Wednesday, July 20, 2011

Essential Air Service

When I was reading my news feed this morning, I read that Delta Airlines plans to end service to 24 small towns that it serves through one of their Delta Connection carriers using turboprop aircraft.  Some of the towns have less than 9,000 residents, and their planes are departing less than half full.  All the subject airports that Delta currently serves are taxpayer subsidized through the Essential Air Service Program enacted by congress at the time of airline deregulation in 1978.  Delta released a press release explaining that these communities are losing money, even under subsidy, and furthermore Delta is retiring their aging fleet of turboprops and 50 seat regional jets. 

So what is this program and why is it necessary, or as I'm about to argue, an unnecessary burden on taxpayers?

In a nutshell the EAS program heavily subsidizes the airline(s) selected by the program administrators based on competitive bidding by carriers wishing to operate under subsidy.  The EAS program office has published a history of the program.  In Delta's press release, they gave a brief explanation of the purpose of the program.
The EAS program was created to ensure small communities continue to have access to passenger air service. In some cases, airline service in EAS markets is subsidized by the government. The Airline Deregulation Act of 1978 provides that if a carrier is held in beyond the 90-day notice period, it is entitled to receive compensation "to pay for the fully allocated actual cost to the carrier of performing the ...service ... plus a reasonable return on investment that is at least 5 percent of operating costs; and to provide the carrier an additional return that recognizes the demonstrated additional lost profits from opportunities foregone [by continuing to be held in and providing service].
So essentially the US taxpayer is paying  airlines a rather substantial subsidy, including a profit margin to entice them to operate to communities that could not support air travel otherwise.  Basically any airport that had service prior to deregulation is eligible for EAS provided they are more than 70 miles from the nearest commercial airport.  The entire list of cities served by this program as of May 2010 can be read here.  Some cities are extremely close to major airports that in many cases are airline hubs.  Two that stuck out to me immediately were Jackson, TN, and Jonesboro, AR.  Both of these cities are 60 to 90 minutes from Memphis International Airport.  Is there any reason why we the taxpayers should be paying airlines to fly to cities like these that enplane less than 50 passengers a day and are an easy drive to a major airport?  Some states with powerful Senators and Congressmen have added pork to keep air service to towns that are in close proximity to one another, and not all that far from a commercial airport.  If you look at the spreadsheet to which I linked, the kings of subsidized airline pork include West Virginia, and Pennsylvania, including the late John Murtha's pork laden Johnstown Airport.  That particular airport is currently getting a second parallel runway built long enough to support large jets, but that is a different subject for a different blog post.

Other communities, mostly in the lightly populated western states, the argument can be made that subsidized air service is still necessary.  In a few cases, these towns are hundreds of miles from the nearest large or even medium sized city.  Still this list can be trimmed town to a small fraction of towns where government subsidized air service can be deemed necessary in the 21st century.  I went through the list with my atlas and the list can be reduced by 90% saving the taxpayers tens of millions of dollars annually.

This program is just one example of waste, and you may say, it is small potatoes when we are talking about current level of government spending.  However, if the president went through his budget with a fine toothed comb and line by line, as he promised during the campaign, and removed waste and overspending, and we had responsible people in Congress, we could get our debt under control, and actually have balanced budgets.  Unfortunately I don't see this anytime in the foreseeable future, or dare say in my lifetime.

Correction and update:  I've cleaned up my typos and need to hat tip the New York Times (via Yahoo Business).  I apologize for the omission.


  1. It's not just the subsidy to the airlines that is costing the taxpayers, it's the horrendous cost of staffing the airports. At one small airport in upstate New York it requires 17 TSA personnel at a cost of over $2 million/year to staff it.

    I can remember flying in the 1950s into small airports where the pilots took the tickets. Things were a lot looser then.

    If small communities want air service, they should be the ones to support it. As you point out, most are within an hour to an hour and a half of an established airport. I have lived in 3 different metro areas in recent years and all have taken over 45 minutes driving time to get to the airport.

  2. Thanks for your input. It occurred to me after publishing the piece, that TSA expenses also need to be taken into account. 17 TSA personnel seems excessive if the airport only has a flight or 2 a day, but then again, it is a government agency, and when has the government done anything efficiently? In many airports, TSA stands for Thousands Standing Around. Cheers!