Amendment Cover

BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.

Application of ) ) KONA ASSOCIATES, L.L.C. ) Docket OST-2004-17689 ) for an exemption pursuant to 49 U.S.C.§40109 ) from the provisions of 49 U.S.C.§41101 ) (indirect air transportation) ) )

APPLICATION OF KONA ASSOCIATES, L.L.C. FOR AMENDMENT OF EXEMPTION

Communications with respect the this document should be addressed to:

Mark W. Atwood Kathryn Sobotta Cozen O’Connor 1200 19th St., N.W. Washington, DC 20036 (202) 463-2513 [email protected] [email protected]

April 2, 2021

NOTE: Any person may comment on this application by filing an answer in the above- referenced docket and serving a copy on undersigned counsel and all parties on the attached service list. Answers are due not later than April 19, 2021.

BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.

Application of ) ) KONA ASSOCIATES, L.L.C. ) Docket OST-2004-17689 ) for an exemption pursuant to 49 U.S.C.§40109 ) from the provisions of 49 U.S.C.§41101 ) (indirect air transportation) ) )

APPLICATION OF KONA ASSOCIATES, L.L.C. FOR AMENDMENT OF EXEMPTION

Pursuant to 14 CFR Part 302, Subpart C, Kona Associates (“Kona”) hereby requests the Department to amend the exemption authority granted by Order 2004-8-8 and amended on May 2, 2014, to increase the number of members allowed to participate in the Kona Shuttle program from 150 to 250. In support of this request,

Kona submits as follows:

Background

In August 2004, the Department granted Kona, a Delaware non-profit limited liability company, an exemption from 49 U.S.C.§ 41101 and the applicable DOT regulations to permit Kona to engage in indirect air transportation. (Order 2004-8-8.)

Specifically, Kona was authorized to arrange and make available to its members charter shuttle air service between Oakland, California, and Kailua-Kona, Hawaii.

The members of Kona are all club members and residents of three very exclusive resort communities on the Kona Coast of Hawaii, developed by Discovery Land

Company: Kuki’o, Hualalai, and Mauna Lani. Many of the members maintain principal

residences in the San Francisco Bay area, and use the shuttle flights to visit their homes in Hawaii. In order to qualify for use of the shuttle flights, a member must pay a substantial up-front fee to join, and substantial annual dues thereafter. These fees and dues cover the costs of operating the flights. In return, members are entitled to a number of seats based on the level of dues they pay. Seats may only be used by the members, their families, guests and household staff. Seats may not be sold, traded or otherwise transferred to the public. The three communities are small, and Kona originally forecast the maximum number of participants as 120 members.

Based on the circumstances and limited nature of the shuttle program, the

Department granted Kona an exemption, conditioned on adherence to the conditions described by Kona in its application. Kona launched the shuttle program in January

2008 after achieving the minimum required number of members. It has operated successfully since, on a twice-weekly basis, and the program has increased in popularity amongst residents. Because of the number of residents who wanted to be included in the program, Kona requested on February 24, 2014 that its membership limit be increased to 150. The Department approved that increase on May 2, 2014.

Since that time, interest amongst eligible members of the three communities has continued to increase, and the Shuttle’s waiting list has expanded beyond Kona’s expectations.

While Kona intends for this program to remain small and exclusive, in accordance with the wishes of its members, it now believes that a limit of 250 members will better enable it to serve the needs and wishes of both existing and potential members. The shuttle program fulfills an important need for many of these residents.

The current and expected levels of commercial scheduled air service to the Island of

Hawaii from the Bay Area are less than satisfactory to the residents of the communities; there are only two daily flights to Kona from the Bay Area, and the first-class seats that the members wish to book are frequently unavailable. Moreover, the current health concerns about traveling in crowded airplanes exacerbate the undesirability of having to depend on scheduled transportation. The service afforded by Kona Associates to its members provides a level of comfort, security and convenience that cannot be duplicated by any commercial carrier in any event.

Increasing the membership limit by such a modest amount would not affect the very restricted nature of this program. The shuttle will still be limited to the members of the same three communities, and all of the other conditions and restrictions contained in the exemption order will remain unchanged.

This request is consistent with precedent. The Department has granted similar exemptions to The Yellowstone Mountain Club, L.L.C., and Baker’s Bay Associates,

L.L.C. (Order 2012-2-1 and Notice of Action Taken issued June 6, 2012, Docket OST-

2012-0053) and more recently to Kona Express of Hawaii (Notice of Action Taken issued April 11, 2018, Docket OST-2018-0013). All these exemptions were based on concepts very similar to Kona’s – the provision of air transportation to residents of very exclusive resort communities who pay membership fees to participate in the program.

In these three cases, the participating membership limitations ranged from 300 to 395.

Thus, even with the 100-member increase requested, the Kona program will still be considerably smaller than the programs approved by the Department.

ACCORDINGLY, Kona Associates requests that the Department further amend and modify the exemption authority granted by Order 2004-8-8 to permit the participating membership of the shuttle program to be increased to a maximum of 250 members.

Respectfully submitted,

Mark W. Atwood Kathryn Sobotta Cozen O’Connor 1200 19th St., N.W. Washington, DC 20036 (202) 463-2513 [email protected] [email protected]

Counsel for Kona Associates, L.L.C.

Dated: April 2, 2021

CERTIFICATE OF SERVICE

I hereby certify that I have this date served a copy of the foregoing Application by electronic mail upon the following:

DATED: April 2, 2021 ______Dawn M. Pefley