Update on Waimea Airport and Mokulele

KAILUA-KONA — After the federal government announced plans to end a subsidy for air service at the Waimea-Kohala Airport, the president of Mokulele Airlines said Wednesday he wants the airline to continue to be able to fly in and out of North Hawaii.

“We’re still hopeful that we’re going to be in Waimea,” said Rob McKinney. “That’s our intention and that’s our goal, that Waimea still has air service of some kind.”

Meanwhile, lawmakers are pursuing options to continue the subsidy for the community, which is at risk of losing the federal program because of a change in law that requires certain communities to kick in a share of the cost.

The U.S. Department of Transportation earlier this month announced they were ending a subsidy to Mokulele Airlines for Essential Air Service, a federal program designed to guarantee air service for small communities across the nation, effective Jan. 16.

The department has had a contract with Mokulele Airlines since 2013 under which the airline provides the airport with 12 nonstop round trips each week at an annual subsidy rate starting at $494,291 in 2013 and dropping each year to $412,389 for the last year of the contract ending Sept. 30 of this year.

This past May, three months after the department began soliciting proposals for a new contract to start last month, the passage of a federal spending bill added a new requirement for essential air service contracts for communities less than 40 miles away from the nearest small hub airport.

That requirement bars any money from being spent on a new contract until the Secretary of Transportation negotiates with the local community over a local cost share. Although the Hawaii Department of Transportation initially offered to contribute 5 percent of the contract, it was later determined that the state agency was legally barred from putting any of its funds toward a local cost share.

As a result, the feds determined local officials had “failed to negotiate a local cost share,” according to the order terminating the subsidized service, and decided to end the subsidy for Essential Air Service at the Waimea-Kohala Airport.

But McKinney said he’s hoping an end of the subsidy doesn’t mean the end of the airline’s service at the Waimea-Kohala Airport.

“Mokulele is proud to have been Waimea’s hometown airline for these past four years, and it’s really our intention to continue to do that,” he said. “And we’re just hoping we can work out these logistical snags in the interim.”

The flights in and out of Waimea are a popular choice for travelers, he added.

“We feel like we’re doing a pretty good job for Waimea,” he said. Currently, they’re completing 97 percent of their published flights, flying 78 percent full and fares are averaging $62, “which I think is a very fair deal for the community that needs to get off the island,” he added.

While they’re exploring all options for staying in Waimea after mid-January, they aren’t going to be able to continue as they currently are.

If the subsidy ends, he said, the schedule will most likely have to be curtailed and fares will have to increase, though to what extent isn’t yet known.

“But we will make every attempt to be good corporate citizens and neighbors and provide the service that the community has grown accustomed to over the years,” he said. “But it won’t be as it is today with the same fares and the same frequency.”

Mokulele Airlines also serves Imperial, California, under an Essential Air Service contract and has applied to bring Hana Airport back into the Essential Air Service program.

While only about 2 percent of the airline’s revenue comes from the federal government, he said, Essential Air Service is still exactly that — essential — for the Waimea community.

“As it pertains specifically to the community of Waimea, it really is necessary for us to be able to provide the same level of service at the same affordable fares that we always have.”

And once a community loses Essential Air Service, he added, “it’s very rare that it ever comes back.”

When the feds solicited community feedback on a new contract, nearly 70 area residents wrote back. While some residents were split between selecting Mokulele Airlines or the other bidder, Makani Kai Air, as the carrier of choice, they unanimously supported continuing subsidized service at the airport, often citing convenience and the need to frequently travel for business or medical reasons.

Some residents also wrote in favor of expanded service from the Waimea airport to support direct flights to Honolulu.

McKinney said Mokulele Airlines hasn’t offered service from Waimea to Honolulu mostly because of increased price sensitivity from the federal government.

Meanwhile, the area’s lawmakers are working to keep the subsidy either by finding a way to support the community’s share of the cost or amending the law.

Rep. Cindy Evans, D-North Kona, North Kohala and South Kohala is pursuing ways the community can meet the requirements for the local cost share to support the subsidy.

It’s a three-part effort, she said, focused on the details of how the community could support the cost share requirement.

The first two issues are negotiating the exact amount of the community’s cost share and the logistics of paying it.

Although the subsidy rate is identified in federal orders as an annual sum, the U.S. Department of Transportation actually pays carriers based on each flight completed.

Each month, carriers invoice the department for the subsidy based on flights completed the previous month and have to report any deviations or service adjustments.

For example, the subsidy rate can be reduced if the carrier substitutes a smaller, less expensive aircraft and the carrier could also lose out on compensation for any flights that don’t operate in conformance with the contract.

But making monthly payments could be a tough hurdle to meet the local cost share, said Evans.

“If we had to write checks every month, it gets almost prohibitive,” she said.

Evans added that she’s also exploring potential revenue sources to support the community cost share.

Sen. Lorraine Inouye (D-Hilo, Hamakua, Kohala, Waimea, Waikoloa and Kona) said she’s supportive of Mokulele Airlines continuing to serve the airport, but is skeptical about whether the community can meet the cost share requirement. Given that it’s a four-year contract, she said, any source of funds would need to be able to commit for the full term.

As a result, she said, she plans to work with the state’s congressional delegation to see if the law establishing the cost share requirement can be amended. Inouye added that she plans to introduce a resolution next session urging the state’s lawmakers in Congress to pursue a change in the law.