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 May 6, 2013 Susan L. Kurland Assistant Secretary for Aviation and International Affairs RE: Proposal to Provide Essential Air Service at Kamuela, Hawaii Dear Ms. Kurland, I am responding to the notice Issued by the Department of Transportation on the 25 th of April, 2013, related to providing Essential Air Service to Kamuela, Hawaii. 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 Kamuela, Hawaii. The proposed two year service profile and pricing details are: YEAR ONE Service Profile Details / Frequency Annual Subsidy Honolulu, HI and Kamuela, HI Two (2), nonstop round trips Between Honolulu International Airport (PHNL) and Kamuela Airport, (PHMU) Monday through Saturday $998,950.00 YEAR TWO Honolulu, HI to Kamuela, HI Two (2), nonstop round trips Between Honolulu International Airport (PHNL) and Kamuela Airport, (PHMU) Monday through Saturday $948,925.00
3 For Revenue and Expense Details, See Appendix A. Background Kamuela is one of the most isolated communities on the island of Hawaii. Pacific Wings, currently the only scheduled commercial airline serving Kamuela for the past decade, did so under an EAS subsidy agreement until it canceled the agreement. 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 Kamuela in order to re-submit a proposal to provide EAS to Kamuela. They employed a similar tactic with the community of Kaluapapa on the island of Molokai. In order to determine what the community of Kamuela 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 they would like to be able to come to Honolulu direct from Kamuela for business or personal appointments and return to Kamuela the same day. About Schuman Aviation Company Ltd Schuman Aviation Company Ltd. is a locally owned business that has operated 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. 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. Makani Kai Helicopters, established in 1988, based at the Honolulu International Airport, is Oahu s oldest, largest and most experienced helicopter tour company. In 25 the years since its inception, the company has provided aerial tours for over 14,000 persons annually without incident or accident. The company employs two Eurocopter A-Stars, an MD500 and uses a Robinson R-44 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. The company received further recognition of its commitment to safety in 2012 when it became accredited by the International Standard for Business Aircraft Operations (IS-BAO), the first such aircraft operator in the country so distinguished. 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 for Hawaii Five-0.
4 Schuman Aviation Company Ltd. dba Hawaii Aviation Services is an FAA Part 141 Repair Station (Certificate # MKHR108K) and is authorized by the FAA to perform work on Cessna 150s, 172s and 208 Caravans, Piper Chieftains, Eurocopter A-Stars, MD500 s and Robinson helicopters, as well as Lycoming, Turbomeca, Allison, and Pratt & Whitney engines. All aircraft maintained under an FAA Repair Station Certificate are accountable to a higher level of maintenance tracking, reliability and accountability. In 2009, the company expanded its operations with the addition of two Piper Chieftains, two Cessna Grand Caravans, and established Makani Kai Air Charters. The Grand Caravans make regular scheduled flights to Kaluapapa, Molokai, 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 carrier sensitive to the needs of the Molokai community. 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 air service to Kamuela using nine-seat Cessna 208B Grand Caravans, the same aircraft currently used by the incumbent carrier. The Caravan has proven to be an exceptionally reliable aircraft for Makani Kai and has enjoyed a 99.9%+ reliability record in conducting our current EAS commitment to Kalaupapa on the island of Molokai. As you may be aware, FAA regulations stipulate that a single-engine aircraft such as the Caravan must remain within gliding distance to shore whenever carrying passengers over water. Occasionally, weather will preclude climbing to such high altitudes and safely descend into Kamuela, which means possibly delaying or cancelling flights. Caravans must also submit to regular schedule maintenance that will take the aircraft out of service for a period of hours up to a few days. In either event, our back up plan to continue the reliable service is to launch into service one of our back up aircraft, the nine seat Piper Chieftain. Because the Piper is a twin-engine aircraft it has no such altitude restriction. We can fly below the weather on our way to service Kamuela thus increasing reliability and dependability. Having a backup aircraft available and a pilot on standby, every day, has made our Air Carrier reliability and dependability unmatched in the State of Hawaii. Just ask the residents of Kalaupapa. Makani Kai s convenient location at the Honolulu International Airport means Kamuela passengers will have easy access to the national transportation network and every large domestic FAA Part 121 air carrier. Although it will be quick and easy to book reservations online through our website, we plan to fully staff a phone bank to handle reservation requests and answer questions. This is primarily to accommodate those Kamuela residents who lack Internet access. Our phones are answered by a live person 15 hours a day, seven days a week.
5 Community Views We interviewed several Kamuela residents to determine what they are looking for in scheduled air service to the community. Besides the obvious plea for lower air fares and reliable service, there was consensus that the company chosen to provide EAS to Kamuela 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 Kamuela 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 carrier should be financially stable and able to provide air service for years to come. In addressing that last concern, I d like to point out that Schuman Aviation is a responsible corporate citizen, held in high regard within the Hawaii business community, and is recognized by Hawaii Business magazine for excellence in small business. The company is well run and financially strong. Ease of Use Makani Kai Air Charters brings travelers ease and convenience: our two million-dollar passenger terminal in Honolulu obviates the need for TSA security screening. This will: Allow lower fares because there are no gate fees Increase consistency in arrival and departure times Allow faster turn-around of aircraft and ease the loading and unloading of passengers Vastly improve the air transport experience by eliminating lines and security delays The comfortable and spacious air-conditioned passenger terminal offers other advantages: Plenty of free parking Free shuttle service around the airport area, downtown and Waikiki Clean, ADA-compliant rest rooms Passengers will simply arrive 20 minutes in advance of departure, board the aircraft and fly. Also, in recognition of the fact that there are persons in Kamuela who are not ambulatory, we are prepared to accommodate wheelchair-bound individuals with the Caravan. Several years ago, I made a commitment to disabled persons by fabricating an electric lift to transport wheelchairbound passengers into the helicopter. It was then and remains now my conviction that disabled persons 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 disabled persons maintain dignity while getting into and out of the aircraft.
6 In Summary Makani Kai Air Charters is a home grown company, one deeply rooted in the community, one with Hawaii and its people in its heart. Here is a professional organization with accolades from countless customers over a quarter century 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. It is my personal belief that should we provide Kamuela with the same on time dependable service which we have been providing the residents of Kalaupapa, the ridership will increase with the hopes that the increase in passengers would be enough to someday go subsidy free without having to raise the prices to the ridiculous level Pacific Wings employed. It is our fervent hope that the DOT takes a long look at the capabilities and commitment to unmatched levels of service offered by Makani Kai and make the right choice for a community in need. Sincerely, G. Richard Schuman President Diane Schuman CFO
7 Estimated Annual Revenue: APPENDEX A HNL MUE - HNL $93,600.00 $150.00*per passenger one way * plus FET Tax and Segment Fees. Total Revenue $93,600.00 Estimated Expenses: Aircraft $180,000.00 Aircraft Lease Insurance $76,000.00 Pilots $162,240.00 Fuel $269,568.00 Maintenance $187,250.00 Parts and labor Engine & Prop Reserve $149,800.00 Set aside for engine and propeller overhauls State Landing Fees $15,600. Administration $85,000.00 Facilities & Utilities $55,000.000 Total Expenses $1,179,658.00 Operational Loss $(1,086,058.00) Subsidy requested 1 st year $998,950.00 Subsidy requested 2 nd year $948,925.00 Estimated passengers 1st year 624 Departures 1248 Flight Hours 1498 Daily Flight Schedule: Monday thru Saturday Depart Honolulu (HNL) 5:30am Depart Kamuela (MUE) 7:05am Depart Honolulu (HNL) 4:00pm Depart Kamuela (MUE) 5:30pm Arrive (Kamuela) 6:45am Arrive Honolulu (HNL) 8:20am Arrive Kamuela (MUE) 5:15pm Arrive Honolulu (HNL) 6:45pm