Judging by a recently published U.S. General Accounting Office study on the effectiveness of government support for small community air service, subsidy proponents face an uphill battle against the Bush Administration’s proposal to cut EAS funding from $113 million to $50 million and eliminate the Small Community Air Service Development pilot program for fiscal year 2004. Far from raising concerns about the proposed budget’s potential to remove small communities from the nation’s air-transport network, the 19-page study essentially questioned the return on the government’s investment, stressing the programs’ escalating costs and declining usage base.
According to the study, the number of passengers flying on routes supported by the EAS program continues to fall while program costs have tripled since FY1995. The average subsidy per community between 1995 and 2002 rose from $424,000 to $828,000 (2002 constant dollars), resulting in a per-passenger increase from $79 to $229. Meanwhile, less than 10 percent of a given community’s potential passengers typically use the subsidized service, it said, while the rest quite rationally choose to drive to a larger airport offering lower fares or more frequent service. In FY2000, the median number of passengers on each EAS flight fell to just three.
As for the small community pilot program, authorized to provide $20 million directly to communities as part of AIR-21, the study concluded that efforts financed by the grants did little to attract new or enhanced service. If they do, said the report, the service typically lasts only as long as the funds continue to flow. However, the GAO acknowledged that the program needed more time to prove its effectiveness or lack thereof. It also conceded that the program funded a few “innovative approaches,” such as Mobile, Ala.’s program to provide ground services to an airline.
The GAO report said both EAS and the pilot program “appear to be meeting [their] statutory objectives,” but its authors expressed serious doubt about their effectiveness in fostering sustained air service once the subsidies end. More important than long-term viability, however, remains a given community’s commitment to the service, according to the GAO. “At many of the communities we studied, there was not a clear demonstration of community commitment to air service,” it said.
“The [EAS] program clearly has not provided an effective transportation solution for most travelers. Subsidies paid directly to carriers support limited air service, but not the quality of service that passengers desire, and not at the fares that attract local traffic.”
Several factors, including increasing carrier costs, limited passenger revenue and an increasing number of communities eligible for EAS subsidies, could place an unsustainable strain on the program, concluded the study. On the question of the small community program, the authors expressed concerns that the grants funded few innovative approaches for developing a self-sustaining air service, in effect turning it into another subsidy.
According to the GAO, the next budget authorization “provides an opportunity for Congress to clarify the federal strategy for assisting small communities with air service.” Of course, the first question hinges on the level of “commitment” the Administration chooses to assert. Notwithstanding the GAO’s skepticism, regional airlines have, in fact, more aggressively bid for EAS business since the last budget authorization raised funding from $50 million to $113 million. And while few would argue that the system needs an overhaul, airlines argue that a cut in funding will only weaken an already suffering industry.
“In the aftermath of September 11, the Bush Administration noted the value of maintaining the integrity of the national air service system in large and small communities,” said Maurice Parker, executive director of Phoenix-based Regional Aviation Partners. “Scarcely 18 months later, the Administration wants to cut EAS spending to the statutory minimum.
“While we acknowledge that an overhaul of the EAS system is much needed, the old ‘starve out’ plan is not the answer,” added Parker.
