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OST-1999-6502

http://www.hawaii.gov/dot/airports/maui/hnm/index.htm

EAS at Hana, HI

Please be advised that this letter is serving as official notification from Pacific Wings of its intention to withdraw service from Hana effective 90 days from the date of this letter. This decision is being made based on the fact that the economic cost of operation for our company to service the community under the present schedule is impossible due to the increased costs and limited income we have incurred in our attempt to provide reasonably timed flights for the community of Hana. It is not our desire to abandon Hana but we must look for financial assistance in order to continue our service

Another interesting phenomena which occurs in Hawaii that I have never experienced in our previous operation in Las Vegas is the routine flights being offered within the State of Hawaii by non-scheduled companies. These companies operate routinely at the same time each day. They announce to the world that they are not scheduled but in fact sell individual seats at specific times for their flights. To the best of my knowledge, these companies do not pay federal excise tax, .which is required for flights on an established line. The meaning of established line is Clot the same as a scheduled flight. Established line, by definition, is a somewhat regular flight between the same two points or over the same route. These flights do require the ,payment of excise tax. However, their lack of compliance with the same riles and regulations that we or Island Air must obey allows them a greater profit margin. Therefore, discounting in the marketplace is rampant, which lowers our overall profitability; which, in turn, requires us to request subsidy to an extent that may not be required if we were .able to obtain reasonable revenue on our sectors.

Counsel:  Pacific Wings, Myron Caplan, 808.873.0877

By:  Bradley Mims

Order 2000-2-5 is setting a final annual rate for Pacific Wings' essential air service at Hana, Hawaii, until further Department action. The carrier is eligible for subsidy support on February 9, 2000 but it is unlikely that a final carrier selection order will be issued by that time because the Department is waiting the community's response to the three service options presented in the carrier selection proceeding. Issuing this order will allow the carrier to be compensated for its forced service in the meantime

By:  Bradley Mims

While Hawaii is cognizant of the substantial pressures placed on the Department in recent years to reduce the overall cost of the EAS subsidy program, Hawaii respectfully submits that the cost-reduction objective must be subordinate to the overriding objective of insuring the maintenance of reasonably convenient access by isolated small communities to the nation’s air transportation system at affordable prices. That basic and crucial objective of insuring the maintenance of essential air service to isolated small communities generating traffic levels which may be too limited to sustain minimum necessary levels of air transportation without subsidy support has been the primary rationale for the Department’s Essential Air Service Program throughout its 22-year existence.

Counsel:  Shaw Pittman, Nathaniel Breed, 202.663.8078

By:  Randall Bennett

Order 2000-4-6 is extending Pacific Wings's service obligation at Hana for another 30 days, through May 10, 2000 effective immediately. Petitions are due April 21, 2000.  

By:  Randall Bennett

Order 2000-5-2 is selecting Air Nevada, Inc., d/b/a Pacific Wings to provide essential air service (EAS) at Hana consisting of two nonstop round trips per day to Honolulu, and three nonstop round trips per day to Kahului for $574,500 annually. 

By:  Bradley Mims

Because a $50 million budget can no longer cover the program's current commitments, the Administration's budget proposal also includes a proposal to revise some of the standards under which communities are ineligible for subsidy-supported scheduled air service. Under the proposed revisions, communities would not be eligible if they are:

• Located within 100 highway miles of the nearest large or medium hub airport² The current standard is 70 highway miles for both large and medium hubs. Located within 70 highway miles of the nearest small hub airport. There is no current standard addressing communities' proximity to small hub airports.
• Located within 50 highway miles of the nearest non-hub airport offering jet service. There is no current standard addressing communities' proximity to non-hub jet service.

The statutory prohibition against continuing to subsidize communities requiring subsidy of more than $200 per passenger, except for exceptionally isolated points, would remain unchanged.  The proposed revisions would allow the Department to continue to meet its core obligation of ensuring that truly isolated communities continue to receive at least a minimum level of scheduled air service and thereby remain connected to the national air transportation system. At the same time, it would curtail spending for local service at communities that are within reasonable driving distances of service at other airports.

In light of the program's current spending rate and the Administration's budget proposal, we have decided to issue this statement of proposed policy now, to give the communities and carriers ample notice of the program reductions that we will implement in the event that Congress enacts them into law. Those reductions will result in the termination of subsidy at the 17 communities listed below as of October 1, 2001 -- the first day of fiscal year 2002 -- and will allow the carriers providing subsidized service at those communities to discontinue service on the same date, if they choose, without the need to provide individual notice. Implementation of the reductions at the very outset of the next fiscal year is necessary for program spending to remain within the proposed $50 million budget. Waiting to initiate the process until Congress has already acted could delay implementation of the reductions and require us to make even deeper program cuts, affecting more communities, in order to remain within our budgetary constraints.

By:  Susan McDermott

By:  Renee & Errol Gard

By:  County of Maui, James Apana

By:  Avery Chumbley, State Senator

By:  Governor Benjamin Cayetano 

By:  Senate/State of Hawaii, Avery Chambey

The loss of EAS subsidies will have a direct and catastrophic effect on remote and rural Hawaii communities already suffering from declining tourism and economic malaise. Hawaii's major airlines have decreased interisland air service by approximately 40%, and increased fares an average of 11% annually during the past five years, eliminating service to small communities such as Hana and Kamuela. Current industry conditions and trends make it highly unlikely that any scheduled airlines will find it economically feasible to serve these communities in the absence of EAS subsidies; further depressing the already declining interisland air service market.

Counsel:  Pacific Wings, Greg Kahlstorf

I know you have talked over the phone with Kevin Adams about Pacific Wings submitting a proposal, but time has elapsed and we wanted to put something on the record. As we advised you by e-mail on January 22, 2002, your rates at Hana, Kalaupapa, and Kamuela were then due to expire soon. One of your rates has now expired, and two are due to expire soon. Specifically, your rates were set to expire at Kalaupapa on February 28, at Hana on March 31, and at Kamuela on April 30, 2002.

By:  Dennis DeVany

By this order we are setting a short-term final subsidy rate, retroactive to October 1, 2001, until the rate was set to expire (February 28, 2002) for Pacific Wings' essential air service (EAS) at Kalaupapa in the amount of $283,644 annually. At Hana and Kamuela, the carrier agreed to no changes from the original rates set by Orders 2000-5-2 and 20004­26. We are also setting new final rates for all three communities, effective when the prior rates expired until further Department action. Finally, we are also requesting proposals for long-term service at these communities.

By:  Read Van de Water

We respectfully submit our EAS proposal for Cessna Caravan (CE208) service for the three communities of Kalaupapa, Kamuela, and Hana, Hawaii. The proposed subsidy need is detailed in the attached appendix and is based on our historical service. Kevin and I reached agreement on the numbers after many hours of analysis.

By:  Franklin Ford

By:  Dennis DeVany

Pacific Wings has made a corporate decision to upgrade its fleet from its current, piston-engine Cessna 402 aircraft to factory-new, prop jet Cessna Caravans. The communities are fully supportive of Pacific Wings' service, especially the introduction of its new Cessna Caravan aircraft. In the short term, the Caravans require significantly more subsidy, $2,323,918 compared to the current rates of $1,728,127, due largely to the higher ownership costs. We are optimistic that the new aircraft will be well received by the communities, in terms of passenger acceptance and increased operational reliability, both of which should result in more passenger usage and thus lower subsidy. In that regard, we note that the carrier was willing to forecast significantly more passengers in the second year of Caravan service. Based on the above, we find the proposed service and subsidy levels to be reasonable. We strongly encourage all three communities to work closely with Pacific Wings to increase ridership and ultimately to reduce the amount of subsidy required to support the service.

By:  Read Van de Water

By:  James Apana, Mayor

Order 04-09-17
OST-99-6502 - EAS at Hana, HI
OST-00-6773 - EAS at Kalaupapa, HI
OST-97-2833 - EAS at Kamuela, HI

Issued September 17, 2004 | Served September 22, 2004

Order Requesting Proposals

By this order, the Department is requesting proposals from carriers interested in providing essential air service at Hana, Kalaupapa, and Kamuela, Hawaii, for a new two-year period, with or without subsidy. The order reflects new, streamlined procedures for processing such proposals.

Pacific Wings has provided service to Hana, Kalaupapa, and Kamuela for a number of years. During the year ended May 2004, the most recent 12‑month period for which traffic data are available, daily enplanements were as follows: Hana, 8.9 to Honolulu and 3.1 to Kahului; Kalaupapa, 5.3 to Honolulu; and Kamuela, 5.7 to Honolulu and 4.7 to Kahului.4 At Hana, applicants should consider an option adding service to Honolulu, the bigger traffic generating hub, and reducing or eliminating service to Kahului, which has generated much less traffic.

By: Karan Bhatia

OST-97-2833 - EAS at Kamuela, HI
OST-99-6502 - EAS at Hana, HI
OST-00-6773 - EAS at Kalaupapa, HI

September 27, 2004

Re: Letter from Part 135 Regulated Operators Partnership

Island Air has already increased the number of operations in and out of Kahului by a substantial number and is reportedly on their way to a five‑fold increase in operations there. Island Air seems to have an operating policy of leaving one engine running on the passenger ramp for protracted periods of time, presumably to save cycles on the engine. This creates a potential hazard to wayward passengers and others as no one monitors the area surrounding this extremely lethal instrument.

Island Air has been offered space at the main terminal, but they have summarily refused it. In the Main Terminal, there are many available gates designed for access to Dash 8 aircraft. The Commuter Terminal was created to handle normal category aircraft with 19 or fewer seats that serve rural Hawaii airports. It seems clear that Island Air has chosen a business model using large transport category aircraft that more appropriately lends itself to operations out of the Main Terminal just like they use at Hilo, Kona, and, Lihue. As you may remember, when Mahalo Airlines began service to Kahului with similar size aircraft they were sent to the main terminal without debate, in the interest of safety.

I struggle to understand why the condition is tolerated that forces commuter passengers to run a gauntlet on a ramp designed for normal category aircraft, especially when a solution that is so intuitively apparent exists. I ask for your assistance to use the Federal Aviation Administration's‑mandate for public safety to launch an investigation to determine some "best practices" before an inevitable tragedy occurs. Thank you for your help with this matter.

By: PROP, Rob McKinney

OST-97-2833 - EAS at Kamuela, HI
OST-99-6502 - EAS at Hana, HI
OST-00-6773 - EAS at Kalaupapa, HI

October 20, 2004

Re: Extension of Time

On October 20, 2004, Corporate Airlines, Inc., requested an extension of time, until November 15, 2004, to file a competitive proposal in response to Order 2004-9-17, served September 22. That order requested competitive proposals be submitted by October 22, 2004, for EAS at three Hawaiian communities: Hana, Kalaupapa, and Kamuela.

This is to advise all parties that we have decided to grant Corporate's request for an extension of time to file. Objections and/or competitive proposals, in response to our actions in Order 2004-9-17, must now be filed no later than November 15, 2004.

By: Dennis DeVany

OST-97-2833 - EAS at Kamuela, HI
OST-99-6502 - EAS at Hana, HI
OST-00-6773 - EAS at Kalaupapa, HI

November 12, 2004

Re: Proposal of Aviation Ventures d/b/a Vision Air

By: William Acor

November 12, 2004

Re: Proposal of Corporate Airlines

By: Fred Breeden

November 12, 2004

Re: Proposal of Pacific Wings

By: R. Franklin Ford, Jr.

OST-97-2833 - EAS at Kamuela, HI
OST-99-6502 - EAS at Hana, HI
OST-00-6773 - EAS at Kalaupapa, HI

December 13, 2004

Re: Request for Comments from Roy Sakata, Airports Division, State of Hawaii, Department of Transportation

I would like to update you on the essential air service situation at each of the above communities, and give you an opportunity to submit any final comments if you wish before we issue a final order selecting a carrier proposal and/or service option for a new two-year period beginning December 1, 2004. We also sent an identical letter to Mayor Kim regarding EAS at Kamuela, and to Mayor Arakawa regarding EAS at Kalaupapa and Hana.

As you know, by Order 2002-8-10, August 12, 2002, we re-selected Pacific Wings Airlines, Ltd., to provide subsidized essential air service at Hana (Docket OST-1999-6502), Kalaupapa (Docket OST-2000-6773), and Kamuela (Docket OST-1997-2833), Hawaii, through November 30, 2004. The carrier was selected to provide each community with service to Honolulu and/or Kahului using 9-seat, single-engine turboprop Cessna 208 Caravans. As is our normal practice near the end of a two-year term, we issued Order 2004-9-17, which solicited proposals from carriers interested in serving each community for a new two-year period, either with or without subsidy. In response to our request, we received three proposals: from the incumbent Pacific Wings; from Aviation Ventures, Inc. d/b/a Vision Air; and from Corporate Airlines, Inc. Since you should have received copies of the proposals from each carrier, we will only briefly summarize them below.

By: Dennis DeVany

December 13, 2004

Re: Request for Comments from Harry Kim, Mayor of the County of Hawaii

By: Dennis DeVany

December 13, 2004

Re: Request for Comments from Alan Arakawa, Mayor of the County of Maui

By: Dennis DeVany

OST-97-2833 - EAS at Kamuela, HI
OST-99-6502 - EAS at Hana, HI
OST-00-6773 - EAS at Kalaupapa, HI

December 21, 2004

Re: Comments of Alan Arakawa, Mayor of County of Maui

It is important that when services are being considered for Hana and Kalaupapa, the amount of flights made available to the residents is of high priority. If residents and visitors alike are aware of air transportation services available to these areas, it is my belief that those services will be utilized.

By: Alan Arakawa

December 29, 2004

Re: Alan Arakawa, Mayor of County of Maui, Letter in Support of Pacific Wings

Pacific Wings is a local company with ties to these communities and is also an employer in these same communities. Pacific Wings' commitment to make air travel readily accessible to those with disabilities is also commendable. Whether providing transportation for a dialysis patient from Hana, or wheelchair‑bound patients with Hanson's disease from Kalaupapa, this company has shown dedication to serve those less fortunate in these communities.

In addition, with rider‑ship on the rise and subsidy request on the decline, Pacific Wings has proven to be a successful business model. As the incumbent air carrier, the service this company provides is a vital transportation link for these remote rural communities. That is why their EAS contract should be renewed for another period.

By: Alan Arakawa

OST-97-2833 - EAS at Kamuela, HI
OST-99-6502 - EAS at Hana, HI
OST-00-6773 - EAS at Kalaupapa, HI

December 27, 2004

Re: Harry Kim, Mayor of the County of Hawaii Letter in Support of Pacific Wings

By: Harry Kim

January 3, 2005

Re: Department of Health, State of Hawaii Letter Commending Pacific Wings

By: Michael McCarten

January 4, 2005

Re: State Senator Kalam English Letter Requesting the Extension of the Deadline for Community Comments

By: Kalam English

January 5, 2005

Re: County Council, County of Maui Letter Requesting the Extension of the Deadline for Community Comments

I am writing to you regarding pubic comment on the federal subsidy for air transportation in East Maui. As the situation stands, the period for public input will be closed on Friday, January 7, 2005. I firmly believe that this is not enough time to gauge public sentiment and response; therefore I request that the Department of Transportation extend the comment process for 30 days after January 7.

By: Bob Carroll

January 5, 2005

Re: Letter Extending the Deadline for Community Comments

At the request of the County Council of the County of Maui, Hawaii, we are extending the deadline for filing community comments for the carrier selection case in the above-listed dockets from January 7, 2005, to February 7, 2005.

By: Dennis DeVany

OST-97-2833 - EAS at Kamuela, HI
OST-99-6502 - EAS at Hana, HI
OST-00-6773 - EAS at Kalaupapa, HI

January 5, 2005

Re: Congressman Ed Case Letter in Support of Pacific Wings

By: Ed Case

OST-97-2833 - EAS at Kamuela, HI
OST-99-6502 - EAS at Hana, HI
OST-00-6773 - EAS at Kalaupapa, HI

January 5, 2005

Re: Opposition of Pacific Wings Airlines to Request for Extension of Time

Earlier today we were notified that your office has received two requests for an extension of time to respond to your letter dated December 13, 2004 sent simultaneously to Mr. Roy Sakata, Mayor Harry Kim, and Mayor Alan Arakawa requesting the views of the affected communities. The requests come on the eve of the January 7, 2005 deadline imposed in the December 13 letter. Because the requests fail to show good cause for an extension of time, and because further delay in making an EAS decision and award will prejudice Pacific Wings, Pacific Wings hereby opposes any extension of time.

Counsel: Patton Boggs, Gregory Walden, 202-457-6135, gwalden@pattonboggs.com

Order 05-01-06

Issued and Served January 7, 2005

Order Granting a 30-Day Extension fro Public Comments | Word

By this order, the Department is granting a 30-day extension for the submission of public comments, until February 7, 2005.

By: Randall Bennett

OST-97-2833 - EAS at Kamuela, HI
OST-99-6502 - EAS at Hana, HI
OST-00-6773 - EAS at Kalaupapa, HI

January 14, 2005

Re: Comments of The County of Hawaii

By: Harry Kim, Mayor

January 14, 2005

Re: Comments of State of Hawaii Department of Transportation

By: Brian Sekiguchi

OST-97-2833 - EAS at Kamuela, HI
OST-99-6502 - EAS at Hana, HI
OST-00-6773 - EAS at Kalaupapa, HI

February 6, 2005

Re: Comments of The County of Hawaii

By: Harry Kim, Mayor

January 31, 2005

Re: Comments of The County of Maui

By: Alan Arakawa, Mayor

February 7, 2005

Re: Comments of Hana Coast Realty

By: Carl Lindquist

February 7, 2005

Re: Comments of The Hotel Hana-Maui

By: Michael Freed

January 14, 2005

Re: The County of Hawaii Letter in Support of Vision Air

By: Harry Kim, Mayor

February 7, 2005

Re: Robert Filippi Letter in Support of Vision Air

By: Robert Filippi

February 8, 2005

Re: William Conner Letter in Support of Vision Air

By: William Conner

February 7, 2005

Re: Letter from Vision Air

By: Warren Kaplan

Order 2005-03-34
OST-99-6502 - EAS at Hana, HI
OST-00-6773 - EAS at Kalaupapa, HI
OST-97-2833 - EAS at Kamuela, HI

Issued March 24, 2005 | Served March 29, 2005

Order Reselecting Carrier and Establishing Subsidy Rates

By this order, the Department is reselecting Pacific Wings Airlines, Ltd., to provide essential air service at Hana, Kalaupapa, and Kamuela, Hawaii, for the period from April 1, 2005, through March 31, 2007, at an annual rate of $1,597,422 for the first year and at an annual rate of $1,501,752 for the second year.

By: Karan Bhatia

Order 2006-10-15
OST-1999-6502 - Hana
OST-2000-6773 - Kalaupapa
OST-1997-2833 - Kamuela

Issued October 26, 2006 | Served October 31, 2006

Order Requesting Proposals

By this order, the Department is requesting proposals from carriers interested in providing essential air service at Hana, Kalaupapa, and Kamuela, Hawaii, for the two-year period beginning April 1, 2007, with or without subsidy.

With respect to each community specifically, we expect proposals at Hana consisting of four well- timed, nonstop round trips a day to Honolulu and/or Kahului (total of 28 weekly round trips); at Kalaupapa, consisting of two nonstop round trips a day to Honolulu (total of 12 weekly round trips); and at Kamuela, consisting of two nonstop round trips a day to Honolulu and/or Kahului (total of 12 weekly round trips). Service should be provided using an appropriate aircraft for each community, i.e., two pilots, single or twin-engine aircraft, capacity of 8 or more passenger seats. We encourage proposals that meet the needs of the communities in an efficient manner. Carriers are also welcome to propose more than one service option, if they choose, and they need not limit themselves in any way if they envision other. potentially more attractive service possibilities -- different hubs or smaller aircraft, for example -- with subsidy requirements that remain competitive.

By: Todd Homan

OST-1999-6502 - Hana
OST-2000-6773 - Kalaupapa
OST-1997-2833 - Kamuela

November 15, 2006

Email Message - Comments of Kalaupapa National Historical Park

It has come to my attention that the contract for airline service to Kalaupapa, Molokai, Hawaii will soon be decided. I would like to state my desire for a change in service both personally and professionally. The current carrier Pacific Wings has provided very poor customer service. It took almost two months to get a response from them when they overcharged a Kalaupapa employee for four extra tickets. Their scheduling does not benefit the consumer and their pricing does not reflect a subsidized fare.

It would be most welcome if you would consider offering the contract to another carrier.

By: Roseann Worley, 808-567-6802, Rose_Worley@nps.gov

November 16, 2006

Comments of the Community of Hana

We believe it is imperative that the DOT consider a new carrier for air service to and from Hana Airport. Over the past six years it has become increasingly difficult to plan trips due to the ever changing schedules and what seems to be punitive scheduling.

Pacific Wings has fares that nearly double those of the open Hawaii Market. Pacific Wings publishes more flights than they ever fly and doesn't have the capability to do so. This makes it impossible to make plans or count on their services.

Clearly, Pacific Wings takes this government subsidy for granted and the thought of actually serving the community for which they receive subsidy has become foreign to the them.

By: Hana Community

OST-1999-6502 - Hana
OST-2000-6773 - Kalaupapa
OST-1997-2833 - Kamuela

November 17, 2006

Proposal of Mokulele Airlines

Pursuant to Order 2006-10-15, Mokulele Flight Service, Inc. d/b/a Mokulele Airlines respectfully submits this proposal to provide essential air service to the communities and residents of Hana, Kamuela, and Kalaupapa, Hawaii, for the two year period beginning April 1, 2007.

Hana will receive two daily roundtrips to Honolulu and two daily roundtrips to Maui (7 days per week). Kamuela will receive two daily roundtrip flights (6 days per week) serving Honolulu and Maui. Kalaupapa will receive two daily roundtrip flights (6 days per week) serving Honolulu.

Mokulele proposes to provide scheduled services using 9-seat Cessna Grand Caravans which is the same aircraft operated by the incumbent carrier in these markets. However, Mokulele’s fleet configuration will represent a significant upgrade as our aircraft will have an all first-class configuration, with two 19” LCD screens providing in-flight news and entertainment.

By: Mokulele, Robert McKinney, 808-326-7070

Order 2006-10-15
OST-1999-6502 - Hana
OST-2000-6773 - Kalaupapa
OST-1997-2833 - Kamuela

Issued October 26, 2006 | Served October 31, 2006 | Corrected November 21, 2006

Order Requesting Proposals - Corrected

Order 2006-10-15 erroneously sited docket number OST-1997-2822 instead of OST-1997-2833.

By: Todd Homan

November 22, 2006

Re: Comments of Hana Health

It is with great pleasure that I write this letter of support for the expansion of Mokulele Airlines into the Hana marketplace. The District of Hana is one of the most remote regions in the state of Hawaii. Although only 52 miles from the Kahului airport, the trip takes approximately 2 hours, at a speed of between 10 and 25 miles an hour, along a single lane road with 617 turns and 56 one-lane bridges. The road winds through tropical rain forests and along steep sea cliffs.

Hana Health is hopeful that Mokulele Airlines will be allowed to enter the Hana marketplace and develop a flight schedule that meets the needs of the health center and the larger community, at a reasonable cost. Please feel free to contact me with any questions, or for additional information. We look forward to the improved services that Mokulele intends to provide for our community.

By: Hana Health, Cheryl Vasconcellos, Executive Director, P.O. Box 807, Hana, Maui HI 96713

OST-1999-6502 - Hana
OST-2000-6773 - Kalaupapa
OST-1997-2833 - Kamuela

November 30, 2006

Proposal of Pacific Wings

Pacific Wings will continue to serve Hana, Kamuela and Kalaupapa, Hawaii at or above levels stipulated by the program for these communities, without further EAS subsidies.

Pacific Wings will offer eight nonstops and two connecting flights a day between Honolulu and Hana,
(including new early morning and late afternoon service) beginning 01 DEC 06. At the same time, we are increasing the number of daily nonstops between Hana and Kahului to 12.

By: Pacific Wings, Greg Kahlstorf

December 1, 2006

Re: Email Message - Comments of Eric Brown

I wanted to address the Pacific Wings fluctuating flight schedule between Kalaupapa and Honolulu, Hawaii. For many months the carrier has been pretty reliable for my business travel. In the past 2 months, however, they have begun to alter their schedule on rather short notice. Sometimes I have called in the morning (e.g. November 19th) to reconfirm an already changed flight (e.g. departure 3:20pm to 5:45pm) to find out that the flight is now departing 4.5 hours earlier (e.g. 5:45pm to 1:20pm). To Pacific Wings credit they have tried contacting me and so far, these changes have not resulted in missing connecting flights or appointments, but it is very inconvenient. I understand that carriers need to change flights occasionally to meet demand and aircraft availability but I cannot keep changing my business schedule on such short notice to accommodate their desires, especially when my flight options are so limited to and from our remote park.

Eric Brown, Ph.D., Marine Ecologist, Kalaupapa NHP, P.O. Box 2222, Kalaupapa HI 96742

Order 2006-12-3
OST-1999-6502 - Hana
OST-2000-6773 - Kalaupapa
OST-1997-2833 - Kamuela

Issued December 4, 2006 | Served December 7, 2006

Order Terminating Carrier-Selection Case

By this order, the Department is terminating the carrier-selection proceeding for essential air service at Hana, Kalaupapa, and Kamuela, Hawaii. The incumbent EAS carrier, Pacific Wings, has proposed to continue to provide all three communities' EAS on a subsidy-free basis beginning April 1, 2007, after the end of the current two-year contract on March 31.

By: Todd Homan

October 2, 2007

Complaints of Hana Residents - 20 MB

In response to the request from Kelly Kolb of U.S. Department of Transportation Congressional Affairs to my staff for written evidence of passenger complaints relating to the EAS Service for Hana, Maui, I am enclosing complaints from Hana residents, business persons and organization leaders for your review. We received letters from 15 people regarding the EAS carrier, Pacific Wings. Enclosed for your convenience is an outline of the complaints. The letters, only one of which predates the current EAS agreement, relates to comments about Pacific Wings service after April 1, 2007.

Also enclosed is a letter from Pacific Wings received on Monday, October 1, 2007 in which the CEO of the carrier, Greg Kahlstorf, explains Pacific Wings' position in this matter. Mr. Kahlstorf also makes false and unsubstantiated allegations about my motivation for pursuing this matter on behalf of the Hana community. Mr. Kahlstorf's misleading and baseless accusations are consistent with his response to other individuals who have questioned Pacific Wings' performance, as your investigation will discover.

By: Congresswoman, Mazie Hirono

OST-1999-6502 - Hana
OST-2000-6773 - Kalaupapa
OST-1997-2833 - Kamuela

October 22, 2007

Re: Mokulele Airlines Request to Vacate Order 2006-12-3

I write to request the Department vacate Order 2006-12-3, terminating the carrier selection process for Hana, Kalaupapa, and Kamuela, HI and reinstate the selection process for subsidized service to the three Hawaii communities which we believe is in the best interest of the affected communities.

On October 2, 2007, the Department received 15 letters of complaint from residents, business owners and travelers to Hana stating their dissatisfaction, concerns and frustrations with the current air service provider.

In the four months (December, 2006 thru April, 2007) immediately following the DOT’s termination of the carrier selection process, origin and destination (O&D) levels at Hana declined substantially. According to DOT’s Bureau of Transportation Statistics in December, 2006 339 O&D passengers traveled between Honolulu (HNL) and Hana (HNM), 140 O&D passengers between Hilo (ITO) and HNM, and 275 passengers between Kahului (OGG) and HNM.

Conversely, in April of 2007, the BTS reports 217 passengers for the HNL-HNM market, a 36% reduction from December, 2006; 69 passengers for the ITO-HNM market, a 51% decline from December, 2006; and 207 for the OGG-HNM market, a 25% decrease from December, 2006.

In DOT Order Number 1989-12-52, the Department made it clear that:

“. . . if communities are not receiving air service that is as reliable as they expect or demand we anticipate and encourage them to contact us for assistance…”

The representations of Hawaii EAS communities filed with the DOT on October 2, 2007 through the office of Congresswoman Mazie K. Hirono, I believe, satisfy the request for assistance requirement. Hawaii EAS communities, like those on the mainland, are guaranteed a minimal level of service. When essential air service is not provided in a manner consistent with the letter and spirit of the law, the DOT must affirmatively exercise its discretion in the best interest of the communities. We therefore request the carrier selection process be reinstated immediately.

By: Mokulele, William Boyer

October 22, 2007

Pacific Wings Complaint Letter from Mark Bratton

The community of Hana is in need of your assistance. Traveling to and from Hana is currently dependent on a local carrier, Pacific Wings. It has been extremely difficult to rely on Pacific Wings due to the very limited flight schedule, as well as regular flight delays and cancellations. Flights have been averaging $300 one way, and they often have discrepancies on their website where flights are available, but when searching, none are listed. This causes a tremendous interruption to the community and creates extra costs for many businesses.

October 25, 2007

Re: Response of Pacific Wings

The vast majority who want to take advantage of below-market fares on the majors can do so from Honolulu to Kahului; then take another deeply discounted flight on Pacific Wings Express from Kahului to Hana. The difference is the Pacific Wings segment from Kahului to Hana is only 12 minutes, so the airline can make a profit at that price, while none of the majors (or Pacific Wings) can profitably operate the longer distance Honolulu-Kahului segment at those prices.

Pacific Wings continues to offer scheduled service between Honolulu and Hana, but those who want the convenience of a nonstop flight will pay a fare commensurate with the actual costs of operating it at significantly diminished load factors due to Mesa's loss-based pricing.

Pacific Wings has successfully piloted a business plan that works aggressively to wean communities off EAS subsidies; and, has recently marketed and implemented that business model in three New
Mexico EAS locations. Through these efforts, Pacific Wings has saved federal taxpayers millions.

By: Pacific Wings, Greg Kahlstorf

OST-1999-6502 - Hana
OST-2000-6773 - Kalaupapa
OST-1997-2833 - Kamuela

November 19, 2007

Re: Response of Pacific Wings

Mokulele is fundamentally dependent on Mesa, particularly for product distribution, and in light of Mesa's legal exposure to Hawaiian and perhaps other airlines, there is significant doubt whether Mesa will continue to serve Hawaii. It appears that Mokulele may be attempting to ensure its future survival by doing anything possible to obtain federal subsidies in the event its business partnership is grounded by Mesa's withdrawal from the Hawaii market.

By: Pacific Wings, Greg Kahlstorf

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