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Feds to end subsidy for air service to Waimea airport

KAILUA-KONA — The U.S. Department of Transportation in January will end a subsidy for air service at the Waimea-Kohala Airport following unsuccessful efforts to negotiate sharing the subsidy’s cost.

The order, issued on Tuesday, ends a subsidy to Mokulele Airlines for air service to the airport, effective Jan. 16. The order doesn’t restrict that airline or any other carrier from offering unsubsidized service after the subsidy ends.

Rep. Cindy Evans, D-North Kona, North Kohala and South Kohala, said she’s speaking with officials on the county, state and federal levels about the impact of the subsidy’s termination and whether there is still an opportunity to find a cost share for the program.

Sen. Lorraine Inouye, D-Hilo, Hamakua, Kohala, Waimea, Waikoloa and Kona, said while she’s disappointed about the scheduled termination of the subsidy, she’s looking into usage data for the airport and communicating with officials at various levels to explore what options are available.

The airport last year recorded the second lowest number of passengers of any airport in the state, according to state air traffic statistics, with only 10,408 passengers. It recorded the fourth lowest number of takeoffs and landings, just under 2,800 for the year. By comparison, the Ellison Onizuka Kona International Airport at Keahole recorded more than 3 million passengers and more than 135,000 takeoffs and landings.

A separate report on state airports’ revenue and expenses does not break out the Waimea-Kohala airport individually.

The Essential Air Service program is a federal program designed to guarantee air service for small communities across the country. The U.S. Department of Transportation lists more than 173 subsidized Essential Air Service communities across the country.

The community identified by the feds as Kamuela is one of just two subsidized Essential Air Service communities in Hawaii, along with Kalaupapa on Molokai, which recorded more passengers than Waimea-Kohala last year, 15,285, but fewer takeoffs and landings, just 2,215.

The current contract for the Waimea-Kohala Airport goes back to 2013, when the U.S. Department of Transportation picked Mokulele Airlines to provide Essential Air Service from October of that year through this past September, according to department documents.

Under that order, the airline has provided the airport with 12 nonstop round trips each week to either Maui or Honolulu via nine-seat aircraft. The subsidy rate started at $494,291 the first year and gradually lowered to $412,389 for 2017.

In total, the subsidy was valued at close to $1.76 million over the four years.

This past February, the department started soliciting proposals for the new contract to start last month.

Both Mokulele Airlines and Makani Kai Air submitted proposals for consideration, according to the order released earlier this week.

But the federal 2017 omnibus spending bill, signed into law in May, barred any money being used for an EAS contract with a community less than 40 miles from the nearest small hub airport before the secretary of Transportation has negotiated a cost share with the community.

That means the requirement for negotiations includes the Waimea-Kohala Airport. The department measured the distance from the post office in Waimea to the Ellison Onizuka Kona International Airport at Keahole, a distance that comes to about 36 miles.

According to the U.S. DOT’s list of subsidized Essential Air Service communities, which does not include communities in Hawaii and Alaska, there are only two other communities that are less than 40 miles from the nearest small hub: Pueblo, Colorado; and Lancaster, Pennsylvania.

In March, the Waimea Community Association hosted a forum to talk about continued service at the airport and hear from Mokulele Airlines and Makani Kai Air.

But the issue of cost sharing at the local airport wasn’t on the table at the time, said Patti Cook, president of the nonprofit Waimea Community Association.

“At that point, it was really a conversation for subsidized EAS service for Waimea,” she said.

It wasn’t until later in the summer, she said, that federal representatives contacted her about cost sharing. But that’s an issue beyond the scope of what the community association does.

“That’s beyond our ability,” she said, saying she checked that the feds had been coordinating with government leaders as well.

Overall though she said she felt there was a “fair amount of outreach” from the federal government during the process.

That March meeting was the only community association meeting about the subsidized service and nobody from the federal government was in attendance.

In July, the director of the state Department of Transportation, Ford Fuchigami, wrote to the federal DOT in support of continuing the Essential Air Service program at the airport. In that letter, he said his department’s Airports Division would contribute 5 percent of the upcoming contract.

That money would be sourced from airport revenue, according to the federal order.

But Federal Aviation Administration policies ban the use of airport revenue to subsidize airline service.

When the feds told the state that airport revenue couldn’t be a part of the local contribution, Fuchigami indicated there wouldn’t be any state funds available for a cost share. State Department of Transportation spokesman Tim Sakahara said Friday the department “is not allowed by law to use its funds to pay for the local cost share.”

At some point, the department received a “final offer from the community” for a contribution of $500 as the local cost share. Documents state that the full contract was about $1.6 million.

The federal order doesn’t identify the source of the $500 offer or when it was made.

In any case, the feds considered that $500 offer too minimal to consider and tried to continue negotiations “for a substantive cost share proposal.”

In September, an email referenced in the order from Fuchigami indicated that they were going to “end all attempts to provide EAS for Waimea” and affirmed at the end of October that the state couldn’t provide funding toward a cost share.

As a result, the federal Department of Transportation made the decision to terminate the subsidy for Essential Air Service at the Waimea-Kohala Airport.

The existing contract with Mokulele, which was already extended once through the end of October, was extended in Tuesday’s order a second time through Jan. 15 “to allow for an orderly shutdown of service and not disrupt travel plans over the upcoming holiday season.” A representative for Mokulele did not return a request for comment on Friday.

 

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