Schuman Aviation Company Ltd dba

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1 DtfT-^er-Zooo - (rt^3 Schuman Aviation Company Ltd dba Air Carrier Certificate ivikha108k 130lolana Place Honolulu Hawaii richard@makanikai.com UJ I. Makatij Kai Helicopters - Makani Kai Air Charters ~ Ko Olina Helicopters - Pacific Air Express - Hawaii Aviation

2 SCliUMAN AVIATION COMPANY, LTD 130 lolana PLACE, HONOLULU, HI K-8:i4-5«i;J FAX H08-8:J7-7S«7 April Brian Swanson, AICP U.S. Department of Transportation Office of Aviation Analysis, X-50 W New Jersey Avenue, S.E. Washington, DC RE: Proposal to Provide Essential Air Service at Kalaupapa, Hawaii (Docket DOT-OST ) Dear Mr. Swanson, In response to the above-referenced orders, Schuman Aviation Company Ltd. dba Makani Kai Air Charters (FAA Air Carrier Certificate MKHA108K), respectfully submits its bid for provision of Essential Air Service at Kalaupapa, Hawaii. The proposed two year service profile and pricing details are: SL-rvicc Pi'olilc YEAR ONE Honolulu, HI to Kalaupapa, HI Kalaupapa, HI to Molokai, HI Details / Frci iicncy Two (2) daily round trips Monday through Saturday Three (3) daily round trips Monday through Saturday Annual Subsidy $932, YEAR TWO Honolulu, HI to Kalaupapa, HI Kalaupapa, HI to Molokai, HI Two (i) daily round trips Monday through Saturday Three (3) daily round trips Monday through Saturday $923, For Revenue and Expense Details, See Appendix A. IVIafcanj Kai Helicopters - Makani Kai Air Charters - Ko Olina Helicopters - Pacific Air Express - Hawaii Aviation

3 Proposal to Provide Essential Air Service at Kalaupapa (Conlinued) Background - Kalaupapa is one of the most isolated communities in the country. There is no road access to the area: Kalaupapa is a peninsula that sits at the bottom of 2,000-foot vertical cliffs, effectively cutting the area off from the rest of the island of Molokai. To get to Kalaupapa, one can hike down the cliff trail, ride a mule, or fly. This isolated nature is precisely the reason that Kalaupapa was selected in the 1800's as the settlement for Hansen's Disease patients. Peninsula residents today rely on the settlement's annual barge to deliver food, equipment and fuel. Pacific Wings, currently the only scheduled commercial airline serving Kalaupapa for the past decade, did so under an HAS subsidy agreement until April 1, The company provided subsidy-free service but evidently determined that such service was not profitable. Pacific Wings has petitioned the DOT to suspend its service to Kalaupapa in order to re-submit a proposal to provide EAS to Kalaupapa. In order to determine what the community of Kalaupapa wants and needs for air service, we interviewed residents and workers to find out what they are looking for in an air service provider. Along with the usual requirements of safety, reliability and timeliness, those we spoke with made it clear that patients would like to be able to come to Honolulu for medical appointments and return to Kalaupapa the same day. Accordingly, we are working in conjunction with Island Air in establishing flight schedules with enough time between the arrivals of our proposed flights from Kalaupapa to Molokai / Honolulu and departure.of those flights back to Molokai / Kalaupapa to accommodate this need. It also became clear that there was a need for residents and visitors to be able to fly "topside" to the Molokai Airport and back down to the settlement, so we are proposing three daily round trip flights between the Molokai Aiiport and Kalaupapa airport. About Schuman Aviation Company Ltd - Schuman Aviation Company Ltd. is a locally owned business that has operated Makani Kai Helicopters since The Schuman name is well known in Hawaii: Gustav A. Schuman, my great grandfather, immigrated to Hawaii from Germany in 1893 and established one of Hawaii's first automobile dealerships. Schuman Cartiage Company Ltd, which eventually cartied the Cadillac, CMC, Hummer and Subaru brands, was in business for over 110 years. In 1996, I established Schuman Aviation Company Ltd. to provide, "the best customer service of any aviation company in Hawaii, bar none." My local upbringing has given me a firm understanding and appreciation of the culture of the people of Hawaii. My family's relationships with members of the Molokai community in some cases go back generations. My grandmother was raised on the island of Molokai. Makani Kai Helicopters, established in 1988, based at the Honolulu International Airport, is Oahu's oldest, largest and most experienced helicopter tour company. In 22 years, the company Makani Kat Helicopters - Makani Kai Air Charters - Ko Olina Helicopters - Pacific Air Express - Hawaii Aviation

4 Proposal to Provide Essential Air Service at Kalaupapa (Continued) has provided aerial tours for over 14,000 persons annually without incident or accident. The company employs two Eurocopter A-Stars and uses two Robinson R-44s for special jobs and photo charters. Makani Kai Helicopters is the recipient of the FAA's Diamond Award for maintenance excellence, the prestigious Platinum Safety Award from the Helicopters Association International, and is a member of TOPS, The Tour Operators Program of Safety. More topically, Makani Kai Helicopters provides the helicopters and piloting for the new Hawaii Five-0 television series on CBS The company is on track to become the authorized Cessna Service Center for the State of Hawaii and is headquarters for the Robinson Helicopter dealership and service center for the State of Hawaii. Schuman Aviation Company Ltd. dba Hawaii Aviation is an FAA Part 141 Repair Station (Certificate # MKHR108K) and is authorized by the FAA to perform work on Cessna 150s to 172s and the Caravans, Piper Chieftains, Eurocopter A-Stars and Robinson helicopters, as well as Lycoming, Turbomeca, and Pratt & Whitney engines. All aircraft maintained under an FAA Repair Station Certificate must adhere to a higher level of maintenance tracking, reliability and accountability. In 2009, the company expanded its operations with the addition of two Piper Chieftains and established Makani Kai Air Charters. The Chieftains make regular visits to Kalaupapa, carrying residents and physicians as well as tourists and others wishing to take the Father Damien Tour. Makani Kai Air Charters has built its reputation as a safe, reliable and accommodating air cartier, sensitive to the needs of the community. Also in 2009, Schuman Aviation Company Ltd. began air cargo operations using Cessna 208B Caravans in conjunction with Pacific Air Cargo. That operation, doing business as Pacific Air Express, serves the islands of Maui and Kauai six nights a week. The cargo endeavor has given us first-hand operational and maintenance experience with the Caravan. In 2010, Schuman Aviation Company Ltd. was granted Initial FAA Part 135 Scheduled Commuter status by the Department of Transportation. Reliability & Dependability - Makani Kai Air Charters proposes to provide scheduled services to Kalaupapa using nine-seat Cessna 208B Grand Caravans, the same aircraft curtently used by the incumbent carrier. The Caravan has proven tffbe an exceptionally reliable aircraft for Makani Kai's cargo operations. The Caravan has enjoyed a 99% reliability record making nightly flights from Oahu to Maui and Kauai. Makani Kai Helicopters - Makani Kai Air Charters - Ko Olina Helicopters - Pacific Air Express - Hawaii Aviation

5 Proposal to Provide Essential Air Service at Kalaupapa (Continued) As you are no doubt aware, FAA regulations stipulate that a single-engine aircraft such as the Caravan must remain within gliding distance to shore whenever over water carrying passengers. That means that the Caravans must climb to an altitude of 5,000 feet plus when crossing the 25 mile Molokai chaimel in order to comply with the FAA regulations. Occasionally, weather will preclude climbing to such altitudes which means possibly cancelling a flight. In that event, we plan to press into service one of our two Piper Chieftain twin-engine aircraft to make the trip because the Piper Chieftains have no such altitude restriction. We can fly below the weather on our way to service Kalaupapa. As a measure of added safety, all of our pilots are Airline Transport Rated (ATP) professionals and well versed in single pilot Instrument Flight Rules (IFR) operations. Contractual and Marketing Arrangements with a Larger Carrier - Schuman Aviation Company Ltd is currently negotiating a code sharing agreement with Island Air. Island Air has been operating in Hawaii skies for over 30 years and is a leading regional carrier serving aiiports on all major Hawaiian Islands. The airline offers flights between Oahu, Maui (Kahului Airport and West Maui's Kapalua Airport), Molokai, Lanai, Kauai, and the Big Island of Hawaii. Island Air operates a fleet of 37-seat Dash 8 turboprop aircraft. The Kaluapapa passengers will have easy access to the national transportation network through Island Air's code share agreements with many of the large domestic FAA Part 121 air caaiers. Although it will be quick and easy to book reservations online at our website, we plan to fully staff, a phone bank to handle reservation requests and answer questions. This is to accommodate the large percentage of Kalaupapa residents without Internet access. Our phones are answered by a real live persoii 24 hours a day, seven days a week. Community Views - We interviewed several Kalaupapa residents, healthcare professionals. National Park employees and State personnel to determine what they are looking for in scheduled air service to the community. Besides the obvious plea for lower air fares, there was consensus that the company chosen to provide EAS to Kalaupapa should be accommodating to the community's specific needs, such as ensuring that the aircraft is accessible by disabled persons, that the flight schedule would allow transit to Honolulu and back to Kalaupapa the same day. and that the air carrier have a proven track record of safety and on time service. It was also noted that the chosen cartier should be financially stable and able to provide air service for years to come. It should be noted here that Schuman Aviation is held in high regard within Hawaii business community, is a staunch member of the Chamber of Commerce and the Better Business Bureau and was recognized by Hawaii Business magazine for excellence in small business. The company is well run and financially strong. Makani Kai Helicopters - Makani Kai Air Charters - Ko Olina Helicopters - Pacific Air Express - Hawaii Aviation

6 Proposal to Provide Essential Air Service at Kalaupapa (Continued) In our interviews, several individuals expressed frustration over the inability or unwillingness on the part of the incumbent cartier to accommodate special needs. Rita Ward, a lifelong Kalaupapa resident who had been using the incumbent carrier for a decade, complained that the Pacific Wings pilot refused to allow her to board the aircraft when she inadvertently forgot her identification. Kalaupapa is not a TSA secured airport and passenger identification is not required. Here is a woman who grew up in a very small community, well known by everyone in the community and by the aircrews, who flies the route with great frequency, who was nonetheless refused transport based on a Pacific Wings company policy. This was unfortunate because Rita was on her way to visit her mother, Gloria Marks, who was airlifted out by the Coast Guard the night before and hospitalized in Honolulu. It's a matter of understanding and appreciating the situation...and using some common sense in support of a small, isolated community like Kalaupapa. Incidentally, I personally picked up Rita that morning and flew her back to Honolulu. No charge. Ease of Use - Makani Kai Air Charters brings travelers ease and convenience: our million-dollar passenger tenninal in Honolulu obviates the need for TSA security screening. This will: Allow lower fares because there are no gate fees Increase reliability in arrival and departure times Allow faster turn-around of aircraft and easy loading and unloading of passengers. Vastly improve the air transport experience-by-eliminating lines and security delays. Curtently plenty of Free public parking From a passenger terminal facility, there is none better in Hawaii. Free shuttle service around the airport area, downtown and Waikiki. Clean rest rooms fully ADA compliant. Air-conditioned wailing area. Passengers will simply arrive 20 minutes in advance of departure, board the aircraft and fly. We'll even provide complimentary shuttle service between the airport, downtown and Waikiki. Also, knowing that there are a few persons at Kalaupapa who are unable to walk, we are prepared to accommodate wheelchair-bound individuals with the Caravan. Several years ago, I made a commitment to disabled persons wanting to fly our scenic helicopter tours by fabricating an electric lift to transport the passenger from their wheelchair up into the helicopter. It was then and remains now my conviction that the disabled should have every opportunity to enjoy what other visitors enjoy, if at all possible. The lift provides easy and convenient access to our aerial tours and helps the disabled person maintain dignity while getting into and out of the aircraft. Similarly, we will design and'build a lift to allow the disabled passenger to be loaded into the Caravan while comfortably seated in their wheelchair. The transfer from the wheel chair to the aircraft seat can lake place once inside the aircraft. Makani Kai Helicopters - Makani Kai Air Charters - Ko Olina Helicopters - Pacific Air Express ~ Hawaii Aviation

7 Proposal to Provide Essential Air Service at Kalaupapa (Continued) In Summary - Our specially designed electric lift allows disabled persons easy access to the helicopter. We plan to build a similar lift to accommodate wheel-chair bound persons traveling on our Caravans. Makani Kai Air Charters is a home grown company, one with deep roots in the community, one with Hawaii and its people in its heart. Here is a professional organization with accolades from countless customers over two decades of sterling service, with the solid endorsement of the FAA and the communities of Molokai and Kalaupapa. We submit this proposal respectfully based not on the prospect of boosting the bottom line for stockholders, but rather from a genuine desire to provide good service to people who deserve such service. Since the residents of Kalaupapa have had to endure such financial hardship over the past several years, Makani Kai Air Charters will offer bonafide Kalaupapa residents 50% off established airfares. It is our fervent hope that the DOT takes a long look beyond schedules, subsidies and service level unmatched by anyone else in Hawaii and make the right choice for a community in need. Sincerely, G. Richard Schuman President Diane Schuman CFO Makani Kai Helicopters - Makani Kai Air Charters - Ko OJina Helicopters - Pacific Air Express - Hawaii Aviation

8 Estimated Annual Revenue: HNL - LUP - HNL $234, LUP - MKK - LUP $121, Total Revenue $355, APPENPEX A $125.00*per passenger one way $65.00* per passenger one way * plus FET Tax and Segment Fees. Prices set for two years * 50% discount for Kaluapapa residents. $ t $32.50 Estimated Expenses: Aircraft $180, Aircraft Lease Insurance $96, Million Dollar Liability Coverage Pilots $162, Fuel $228, Maintenance $117, Parts and labor Engine & Prop Reserve $97, Set aside for engine and propeller overhauls State Landing Fees $15, Administration $85, Total Expenses Operational Loss $981, $(626,184.40) Subsidy requested 1'* year $932, Subsidy requested 2""* year $923, Estimated passengers 1st year 2496 Departures 2616 Flight Hours 936 Daily Flight Schedule: Monday thru Saturday Depart Honolulu (HNL) 8;30am Depart Kalaupapa (LUP) 9:10am Depart Molokai (MKK) 9:30am Depart Kalaupapa (LUP) 1:30pm Depart Molokai (MKK) 1:50pm Depart Kalaupapa (LUP) 2:15pm Arrive Kaluapapa (LUP) 9:00am Arrive Molokai (MKK) 9:20am Arrive Kalaupapa (LUP) 9:40am Arrive Molokai (MKK) 1:40am Arrive Kalaupapa (LUP) 2:00pm Arrive Honolulu (HNL) 2;45pm Depart Honolulu (HNL) 3:00pm Depart Kalaupapa (LUP) 3:40pm Depart Molokai (MKK) 4:10pm Depart Kalaupapa (LUP) 4:30pm Arrive Kaluapapa (LUP) 3:30pm Artive Molokai (MKK) 3:50pm Arrive Kalaupapa (LUP) 4:20pm Arrive Honolulu (HNL) 5:00pm IVIakani Kai Helicopters - lulakani Kai Air Charters - Ko Olina Helicopters - Pacific Air Express - Hawaii Aviation

9 DanielK. Inouye, the most senior member of the U.S. Senate and the President Pro-Tempore, isshownhere with IVIakani Kai Air Charters owner Richard Schuman upon the senator's arrival back in Honolulu. Senator Inouye and his staff have the utmost trust In Makani Kai Air Charters and in this case flew with us to Kalaupapa on the island of Molokai for a visit. Makani Kai Helicopters - Makani Kai Air Charters ~ Ko Olina Helicopters - Pacific Air Express - Hawaii Aviation