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GUEST POST: Fixing The Essential Air Service Program

15 Jul

Editor’s note: It’s my las day of vacation, so we have reached the last guest post from my aviation/airline/travel geek friends.  Nathan Vallier has worked for a who’s who in small air service providers, including Mesa Air, RegionsAir and Hawaii’s go! Mokulele, where among other things, he helped operate the Essential Air Service program. Small community air service is an issue near and dear to my heart. You can check out my Feb. 9 post on the topic here.  Vallier has also consulted on EAS, which gives him a unique view on the ins and outs of the program, and how it can be fixed.  Enjoy! 

For as long as I can remember, the Essential Air Service (EAS) program has been a “love and hate” program in Washington D.C.   Uneducated congressmen love to make it the poster child for “bad government,” while those protecting it fail to get their message across.   While there are some bad politicians out there, some bad airlines also exist that are taking this program for all its worth, and unfortunately it costs you, the consumer, in the end.

EAS initially started out as a small program to guarantee flights to itty bitty communities like Parsons, Kansas, and Mattoon, Illinois.  Now we’re seeing larger markets like Decatur, Illinois getting $3 million a year for subsidies.  In 2000, there were 80 subsidized cities with a total cost of $45 million.  In 2010, there were 109 subsidized cities with a total cost of $170 million.  Ouch.  But still, this is just a tiny little program compared to other government spending.   

Yet congressional leaders in districts not affected by EAS (or those whose markets became ineligible) love to say how this is a government pork program, it only helps the rich, etc.  They get in some really good sound bites, and the opposition rarely gets as good coverage.

What you don’t hear are ways we can make this program work, rather than let it keep going at its current pace.   I think there’s room to make this program work, but its going to require some changes.

  1. Stop paying airlines full subsidy when an airport closes, for whatever reason.  We should not be providing a full subsidy to an air carrier when they can’t operate.   Many airlines have fixed costs and variable costs, so why not have a formula so that the basic costs are met?  So if a runway has to be closed for repairs and it requires closure of the airport for 2 weeks, then the carrier would receive 50% to 66% of their subsidy so they can maintain their station, keep paying personnel, and pay for the planes.  But that’s IF these costs are still incurred. 
  2. Get rid of the 15-seat guarantee.  Major carriers are forcing their partners to drop turboprop planes, so there’s going to be a huge vacuum for service between 9 seats and 50 seats.  We may see some new operators, but what we are getting are a lot of smaller 9-seat operators who are loving this business and it will help them grow.   This block is costing the Dept. of Transportation millions a year as it has to pick an operator with a 30- to 50- seat turboprop/jet to fly in a market where a 9-seat operation can do it cheaper & better.
  3. Match capacity with demand.  Right now, the minimum service is 2 flights a day with 19-seat planes.  But what if you only board 2 passengers a day? This is where EAS gets expensive – as you, the American traveler, picks up the tab.  So why not follow #2 and allow a 9-seat operator to come in and offer 2 or 3 flights a day, and actually give these communities a chance?  Most of these markets are losing passengers because they are less competitive – being price and schedule drivers.  That’s why Decatur is on the EAS list.  The city used to board over 50,000 people a year when it had shuttle service to St. Louis, 3 flights to Indianapolis, and 4 to Chicago.  But area airports like Bloomington and Champaign were able to lure new carriers – and now you have multiple carriers & frequencies out of Bloomington.  So as a traveler, do you really want to sit in O’Hare for 5 hours waiting for your flight to Decatur, or wait an hour and hop to Bloomington and Champaign, then drive 45 minutes home?  (Note: Bloomington was also an original Air Tran & Frontier (new one) market, which significantly dropped fares).
  4. Penalize airlines for not following through with their bid.  EAS has become a salesman’s dream.  You can go in, promise communities everything they want, win the award, then offer sub-par service.  This is happening too often and its costing communities.  One airline has gone as far as to drop their subsidy as retaliation to airports that seek other carriers or complain to the DOT (Once you drop your subsidy, the airport is then removed from the subsidized program and rules).  Aggressive bidding also hurt airlines, which is one reason why RegionsAir, Lone Star, and Big Sky are no longer in business.  Airline planners would try to “out bid” incumbent airlines. DOT would regularly replace an airline that’s been in a market for 20 years if it would allow them to save money – sometimes as low as $100,000 a year.   ‘when this happens, it can leave holes in the other airlines network, resulting in “orphaned” routes which can increase costs greatly.
  5. Drop seasonal subsidies.  Gustavus, Alaska is in my back yard… and it’s a fun place to visit.  It’s a 15-minute flight on Alaska Airlines, or 25 minutes on a commuter airline from Juneau.  Alaska gets more than $1.4 million a year to fly 60 flights from June to September, with an average of 40 passengers on board.   Yet Air Excursions and Wings of Alaska may operate up to 15 flights a day on 5- to 9-seat Cessnas and  turboprops.  Almost every local in Gustavus flies on one of these two airlines, and neither gets a subsidy (they do,however, get money for carrying mail).  Both airlines have their own terminals in Gustavus, and both most definitely have the ability to pick up any capacity should Gustavus get cut.  The other cost you don’t hear about is the daily charters to fly TSA screeners back and forth everyday.  That adds another $150,000 to the tab.
  6. Promote growth of the market and stop rewarding airlines for being vapid in a market.  The idea of EAS is to get the airlines off subsidy.   Airlines should be required to increase boardings, except for force majeur or economical events.  Right now the airlines have zero motivation for doing anything outside of offering their flights – no real push to do public relations, marketing, etc.  Cape Air is one of the exceptions to the rule, and SeaPort Airlines has been known to run fun events.

In the end, EAS can very easily be an efficient program, but the airports need to step up to the plate and do more to protect their subsidies or make them work.  Otherwise, the new age of extreme fiscal conservatives may finally be able to have their way and get rid of this “pork” program.

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