 

average selling fare of only $50 one way, well below what has been offered in the recent pass. Mokulele would 

market this service via its own on-line website and through its established links to the Global Distribution 

System. Additionally this service would be marketed via on-line travel agencies like Expedia, ORBITZ and 

Travelocity.
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Draft Flight Schedule

OASIS/MARKSUM MOKULELE AIRLINES 16:31 09/02/14

SCHEDULE MWABQ01 (LOCAL) MARKET SUMMARY PAGE 2

11/01/14 - 99/99/99

FROM TO DEP ARR FLT# EQP FREQUENCY STOPS

ALBUQUERQUE SILVER CITY 630am 805am 101 CNA MON thru FRI 0

ALBUQUERQUE SILVER CITY 330pm 505pm 103 CNA MON thru FRI 0

ALBUQUERQUE SILVER CITY 1200pm 135pm 105 CNA SAT & SUN 0

SILVER CITY ALBUQUERQUE 825am 1000am 102 CNA MON thru FRI 0

SILVER CITY ALBUQUERQUE 525pm 700pm 104 CNA MON thru FRI 0

SILVER CITY ALBUQUERQUE 155pm 330pm 106 CNA SAT & SUN 0

(Note: This is a Draft Schedule ONLY. The final selling schedule may vary.)
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Silver City

to Albuquerque

Weekly Frequencies 2 4

Completion Factor 98%

Annual Departures 1,224

Block Time (in minutes) 1.58

Annual Block Hours 1,938

Stage length (statute miles) 188

Available Seat Miles (9 seats) 2,071,008

Enplaned Load Factor 34%

Enplaned Passengers 3,725

Revenue Passenger Miles 700,300

Average Fare $46.51

$50 fare

Revenue:

Passenger $173,255.81

Thru Pax Revenue $0.00

Ancillaries $3.50 $13,037.50

$186,293.31

Assumptions

Fuel Cost P/Gal $4.00

Fuel Burn Gallons P/Hr 48.00

Direct Expenses:

Ownership $114.55 Per Blk Hr $222,000.00

Flight Crew $138.76 Per Blk Hr $268,920.00

Fuel & Into Plane Fees $192.00 Per Blk Hr $372,096.00

Insurance $15.00 Per Blk Hr $29,070.00

Maintenance $168.00 Per Blk Hr $325,584.00

Miscellaneous/Reaccom $15.00 Per Blk Hr $29,070.00

Total Direct Expenses $1,246,740.00

Indirect Expenses:

Station Costs $190.49 per dept $233,164.80

Landing Fees $15.50 per dept $18,972.00

Agent Bookings & Sales $9.10 per Pax $16,948.75

Web bookings & sales $4.15 per Pax $7,729.38

Marketing $3.35 per Pax $12,478.75

Set up costs / training $10,000.00

General & Admin/Other 4.8% of Direct $59,843.52

Total Indirect Expenses $359,137.20

$1,605,877.20

Income (loss) ($1,419,583.88)

cost per hour $828.63

Profit Element (5% Return on Costs) $80,293.86

Subsidy Required ($1,499,877.74)

Silver City, NM.

per passenger

Total Revenue

Total Operating Expenses
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Company Background and Information

Based in Kona, Hawaii, Mokulele was founded in 1998 as an inter-island airline offering service to seven 

destinations on five islands. The management team of Mokulele is highly experienced in the airline 

industry and has seized on the opportunity for expansion by providing greater efficiencies and operational 

controls. Mokulele is a “scheduled” FAA Part 135 Air Carrier with an excellent service record. Mokulele 

operates more than 120 daily flights and carries 20,000 plus passengers monthly with its fleet of nine NEW 

Cessna Grand Caravan 208EX aircraft. 

Current Operations

Mokulele currently employs 110 full-time and 70 part-time employees, most performing collateral 

duties at the nine airports it currently serves. The employee group is primarily comprised of young, local 

residents eager to see the company prosper and grow in the island market along with many who have 

been with Mokulele for 5 years or more.

Presently, Mokulele owns nine new and five standard model Cessna Grand Caravans, each configured 

with nine passenger seats. The aircraft maintenance departments are located at Kona and Kahului 

where it employs 12 licensed A&P mechanics.

The airline flies to one EAS (government subsidy) route, awarded in July and started on time and one 

private-subsidized route from Maui; all other routes are flown at-risk. We’ve been so successful in our 

EAS route that we will soon be adding an additional subsidy-free flight. (Exhibit B)
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Operating Certificate and Authority

Mokulele conducts business as a certified FAA Part 135, Scheduled Air Carrier. Refer to Exhibit A for 

copies of Mokulele’s FAA Air Carrier Certificate.

Routes and Airports Served

Market Opportunity

The following, in descending order of importance, are ten elements that will lead to the continued 

success of Mokulele Airlines:

 Employing an experienced, professional management team that combines visualization, realism 

and solid knowledge of the Federal Aviation Regulations relating to flight and legal 

responsibilities involved for companies engaged in scheduled passenger flights.

 The management team’s strengths include familiarity with the latest aviation, electronic and 

informational technologies; familiarity with the region and markets to be served; realization of 

the crucial importance of an organization’s personnel and their relationship to the company’s 

success and a total commitment to the overall mission and goals of the airline.

 Implementing an intelligent, progressive and aggressive marketing strategy that identifies 

Mokulele Airlines as a unique air carrier flying unique routes with a unique passenger clientele. 

It is a marketing philosophy that identifies Mokulele and its employees as sharper, smarter and

with a higher level of professionalism and operation standard than is the norm in the market, 

combined with highly competitive fare pricing.

 Presenting a friendly, cooperative, enjoyable yet highly professional safety-conscious flight crew 

to the traveling public.
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 Maintaining aircraft with a highly trained and knowledgeable staff equipped with spare parts 

and tooling, yields aircraft that comply with all FAA aircraft maintenance standards and high 

dispatch reliability.

 Establishing a high level of operational oversight and quality control that will ensure that 

Mokulele always lives up to its commitment to a high level of flight safety, customer satisfaction 

and convenience at a reasonable, highly competitive fare.

 Growing the company based on need rather than growth for growth’s sake. This requires being 

aware of solid niche-enlargement opportunities that will allow incremental, but always 

profitable expansion. Examples of this strategy include the expansion of service to Kapalua and 

Hana, Maui in 2012.

 Development and implementation of code share and interline agreements with well-established 

major airlines thus offering cost advantages to our clients.

 Identifying and developing cost-effective opportunities for new markets, new market concepts 

and expanded sales potential. This objective can be accomplished by maintaining an awareness 

of combining the core aviation business with ancillary marketing concepts and activities and 

ground-based operations that support, supplement, and complement the aviation elements of 

the business. These elements include such activities as aviation services, and other logical 

business pursuits both within and outside the immediate aviation business.

 Utilization of the latest electronic and informational technologies in sales and marketing, 

reservations, scheduling, resource planning and operational oversight. Technologies such as 

Internet marketing, reservations, operational oversight and flight tracking all contribute to 

reduced staffing requirements for Mokulele.

Competitive Advantages

The current competitive environment for Mokulele Airlines is bright with very little competition. 

Mokulele Airlines is uniquely positioned to continue growing. Our customers love the personal 

attention given to them by our staff, shorter check-in requirements, and customer initiatives such as 

free parking at most of our airports and shuttles to the other terminals at the larger airports. By 

providing frequent service at affordable fares, Mokulele is quickly growing to be Hawai’i’s premier interisland carrier.

Codesharing and Interline Agreements

Codeshare and interline agreements provide our travelers with the additional protections of IATA 

agreements and single ticketing to many destinations covered by our codeshare and interline partners. 

Customers can purchase one ticket from Ho’olehua to Boise, Idaho, for example. Our systems are 

capable of both inbound and outbound codesharing and reciprocal frequent flyer benefits (including 

accrual and redemption).
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Modern Distribution 

Customers are able to book a ticket on Mokulele using their favorite online booking tool, via most 

corporate travel portals, through traditional travel agents, and also through 3 airlines. Mokulele uses 

Radixx to power our reservation system and industry-standard Type A messaging and electronic 

ticketing with all the major GDS’s.

The Mokulele website also allows for online changes & cancellations – reducing the need to contact our 

reservations office or make a trip to the airport. Cancellations are mostly refunded to a voucher, which 

can also be redeemed online.

The private booking portal allows for tour operators, travel agents, and businesses to better manage 

their travel by providing real time reports, access to credit limits, reservation details, and cancel/change 

abilities.

Creative Marketing

Mokulele believes in reaching out to our customers using creative ads that help set the tone for their 

vacation. Mokulele uses a variety of direct-contact methods – ranging from social media, co-op 

partnerships with our destinations, tourism board outreach programs, and emails. Mokulele also 

spends money on television, radio, and print advertising.
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Smarter selling solutions

As many costs rise, Mokulele is able to respond rapidly to the changing environment. By offering ONLY 

9 seats per flight, we have the ability to make a profit on a flight with only 4 or 5 passengers on board –

and during peak times, we can add additional planes, ‘extra sections’, and fly 18 or 27 customers at the

same time!

The airline is also focused on its corporate sales program, which gives frequent users a private booking 

portal that has lower fares, relaxed fare rules, and free baggage allowances. The booking portal also 

allows for online changes & cancellations – alleviating the need to call into the reservations office.
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The Aircraft

The proposed flights are offered aboard a Cessna Grand Caravan operated with both a captain and a 

first officer onboard. The Cessna Caravan is a modern aircraft, still in production. Manufactured by one 

of the most recognized aviation companies in history, the Caravan is one of the largest and safest 

aircraft of its size and range. The aircraft comfortably seats nine passengers with a large cargo pod for 

baggage. The aircraft is equipped with modern avionics, fully integrated auto pilot, and onboard 

weather radar. The aircraft are air conditioned and heated for passenger comfort.

Comfortable Interior

Mokulele has outfitted all Caravans with a single seat – per side configuration. This provides every 

guest on board with a window and aisle seat. Each airplane is air conditioned and most seats have a 

reading light and personal air vent. Each aircraft also has a secure bulkhead separating the cockpit 

from the cabin – giving our pilots an extra level of security, or may leave the doors open to provide our 

passengers with amazing views from the front of the aircraft.
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Track Record

Under the current leadership team, the company has been able to grow to its highest levels in the entire 

history of the airline. Since the purchase by Transpac Holdings, the airline has nearly doubled in size 

while passenger traffic has grown 115%. The company saw a massive spike in traffic during 2013 when 

Mokulele upgraded its fleet, seeing an 88% increase in passenger traffic on only 60% growth.

Special Discussion of Proposed Hub Realignment

Over the past few years Silver City has suffered from infrequent and unreliable service to a hub airport 

the community does not desire. Albuquerque is the business and medical center of the state of New 

Mexico. Mokulele contends that this alternate service pattern featuring two weekday roundtrips to 

Albuquerque will enable to the community to again use this vital link to the national transportation 

system. Moreover the inclusion of a new generation, reliable turboprop aircraft will restore the 

reliability this service has sorely lacked for so long. Finally, this proposal is based upon a selling average 

fare of only $50 one way. This lower fare structure will further stimulate ridership as the community 

realizes it true traffic potential.

0

50000

100000

150000

200000

250000

300000

2009 2010 2011 2012 2013

Mokulele Historical Performance

Passengers flown

Seats Available
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This proposal offers the community and the DOT the following possible scenario:

Service Option 1:

Service from Silver City, NM to Albuquerque, NM.

With this proposal, Mokulele offers a single dedicated CN-208B aircraft dedicated to operating two 

weekday roundtrips in the Silver City, NM to Albuquerque, NM market. Weekend Service would consist 

of one roundtrip each Saturday and Sunday. It is Mokulele’s intent to charge an average fare of only $50 

one way. We feel that the redirection of scheduled service back to the primary New Mexico business 

hub of Albuquerque, along with an aggressive pricing structure, will regain ridership that has been lost. 

As subsidy compensation for that service, Mokulele would require $1,499,878, or roughly $1,225 per 

segment. This is offered for a two or four year term. 

Conclusion

Mokulele is an established, Part 135 air carrier with a solid track record of frequent and reliable service. 

With this option, Mokulele offers Silver City a service option that will build ridership with reasonable 

fares and dependable service. Mokulele is an established Essential Air Service provider, recently 

announcing additional, subsidy free service over and above its EAS requirement in the Waimea-Kohala 

market, due to increasing ridership. (Exhibit B) Mokulele looks forward to bringing the same 

commitment to quality air service and reasonable pricing that has established it as a primary player in 

the tough Hawaiian inter-Island market to the mainland. We look forward to serving these New Mexico 

communities.
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Exhibit A
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Exhibit B

MOKULELE AIRLINES EXPANDS SERVICE BETWEEN

KAMUELA AND MAUI WITH THE ADDITION OF

A THIRD DAILY ROUNDTRIP FLIGHT

New flight being added to meet the demand for service from Kamuela

which has exceeded EAS expectations.

Kailua-Kona, HI — June 26, 2014 ... Mokulele Airlines has announced that it is expanding its service 

between Kamuela-Waimea on the Big Island and Kahului, Maui by adding a third daily roundtrip flight to meet 

growing demand. Mokulele began offering service form Kamuela in September 2013 after being awarded the 

Essential Air Service (EAS) contract from the Hawaii Department of Transportation. EAS is a government program 

designed to help ensure that smaller communities have access to commercial air service.

“Since winning the award, we’ve focused on delivering low fare, high-quality flights to the community by working 

directly with those who would use our service, and our boardings have reflected that,” explains Mokulele’s 

President and CEO Ron Hansen. Since Mokulele initiated the service, air traffic has grown more in Kamuela than in 

any other EAS market in the past two years. Mokulele expects to fly over 12,000 passengers in its first year of 

operation from Kamuela, compared to approximately 50 flown by the previous operator over a similar time period.

Mokulele will now offer 42 weekly flights between the two destinations, only 24 of which are subsidized by the 

EAS program. “The EAS program can truly help small communities when partnered with the right operator,” 

Hansen adds. “Because of the EAS program, we’re now able to increase flights, and hopefully grow Kamuela off of 

the EAS subsidy program by the end of our four-year agreement. We’re doing whatever it takes to build traffic to 

the point the market is 100 percent self-sustaining and no longer dependent on federal dollars.”

With the new flights, passengers can depart from Kahului at 8:35 am and arrive in Kamuela at 9:20 am. Maui-bound 

passengers can depart Kamuela at 9:40 am and arrive in Kahului at 10:25 am. Fare start at $69 each way, taxes 

included, some restrictions apply and seats may be limited. Complete details and flight schedules can be found at 

www.mokuleleairlines.com.

About Mokulele Airlines

Mokulele Airlines, flying the skies of Hawaii since 1994, was purchased by TransPac Aviation, Inc. in 2011 with a 

goal of providing high quality, low-cost interisland air service. Mokulele, which is headquartered in Kailua-Kona, 

now offers more than 120 flights a day connecting Oahu, Molokai, Lanai, Maui and the Big Island on its fleet of 

nine-passenger, turbine-powered Cessna Grand Caravans. For reservations & information, visit 

mokuleleairlines.com, facebook.com/mokulele, contact your favorite travel agent or call 866-260-7070.