EAS Subsidies Go Directly to Air Carriers, Not Airports

 

By Paul Eubanks, Centerlines Blog, Aug. 3
Due to congressional disagreement on how to extend authorization funding, the FAA remains partially shut-down.  At the heart of the disagreement are programmatic changes to the Department of Transportation’s Essential Air Service program.

When Congress first began debate on whether to deregulate the airline industry in the late 1970s, several lawmakers were concerned about the prospect of allowing carriers to terminate scheduled air service without government approval.  As a result, they feared that communities with relatively lower traffic levels would lose service entirely as carriers shifted their operations to larger and more financially lucrative markets.  To address these concerns, the Airline Deregulation Act of 1978 created the EAS program to ensure that communities retain a connection to the national air transportation system.  Interestingly enough, any community receiving schedule air service from a certificated carrier on October 24, 1978, was eligible for EAS.

Over the past three decades the eligibility rules governing the EAS program have changed.  Today the EAS program ensures a safety net level of access, through federal subsidies, for smaller communities that would otherwise not receive scheduled air service.

Currently, communities are only eligible to receive subsidized air service through the EAS program if they are further than 70 driving miles of an FAA designated large or medium hub airport OR if their subsidy per passenger does not exceed $200 (annual subsidy level divided by annual passengers generated).  Communities more than 210 driving miles from the nearest medium or large hub airport are exempt from the $200 per passenger subsidy.

Who exactly receives the EAS subsidy from the department?  The answer is simple: the contracted air carrier serving the EAS community, not the airport.  DOT pays the contracted air carrier on a per flight completed basis.  At the end of each month, the air carrier submits claims for the prior month based on the number of completed fights (in conformance with the DOT/air carrier contract).

Returning to the current stalemate on Capitol Hill and the EAS program.  The House passed FAA Reauthorization extension (#21 might I add), H.R. 2253, would limit EAS eligibility to communities that are located 90 or more miles from a large or medium hub airport. It also includes a waiver should the DOT Secretary determine that geographic characteristics result in undue difficulty accessing the nearest large or medium hub airport.  Additionally, the bill would set a subsidy cap of $1,000 per passenger for communities more than 210 driving miles from the nearest medium or large hub airport.  This would specifically affect three airports currently receiving EAS funding including Ely, Nev.; Alamogordo, N.M., and Glendive, Mont..

While ACI-NA remains neutral on the specific EAS provisions in the House-passed extension, we are asking that Congress pass an FAA extension now.  Otherwise, the Aviation Trust Fund will continues to lose over $200 million a week and critical safety and security projects will continued to be cancelled or deferred.