Email Message to Brian Sekiguchi

Sent: Wednesday, May 18, 2005 4:32 PM
To: 'brian.sekiguchi@hawaii.gov'; 'Ron.V.Simpson@faa.gov'
Subject: Airport Compliance Task Force Meeting Minutes & Recommendations

17 MAY 05 1:00 PM

AIRPORTS DIVISION HEADQUARTERS

IN ATTENDANCE: FAA, Airports Division, Part 135 Regulated Operators Partnership 

MEETING NOTES:

(1) It was discussed and agreed that the absence of ACH should not impact or inhibit the ability of attendees to proceed with identification and discussion of airport compliance issues, northe advancement of related proposals, initiatives and fact finding by cognizant government agencies.

(2) It was discussed and agreed that compliance with federal grant assurances is the cornerstone of responsible airport management, and that bringing the state of Hawaii into compliance is a matter of priority for all stakeholders.

(3) It was discussed agreed that the nature and existence of certain compliance issues makes a task force approach appropriate to the circumstances and that the meeting would serve as the catalyst for such a working group.

(4) It was discussed and agreed that the current HDOT Airports Division Administrator has taken an active interest in assimilating pertinent statutory and regulatory information necessary to achieve and maintain compliance; and, that recent actions and decisions by the airport sponsor demonstrate an awareness of particular deficiencies and an effort to address them.

(5) It was discussed and acknowledged that some departments within the Airports Division, and in particular Property Management, appear to be resisting the Administrator's efforts to bring Hawaii's airports into compliance. Moreover, it appears these departments or individuals may be working at cross purposes or attempting to undermine compliance by failing to act on the instructions of the Administrator on a timely basis, or by implementing the Administrator's directives in a manner inconsistent with federal grant assurances.

(6) It was discussed and agreed that the airport residual ratesetting methodology appears to be dysfunctional on several levels:

a) Significant discounts, write offs and refunds of signatory air carrier debt over a period of years are apparentfrom audited financial reports, indicating the ratesetting methodology is not self-sustaining and the airport sponsor is not in compliance with key provisions of the Airport Master Lease and extensions

b) Air carriers that no longer qualify for signatory status, and who assume no financial risk for airport revenue shortfalls assurances prohibiting economic discrimination among or between classes of air carriers

c) The industry association recognized by the master lease and extensions has adopted discriminatory admissions and membership criteria which exclude specific types of signatory air carriers, effectively depriving them of the rights, benefits and privileges commonly associated with participation as a signatory carrier. Moreover, the officially recognized signatory group refuses to communicate with disenfranchised signatories except through its attorneys

(7) It was discussed and agreed that certain relationships between ACH, the Hawaii Airline Liaison Office and AvAirPros raise certain questions concerning apparent conflicts of interest:

a ACH and HALO are simultaneously administered and managed by the same Florida consulting firm - AvAirPros

b) AvAirPros provides consulting services regarding matters; directly related to ACH and HALO to the airport sponsor

c) AvAirPros is paid from an escrow account under the joint control of ACH and the airport sponsor

d) The escrow account used to pay AvAirPros was funded by the airport sponsor through an unusual series of financial transactions initiated by ACH and certain member air carriers

e) ACH, AvAirPros and HALO all appear to be simultaneously represented by the same influential law firm

(8) It was discussed and agreed that ACH, its lobbyists and lawyers possess considerable political power, and that this political power has historically been used to influence the actions and decisions of the airport sponsor.

(9) It was discussed and agreed that the airport sponsor must partner and align with the FAA in order to avoid political manipulation or intimidation resulting from efforts to bring Hawaii's airports into compliance with federal grant assurances.

(10) It was discussed and agreed that the FAA should be prepared to exercise its judicial enforcement options if necessary to protect the airport sponsor from political interference and to bring state airports into compliance.

(11) It was discussed and agreed that admission or membership standards which serve to exclude or discriminate against air carriers or classes of air carriers are inconsistent with the officially recognized role and status of ACH and HALO. It was further agreed that continued refusal to engage in direct, proactive dialogue with disenfranchised signatories regarding ACH membership or admissions policies undermines their advisory position and status with the Airports Division.

(12) It was discussed and agreed that any ad-hoc rate adjustments for new signatory carriers must be consistent with rate and charge methodologies applied to other, similarly situated signatories and, that no charge or rate changes will be implemented for signatories occupying commuter terminal areas until the Airports Division addressees conflicts in the competition plan and inequities inherent to the overall airport ratesetting methodology, which currently favors some signatories with significant discounts, write offs and refunds of airport use fees.

(13) It was discussed and agreed that recent changes to the main ramp and terminal at Kahului Airport have resulted in substantial changes to its nature and use, and that these changes were based on verbal representations and statements made during meetings involving unnamed participants with no minutes, agendas, plans, proposals or other written materials. It was acknowledged that these actions may place the airport in conflict with federal grant assurances because the airport sponsor failed to:

a) provide advance notice of proposed rulemaking to all signatories or general airport users

b) document plans, proposals, studies, memoranda or meeting minutes regarding these changes

c) include all signatory carriers in discussions regarding proposed changes

d) provide airport users with any written notice whatsoever that major, undocumented changes were being implemented

e) update the competition plan to reflect the new gate and terminal use methodology, including any net gate loss or gain resulting from these changes

(14) It was discussed and agreed that the Compliance Task Force would continue to hold regular meetings to identify compliance issues, solutions and progress.

(15) It was discussed and agreed that the airport sponsor will provide documentation pertaining to alleged 1995 overpayments by signatory air carriers. Specifically, the 2002 letter written by ACH on behalf of certain air carriers seeking refunds.

RECOMMENDATIONS AND ACTION ITEMS:

A number of recommendations and action items were discussed and proposed to address non-compliance issues.

(1) It was recommended that the airport sponsor schedule no further exclusive or private meetings with ACH or any other signatory lobbying group, and that any ACH meetings attended by any HDOT personnel be open to all signatories.

(2) It was recommended that the airport sponsor provide all signatories with written notification in advance of any meetings with ACH, and that any such meetings be scheduled at places and times that enable government officials and signatories from neighbor islands a reasonable opportunity to make travel arrangements necessary to attend.

(3) It was recommended that all signatories be provided with advance written notification of any proposed rulemaking (or changes to existing rules) that will affect or alter the nature and use of terminals, tarmacs, runways, taxiways, gates, counters, ramps or any other common airport spaces or facilities.

(4) It was recommended that all signatories be provided with an opportunity to participate fully in any meetings, deliberations, fact findings, work groups or other collaborative aspects of the rulemaking and revision process.

(5) It was recommended that the airport sponsor document specific proposals, plans, meetings, research, discussions nd decisions relative to any proposed rulemaking; that these documents be freely distributed to all signatories; and, that these documents be retained for future reference in the event questions or disputes should arise concerning the intent of (or accountability for) changes.

(6) It was recommended that the airport sponsor act immediately to rescind undocumented terminal and ramp use changes at Kahului Airport which have been made for the sole and specific benefit of a single dominant local air carrier. These changes effectively convey certain privileges, competitive advantages and exclusive rights to that carrier, which are not readily extensible to competitors.

(7) It was recommended that the airport sponsor request immediate assistance from the FAA Western-Pacific Region Airports Division in the investigation of certain questions related to the Prepaid Airport Use Charge Fund (PAUCF). It was further recommended that for the duration of such an investigation the airport sponsor:

a) request that a representative of the FAA Western-Pacific Region Airports Division be added as a required signatory to the escrow account containing PAUCF monies

b) authorize no further disbursements from the PAUCF which are not essential to ongoing airport operations

c) obtain concurrence and approval from the FAA Western-Pacific Region Airports Division before making any PAUCF disbursements

(8) It was recommended that the airport sponsor review and verify that all required state requests for proposals, competitive bidding and procurement processes have been observed relative to any contracts the Airports Division may currently hold with AvAirPros.

(9)It was recommended that the airport sponsor immediately suspend work and payment on any contracting services currently provided by AvAirPros which are not essential to ongoing airport operations, pending the outcome of joint investigation and fact finding by the FAA Western-Pacific Region Airports Division and the HDOT Airports Administrator

(10) It was recommended that the Airport Master Lease and extensions be amended to eliminate involvement of the ACH Chairman in airport budget preparation, review, presentation or development, in order to avoid federal grant assurance conflicts resultin from discriminatory ACH admissions policies or the appearance of conveying a prohibited exclusive right.

(11) It was recommended that the airport provide the signatory airlines with sixty days written notice of intent to terminate the extension agreement, and to adopt a compensatory rate setting method more appropriate to mature, revenue-generating airports like those found in Hawaii. It was further recommended that the airport establish a simplified schedule of charges and fees to be applied uniformly to all aeronautical users based upon individual utilization, and that all aeronautical users be afforded equal recognition and rights.

All parties in attendance agreed to attend a follow-up meeting in June. Available dates are June 6, 7, 8, 23 or 24. ;ACH members and executives will again be invited to attend.