Is Small Community Air Service Near Extinction?

It May Be Time To Sound The Warning

June 2002

This commentary comes exclusively to C/R News courtesy of Maurice Parker, executive director of Regional Aviation Partners. Mr. Parker sits on the Board of Directors for Mesa Airlines and previously served as a mediator with the National Mediation Board, specializing in airlines.

Small communities are losing service at an alarming rate. Since enactment of the Airline Deregulation Act in 1978, 38 communities have lost air service despite Congress's promise to maintain service to small communities when the industry was deregulated.

The Essential Air Service (EAS) program was created to keep this promise to small communities. However, budget shortfalls in the 1980s and early 1990s gave rise to regulatory agencies making changes that permanently eliminated many small communities from the nation's air transportation system.

In FY 1998, Congress finally decided to create permanent funding for EAS at $50 million a year under the Rural Air Service Survival Act, part of the FAA's reauthorization act. But right before September 11th, the Department of Transportation had given notice that 18 small communities would lose their EAS subsidy, effective October 1, 2001. And the tragedy was that if service had been discontinued, then communities would have been left without any connection to the national air transportation system.

Even worse, despite a doubling of EAS funding in fiscal year 2002 and projections to continue to fund the program at or above those levels for FY2003, the Department of Transportation (DOT) continues to systematically eliminate small communities each year. What is not spelled out clearly in the President's FY2003 budget is that community eliminations remain at the top of the DOT's "hit list" in spite of budget increases that are sufficient to maintain the program "without further eliminations!"

Congress needs to act now and provide some leadership and permanently fund EAS at levels consistent with the needs of the communities. Remember, subsided service is not a hole that you continuously pour money into. There is a return! These communities respond by hosting business and industries that generate tax revenue to local governments and the national treasury. Economic development is significantly enhanced in communities where reliable air transportation is available.

Congress must provide an environment for air carriers so that carriers can provide affordable and reliable air service to and from small communities. This starts with creating an operating environment where the major carriers will want to continue to serve small communities. A significant part of that equation must address labor issues, as they exist today. Regional and commuter airlines must be allowed to operate in an environment where they can provide safe and economical air transportation to small communities.

When Congress passed the Airline Deregulation Act on October 24, 1978, they simply said that any community receiving scheduled air service from a certificated carrier on that date was an eligible EAS community, and they instructed the regulatory agency (then the Civil Aeronautics Board, later the Department of Transportation) to establish procedures to determine when and how to invoke the law's provisions on behalf of individual communities. Thus, technically, even the very largest cities, such as New York, are EAS-eligible communities, but as a practical matter the Department only invokes the provisions of the EAS program for communities that have a very limited amount of air service.

Communities Losing EAS Funds Since 1978

Source: Office of Aviation Analysis, DOT

Over the years the Congress and the Department have worked to streamline the EAS program and increase its efficiency, mostly by eliminating service guarantees and subsidy support for communities that are within a reasonable drive of a major hub airport.

Currently, communities are not eligible to receive subsidized air service if they are within 70 driving miles of an FAA-designated Large or Medium Hub airport, or if their subsidy per passenger exceeded $200 (there is an exception from the $200-per-passenger standard for communities that are more than 210 highway miles from the nearest Medium or Large Hub).