1 Schuman Aviation Company Ltd dba Air Carrier Certificate MKHA108K 130 Iolana Place Honolulu Hawaii 96819 808-834-5813 Email richard@makanikai.com
2 Schuman Aviation Company, Ltd 130 Iolana Place, Honolulu, HI 96819 808-834-5813 Fax 808-837-7867 richard@makanikai.com October 30. 2013 Scott Faulk Transportation Industry Analyst U.S. Department of Transportation Office of Aviation Analysis 1200 New Jersey Ave., SE Washington, DC 20590 RE: Proposal to Provide Essential Air Service at Kalaupapa, Hawaii (Docket DOT-OST-2000-6773) Dear Mr. Faulk, 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 proposal is for a two year and four year service agreements. This proposal is for 12 nonstop round trips between Honolulu and Kalaupapa and 18 nonstop round trips between Kalaupapa and Molokai Airport, servicing the community seven days a week. The profile and pricing details are as follows: Two Year Proposal YEAR ONE Service Profile Details / Frequency Annual Subsidy Honolulu, HI to Kalaupapa, HI See Appendex B Kalaupapa, HI to Molokai, HI See Appendex B $787,386.00 YEAR TWO Honolulu, HI to Kalaupapa, HI See Appendex B Kalaupapa, HI to Molokai, HI See Appendex B $771,232.00
3 Four Year Proposal Service Profile Details / Frequency Annual Subsidy YEAR ONE Honolulu, HI & Kalaupapa, HI See Appendix B Kalaupapa, HI & Molokai, HI See Appendix B $751,040.00 YEAR TWO Honolulu, HI & Kalaupapa, HI See Appendix B Kalaupapa, HI & Molokai, HI See Appendix B $730,848.00 YEAR THREE Honolulu, HI & Kalaupapa, HI See Appendix B Kalaupapa, HI & Molokai, HI See Appendix B $710,656.00 YEAR FOUR Honolulu, HI & Kalaupapa, HI See Appendix B Kalaupapa, HI & Molokai, HI See Appendix B $690,463.00 For Revenue and Expense Details, See Appendix A.
4 Background As has been pointed out previously, Kalaupapa is one of the most isolated communities in the country. There is no road access to the area: the Kalaupapa peninsula sits at the bottom of 2,000- foot vertical cliffs. To get to Kalaupapa, one can hike down the cliff trail, ride a mule, or fly. Peninsula residents today rely on an annual barge to deliver food, equipment and fuel. EAS support is essential for the livelihood and daily survival for patients and residents of isolated communities. Since receiving the EAS contract in 2011, Makani Kai Air has continuously interviewed residents, workers and daily passengers to determine what we can do to improve our service. The answers, not surprisingly, are much the same as they were when we polled people in 2011: along with the usual requirements of safety, reliability and timeliness, those we spoke with reiterated their desire for a convenient flight schedule to facilitate being able to come to Honolulu for medical appointments and return to Kalaupapa the same day. If selected to continue the EAS to Kalaupapa, our daily schedule will remain as it is today as it appears to be serving the community well. In fact, Makani Kai Air has enjoyed a great deal of support from the community. Our fares have given Kalaupapa residents the freedom to once again travel to and from the settlement for medical appointments, shopping excursions and visits with family and friends. Enplanement records indicate that the total number of Kalaupapa residents flying into and out of the community increased by a significant margin after Makani Kai Air began service to the area. This trend is all the more impressive when you consider that many of the trips taken prior to the EAS were done so by State and Federal workers upon whom the ticket price had no bearing. Being part of the lifeline of a community and being able to service the community of Kaluapapa has been an honor. The patients of Kaluapapa endureed many generations of hardship since being banished to that peninsula. For Makani Kai Air, the EAS contact means more than simply moving people to and from the peninsula: we are part and parcel of the community, a responsible and caring organization that prides itself on being reliable, on time and serving with heart. If awarded a subsequent EAS contract, we will not raise fares to the residents of Kaluapapa from our current price. About Schuman Aviation Company Ltd Schuman Aviation Company Ltd. is the only locally owned business and operated Air Carrier in the State of Hawaii. We have owned Makani Kai Helicopters since 1996. 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 Carriage Company Ltd, which eventually carried the Cadillac, GMC, Hummer and Subaru brands, was in business for over a century.
5 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 and based at the Honolulu International Airport, is Oahu s oldest, largest and most experienced helicopter tour company. In the quarter century since, the company has provided aerial tours for over 14,000 persons annually without incident or accident. The company owns two Eurocopter A-Stars, one MD-500, and two Piper Chieftains. The company leases two Cessna Grand Caravans. Makani Kai Helicopters is the recipient of the FAA s Diamond Award for maintenance excellence as well as the prestigious Platinum Safety Award from the Helicopters Association International. Schuman Aviation Company is the only company of its kind in the U.S. to have been awarded IS- BAO certification. IS-BAO is a code of best practices designed to help flight departments worldwide achieve the highest level of safety and professionalism. IS-BAO safety certification is awarded to flight departments that have successfully met the rigorous IS-BAO standards as verified by an accredited IS-BAO auditor. More topically, Makani Kai Helicopters provides the helicopters and piloting services for the CBS show, Hawaii Five-0. 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, MD 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. Makani Kai Air has a reputation as a safe, reliable and accommodating air carrier, sensitive to the needs of the communities it serves. 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 currently provides the Kalaupapa and Molokai communities with unprecedented convenience, flight availability and reliability. In providing EAS service to Kalaupapa, we have had not one cancellation for aircraft mechanical issues. In two years of service, the longest delay for a flight was 45 minutes, and there were just three days when flights had to be rescheduled due to inclement weather. The chief reason for our enviable record is the availability of a back-up aircraft. If ever a maintenance issue should arise, we can always press into service our twin-engine Piper Chieftain. The back-up aircraft has another useful role: occasionally, inclement weather prohibits our Cessna
6 from making the flight. Regulations require single-engine aircraft to remain within gliding distance to shore. This means that our Cessna Caravans must climb to 7,500 feet over the channel, an altitude that sometimes is obscured by clouds. Our Chieftain can safely and legally fly beneath the weather and still make the trip. The Chieftain and crew are on call 24/7, so there is always an alternative available. With the FAA Commuter Authorized Piper Chieftain on hand, we can service the community of Kalaupapa with an exceptional degree of reliability. Makani Kai Air Charters proposes to continue providing scheduled services to Kalaupapa using the same nine-seat Cessna 208B Grand Caravans as the regular aircraft that we have used thus far. Reservations and booking Arrangements. Although it is quick and easy to book reservations online at our website, MakaniKaiAir.com, we have staff on hand to handle phone 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 person 24 hours a day, seven days a week, and usually on the first ring. No automated tellers, no distractions or diversions. Unlike any other EAS destination in the country, Kalaupapa does not allow free access, and requires persons wishing to visit to first gain sponsorship or to register for the Damien Tour. The State of Hawaii Department of Health also restricts persons from under the age of 16 from visiting the settlement. No person can come to Kalaupapa without first gaining a sponsor. Therefore it has become our responsibility to vet would-be passengers prior to permitting them a ticket to fly to the peninsula. This passenger screening is conducted without charge; it s just another service we provide to protect the community from unauthorized visitors. Each resident of Kalaupapa has a personal account with Makani Kai Air, allowing them to email or call in reservations at any time that is convenient. Flight Schedule Makani Kai Air s current flight schedule was developed by the residents of Kalaupapa. This followed a period of gathering comments in community meetings and took into account all parties residing in Kalaupapa, including State of Hawaii workers and Federal Department of National Parks employees. Makani Kai Air adjusted its fight schedule to better accommodate Kalaupapa s annual barge day. Additional flights were added to bring in personal to load and unload the barge. And our return schedule was likewise modified in order to meet the needs workers when they had completed their tasks. Flight schedules also are changed when requested to meet the needs of the community for occasional celebrations or special gatherings. We feel that it is a matter of understanding and appreciating the situation and using common sense to support a small, isolated community.
7 Ease of Use Makani Kai Air Charters brings travelers ease and convenience: our million-dollar passenger terminal in Honolulu obviates the need for TSA security screening. This: Allows lower fares because there are no gate fees Increased on-time performance in arrival and departure times Allows faster turn-around of aircraft and easier loading and unloading of passengers Vastly improves the experience by eliminating lines and security delays In addition, we offer benefits to Kaluapapa travelers unavailable from conventional air carriers. These benefits include: Free overnight parking Free shuttle service in and around the airport area, downtown and Waikiki No bags fees No overweight bag fees No fees for pets No restrictions on individual body weight* No rescheduling fees No cancellation fees No charge to transport unaccompanied packages to and from Kalaupapa Clean rest rooms fully ADA compliant. Air-conditioned waiting area. Passengers simply arrive 15 to 20 minutes in advance of departure, board the aircraft and fly. Also, because there are non-ambulatory residents at Kalaupapa, we engineered the ability to transport wheelchair-bound passengers. We have the equipment at Kalaupapa and in Honolulu to assist passengers into and out of the aircraft, safely and with dignity. This is an important distinction as some competitors simply do not accept wheelchair bound individuals. * An important consideration for at least two of Kalaupapa s patients who weigh in excess of 300 pounds and thus may be restricted from flying with our other competitors.
8 In Summary 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. We are 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 and based upon a genuine desire to provide good service to people who deserve such service. It is our fervent hope that the DOT makes the right choice once again for the people and the community of Kalaupapa. Sincerely, G. Richard Schuman President
9 APPENDEX A Estimated Annual Revenue: Kaluapapa Resident Prices Between HNL & LUP $90,480 $ 72.50* Kaluapapa residents price for term of contract Between MKK & LUP $79,560 $ 42.50* Kaluapapa residents price for term of contract * plus FET Tax and Segment Fees. Total Revenue $170,040 Averaged Estimated Expenses over the course of the contract: Aircraft $180,000.00 Insurance $96,000.00 Pilots $162,240.00 Fuel $228,150.00 Maintenance $117,000.00 Engine & Prop Reserve $97,500.00 State Landing Fees $15,974.40 Administration $85,000.00 Total Expenses $981,864.40 Operational Loss $(811,824.00) Departures per year: 2616 Flight Hours per year: 936 TWO YEAR SERVICE PLAN Subsidy requested 1 st year $787,386.60 Estimated passengers 2800 Subsidy requested 2 nd year $771,232.80 Estimated passengers 3000 FOUR YEAR SERVICE PLAN Subsidy requested 1 st year $751,040.00 Estimated passengers 2800 Subsidy requested 2 nd year $730,848.00 Estimated passengers 3000 Subsidy requested 3rd year $710,656.00 Estimated passengers 3200 Subsidy requested 4 th year $690,463.00 Estimated passengers 3400
10 APPENDIX B