Essential Air Service – Thirty Years of Wasting Your Money

Essential Air Service (EAS) seems to be a hot topic these days. It was probably Big Sky’s announcement that they were getting out of the game that triggered it. At least, that announcement is what got me working on this. Little did I know that USA Today was also working on an article that has a lot of overlap with mine. But as an opinionated blogger, I’ll say what USA Today makes you infer: EAS is a huge waste of taxpayer dollars, and it should be reduced if not eliminated.

Ok, so its $100m annual budget isn’t going to even make a dent in the deficit, but hey, we have to start somewhere. Maybe I could have ignored it when it had a $25m budget 10 years ago, but it’s crept up past $100m, and that’s ridiculous. So what is EAS? It’s a subsidy program that is a spawn of deregulation, and it doubles as a huge funnel where the IRS pours your money every year.

Let me back away from the snarkiness and get into some facts. When the industry was deregulated in the 1970s, the government worried that smaller cities would lose service. So, any city that had service before deregulation became technically eligible for subsidies to maintain that service. This is called EAS. Over the years, the cities eligible for service have changed, but the idea remains the same.

Now, there are effectively two different programs here. One is for Alaska, and the other is for the rest of the US. I’m not going to talk about the Alaska program in this post. There are communities up there that do not have road access to anywhere else, so they rely on aviation for their livelihood. I can understand the need for a limited program like that, though I have no doubt that we’re wasting money there as well. Still, I think that’s a post for another time. Instead, let’s focus on the rest of the US.

As of the November 2007 EAS report, there were 102 cities in the program. For flying to those cities, airlines receive annual subsidies of $100,686,910. Which cities have been deemed so important that they need the government to guarantee service? I put them all into a handy Google map so you can see where they are.



One thing you might notice here is that there are a lot of cities on this map. Chances are they’re all in places you’ve never been and never plan to go. (I’ve actually only stayed the night in one of these, Jackson, Tennessee, but I didn’t fly there.) What are the rules for getting on the list? You can read the history of it here (pdf), but today, the rules are pretty simple.

  • The airport still must have had service prior to deregulation
  • The airport must be more than 70 miles away from a medium to large hub airport
  • The subsidy cannot amount to more than $200 per passenger unless the airport is 210 miles from a hub airport

So many problems. Where should we start? First of all, I’m not sure why the distinction was made that an airport needs to be more than 70 miles away from a hub airport. An easy way to reduce the budget here is to require an airport be more than 70 miles away from any airport with commercial service to a hub. That would drop 25 airports off our list of 102 right away.

But why stop at 70 miles? Seems somewhat arbitrary. I would say we should move it up to 100 miles. That’s still not a terrible drive for the handful of people who actually take those flights. That eliminates 56 cities and $55m from the budget.

Now, take a look at that map again. Notice how many of these cities are right near each other? There seem to be some real hotspots here. I’m guessing New York, West Virginia, Montana, Kansas, and Nebraska had some pretty powerful senators who made sure the airlines kept flying to every tiny town no matter how close they are to each other. Every vote counts, right?

How about Glasgow and Wolf Point, Montana? They’re only 54 miles apart, but they both get EAS subsidies. Grand Island and Kearney, Nebraska are about the same distance from each other. Dodge City, Kansas is a mere 45 miles from Garden City, and Liberal is only 75 miles away from there. Clarskburg, West Virginia is only 34 short miles away from Morgantown. And it looks like every small New York town on the Canadian border between Lake Ontario and Vermont gets its very own subsidy as well. You get the idea. We could eliminate subsidies to several of these towns and they would less than a hour’s drive away from the next one.

But do we even need to keep any of these services? I mean, how many people are we actually inconveniencing here? For the 12 months ending September 2007, the EAS program saw 528,853 people depart on EAS service from an EAS airport, and 300,000 of those people fly to airports within 100 miles of another airport with non-EAS service. To put that in context, all of those 500,000+ people add up to about 90% of the number of people who fly out of Fresno in a year. These aren’t big numbers.

On the flip side, there were 107,298 departures from those EAS airports and that’s about 6.5 times the number of flights out of Fresno. Of course, that’s partially because there’s an average of 21.7 seats per flight on these routes, but more importantly, each flight averages 4.9 passengers for a miserable 23% load factor.

With those kinds of numbers, can these airlines make money even with the subsidies? Not easily. We saw EAS carrier RegionsAir go under last year. It was for safety/regulatory reasons and not financial ones, but the two tend go hand in hand. Then at the end of the year, as I mentioned earlier, Big Sky announced they’d be getting out of the EAS business. The only thing keeping them in the game is that they need to find someone to fly their Montana routes before they can padlock the door. Great Lakes, one of the only EAS carriers left, has shown some interest, but those are some really ugly markets up there.

Lewistown, Montana takes the cake for having the lowest load factor last year. They had an unbelievable .6 passengers per flight. Yes, there’s a decimal point in front of that number. It’s impossible to succeed in a place like that unless the government wants to bump up its subsidy a LOT. I mean, that’s a 3% load factor on a 19 seat plane. And we’re paying to keep that going.

I know I’m pretty negative here, but is there any value at all? Sure there is. Some of these cities are truly remote, more than 200 miles away from an airport with commercial service. I think there’s probably value in the government encouraging service to remain in these cities to some extent. But if the airlines are having trouble making this work now (especially with $100 oil), then I’m not so sure that most of these routes can continue at a reasonable rate.

There may be some hope, however. 08_01_07 cessna402See, the 19 seaters used to be the gold standard for this kind of work. But back in 1997, the FAA reclassified those planes to operate under the same standards as large jets. Previously, large commercial operators flew under Part 121 and aircraft under 30 seats could fly under Part 135 operations for commuters/air taxis. That threshold was lowered to 10 seats in 1997. I don’t know much about the technical differences between 121 and 135, but I do understand that it costs more money to fly under Part 121. With that in mind, you’d think that flying an aircraft under 10 seats would be smart, especially considering the number of people taking these flights anyway.

And that’s exactly what’s happening. Cape Air has the EAS service within Puerto Rico from San Juan to both Ponce and Mayaguez. They’re using 9 seat Cessna 402C aircraft. Also, Hawaii’s Pacific Wings has branched out to the mainland and now flies EAS routes in New Mexico (under the New Mexico Airlines brand) with the same 9 seat Cessnas. Yes, this plane hasn’t been made in 20 years, but there are others like them.

For cities that are truly remote, this might be the best solution. I honestly can’t say that I know whether this will work on not, but it has to cost less than flying those empty 19 seaters around. Sadly, I won’t hold my breath that we’ll see anything dramatic happen in the near future, but I’ll certainly keep my fingers crossed.

If you’d like to dig in to the details, I’ve compiled route by route information in this spreadsheet.

There are 18 comments. Comments.

Comments

Your email address will not be published. Required fields are marked *