Commercial Aviation
Programs and Options for the Federal Approach to Providing and Improving Air Service to Small Communities Gao ID: GAO-06-398T September 14, 2006Over the last decade, significant changes have occurred in the airline industry. Network carriers are facing challenging financial conditions and low-cost carriers are attracting passengers away from some small community airports. These changes, and others, have challenged the ability of small communities to attract adequate commercial air service. In response to these challenges, Congress has established two key funding programs--the Essential Air Service (EAS) and the Small Community Air Service Development Program (SCASDP)--to help small communities retain or attract air service. However, the sustainability of such funding could be affected by the federal government's fiscal imbalance. In addition, GAO reports have raised questions about how these programs support commercial air service to small communities. Given this environment, this testimony discusses (1) the development and impact of EAS, (2) the status of SCASDP and (3) options for reforming EAS and evaluating SCASDP. The testimony is based on previous GAO research and interviews related to these programs, along with program updates.
The EAS program guarantees that communities that were served by air carriers before deregulation continue to receive a certain level of scheduled air service, under certain conditions. A growing number of communities are receiving subsidies under this program and funding for the EAS program has risen more than four-fold over the past 10 years. The federal subsidies have resulted in continued air service to the EAS communities, but if the subsidies were removed, air service might end at many of these communities. SCASDP grantees have used their grants to pursue a variety of goals and have used a variety of strategies, including marketing and revenue guarantees, to improve air service. The program has had mixed results: 11 of the 23 projects completed as of September 30, 2005, showed self-sustaining improvements to air service; while the remaining 12 grantees either discontinued the improvement or the improvement was not self-sustaining. Finally, the number of applications for SCASDP grants has declined--from 179 in 2002 to 75 in 2006. There are options for reforming EAS such as consolidating service into regional airports, which might make it more cost-effective, but also could reduce service to some communities. In 2003, Congress established several programs as alternatives for EAS, but these programs have not progressed. The Department of Transportation has agreed to evaluate completed SCASDP projects, an effort that will be useful when Congress considers the reauthorization of this program in 2008; this could also identify "lessons learned" from successful projects.
GAO-06-398T, Commercial Aviation: Programs and Options for the Federal Approach to Providing and Improving Air Service to Small Communities
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Testimony:
Before the Subcommittee on Aviation, Committee on Commerce, Science and
Transportation, U.S. Senate:
United States Government Accountability Office:
GAO:
For Release on Delivery Expected at 10:00 a.m. EDT:
Thursday, September 14, 2006:
Commercial Aviation:
Programs and Options for the Federal Approach to Providing and
Improving Air Service to Small Communities:
Statement of Gerald L. Dillingham, Director Physical Infrastructure
Issues:
GAO-06-398T:
GAO Highlights:
Highlights of GAO-06-398T, a report to the Subcommittee on Aviation,
Committee on Commerce, Science and Transportation, U.S. Senate
Why GAO Did This Study:
Over the last decade, significant changes have occurred in the airline
industry. Network carriers are facing challenging financial conditions
and low-cost carriers are attracting passengers away from some small
community airports. These changes, and others, have challenged the
ability of small communities to attract adequate commercial air
service.
In response to these challenges, Congress has established two key
funding programs”the Essential Air Service (EAS) and the Small
Community Air Service Development Program (SCASDP)”to help small
communities retain or attract air service. However, the sustainability
of such funding could be affected by the federal government‘s fiscal
imbalance. In addition, GAO reports have raised questions about how
these programs support commercial air service to small communities.
Given this environment, this testimony discusses (1) the development
and impact of EAS, (2) the status of SCASDP and (3) options for
reforming EAS and evaluating SCASDP. The testimony is based on previous
GAO research and interviews related to these programs, along with
program updates.
What GAO Found:
The EAS program guarantees that communities that were served by air
carriers before deregulation continue to receive a certain level of
scheduled air service, under certain conditions. A growing number of
communities are receiving subsidies under this program and funding for
the EAS program has risen more than four-fold over the past 10 years.
The federal subsidies have resulted in continued air service to the EAS
communities, but if the subsidies were removed, air service might end
at many of these communities.
SCASDP grantees have used their grants to pursue a variety of goals and
have used a variety of strategies, including marketing and revenue
guarantees, to improve air service. The program has had mixed results:
11 of the 23 projects completed as of September 30, 2005, showed self-
sustaining improvements to air service; while the remaining 12 grantees
either discontinued the improvement or the improvement was not self-
sustaining. Finally, the number of applications for SCASDP grants has
declined”from 179 in 2002 to 75 in 2006.
There are options for reforming EAS such as consolidating service into
regional airports, which might make it more cost-effective, but also
could reduce service to some communities. In 2003, Congress established
several programs as alternatives for EAS, but these programs have not
progressed. The Department of Transportation has agreed to evaluate
completed SCASDP projects, an effort that will be useful when Congress
considers the reauthorization of this program in 2008; this could also
identify ’lessons learned“ from successful projects.
Figure: EAS Communities as of May 2006; SCASDP COmmunities, 2002-2006:
[See PDF for Image]
Source: GAO.
[End of Figure]
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-398T].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Gerald Dillingham at
(202) 512-2834 or dillinghamg@gao.gov.
[End of Section]
Mr. Chairman and Members of the Subcommittee:
We appreciate the opportunity to testify today on issues related to the
federal approach to providing air service to small and underserved
communities. Over the last decade, significant changes have occurred in
the airline industry that have affected service to small communities.
Service to small communities decreased as a result of the weak
financial condition of the airline industry that was exacerbated by the
events of September 11, 2001. Some network carriers are still facing
challenging financial conditions which can negatively affect small
community air service.[Footnote 1] For example, small communities may
become cost-cutting targets because they are often the carrier's least
profitable operation. This, as well as other changes, have challenged
small communities to obtain adequate commercial air service at
reasonable prices.[Footnote 2]
Two key federal programs help support air service to small communities-
-the Essential Air Service (EAS) program and the Small Community Air
Service Development Program (SCASDP).[Footnote 3] EAS, established
after airline deregulation in 1978, is designed to ensure that small
communities that received scheduled passenger air service before
deregulation continue to have access to the nation's air transportation
system. In fiscal year 2006, Congress appropriated about $109 million
to the Department of Transportation (DOT) for EAS. For fiscal year
2007, the administration requested that $50 million be allocated for
the program and paid for by overflight fees,[Footnote 4] while both the
House and Senate Appropriations Committees are proposing $117 million
for the program. Congress established SCASDP in 2000 and has
appropriated $20 million annually from 2002 through 2005 for DOT to
award up to 40 grants each year to communities that have demonstrated
air-service deficiencies or higher-than-average fares. However, in
fiscal year 2005, DOT transferred $5 million of these funds from SCASDP
to EAS.[Footnote 5] For fiscal year 2006, Congress authorized $10
million. For fiscal year 2007, the administration proposed no funding
for SCASDP while the House and Senate Appropriations Committees are
proposing $20 million and $10 million, respectively. In addition, we
have reported that it was too early to assess the effectiveness of
SCASDP and have raised questions about the current structure of EAS.
While the airline industry has been facing fiscal challenges, the
federal government's financial condition and long-term fiscal outlook
also deteriorated. We have reported on the nation's long-term fiscal
imbalances and the need for a fundamental and periodic reexamination of
the base of government, ultimately covering discretionary and mandatory
programs as well as the revenue side of the budget.[Footnote 6] In
light of these challenges, we have identified some options for
reforming EAS and recommended that DOT evaluate SCASDP.
My testimony today will discuss (1) the development and impact of EAS,
(2) the status of SCASDP, and (3) options for reforming EAS and
evaluating SCASDP. My statement is based primarily on the body of
research that we have conducted related to these programs, program
updates, and recent interviews with (and data from) key stakeholders.
We obtained information on the status of projects from the Office of
the Secretary (OST). Based on assessments conducted during previous
reviews, we concluded that the data are reliable for the purposes of
this report. Appendix V contains a list of our related testimonies and
reports. We conducted our work on EAS from March through December 2002
and our work on SCASDP from September 2004 through October 2005 in
accordance with generally accepted government auditing standards.
In summary:
* In recent years, a growing number of communities have received
subsidies under EAS--expanding from 95 communities in fiscal year 1997
to 152 in fiscal year 2006. Similarly, funding for EAS has risen more
than four-fold over this 10-year period--from $25.9 million in fiscal
year 1997 to $109.4 million in fiscal year 2006. In addition, EAS funds
were used to subsidize about 1 million passenger enplanements in 2004-
-about 0.15 percent of the nation's 706 million annual passenger
enplanements.[Footnote 7] It is possible that air service might end at
many of these communities, if these subsidies were removed.
* Our recent review of SCASDP found that the number of grant
applications was declining, grantees were pursuing a variety of goals
and strategies for supporting air service, and completed grants had
mixed results. Specifically, we found that the number of applications
for SCASDP has declined--from 179 in 2002 to 75 in 2006. We also found
that the goals grantees are pursuing include trying to add flights and
destinations, or trying to obtain lower fares. The different strategies
grantees are employing to improve air service in their communities
include offering subsidies or revenue guarantees to airlines,
marketing, hiring personnel, and conducting studies. Finally, although
we could not assess the effectiveness of the program, since few
projects--23 of 157--had been completed at the time of our review, we
found the results of the completed projects were mixed. Of the 23
projects, 11 had implemented a self-sustaining improvement to air
service, while the remaining 12 had not.
* To ensure the effective use of scarce resources, these programs need
to be examined and options for program improvement need to be
addressed. We have previously reported on some options for changing EAS
to potentially make it more cost-effective. These options include (1)
targeting subsidized service to more remote communities, (2) better
matching capacity with community use, (3) consolidating service to
multiple communities into regional airports, and (4) changing the form
of the federal assistance from carrier subsidies to local grants. These
changes require legislative action. Although these options might make
EAS more cost-effective, they could also reduce service to some areas.
In 2003, the Vision 100-Century of Aviation Reauthorization Act,
(Vision-100) provided for several alternative programs for EAS
communities. However, these programs have not progressed due, in part,
to a lack of response from EAS communities. Regarding SCASDP, as we
recommended, DOT plans to conduct a comprehensive evaluation of
completed projects after fiscal year 2006. The results of such an
evaluation will be useful when Congress considers the reauthorization
of this program in 2008 and could result in identifying "lessons
learned" from successful projects. These lessons could be shared with
other small communities that are trying to improve air service, and, if
needed, to reform and refocus the program.
Background:
Before I discuss these issues in detail, let me sketch the background
of air service to small communities and these programs. Air service to
many small communities has declined in recent years, particularly after
the September 11, 2001 attacks. As of 2005, scheduled departures at
small-, medium-, and large-hub airports had largely returned to 2000
levels. However, departures from nonhub airports continued to decline-
-the number of departures declined 17 percent at nonhub airports
between July 2000 and July 2005. Small-hub airports actually had more
scheduled departures in July 2005 than in July 2000, a fact that
clearly distinguishes them from nonhub airports.
Several factors may help explain why some small communities, especially
nonhubs, face relatively limited air service. First, small communities
can become cost-cutting targets of air carriers because they are often
a carrier's least profitable operation. Consequently, many network
carriers have cut service to small communities and regional carriers
now operate at many small communities where the network carriers have
withdrawn.[Footnote 8] Second, the "Commuter Rule" that FAA enacted in
1995 brought small commuter aircraft under the same safety standards as
larger aircraft--a change that made it more difficult to economically
operate smaller aircraft, such as 19-seat turboprops.[Footnote 9] For
example, the Commuter Rule required commuter air carriers who flew
aircraft equipped with 10 or more seats to improve ground deicing
programs and carry additional passenger safety equipment. Additionally,
the 2001 Aviation and Transportation Security Act instituted the same
security requirements for screening passengers at smaller airports as
it did for larger airports, sometimes making travel from small airports
less convenient than it had been.[Footnote 10] Third, regional carriers
had reduced the use of turboprops in favor of regional jets, which had
a negative effect on small communities that have not generated the
passenger levels needed to support regional jet service. Finally, many
small communities experience passenger "leakage"--that is, passengers
choosing to drive longer distances to larger airports instead of using
closer small airports. Low-cost carriers have generally avoided flying
to small communities but have offered low fares that encourage
passengers to drive longer distances to take advantage of
them.[Footnote 11]
Mr. Chairman, as you know, Congress established EAS as part of the
Airline Deregulation Act of 1978 to help areas that face limited
service. The act guaranteed that communities served by air carriers
before deregulation would continue to receive a certain level of
scheduled air service.[Footnote 12] In general, the act guaranteed
continued service by authorizing DOT to require carriers to continue
providing service at these communities. If an air carrier could not
continue that service without incurring a loss, DOT could then use EAS
funds to award that carrier a subsidy.[Footnote 13] Under the Airline
Deregulation Act, EAS was scheduled to sunset, or end, after 10 years.
In 1987, Congress extended the program for another 10 years, and in
1998, it eliminated the sunset provision, thereby permanently
authorizing EAS.
Funding for EAS comes from a combination of permanent and annual
appropriations. The Federal Aviation Reauthorization Act of 1996 (P.L.
104-264) permanently appropriated the first $50 million of such
funding--for EAS and safety projects at rural airports--from the
collection of overflight fees. Congress can appropriate additional
funds from the general fund on an annual basis.
To be eligible for this subsidized service, communities must meet three
general requirements. They (1) must have received scheduled commercial
passenger service as of October 1978, (2) may be no closer than 70
highway miles to a medium-or large-hub airport, and (3) must require a
subsidy of less than $200 per person (unless the community is more than
210 highway miles from the nearest medium-or large-hub airport, in
which case no average per-passenger dollar limit applies).[Footnote 14]
Federal law also defines the service that subsidized communities are to
receive under EAS.[Footnote 15] For example, carriers providing EAS
flights are required to use aircraft with at least 15 seats unless the
community seeks a waiver. In addition, flights are to occur at
"reasonable times" and at prices that are "not excessive." EAS
operations to communities in Alaska are subject to different
requirements (e.g., carriers may use smaller aircraft).
Air carriers apply directly to DOT for EAS subsidies. Air carriers set
the subsidy application process in motion when they file a 90-day
notice of intent to suspend or terminate service. If no air carrier is
willing to or able to profitably provide replacement air service
without a subsidy, DOT solicits proposals from carriers who are willing
to provide service with a subsidy. DOT requires that air carriers
submit historical and projected financial data, such as projected
operating expenses and revenues, sufficient to support a subsidy
calculation. DOT then reviews these data in light of the aviation
industry's pricing structure, the size of aircraft required, the amount
of service required, and the number of projected passengers who would
use this service in the community.[Footnote 16] Finally, DOT selects a
carrier and sets a subsidy amount to cover the difference between the
carrier's projected cost of operation and its expected passenger
revenues, while providing the carrier with a profit element equal to 5
percent of total operating expenses, according to statute.[Footnote 17]
Turning now to SCASDP, Congress authorized SCASDP as a pilot program in
the Wendell H. Ford Aviation Investment and Reform Act for the 21st
Century (AIR-21),[Footnote 18] to help small communities enhance their
air service. AIR-21 authorized the program for fiscal years 2002 and
2003, and subsequent legislation[Footnote 19] reauthorized the program
through fiscal year 2008 and eliminated the "pilot" status of the
program.
The Office of Aviation Analysis in DOT's Office of the Secretary is
responsible for administering the program. The law establishing SCASDP
allows DOT considerable flexibility in implementing the program and
selecting projects to be funded. The law defines basic eligibility
criteria and statutory priority factors, but meeting a given number of
priority factors does not automatically mean DOT will select a project.
DOT also considers many other relevant factors in making decisions on
projects, and the final selection of projects is at the discretion of
the Secretary of Transportation.[Footnote 20] (See app. I for a list of
the factors used in DOT selections.)
SCASDP grants may be made to single communities or a consortium of
communities, although no more than four grants each year may be in the
same state. Consortiums are considered one project for the purpose of
this program. Inclusion of small hubs for eligibility means that some
relatively large airports qualify for this program. For example,
Buffalo Niagara International Airport in Buffalo, New York, and Norfolk
International Airport in Norfolk, Virginia, are eligible for the
program; these airports enplaned over 2.4 million and over 1.9 million
passengers in 2005, respectively. In contrast, small nonhub airports,
such as those in Moab, Utah (with about 2,600 enplanements) or
Owensboro, Kentucky (with about 3,600 enplanements) are also eligible.
SCASDP grants are also available in the 50 states, the District of
Columbia, Puerto Rico, and U.S. territories and possessions. As shown
in appendix II, DOT's awards have been geographically spread out--
covering all states except Delaware, Hawaii, Maryland, New Jersey, and
Rhode Island. To date, no communities in Delaware or Rhode Island have
applied for a grant. Appendix III includes information on all SCASDP
grants awarded as of August 31, 2006.
Number of Airports and Amount of EAS Subsidies Has Been Growing:
Mr. Chairman, demand for EAS subsidies has been growing over the past
10 years, as has the amount of funds appropriated for the program. As
shown in table 1, for fiscal year 2006, EAS is providing subsidies to
air carriers to serve 154 communities--an increase of 57 communities
over the 1997 low point.[Footnote 21] The funding for EAS has also
grown from $25.9 million in 1997 to $109.4 million in 2006. This
amounts to an average of about $720,000 per EAS community in fiscal
year 2006. Appendix II includes a map showing the locations of current
EAS communities and appendix IV lists EAS communities and their current
subsidy amounts.
Table 1: EAS Program Appropriations and Communities Served, Fiscal
Years 1992-2006:
Fiscal year: 1992;
Number of communities: 130;
Total EAS appropriations (in millions): $38.6.
Fiscal year: 1993;
Number of communities: 126;
Total EAS appropriations (in millions): 38.6.
Fiscal year: 1994;
Number of communities: 112;
Total EAS appropriations (in millions): 33.4.
Fiscal year: 1995;
Number of communities: 107;
Total EAS appropriations (in millions): 33.4.
Fiscal year: 1996;
Number of communities: 97;
Total EAS appropriations (in millions): 22.6.
Fiscal year: 1997;
Number of communities: 95;
Total EAS appropriations (in millions): 25.9.
Fiscal year: 1998;
Number of communities: 101;
Total EAS appropriations (in millions): 50.0.
Fiscal year: 1999;
Number of communities: 100;
Total EAS appropriations (in millions): 50.0.
Fiscal year: 2000;
Number of communities: 106;
Total EAS appropriations (in millions): 50.0.
Fiscal year: 2001;
Number of communities: 115;
Total EAS appropriations (in millions): 50.0.
Fiscal year: 2002;
Number of communities: 123;
Total EAS appropriations (in millions): 113.0.
Fiscal year: 2003;
Number of communities: 126;
Total EAS appropriations (in millions): 101.8.
Fiscal year: 2004;
Number of communities: 140;
Total EAS appropriations (in millions): 101.7.
Fiscal year: 2005;
Number of communities: 146;
Total EAS appropriations (in millions): 101.6.
Fiscal year: 2006;
Number of communities: 154;
Total EAS appropriations (in millions): 109.4.
Source: DOT.
[End of table]
In addition, in recent years, the number of communities and states
receiving EAS funding has increased. Since 1998, when a $50 million
funding level was established, eight additional states now have EAS
communities. These states include Alabama, Georgia, Kentucky, Maryland,
Mississippi, Oregon, Tennessee and Virginia. Excluding Alaska, where
different program rules apply, four states now have had significant
increases in the total number of communities served by EAS, compared to
1998. The number of EAS communities in Pennsylvania increased by five,
West Virginia and Wyoming increased by four, and New York increased by
three. These states are now among the largest participants in the
program, in terms of the number of communities served.
In 2004, slightly more than 1 million passengers enplaned at airports
that received EAS-subsidized service--about 0.15 percent of the more
than 706 million passenger enplanements in the United States that
year.[Footnote 22] As of May 1, 2006, 13 regional air carriers served
the subsidized communities in the continental United States, and 15
served those in Alaska, Hawaii, and Puerto Rico. The carriers serving
the communities in the continental United States typically used
turboprop aircraft seating 19 passengers, whereas in Alaska, Hawaii,
and Puerto Rico, the most commonly used aircraft seated 4 to 9
passengers.
If EAS subsidies were removed, air service may end at many small
communities. EAS subsidies have helped communities that were served by
air carriers before deregulation continue to receive scheduled air
service. Since air carriers have to show financial data to support a
subsidy calculation, it is likely that if the subsidy is no longer
available commercial air service would also end. Furthermore, according
to a DOT official, once a community receives subsidized air service it
is rare for an air carrier to offer to provide unsubsidized air
service. Finally, in previous work, we reported that subsidies paid
directly to air carriers have not provided an effective transportation
solution for passengers in many small communities.[Footnote 23]
The Small Community Grant Program Has Had Mixed Results:
Mr. Chairman, our previous work was not able to evaluate the overall
effectiveness of SCASDP; however, we found that SCASDP grantees pursued
several goals and strategies to improve air service, and that the
projects have obtained mixed results. In addition, the number of
applications for SCASDP has declined each year.
As shown in figure 1, in 2002 (the first year SCASDP was funded) DOT
received 179 applications for grants; and by 2006 the number of
applications had declined to 75. DOT officials said that this decline
was, in part, a consequence of several factors, including: (1) many
eligible airport communities had received a grant and were still
implementing projects at the time; (2) the airport community as a whole
was coming to understand the importance DOT places on a fulfilling the
local contribution commitment part of the grant proposal; and (3)
legislative changes in 2003 that prohibited communities or consortiums
from receiving more than one grant for the same project, and that
established the timely use of funds as a priority factor in awarding
grants.[Footnote 24] There have been 182 grant awards made in the 5
years of the program. Of these, 56 grants are now completed--34 from
2002, 15 from 2003, and seven from 2004.[Footnote 25] Finally, as of
August 31, 2006, DOT had terminated seven grants it initially
awarded.[Footnote 26]
Figure 1: SCASDP Grant Proposals, Awards, Terminations, and
Completions, 2002 - 2006:
[See PDF for image]
Source: GAO analysis of DOT data.
Note: DOT granted 6 grants in 2004, from reallocated program funds.
[End of figure]
Although at the time of our review it was too soon to determine the
overall effectiveness of the program, our review of the 23 projects
completed by September 30, 2005, found mixed results. The kinds of
improvements in service that resulted from the grants included adding
an additional air carrier, destination, or flights; or changing the
type of aircraft serving the community. In terms of numbers, airport
officials reported that 19 of the 23 grants resulted in service or fare
improvements during the life of the grant. In addition, during the
course of the grant, enplanements rose at 19 of the 23 airports.
However, after the 23 SCASDP grants were completed, 11 grants resulted
in improvements that were self-sustaining. Three additional
improvements were still in place, although not self-sustaining;
thus 14 improvements were in place after the grants were completed.
(See fig. 2.)
Charleston, West Virginia provides an example of a successful project.
With the aid of a SCASDP grant, Charleston was able to add a new
carrier and new nonstop service to a major market, Houston. At the time
of our review, and after the grant was completed, this service was
continuing at the level the grant provided.
Figure 2: Air Service Improvement during the Course of 23 Grants and
after Project Completion:
[See PDF for image]
Source: GAO.
[End of figure]
Finally, for SCASDP grants awarded from 2002 though 2004, we surveyed
airport officials to identify the types of project goals they had for
their grants. We found that grantees had identified a variety of
project goals to improve air service to their community. These goals
included adding flights, airlines, and destinations; lowering fares;
upgrading the aircraft serving the community; obtaining better data for
planning and marketing air service; increasing enplanements; and
curbing the loss of passengers to other airports. (See fig. 3 for the
number and types of project goals identified by airport directors.)
Figure 3: Project Goals as Identified by Airport Directors for Grants
Awarded 2002 - 2004:
[See PDF for image]
Source: GAO survey of grantee airport directors.
Note: The number of airport directors surveyed may exceed the number of
grants in a year because grants are sometimes awarded to consortiums of
airports. We surveyed all grantee airports.
[End of figure]
To achieve these goals, grantees have used many strategies, including
subsidies and revenue guarantees to the airlines, marketing, hiring
personnel and consultants, and establishing travel banks in which a
community guarantees to buy a certain number of tickets. (See fig. 4.)
In addition, grantees have subsidized the start-up of an airline, taken
over ground station operations for an airline, and subsidized a bus to
transport passengers from their airport to a hub airport. Incorporating
marketing as part of the project was the most common strategy used by
airports. Some airline officials said that marketing efforts are
important for the success of the projects. Airline officials also told
us that projects that provide direct benefits to an airline, such as
revenue guarantees and financial subsidies, have the greatest chance of
success. According to these officials, such projects allow the airline
to test the real market for air service in a community without enduring
the typical financial losses that occur when new air service is
introduced. They further noted that, in the current aviation economic
environment, carriers cannot afford to sustain losses while they build
up passenger demand in a market. The outcomes of the grants may be
affected by broader industry factors that are independent of the grant
itself, such as a decision on the part of an airline to reduce the
number of flights at a hub.
Figure 4: Strategies Included in Grant Projects:
[See PDF for image]
Source: GAO analysis of grantee proposals and grant agreements.
Note: Since grant agreements were not available at the time of this
analysis, 2006 figures are based solely on proposals.
[End of figure]
Options Exist for Reforming EAS and Evaluating SCASDP:
Mr. Chairman, let me now turn to a discussion of options both for the
reform of EAS and the evaluation of SCASDP. I raise these options, in
part, because they link to our previous report on the challenges facing
the federal government in the 21st century, which notes that the
federal government's long-term fiscal imbalance presents enormous
challenges to the nation's ability to respond to emerging forces
reshaping American society, the United States' place in the world, and
the future role of the federal government.[Footnote 27] In our previous
report, we call for a more fundamental and periodic reexamination of
the base of government, ultimately covering discretionary and mandatory
programs as well as the revenue side of the budget. In light of these
challenges, Congress may wish to weigh options for reforming EAS and
obtaining additional information about SCASDP's effectiveness--
information that could be obtained if DOT follows our recommendation to
evaluate the program's effectiveness once more grant projects have been
completed.
Examine Options for Enhancing EAS:
In previous work, we have identified options for enhancing the
effectiveness of EAS and controlling cost increases. These options
include targeting subsidized service on more remote communities than is
currently the case, improving the matching of capacity with community
use, consolidating service to multiple communities into regional
airports, and changing the form of federal assistance from carrier
subsidies to local grants; all of these options would require
legislative changes. Several of these options formed the basis for
reforms passed as part of Vision-100. For various reasons these pilot
programs have not progressed, so it is premature to assess their
impact. Let me now briefly discuss each option, stressing at the outset
that each presents potential negative, as well as positive, effects.
The positive effects might include lowered federal costs, increased
passenger traffic at subsidized communities, and enhanced community
choice of transportation options. Potential negative effects might
include increased passenger inconvenience and an adverse effect on
local economies that may lose scheduled airline service.
Targeting Subsidized Service to More Remote Communities:
The first option would be to target subsidized service to more remote
communities. This would mean increasing the highway distance criteria
between EAS-eligible communities and the nearest qualifying airport,
and expanding the definition of qualifying nearby airports to include
small hubs. Currently, to be eligible for EAS-subsidized service, a
community must be more than 70 highway miles from the nearest medium-or
large-hub airport. We found that, if the distance criterion was
increased to 125 highway miles and the qualifying airports were
expanded to include small-hub airport with jet service, 55 EAS-
subsidized communities would no longer qualify for subsidies--and
travelers at those communities would need to drive to the nearby larger
airport to access air service.[Footnote 28]
Limiting subsidized service to more remote communities could
potentially save federal subsidies. For example, we found that about
$24 million annually could be saved if service were terminated at 30
EAS airports that were within 125 miles of medium-or large-hub
airports. This estimate assumed that the total subsidies in effect in
2006 at the communities that might lose their eligibility would not be
obligated to other communities and that those amounts would not change
over time. On the other hand, the passengers who now use subsidized
service at such terminated airports would be inconvenienced because of
the increased driving required to access air service at the nearest hub
airport. In addition, implementing this option could potentially
negatively impact the economy of the affected communities. For
instance, officials from some communities, such as Brookings, South
Dakota, told us that they are able to attract and retain local
businesses because of several factors relating to the quality of life
there--with one important factor being its scheduled air service.
Better Matching Capacity with Community Use:
Another option is to better match capacity with community use. Our past
analysis of passenger enplanement data indicated that relatively few
passengers fly in many EAS markets, and that, on average, most EAS
flights operate with aircraft that are largely empty. To better match
capacity with community use, air carriers could reduce unused capacity-
-either by using smaller aircraft or by reducing the number of flights.
Carriers could use smaller aircraft. For example, we reported that from
1995 to 2002, total passenger traffic dropped at 9 of 24 EAS
communities where carriers added flight frequencies.
Better matching capacity with community use could save federal
subsidies. For instance, reducing the number of required daily
subsidized departures could save federal subsidies by reducing carrier
costs in some locations. Federal subsidies could also be lowered at
communities where carriers used smaller--and hence less costly--
aircraft. On the other hand, there are a number of potential
disadvantages. For example, passenger acceptance is uncertain.
Representatives from some communities, like Beckley and Bluefield, West
Virginia, told us that passengers who are already somewhat reluctant to
fly on 19-seat turboprops would be even less willing to fly on smaller
aircraft. Such negative passenger reaction may cause more people to
drive to larger airports--or simply drive to their destinations.
Additionally, the loss of some daily departures at certain communities
would likely further inconvenience some passengers. Lastly, reduced
capacity may have a negative impact on the economy of the affected
community.[Footnote 29]
Consolidating Subsidized Service Provided to Multiple Communities into
Service at Regional Airports:
Another option is to consolidate subsidized service at multiple
communities into service at regional airports. As of July 1, 2002, 21
EAS subsidized communities were located within 70 highway miles of at
least one other subsidized community. We reported that if subsidized
service to each of these communities were regionalized, 10 regional
airports could serve those 21 communities.
Regionalizing service to some communities could generate federal
savings. However, those savings may be marginal, because the total
costs to serve a single regional airport may be only slightly less than
the cost to serve two or three neighboring airports. For example, in
2002, DOT provided $1.9 million in annual subsidies to Air Midwest,
Inc., to serve Ogdensburg and Massena, New York, with stops at another
EAS-subsidized community (Watertown, New York) before arriving at its
final destination of Pittsburgh, Pennsylvania. According to an official
with Air Midwest, the marginal cost of operating the flight segments to
Massena and Ogdensburg are small in relation to the cost of operating
the flight from Pittsburgh to Watertown. Another potential positive
effect is that passenger levels at the proposed regional airports could
grow because the airline(s) would be drawing from a larger geographic
area, which could prompt the airline(s) to provide better service
(i.e., larger aircraft or more frequent departures).
There are also a number of disadvantages to implementing this option.
First, local passengers would be inconvenienced, since they would
likely have to drive longer distances to obtain local air service.
Moreover, the passenger response to regionalizing local air service is
unknown. Passengers faced with driving longer distances may decide that
driving to an altogether different airport is worthwhile, if it offers
better service and air fares. Additionally, as with other options, the
potential impact on the economy of the affected communities is unknown.
Regionalizing air service has sometimes proven controversial at the
local level, in part because regionalizing air service would require
some communities to give up their own local service for the
hypothetical benefits of a less convenient regional facility. Even in
situations where one airport is larger and better equipped than others
(e.g., where one airport has longer runways, a superior terminal
facility, and better safety equipment on site), it is likely to be
difficult for the other communities to recognize and accept
surrendering their local control and benefits.
Changing Carrier Subsidies to Local Grants:
Another option is to change carrier subsidies into local grants. We
have noted that local grants could enable communities to match their
transportation needs with individually tailored transportation options
to connect them to the national air service system. As we previously
discussed, DOT provides grants to help small communities to enhance
their air service via SCASDP.
Our work on SCASDP identified some positive aspects of the program that
could be beneficial for EAS communities. First, in order for
communities to receive a Small Community grant, they had to develop a
proposal that was directed at improving air service locally. In our
discussion with some of these communities, it was noted that this
required them to take a closer look at their air service and better
understand the market they serve--a benefit that they did not foresee.
In addition, in one case developing the proposal caused the airport to
build a stronger relationship with the community. SCASDP also allows
for flexibility in the strategy a local community can choose to improve
air service, recognizing that local facts and circumstances affect the
chance of a successful outcome. In contrast, EAS has one approach--a
subsidy to an air carrier.
However, there are also differences between the two programs that make
the grant approach problematic for some EAS communities; these
differences should be considered. First, because the grants are
provided on a one-time basis, their purpose is to create self-
sustaining air service improvements. The grant approach is therefore
best applicable where a viable air service market can be developed.
This could be difficult for EAS communities to achieve because,
currently, the service they receive is not profitable unless there is a
subsidy. While some EAS communities might be able to transition to self-
sustaining air service through use of one of the grants, for some
communities this would not be the case. In addition, the grant program
normally includes a local cash match, which may be difficult for some
EAS communities to provide. This could systematically eliminate the
poorest communities, unless other sources of funds--such as state
support or local industry support--could be found.
Vision-100 Small Community Programs Have Not Progressed:
In Vision-100, Congress authorized several programs relevant to small
communities. These programs have not progressed for various reasons.
The Alternate Essential Air Service Pilot Program allows the Secretary
of Transportation to provide assistance directly to a community, rather
than paying compensation to an air carrier. Under the pilot program,
communities could provide assistance to air carriers using smaller
aircraft, fund on-demand air taxi service, provide transportation
services to and from several EAS communities to a single regional
airport or other transportation center, and purchase aircraft. Vision-
100 also authorized the Community Flexibility Pilot Program, which
requires the Secretary of Transportation to establish a program for up
to 10 communities that agree to forgo their EAS subsidy for 10 years in
exchange for a grant twice the amount of the EAS subsidy. The funds may
be used to improve airport facilities. (The grants can be used for
things other than general aviation.) DOT has solicited proposals for
projects in both of these programs. However, according to a DOT
official, no communities expressed any interest in participating in
these programs. Finally, the EAS Local Participation Program allows the
Secretary of Transportation to select no more than 10 designated EAS
communities within 100 miles, by road, of a small hub (and within the
contiguous states) to assume 10 percent of their EAS subsidy costs for
a 4-year period. However, Congress has prohibited DOT from obligating
or expending any funds to implement this program since Vision-100 was
enacted.
Evaluate the Effectiveness of SCASDP before Reauthorization:
We recently recommended that DOT examine the effectiveness of this
program when more projects are complete.[Footnote 30] Such an
evaluation would provide DOT and Congress with information about
whether additional or improved air service was not only obtained, but
whether it continues after the grant support has ended. This may be
particularly important since our work on the limited number of
completed projects found that, 11 of 23 grantees reported that the
improvements were self-sustaining after the grant was complete. In
addition, our prior work on the air service to small communities found
that once financial incentives are removed, additional air service may
be difficult to maintain. Since our report, an additional 33 grants
have been completed and DOT's plans to examine the results from these
completed grants should provide a clearer and more complete picture of
the value of this program. Any improved service achieved from this
program could then be weighed against the cost to achieve those gains.
This information will be important as Congress considers the
reauthorization of this program in 2008.
In addition to the benefit of providing Congress with information upon
which to evaluate the merits of SCASDP, the evaluation would likely
have additional benefits. In conducting this evaluation, DOT could
potentially find that certain strategies the communities used were more
effective than others. For example, during our work, we found some
opposing views on the usefulness of travel banks[Footnote 31] and some
marketing strategies as incentives for attracting improved service. As
DOT officials identify strategies that have been effective in starting
self-sustaining improvements in air service, they could share this
information with other small community airports and, perhaps, consider
such factors in its grant award process. In addition, DOT might find
some best practices and could develop some lessons learned from which
all small community airports could benefit. For example, one airport
used the approach of assuming airline ground operations such as baggage
handling and staffing ticket counters. This approach served to maintain
airline service of one airline and to attract additional service from
another airline. Sharing information on approaches like this that
worked (and approaches that did not) may help other small communities
improve their air service, perhaps even without federal assistance.
In conclusion, Mr. Chairman, Congress is faced with many difficult
choices as it tries to help improve air service to small communities,
especially given the fiscal challenges the nation faces. Regarding EAS,
I think it is important to recognize that for many of the communities,
air service is not--and might never be--commercially viable and there
are limited alternative transportation means for nearby residents to
connect to the national air system. In these cases, continued subsidies
will be needed to maintain that capability. In some other cases,
current EAS communities are within reasonable driving distances to
alternative airports that can provide that connection to the air
system. It will be Congress' weighing of priorities that will
ultimately decide whether this service will continue or whether other,
less costly options will be pursued. In looking at SCASDP, I would
emphasize that we have seen some instances in which the grant funds
provided additional service, and some in which the funds did not work.
When enough experience has been gained with this program, the Congress
will be in a position to determine if the air service gains that are
made are worth the overall cost of the program. I would be pleased to
answer any questions that you or other Members of the Subcommittee may
have at this time.
Contact Information:
For further information on this testimony, please contact Gerald L.
Dillingham at (202) 512-2834 or dillinghamg@gao.gov. Individuals making
key contributions to this testimony and related work include Robert
Ciszewski, Catherine Colwell, Daniel Concepcion, Brandon Haller, Dave
Hooper, Stuart Kaufman, Alex Lawrence, Bonnie Pignatiello Leer, Maureen
Luna-Long, John Mingus, and Glen Trochelman.
[End of section]
Appendix I: Additional Department of Transportation Selection Factors
for SCASDP Grants:
Table:
Service-related Factors: How many carriers are serving the community?.
Service-related Factors: How many destinations are served?.
Service-related Factors: What is the frequency of flights?.
Service-related Factors: What size aircraft service the community?.
Service-related Factors: Has the level of service been increasing or
decreasing over the past 3 years?.
Service-related Factors: Have enplanements been increasing or
decreasing over the past 3 years?.
Service-related Factors: Is the Metropolitan Statistical Area
population increasing or decreasing?.
Service-related Factors: Is the per-capita income increasing or
decreasing?.
Service-related Factors: Are the number of businesses in the area
increasing or decreasing?.
Service-related Factors: What is the proximity to larger air service
centers?.
Service-related Factors: What is the quality of road access to other
air service centers?.
Service-related Factors: Does the community lack service in identified
top origin and destination markets?.
Service-related Factors: Is the proposal designed to provide:
* First air service,;
* Second carrier service,;
* New destinations,;
* Larger aircraft, or;
* More frequent flights?.
Service-related Factors: If this is an air service project, has the
community selected a carrier that is willing and committed to serve?.
Service-related Factors: Service-related Factors: If this is an air
service project, does the community have a targeted carrier that would
serve?.
Source: GAO table based on DOT information.
[End of table]
Project-related Factors: Do demographic indicators and the business
environment support the project?.
Project-related Factors: Does the community have a demonstrated track
record of implementing air service development projects?.
Project-related Factors: Does the project address the stated problem?.
Project-related Factors: Does the community have a firm plan for
promoting the service?.
Project-related Factors: Does the community have a definitive plan for
monitoring, modifying, and terminating the project, if necessary?.
Project-related Factors: Does the community have a plan for continued
support of the project if self-sufficiency or completion is not
attained after the grant expires?.
Project-related Factors: If it is mainly a marketing proposal, does the
community have a firm implementation plan in place?.
Project-related Factors: Is the applicant a participating consortium?.
Project-related Factors: Is the project innovative?.
Project-related Factors: Does the project have unique geographical
traits or other considerations?.
Project-related Factors: Is the amount of funding requested reasonable
compared with the total amount of funding available?.
Project-related Factors: Is the local contribution reasonable compared
with the amount requested?.
Project-related Factors: Can the project be completed during the
funding period requested?.
Project-related Factors: Is the applicant a small hub now?.
Project-related Factors: Is the applicant a large nonhub now?.
Project-related Factors: Is the applicant a small nonhub now?.
Project-related Factors: Is the applicant currently subsidized through
Essential Air Service?.
Project-related Factors: Is the project for marketing only?.
Project-related Factors: Is the project a study only?.
Project-related Factors: Does the project involve intermodal services?.
Project-related Factors: Is the project primarily a carrier incentive?.
Project-related Factors: Is the project primarily air fare focused?.
Project-related Factors: Does the project involve a low-fare service
provider?.
Project-related Factors: Does the proposal shift costs from the local
or state level to the federal level?.
Project-related Factors: Does the proposal show that proximity to other
service would detract from it?.
Project-related Factors: Project-related Factors: Is the applicant
geographically close to a past grant recipient?.
Source: GAO table based on DOT information.
[End of table]
[End of section]
Appendix II: Essential Air Service Airports and Small Community Air
Service Development Program Grantees:
Figure 5: Airports Receiving Essential Air Service (EAS) as of May 2006
and All Small Community Air Service Development Program (SCASDP)
Grantees, through August 10, 2006:
[See PDF for image]
Source: GAO.
Note: Alaska, Hawaii and Puerto Rico are not to scale.
[End of figure]
[End of section]
Appendix III: Status of SCASDP Grants Awarded, 2002 - 2006:
Table:
2002 Grant Year.
Location: Abilene, TX;
Grant amount: $85,010;
Status as of August 31, 2006: Completed.
Location: Akron/Canton, OH;
Grant amount: 950,000;
Status as of August 31, 2006: Completed.
Location: Aleutians East Borough, AK;
Grant amount: 240,000;
Status as of August 31, 2006: Completed.
Location: Asheville, NC;
Grant amount: 500,000;
Status as of August 31, 2006: Completed.
Location: Augusta, GA;
Grant amount: 759,004;
Status as of August 31, 2006: Terminated.
Location: Baker City, OR;
Grant amount: 300,000;
Status as of August 31, 2006: Terminated.
Location: Beaumont/Port Arthur, TX;
Grant amount: 500,000;
Status as of August 31, 2006: Completed.
Location: Bellingham, WA;
Grant amount: 301,500;
Status as of August 31, 2006: Ongoing.
Location: Binghamton, NY;
Grant amount: 500,000;
Status as of August 31, 2006: Completed.
Location: Bismarck, ND;
Grant amount: 1,557,500;
Status as of August 31, 2006: Ongoing.
Location: Brainerd, St Cloud, MN;
Grant amount: 1,000,000;
Status as of August 31, 2006: Completed.
Location: Bristol/Kingsport/Johnson City, TN;
Grant amount: 615,000;
Status as of August 31, 2006: Completed.
Location: Cape Girardeau, MO;
Grant amount: 500,000;
Status as of August 31, 2006: Completed.
Location: Casper, Gillette, WY;
Grant amount: 500,000;
Status as of August 31, 2006: Terminated.
Location: Charleston, WV;
Grant amount: 500,000;
Status as of August 31, 2006: Completed.
Location: Chico, CA;
Grant amount: 44,000;
Status as of August 31, 2006: Completed.
Location: Daytona Beach, FL;
Grant amount: 743,333;
Status as of August 31, 2006: Completed.
Location: Fort Smith, AR;
Grant amount: 108,520;
Status as of August 31, 2006: Completed.
Location: Fort Wayne, IN;
Grant amount: 398,000;
Status as of August 31, 2006: Completed.
Location: Hailey, ID;
Grant amount: 600,000;
Status as of August 31, 2006: Completed.
Location: Lake Charles, LA;
Grant amount: 500,000;
Status as of August 31, 2006: Completed.
Location: Lake Havasu City, AZ;
Grant amount: 403,478;
Status as of August 31, 2006: Completed.
Location: Lamar, CO;
Grant amount: 250,000;
Status as of August 31, 2006: Completed.
Location: Lynchburg, VA;
Grant amount: 500,000;
Status as of August 31, 2006: Completed.
Location: Manhattan, KS;
Grant amount: 388,350;
Status as of August 31, 2006: Completed.
Location: Marion, IL;
Grant amount: 212,694;
Status as of August 31, 2006: Completed.
Location: Mason City, IA;
Grant amount: 600,000;
Status as of August 31, 2006: Terminated.
Location: Meridian, MS;
Grant amount: 500,000;
Status as of August 31, 2006: Completed.
Location: Moab, UT;
Grant amount: 250,000;
Status as of August 31, 2006: Completed.
Location: Mobile, AL;
Grant amount: 456,137;
Status as of August 31, 2006: Completed.
Location: Paducah, KY;
Grant amount: 304,000;
Status as of August 31, 2006: Completed.
Location: Presque Isle, ME;
Grant amount: 500,000;
Status as of August 31, 2006: Completed.
Location: Rapid City, SD;
Grant amount: 1,400,000;
Status as of August 31, 2006: Completed.
Location: Reading, PA;
Grant amount: 470,000;
Status as of August 31, 2006: Completed.
Location: Rhinelander, WI;
Grant amount: 500,000;
Status as of August 31, 2006: Completed.
Location: Santa Maria, CA;
Grant amount: 217,530;
Status as of August 31, 2006: Completed.
Location: Scottsbluff, NE;
Grant amount: 950,000;
Status as of August 31, 2006: Completed.
Location: Somerset, KY;
Grant amount: 95,000;
Status as of August 31, 2006: Completed.
Location: Taos/Ruidoso, NM;
Grant amount: 500,000;
Status as of August 31, 2006: Completed.
Location: Telluride, CO;
Grant amount: 300,000;
Status as of August 31, 2006: Completed.
Location: 2002 Grant YearLocation: Total;
Grant amount: 2002 Grant Year Grant amount: $19,999,056;
Status as of August 31, 2006: [Empty].
Source: GAO analysis of DOT data.
[End of table]
Table:
2003 Grant year.
Location: Aguadilla, PR;
Grant amount: $626,700;
Status as of August 31, 2006: Ongoing.
Location: Aleutians East Borough, AK;
Grant amount: 70,000;
Status as of August 31, 2006: Ongoing.
Location: AZ Consortium, AZ;
Grant amount: 1,500,000;
Status as of August 31, 2006: Ongoing.
Location: Bakersfield, CA;
Grant amount: 982,513;
Status as of August 31, 2006: Ongoing.
Location: Bangor, ME;
Grant amount: 310,000;
Status as of August 31, 2006: Ongoing.
Location: Charleston, SC;
Grant amount: 1,000,000;
Status as of August 31, 2006: Terminated.
Location: Cut Bank, MT;
Grant amount: 90,000;
Status as of August 31, 2006: Completed.
Location: Dickinson, ND;
Grant amount: 750,000;
Status as of August 31, 2006: Completed.
Location: Dothan, AL;
Grant amount: 200,000;
Status as of August 31, 2006: Completed.
Location: Dubuque, IA;
Grant amount: 610,000;
Status as of August 31, 2006: Ongoing.
Location: Duluth, MN;
Grant amount: 1,000,000;
Status as of August 31, 2006: Ongoing.
Location: Elmira, NY;
Grant amount: 200,000;
Status as of August 31, 2006: Ongoing.
Location: Erie, PA;
Grant amount: 500,000;
Status as of August 31, 2006: Completed.
Location: Fresno, CA;
Grant amount: 1,000,000;
Status as of August 31, 2006: Ongoing.
Location: Friday Harbor, WA;
Grant amount: 350,000;
Status as of August 31, 2006: Completed.
Location: Gainesville, FL;
Grant amount: 660,000;
Status as of August 31, 2006: Completed.
Location: Grand Island, NE;
Grant amount: 380,000;
Status as of August 31, 2006: Ongoing.
Location: Greenville, MS;
Grant amount: 400,000;
Status as of August 31, 2006: Terminated.
Location: Gunnison, CO;
Grant amount: 200,000;
Status as of August 31, 2006: Completed.
Location: Joplin, MO;
Grant amount: 500,000;
Status as of August 31, 2006: Ongoing.
Location: Knoxville, TN;
Grant amount: 500,000;
Status as of August 31, 2006: Terminated.
Location: Laredo, TX;
Grant amount: 400,000;
Status as of August 31, 2006: Ongoing.
Location: Lewiston-Nez Perce, ID;
Grant amount: 675,000;
Status as of August 31, 2006: Ongoing.
Location: Mountain Home (Baxter), AR;
Grant amount: 574,875;
Status as of August 31, 2006: Ongoing.
Location: Muskegon, MI;
Grant amount: 500,000;
Status as of August 31, 2006: Completed.
Location: NC Consortium, NC;
Grant amount: 1,200,000;
Status as of August 31, 2006: Ongoing.
Location: Owensboro, KY;
Grant amount: 500,000;
Status as of August 31, 2006: Ongoing.
Location: Parkersburg-Marietta, WV/OH;
Grant amount: 500,000;
Status as of August 31, 2006: Ongoing.
Location: Pierre, SD;
Grant amount: 150,000;
Status as of August 31, 2006: Completed.
Location: Redmond, OR;
Grant amount: 515,000;
Status as of August 31, 2006: Completed.
Location: Savannah, GA;
Grant amount: 523,495;
Status as of August 31, 2006: Completed.
Location: Shreveport, LA;
Grant amount: 500,000;
Status as of August 31, 2006: Completed.
Location: Staunton, VA;
Grant amount: 100,000;
Status as of August 31, 2006: Ongoing.
Location: Taos Consortium, NM;
Grant amount: 1,400,000;
Status as of August 31, 2006: Completed.
Location: Tupelo, MS;
Grant amount: 475,000;
Status as of August 31, 2006: Completed.
Location: Victoria, TX;
Grant amount: 20,000;
Status as of August 31, 2006: Completed.
Location: Total;
Grant amount: $19,862,583;
Status as of August 31, 2006: [Empty].
Source: GAO analysis of DOT data.
[End of table]
Table:
2004 Grant Year.
2004 Grant Year: Location: Albany, GA;
Grant amount: $500,000;
Status as of August 31, 2006: Ongoing.
Location: Alpena, MI;
Grant amount: 583,046;
Status as of August 31, 2006: Ongoing.
Location: Beckley/Lewisburg, WV;
Grant amount: 300,000;
Status as of August 31, 2006: Ongoing.
Location: Bloomington, IL;
Grant amount: 850,000;
Status as of August 31, 2006: Ongoing.
Location: Butte, MT;
Grant amount: 360,000;
Status as of August 31, 2006: Ongoing.
Location: Champaign-Urbana, IL;
Grant amount: 200,000;
Status as of August 31, 2006: Completed.
Location: Charlottesville, VA;
Grant amount: 270,000;
Status as of August 31, 2006: Ongoing.
Location: Chattanooga, TN;
Grant amount: 750,000;
Status as of August 31, 2006: Ongoing.
Location: Clarksburg/Morgantown (reallocation), WV;
Grant amount: 372,286;
Status as of August 31, 2006: Ongoing.
Location: Columbus, MS;
Grant amount: 260,000;
Status as of August 31, 2006: Ongoing.
Location: Del Rio, TX;
Grant amount: 318,750;
Status as of August 31, 2006: Ongoing.
Location: Dubois, PA;
Grant amount: 400,000;
Status as of August 31, 2006: Ongoing.
Location: Eau Claire, WI;
Grant amount: 500,000;
Status as of August 31, 2006: Ongoing.
Location: Elko, NV;
Grant amount: 222,000;
Status as of August 31, 2006: Completed.
Location: Evansville/South Bend, IN;
Grant amount: 1,000,000;
Status as of August 31, 2006: Ongoing.
Location: Farmington, NM;
Grant amount: 650,000;
Status as of August 31, 2006: Ongoing.
Location: Hot Springs (reallocation), AR;
Grant amount: 195,000;
Status as of August 31, 2006: Completed.
Location: Huntsville, AL;
Grant amount: 479,950;
Status as of August 31, 2006: Completed.
Location: Kalamazoo, MI;
Grant amount: 500,000;
Status as of August 31, 2006: Ongoing.
Location: Lafayette, LA;
Grant amount: 240,000;
Status as of August 31, 2006: Ongoing.
Location: Latrobe, PA;
Grant amount: 600,000;
Status as of August 31, 2006: Ongoing.
Location: Lebanon, NH;
Grant amount: 500,000;
Status as of August 31, 2006: Ongoing.
Location: Lincoln, NE;
Grant amount: 1,200,000;
Status as of August 31, 2006: Ongoing.
Location: Logan City, UT;
Grant amount: 530,000;
Status as of August 31, 2006: Ongoing.
Location: Marquette, MI;
Grant amount: 700,000;
Status as of August 31, 2006: Ongoing.
Location: McCook/North Platte, NE;
Grant amount: 275,000;
Status as of August 31, 2006: Ongoing.
Location: New Haven, CT;
Grant amount: 250,000;
Status as of August 31, 2006: Ongoing.
Location: Pocatello, ID;
Grant amount: 75,000;
Status as of August 31, 2006: Completed.
Location: Redding/Arcata, CA;
Grant amount: 500,000;
Status as of August 31, 2006: Ongoing.
Location: Richmond, VA;
Grant amount: 950,000;
Status as of August 31, 2006: Ongoing.
Location: Rutland (reallocation), VT;
Grant amount: 240,000;
Status as of August 31, 2006: Ongoing.
Location: Salem, OR;
Grant amount: 500,000;
Status as of August 31, 2006: Ongoing.
Location: Santa Rosa, CA;
Grant amount: 635,000;
Status as of August 31, 2006: Ongoing.
Location: Sarasota, FL;
Grant amount: 1,500,000;
Status as of August 31, 2006: Ongoing.
Location: Sioux City, IA;
Grant amount: 609,800;
Status as of August 31, 2006: Ongoing.
Location: Sioux Falls, SD;
Grant amount: 350,000;
Status as of August 31, 2006: Ongoing.
Location: Steamboat Springs, CO;
Grant amount: 500,000;
Status as of August 31, 2006: Ongoing.
Location: Sumter, SC;
Grant amount: 50,000;
Status as of August 31, 2006: Completed.
Location: Syracuse (reallocation), NY;
Grant amount: 480,000;
Status as of August 31, 2006: Ongoing.
Location: Tyler, TX;
Grant amount: 90,000;
Status as of August 31, 2006: Ongoing.
Location: Visalia (reallocation), CA;
Grant amount: 200,000;
Status as of August 31, 2006: Ongoing.
Location: Walla Walla, WA;
Grant amount: 250,000;
Status as of August 31, 2006: Ongoing.
Location: Waterloo, IA;
Grant amount: 550,000;
Status as of August 31, 2006: Ongoing.
Location: Wilkes-Barre/Scranton, PA;
Grant amount: 625,000;
Status as of August 31, 2006: Completed.
Location: Worcester (reallocation), MA;
Grant amount: 442,615;
Status as of August 31, 2006: Ongoing.
Location: Youngstown, OH;
Grant amount: 250,000;
Status as of August 31, 2006: Ongoing.
Location: Total;
Grant amount: $21,803,447;
Status as of August 31, 2006: [Empty].
Source: GAO analysis of DOT data.
Note: Program funds from 2002 and 2003 were reallocated to six cities
in 2004.
[End of Table]
Table:
Location: Aberdeen, SD;
Grant amount: : $450,000;
Status as of August 31, 2006: Ongoing.
Location: Alexandria, LA;
Grant amount: 500,000;
Status as of August 31, 2006: Ongoing.
Location: Bradford, PA;
Grant amount: 220,000;
Status as of August 31, 2006: Ongoing.
Location: CA Consortium, CA;
Grant amount: 245,020;
Status as of August 31, 2006: Ongoing.
Location: Cedar City, UT;
Grant amount: 155,000;
Status as of August 31, 2006: Ongoing.
Location: Durango, CO;
Grant amount: 750,000;
Status as of August 31, 2006: Ongoing.
Location: Fargo, ND;
Grant amount: 675,000;
Status as of August 31, 2006: Ongoing.
Location: Florence, SC;
Grant amount: 500,000;
Status as of August 31, 2006: Ongoing.
Location: Great Falls, MT;
Grant amount: 220,000;
Status as of August 31, 2006: Ongoing.
Location: Greenville, NC;
Grant amount: 450,000;
Status as of August 31, 2006: Ongoing.
Location: Gulfport/Biloxi, MS;
Grant amount: 750,000;
Status as of August 31, 2006: Ongoing.
Location: Hancock/Houghton, MI;
Grant amount: 516,000;
Status as of August 31, 2006: Ongoing.
Location: Hibbing, MN;
Grant amount: 485,000;
Status as of August 31, 2006: Ongoing.
Location: Huntington, WV;
Grant amount: 500,000;
Status as of August 31, 2006: Ongoing.
Location: Idaho Falls, ID;
Grant amount: 500,000;
Status as of August 31, 2006: Ongoing.
Location: Ithaca, NY;
Grant amount: 500,000;
Status as of August 31, 2006: Ongoing.
Location: Jacksonville, NC;
Grant amount: 500,000;
Status as of August 31, 2006: Ongoing.
Location: Killeen, TX;
Grant amount: 280,000;
Status as of August 31, 2006: Ongoing.
Location: Knox County, ME;
Grant amount: 555,000;
Status as of August 31, 2006: Ongoing.
Location: Lawton/Ft. Sill, OK;
Grant amount: 570,000;
Status as of August 31, 2006: Ongoing.
Location: Macon, GA;
Grant amount: 507,691;
Status as of August 31, 2006: Ongoing.
Location: Marathon, FL;
Grant amount: 750,000;
Status as of August 31, 2006: Ongoing.
Location: Marshall, MN;
Grant amount: 480,000;
Status as of August 31, 2006: Ongoing.
Location: Massena, NY;
Grant amount: 400,000;
Status as of August 31, 2006: Ongoing.
Location: Modesto, CA;
Grant amount: 550,000;
Status as of August 31, 2006: Ongoing.
Location: Monterey, CA;
Grant amount: 500,000;
Status as of August 31, 2006: Ongoing.
Location: Montgomery, AL;
Grant amount: 600,000;
Status as of August 31, 2006: Ongoing.
Location: Oregon/Washington Consortium, OR/WA;
Grant amount: 180,570;
Status as of August 31, 2006: Ongoing.
Location: Rockford, IL;
Grant amount: 1,000,000;
Status as of August 31, 2006: Ongoing.
Location: Ruidoso, NM;
Grant amount: 600,000;
Status as of August 31, 2006: Ongoing.
Location: Somerset, KY;
Grant amount: 950,000;
Status as of August 31, 2006: Ongoing.
Location: Stewart (Newburgh), NY;
Grant amount: 250,000;
Status as of August 31, 2006: Ongoing.
Location: Vernal, UT;
Grant amount: 40,000;
Status as of August 31, 2006: Ongoing.
Location: Williamsport, PA;
Grant amount: 500,000;
Status as of August 31, 2006: Ongoing.
Location: Wyoming Consortium, WY;
Grant amount: 800,000;
Status as of August 31, 2006: Ongoing.
Location: Total ;
Grant amount: $17,429,281;
Status as of August 31, 2006: [Empty].
Source: GAO analysis of DOT data.
[End of table]
Table:
2006 Grant Year.
2006 Grant Year: Location: Abilene, TX;
Grant amount: $465,100.
Location: Big Sandy Region, KY;
Grant amount: 90,000.
Location: Brunswick, GA;
Grant amount: 500,000.
Location: Cedar Rapids, IA;
Grant amount: 200,000.
Location: Chico, CA;
Grant amount: 472,500.
Location: Fairbanks, AK;
Grant amount: 500,000.
Location: Gallup, NM;
Grant amount: 600,000.
Location: Garden City/Dodge City/Liberal, KS;
Grant amount: 150,000.
Location: Gary, IN;
Grant amount: 600,000.
Location: Grand Forks, ND;
Grant amount: 350,000.
Location: Harrisburg, PA;
Grant amount: 400,000.
Location: Jackson, MS;
Grant amount: 400,000.
Location: Jamestown, NY;
Grant amount: 150,000.
Location: Jamestown/Devil's Lake, ND;
Grant amount: 100,000.
Location: Kalispell, MT;
Grant amount: 450,000.
Location: Longview, TX;
Grant amount: 225,000.
Location: Lynchburg, VA;
Grant amount: 250,000.
Location: Melbourne, FL;
Grant amount: 800,000.
Location: Monroe, LA;
Grant amount: 50,000.
Location: Montrose, CO;
Grant amount: 450,000.
Location: North Bend, OR;
Grant amount: 400,000.
Location: Palmdale, CA;
Grant amount: 900,000.
Location: Springfield, IL;
Grant amount: 390,000.
Location: Toledo, OH;
Grant amount: 400,000.
Location: Tuscaloosa, AL;
Grant amount: 400,000.
Location: Total;
Grant amount: $9,692,600.
Source: DOT data.
[End of table]
[End of section]
Appendix IV: Essential Air Service Communities and Subsidies as of May
1, 2006:
Table 2: Essential Air Service (EAS) Communities in the Contiguous
United States, Hawaii, and Puerto Rico:
States and communities: Alabama: Muscle Shoals;
May 1, 2006 annual subsidy amounts: $1,364,697.
States and communities: Arizona: Kingman;
May 1, 2006 annual subsidy amounts: 1,001,989.
States and communities: Arizona: Page;
May 1, 2006 annual subsidy amounts: 1,057,655.
States and communities: Arizona: Prescott;
May 1, 2006 annual subsidy amounts: 1,001,989.
States and communities: Arizona: Show Low;
May 1, 2006 annual subsidy amounts: 779,325.
States and communities: Arkansas: El Dorado/Camden;
May 1, 2006 annual subsidy amounts: 923,456.
States and communities: Arkansas: Harrison;
May 1, 2006 annual subsidy amounts: 923,456.
States and communities: Arkansas: Hot Springs;
May 1, 2006 annual subsidy amounts: 1,385,183.
States and communities: Arkansas: Jonesboro;
May 1, 2006 annual subsidy amounts: 923,456.
States and communities: California: Crescent City;
May 1, 2006 annual subsidy amounts: 816,025.
States and communities: California: Merced;
May 1, 2006 annual subsidy amounts: 696,788.
States and communities: California: Visalia;
May 1, 2006 annual subsidy amounts: 450,000.
States and communities: Colorado: Alamosa;
May 1, 2006 annual subsidy amounts: 1,083,538.
States and communities: Colorado: Cortez;
May 1, 2006 annual subsidy amounts: 853,587.
States and communities: Colorado: Pueblo;
May 1, 2006 annual subsidy amounts: 780,997.
States and communities: Georgia: Athens;
May 1, 2006 annual subsidy amounts: 392,108.
States and communities: Hawaii: Hana;
May 1, 2006 annual subsidy amounts: 774,718.
States and communities: Hawaii: Kamuela;
May 1, 2006 annual subsidy amounts: 395,053.
States and communities: Hawaii: Kalaupapa;
May 1, 2006 annual subsidy amounts: 331,981.
States and communities: Illinois: Decatur;
May 1, 2006 annual subsidy amounts: 954,404.
States and communities: Illinois: Marion/Herrin;
May 1, 2006 annual subsidy amounts: 1,251,069.
States and communities: Illinois: Quincy;
May 1, 2006 annual subsidy amounts: 1,097,406.
States and communities: Iowa: Burlington;
May 1, 2006 annual subsidy amounts: 1,077,847.
States and communities: Iowa: Fort Dodge;
May 1, 2006 annual subsidy amounts: 1,080,386.
States and communities: Iowa: Mason City;
May 1, 2006 annual subsidy amounts: 1,080,386.
States and communities: Kansas: Dodge City;
May 1, 2006 annual subsidy amounts: 1,379,419.
States and communities: Kansas: Garden City;
May 1, 2006 annual subsidy amounts: 1,733,997.
States and communities: Kansas: Great Bend;
May 1, 2006 annual subsidy amounts: 621,945.
States and communities: Kansas: Hays;
May 1, 2006 annual subsidy amounts: 1,540,392.
States and communities: Kansas: Liberal;
May 1, 2006 annual subsidy amounts: 1,008,582.
States and communities: Kansas: Manhattan/ Ft. Riley;
May 1, 2006 annual subsidy amounts: 487,004.
States and communities: Kansas: Salina;
May 1, 2006 annual subsidy amounts: 487,004.
States and communities: Kentucky: Owensboro;
May 1, 2006 annual subsidy amounts: 1,127,453.
States and communities: Maine: Augusta/Waterville;
May 1, 2006 annual subsidy amounts: 1,065,475.
States and communities: Maine: Bar Harbor;
May 1, 2006 annual subsidy amounts: 1,065,475.
States and communities: Maine: Presque Isle;
May 1, 2006 annual subsidy amounts: 1,116,423.
States and communities: Maine: Rockland;
May 1, 2006 annual subsidy amounts: 1,065,475.
States and communities: Maryland: Hagerstown;
May 1, 2006 annual subsidy amounts: 649,929.
States and communities: Michigan: Escanaba;
May 1, 2006 annual subsidy amounts: 290,952.
States and communities: Michigan: Ironwood/Ashland, WI;
May 1, 2006 annual subsidy amounts: 409,242.
States and communities: Michigan: Iron Mountain/Kingsford;
May 1, 2006 annual subsidy amounts: 602,761.
States and communities: Michigan: Manistee/Ludington;
May 1, 2006 annual subsidy amounts: 776,051.
States and communities: Minnesota: Chisholm/Hibbing;
May 1, 2006 annual subsidy amounts: 1,279,329.
States and communities: Minnesota: Thief River Falls;
May 1, 2006 annual subsidy amounts: 777,709.
States and communities: MIssissippi: Laurel/Hattiesburg;
May 1, 2006 annual subsidy amounts: 1,100,253.
States and communities: Missouri: Cape Girardeau;
May 1, 2006 annual subsidy amounts: 1,147,453.
States and communities: Missouri: Columbia/Jefferson City;
May 1, 2006 annual subsidy amounts: Order 2006-4-6 requested proposals
for Columbia/ Jefferson City.
States and communities: Missouri: Fort Leonard Wood;
May 1, 2006 annual subsidy amounts: 683,201.
States and communities: Missouri: Joplin;
May 1, 2006 annual subsidy amounts: 755,762.
States and communities: Missouri: Kirksville;
May 1, 2006 annual subsidy amounts: 840,200.
States and communities: Montana: Glasgow;
May 1, 2006 annual subsidy amounts: 922,103.
States and communities: Montana: Glendive;
May 1, 2006 annual subsidy amounts: 922,103.
States and communities: Montana: Havre;
May 1, 2006 annual subsidy amounts: 922,103.
States and communities: Montana: Lewistown;
May 1, 2006 annual subsidy amounts: 922,103.
States and communities: Montana: Miles City;
May 1, 2006 annual subsidy amounts: 922,103.
States and communities: Montana: Sidney;
May 1, 2006 annual subsidy amounts: 1,306,313.
States and communities: Montana: West Yellowstone;
May 1, 2006 annual subsidy amounts: 247,122.
States and communities: Montana: Wolf Point;
May 1, 2006 annual subsidy amounts: 922,103.
States and communities: Nebraska: Alliance;
May 1, 2006 annual subsidy amounts: 655,898.
States and communities: Nebraska: Chadron;
May 1, 2006 annual subsidy amounts: 655,898.
States and communities: Nebraska: Grand Island;
May 1, 2006 annual subsidy amounts: 1,198,396.
States and communities: Nebraska: Kearney;
May 1, 2006 annual subsidy amounts: 1,166,849.
States and communities: Nebraska: McCook;
May 1, 2006 annual subsidy amounts: 1,502,651.
States and communities: Nebraska: North Platte;
May 1, 2006 annual subsidy amounts: 870,504.
States and communities: Nebraska: Scottsbluff;
May 1, 2006 annual subsidy amounts: 494,887.
States and communities: Nevada: Ely;
May 1, 2006 annual subsidy amounts: 784,463.
States and communities: New Hampshire; Lebanon;
May 1, 2006 annual subsidy amounts: 998,752.
States and communities: New Mexico: Alamogordo/Holloman;
May 1, 2006 annual subsidy amounts: Order 2006-3-26 requested proposals
on an emergency basis.
States and communities: New Mexico: Carlsbad;
May 1, 2006 annual subsidy amounts: 599,671.
States and communities: New Mexico: Clovis;
May 1, 2006 annual subsidy amounts: 859,057.
States and communities: New Mexico: Hobbs;
May 1, 2006 annual subsidy amounts: 519,614.
States and communities: New Mexico: Silver City/Hurley/Deming;
May 1, 2006 annual subsidy amounts: 859,057.
States and communities: New York: Jamestown;
May 1, 2006 annual subsidy amounts: 1,217,414.
States and communities: New York: Massena;
May 1, 2006 annual subsidy amounts: 585,945.
States and communities: New York: Ogdensburg;
May 1, 2006 annual subsidy amounts: 585,945.
States and communities: New York: Plattsburgh;
May 1, 2006 annual subsidy amounts: 753,964.
States and communities: New York: Saranac Lake;
May 1, 2006 annual subsidy amounts: 753,964.
States and communities: New York: Watertown;
May 1, 2006 annual subsidy amounts: 585,945.
States and communities: North Dakota: Devils Lake;
May 1, 2006 annual subsidy amounts: 1,329,858.
States and communities: North Dakota: Dickinson;
May 1, 2006 annual subsidy amounts: 1,697,248.
States and communities: North Dakota: Jamestown;
May 1, 2006 annual subsidy amounts: 1,351,677.
States and communities: Oklahoma: Enid;
May 1, 2006 annual subsidy amounts: 636,279.
States and communities: Oklahoma: Ponca City;
May 1, 2006 annual subsidy amounts: 636,279.
States and communities: Oregon: Pendleton;
May 1, 2006 annual subsidy amounts: 649,974.
States and communities: Pennsylvania: Altoona;
May 1, 2006 annual subsidy amounts: 893,774.
States and communities: Pennsylvania: Bradford;
May 1, 2006 annual subsidy amounts: 1,217,414.
States and communities: Pennsylvania: DuBois;
May 1, 2006 annual subsidy amounts: 643,818.
States and communities: Pennsylvania: Johnstown;
May 1, 2006 annual subsidy amounts: 464,777.
States and communities: Pennsylvania: Lancaster;
May 1, 2006 annual subsidy amounts: 1,611,707.
States and communities: Pennsylvania: Oil City/Franklin;
May 1, 2006 annual subsidy amounts: 683,636.
States and communities: Puerto Rico; Mayaguez;
May 1, 2006 annual subsidy amounts: 688,551.
States and communities: Puerto Rico: Ponce;
May 1, 2006 annual subsidy amounts: 622,056.
States and communities: South Dakota: Brookings;
May 1, 2006 annual subsidy amounts: 1,039,364.
States and communities: South Dakota: Huron;
May 1, 2006 annual subsidy amounts: 1,039,364.
States and communities: South Dakota: Pierre;
May 1, 2006 annual subsidy amounts: 449,912.
States and communities: South Dakota: Watertown;
May 1, 2006 annual subsidy amounts: 1,211,589.
States and communities: Tennessee: Jackson;
May 1, 2006 annual subsidy amounts: 1,179,026.
States and communities: Texas: Victoria;
May 1, 2006 annual subsidy amounts: 510,185.
States and communities: Utah: Cedar City;
May 1, 2006 annual subsidy amounts: 1,068,608.
States and communities: Utah: Moab;
May 1, 2006 annual subsidy amounts: 783,608.
States and communities: Utah: Vernal;
May 1, 2006 annual subsidy amounts: 555,771.
States and communities: Vermont: Rutland;
May 1, 2006 annual subsidy amounts: 849,705.
States and communities: Virginia: Staunton;
May 1, 2006 annual subsidy amounts: 650,123.
States and communities: Washington: Ephrata/Moses Lake;
May 1, 2006 annual subsidy amounts: 1,698,922.
States and communities: West Virginia: Beckley;
May 1, 2006 annual subsidy amounts: 977,858.
States and communities: West Virginia: Clarksburg/Fairmont;
May 1, 2006 annual subsidy amounts: 306,109.
States and communities: West Virginia: Greenbrier/Lewisburg/White;
Sulphur Springs;
May 1, 2006 annual subsidy amounts: 540,579.
States and communities: West Virginia: Morgantown;
May 1, 2006 annual subsidy amounts: 306,109.
States and communities: West Virginia: Parkersburg;
May 1, 2006 annual subsidy amounts: 439,115.
States and communities: West Virginia: Princeton/Bluefield;
May 1, 2006 annual subsidy amounts: 977,858.
States and communities: Wyoming: Laramie;
May 1, 2006 annual subsidy amounts: 397,400.
States and communities: Wyoming: Riverton;
May 1, 2006 annual subsidy amounts: 394,046.
States and communities: Wyoming: Rock Springs;
May 1, 2006 annual subsidy amounts: 390,488.
States and communities: Wyoming: Sheridan;
May 1, 2006 annual subsidy amounts: 336,701.
States and communities: Wyoming: Worland;
May 1, 2006 annual subsidy amounts: 797,844.
Source: DOT:
[End of table]
Table 3: Alaskan EAS Communities:
Community: Adak;
May 1, 2006 annual subsidy: $1,617,923.
Community: Akutan;
May 1, 2006 annual subsidy: 350,381.
Community: Alitak;
May 1, 2006 annual subsidy: 106,054.
Community: Amook Bay;
May 1, 2006 annual subsidy: 16,622.
Community: Atka;
May 1, 2006 annual subsidy: 336,303.
Community: Cape Yakataga;
May 1, 2006 annual subsidy: 30,920.
Community: Central;
May 1, 2006 annual subsidy: 61,421.
Community: Chatham;
May 1, 2006 annual subsidy: 6,433.
Community: Chisana;
May 1, 2006 annual subsidy: Order 2006-4-13 held in 40 -Mile Air and
Requested Proposals.
Community: Circle;
May 1, 2006 annual subsidy: 61,421.
Community: Cordova;
May 1, 2006 annual subsidy: 1,763,179.
Community: Elfin Cove;
May 1, 2006 annual subsidy: 108,297.
Community: Excursion Inlet;
May 1, 2006 annual subsidy: 9,212.
Community: Funter Bay;
May 1, 2006 annual subsidy: 6,433.
Community: Gulkana;
May 1, 2006 annual subsidy: 199,839.
Community: Gustavus;
May 1, 2006 annual subsidy: 732,217.
Community: Healy Lake;
May 1, 2006 annual subsidy: 51,781.
Community: Hydaburg;
May 1, 2006 annual subsidy: 54,733.
Community: Icy Bay;
May 1, 2006 annual subsidy: 30,920.
Community: Karluk;
May 1, 2006 annual subsidy: 38,880.
Community: Kitoi Bay;
May 1, 2006 annual subsidy: 16,622.
Community: Manley;
May 1, 2006 annual subsidy: 24,768.
Community: May Creek;
May 1, 2006 annual subsidy: 69,759.
Community: McCarthy;
May 1, 2006 annual subsidy: 69,759.
Community: Minto;
May 1, 2006 annual subsidy: 24,768.
Community: Moser Bay;
May 1, 2006 annual subsidy: 16,622.
Community: Nikolski;
May 1, 2006 annual subsidy: 173,603.
Community: Olga Bay;
May 1, 2006 annual subsidy: 16,622.
Community: Pelican;
May 1, 2006 annual subsidy: 108,297.
Community: Petersburg;
May 1, 2006 annual subsidy: 732,217.
Community: Port Alexander;
May 1, 2006 annual subsidy: 48,746.
Community: Port Bailey;
May 1, 2006 annual subsidy: 16,622.
Community: Port William;
May 1, 2006 annual subsidy: 16,622.
Community: Seal Bay;
May 1, 2006 annual subsidy: 16,622.
Community: Uganik;
May 1, 2006 annual subsidy: 15,715.
Community: West Point;
May 1, 2006 annual subsidy: 16,622.
Community: Wrangell;
May 1, 2006 annual subsidy: 732,217.
Community: Yakutat;
May 1, 2006 annual subsidy: 1,763,179.
Community: Zachar Bay;
May 1, 2006 annual subsidy: 16,622.
Source: DOT.
[End of table]
[End of section]
Related GAO Products:
Airline Deregulation: Reregulating the Airline Industry Would Reverse
Consumer Benefits and Not Save Airline Pensions. GAO-06-630 Washington,
D.C.: June 9, 2006.
Commercial Aviation: Initial Small Community Air Service Development
Projects Have Achieved Mixed Results. GAO-06-21 Washington, D.C:
November 30, 2005.
Commercial Aviation: Survey of Small Community Air Service Grantees and
Applicants. GAO-06-101SP. Washington, D.C.: November 30, 2005:
Commercial Aviation: Bankruptcy and Pension Problems Are Symptoms of
Underlying Structural Issues. GAO-05-945 Washington, D.C.: September
30, 2005.
Commercial Aviation: Legacy Airlines Must Further Reduce Costs to
Restore Profitability. GAO-04-836 Washington, D.C.: August 11, 2004:
Commercial Aviation: Issues Regarding Federal Assistance for Enhancing
Air Service to Small Communities. GAO-03-540T. Washington, D.C.: March
11, 2003:
Federal Aviation Administration: Reauthorization Provides Opportunities
to Address Key Agency Challenges. GAO-03-653T. Washington, D.C.: April
l0, 2003.
Commercial Aviation: Factors Affecting Efforts to Improve Air Service
at Small Community Airports. GAO-03-330 Washington, D.C.: January 17,
2003:
Commercial Aviation: Financial Condition and Industry Responses Affect
Competition. GAO-03-171T. Washington, D.C.: October 2, 2002.
Options to Enhance the Long-term Viability of the Essential Air Service
Program. GAO-02-997R. Washington, D.C.: August 30, 2002.
Commercial Aviation: Air Service Trends at Small Communities Since
October 2000. GAO-02-432. Washington, D.C.: March 29, 2002.
Proposed Alliance Between American Airlines and British Airways Raises
Competition Concerns and Public Interest Issues. GAO-02-293R.
Washington, D.C.: December 21, 2001.
"State of the U.S. Commercial Airlines Industry and Possible Issues for
Congressional Consideration," Speech by Comptroller General of the
United States David Walker. The International Aviation Club of
Washington: November 28, 2001.
Financial Management: Assessment of the Airline Industry's Estimated
Losses Arising From the Events of September 11. GAO-02-133R.
Washington, D.C.: October 5, 2001.
Commercial Aviation: A Framework for Considering Federal Financial
Assistance. GAO-01-1163T. Washington, D.C.: September 20, 2001.
Aviation Competition: Restricting Airline Ticketing Rules Unlikely to
Help Consumers. GAO-01-832 Washington, D.C.: July 31, 2001.
Aviation Competition: Challenges in Enhancing Competition in Dominated
Markets. GAO-01-518T. Washington, D.C.: March 13, 2001.
Aviation Competition: Regional Jet Service Yet to Reach Many Small
Communities. GAO-01-344 Washington, D.C.: February 14, 2001.
Airline Competition: Issues Raised by Consolidation Proposals. GAO-01-
402T. Washington, D.C.: February 7, 2001.
Aviation Competition: Issues Related to the Proposed United Airlines-US
Airways Merger. GAO-01-212, Washington, D.C.: December 15, 2000.
Essential Air Service: Changes in Subsidy Levels, Air Carrier Costs,
and Passenger Traffic. RCED-00-34, Washington, D.C.: April 14, 2000.
FOOTNOTES
[1] The U.S. network carriers are Alaska Airlines, American Airlines,
Continental Airlines, Delta Air Lines, Northwest Airlines, United
Airlines, and US Airways.
[2] The nation's commercial airports are categorized into four main
groups based on annual passenger enplanements--large hubs, medium hubs,
small hubs, and nonhubs. The 30 large hubs and 37 medium-hub airports
together enplaned about 89 percent of the almost 703 million U.S.
passengers in 2004. In contrast, the 69 small hubs enplaned about 8
percent, and the 374 nonhub airports enplaned about 3 percent of U.S.
passengers.
[3] Small community airports also receive other financial support from
the federal government. For example, under the Airport Improvement
Program small airports receive certain funds for addressing capital
improvement needs--such as for runway or taxiway improvements.
[4] Overflight fees are user fees for air traffic control services
provided by the Federal Aviation Administration (FAA) to aircraft that
fly over, but do not land in the United States, as authorized by the
Federal Aviation Reauthorization Act of 1996 (P.L. 104-264).
[5] The Emergency Supplemental Appropriations Act for Defense, the
Global War on Terror, and Tsunami Relief, 2005, Pub. L. No. 109-13,
recognized that the funds appropriated for EAS may not be sufficient to
meet the service needs of communities encompassed by that program. The
Emergency Supplemental Appropriations Act provided that the Secretary
of Transportation could transfer "such sums as may be necessary to
carry out the essential air service program from any available amounts
appropriated to or directly administered by the Office of the
Secretary."
[6] GAO, 21st Century Challenges: Reexamining the Base of Federal
Government. GAO-05-325SP. (Washington, DC: 2005). February 2005.
[7] The analysis is based on 2004 national enplanement data--the most
recent data available.
[8] A network carrier operates a significant portion of its flights
using at least one hub where connections are made for flights on a
spoke system. Regional carriers provide service from small communities
primarily using regional jets to connect the network carriers' hub-and-
spoke system.
[9] Code of Federal Regulations Title 14 Part 121 (14 CFR Part 121)
provides details on aircraft certification requirements for aircraft
that operate scheduled service with 10 or more seats. The Commuter Rule
was instituted with 60 Fed. Reg. 65832, December 20, 1995.
[10] Aviation and Transportation Security Act, Section 110 of P.L. 107-
71, 115 Stat. 597 (2001).
[11] Low-cost carriers follow a business model that may include point-
to-point service between high-density city pairs, a standardized fleet
with high aircraft utilization, low fares, and minimal onboard service.
[12] Special provisions guaranteed service to Alaskan communities.
[13] Subsidies are used to cover the difference between a carrier's
projected revenues and expenses and to provide a minimum amount of
profit.
[14] The average subsidy per passenger does not equate to a specific
portion of a passenger's ticket price paid for by EAS funds. Ticket
pricing involves a complex variety of factors relating to the demand
for travel between two points, the supply of available seats along that
route, competition in the market, and how air carriers choose to manage
and price their available seating capacity.
[15] 49 USC 41732.
[16] DOT officials said that they check the reasonableness of the cost
and revenue information received from the air carriers against other
data reported to DOT and in documents filed with the Securities and
Exchange Commission.
[17] At any time throughout the year, an air carrier providing
unsubsidized service to an EAS-eligible community can file a notice to
suspend service if the carrier determines that it can no longer provide
profitable service, thus triggering a carrier selection case. In
addition, after DOT selects an air carrier to provide subsidized
service, that agreement is subject to renewal, generally every 2 years,
at which time other air carriers are permitted to submit proposals to
serve that community with or without a subsidy.
[18] P.L. 106-181.
[19] Vision-100, P.L. 108-176
[20] DOT must give priority consideration to communities that (1) have
air fares higher than average for all communities, (2) provide a
portion of the cost of the project from local sources other than
airport revenues, (3) have--or plan to establish--a public-private
partnership to facilitate air carrier service to the public, (4) will
provide material benefits to a broad segment of the public that has
limited access to the national air transportation system, and (5) will
use the assistance in a timely manner.
[21] The highest number of communities served during the program's
history was 405 in 1980.
[22] DOT did not have ridership data available for all EAS communities.
[23] GAO, Commercial Aviation: Factors Affecting Efforts to Improve Air
Service at Small Community Airports, GAO-03-330 (Washington, D.C.:
2003). January 17, 2003.
[24] The authorizing legislation provides one limitation on the timing
of expenditures. If funds are used to subsidize air service, the
subsidy cannot last more than 3 years. However, the time needed to
obtain the service is not included in the subsidy time limit. The
legislation does not limit the timing of expenditures for other
purposes. In fiscal year 2005, DOT issued an order specifying that in
general, grant funds should be expended within 3 years.
[25] We considered a grant to be complete when the activities
associated with the grant were finished and FAA had made final
reimbursements of allowable costs.
[26] According to DOT officials, the agency only initiated the
termination for the grant awarded to Casper/Gillette, Wyoming. The
communities awarded the other six grants requested the termination of
the grants.
[27] GAO-05-325SP
[28] This information was current as of January 2006.
[29] As we reported in our 2002 report, although scheduled commercial
air service is positively correlated with local economic activity, we
were unable to locate reliable studies that describe the extent to
which scheduled commercial air service is directly responsible for
economic development in small communities in the United States (i.e.,
whether air service precedes, follows, or develops simultaneously with
local economic activity).
[30] GAO, Initial Small Community Air Service Development Projects Have
Achieved Mixed Results, GAO-06-21 (Washington, D.C.: Nov. 2005).
[31] Businesses or individuals deposit or promise future travel funds
to a carrier providing new or expanded service. Contributing businesses
and individuals can then draw down from this account.
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