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Report to Congressional Requesters: 

United States Government Accountability Office: 
GAO: 

July 2009: 

National Transportation System: 

Options and Analytical Tools to Strengthen DOT's Approach to Supporting 
Communities' Access to the System: 

GAO-09-753: 

GAO Highlights: 

Highlights of GAO-09-753, a report to congressional requesters. 

Why GAO Did This Study: 

Since 1978, the Essential Air Service (EAS) program has subsidized air 
service to eligible communities that would otherwise not have scheduled 
service. The cost of this program has risen as the number of 
communities being served and subsidies to air carriers have increased. 
At the same time, the number of carriers providing EAS service has 
declined. Given continuing concerns over the EAS program’s long-term 
prospects, GAO was asked to review the program. 

GAO reviewed (1) the characteristics and current status of the EAS 
program, (2) factors affecting the program’s ability to provide air 
service, (3) options for revising the program, and (4) tools for 
assessing the program, the options for its revision, and the program’s 
performance. GAO interviewed stakeholders and reviewed the results of 
an expert panel convened by GAO, Department of Transportation (DOT) 
data and program documentation, and potential methodologies for 
assessing federal programs. 

What GAO Found: 

The EAS program has changed relatively little in 30 years, but current 
conditions raise concerns about whether the program can continue to 
operate as it has. Over the past 2 years subsidies to carriers have 
been increasing, along with EAS program obligations to fund those 
subsidies. In response, the administration is requesting $175 million 
for the EAS program in fiscal year 2010, a $50 million increase over 
recent funding levels. At the same time, the number of carriers 
providing subsidized air service is declining, from 34 in 1987 to 10 in 
2009. More than one-third of the EAS-supported communities temporarily 
lost service in 2008, when 3 carriers ceased operations. 

Several factors contribute to the increasing difficulty in providing 
subsidized air service. The EAS program has statutory requirements for 
minimum aircraft size and frequency of flights, effectively requiring 
carriers to provide service that may not be “right-sized” for some 
small markets. Also, the growth of air service especially by low-cost 
carriers—which today serve most U.S. hub airports---weighed against the 
relatively high fares and inconvenience of EAS flights, can lead people 
to bypass EAS flights and drive to hub airports. Moreover, the 
continued urbanization of the United States may have eroded the 
potential passenger base in some small and rural EAS communities. 

While Congress, DOT, GAO, and others have proposed various revisions to 
the EAS program, Congress has not authorized many changes to program 
requirements. Proposed Federal Aviation Administration reauthorization 
legislation would include performance-based incentives, among other 
changes. GAO and others have suggested increasing flexibility and other 
changes that could make EAS service more sustainable for smaller 
communities. Finally, members of an expert panel organized by GAO all 
believed that small and rural communities would benefit from a 
multimodal approach to transportation. Generally they believed that 
other modes of transportation could be more responsive to communities’ 
transportation needs in some cases. 

Although it is difficult to select options for the EAS program since 
stakeholders do not always agree on program objectives, certain 
analytical tools can help policymakers assess the EAS program. Tools 
include a re-examination framework to revisit the program’s objectives, 
and help evaluate options to make the program more effective. Other 
analytical tools include an analytical approach GAO developed that, for 
a sample of small and rural communities, identified their access to 
different modes of transportation. This approach has the potential for 
broader application to examinations of communities’ access to the 
national transportation network. Finally, once a change is implemented, 
performance measures can be used to periodically evaluate program 
effectiveness. 

What GAO Recommends: 

Congress should consider re-examining the EAS program in light of 
changes in its operating environment, and DOT should assess some of its 
practices as well as whether other forms of air service or other modes 
of transportation might better serve some communities. DOT concurred 
with our revised recommendations. 

View [hyperlink, http://www.gao.gov/products/GAO-09-753] or key 
components. For more information, contact Gerald Dillingham at (202) 
512-2834 or dillinghamg@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

The EAS Program Is Providing Air Service to More Communities, but 
Service Is Costing More and the Number of Carriers Providing Service Is 
Declining: 

The EAS Program's Ability to Provide Service Is Affected by the 
Financial Viability of Service on EAS Routes: 

Options for Modifying the EAS Program and Instituting a Multi-modal 
Approach to Community Transportation: 

Selecting Options for the EAS Program Is Difficult, but Tools Exist for 
Assessing the Options and Improving Program Evaluation: 

Conclusions: 

Matters for Congressional Consideration: 

Recommendations for Executive Action: 

Agency Comments: 

Appendix I: Objectives, Scope and Methodology: 

Appendix II: Panelist Responses to GAO Questionnaire: 

Appendix III: 21st Century Questions for Program Re-examination: 

Appendix IV: Geographic Information Systems Analysis of Small Community 
Transportation Access: 

Appendix V: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Potential Options to Revise the Essential Air Service Program: 

Table 2: Responses to GAO's Questionnaire: 

Figures: 

Figure 1: Location of EAS Communities as of January 1, 2009: 

Figure 2: Total Obligations, Fiscal Years 2003-2008: 

Figure 3: EAS Appropriations, Fiscal Years 2003-2009: 

Figure 4: Example of a Beechcraft 1900 Series Turboprop Aircraft: 

Figure 5: Average Fuel Prices for Selected EAS Carriers, Jan. 2007-Dec. 
2008: 

Figure 6: Changes in Population Distribution, 1980-2007: 

Figure 7: Example of a 9-seat Cessna 402 Aircraft: 

Figure 8: Changes in Distribution of Population, 1980 to 2007: 

Figure 9: Access to Transportation: Air Transport Only: 

Figure 10: Access to Transportation: Major Highway Access: 

Figure 11: Access to Transportation: Passenger Rail: 

Figure 12: Access to Transportation: All modes, Weighted Equally: 

Figure 13: Access to Transportation: Current EAS Communities and Other 
Selected Communities' Access to Medium-and Large-Hub Airports: 

Figure 14: Access to Transportation: Communities with Access to 
Airports Served by Low-Cost Carriers: 

Abbreviations: 

AIR-21Wendell H. Ford Aviation Investment and Reform Act for the 21st 
Century: 

DOT: Department of Transportation: 

FAA: Federal Aviation Administration: 

GIS: Geographic Information Systems: 

GPRA: Government Performance and Results Act of 1993: 

EAS: Essential Air Service: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

July 17, 2009: 

The Honorable John L. Mica: 
Ranking Republican Member: 
Committee on Transportation and Infrastructure: 
House of Representatives: 

The Honorable Thomas E. Petri: 
Ranking Republican Member: 
Subcommittee on Aviation: 
Committee on Transportation and Infrastructure: 
House of Representatives: 

In 1978, Congress deregulated the airline industry and established the 
Essential Air Service (EAS) program to ensure that communities that had 
air service at the time of deregulation would continue to receive at 
least a minimum level of service. Under the EAS program, if an air 
carrier cannot provide air service to eligible communities without 
incurring a loss, the Department of Transportation (DOT) awards the air 
carrier a subsidy to serve those communities. In 2008, this program 
helped support commercial air service to about 150 communities 
throughout the United States. The prospects for the EAS program are a 
matter of concern to many Members of Congress. In April 2009, 22 
Senators submitted a letter to the Director of the Office of Management 
and Budget requesting that the administration's budget request "reflect 
the priority of the EAS program to rural America..." The 
administration, in its fiscal year 2010 budget request for DOT notes 
that the current EAS program is not efficiently designed, and states 
its intent to work with Congress to develop a sustainable program that 
will fulfill its commitment while enhancing convenience for travelers 
and improving cost effectiveness. 

Many factors appear to be contributing to increased operating costs for 
EAS carriers and increasing demand from communities, leading to higher 
subsidy costs for the EAS program. The administration's fiscal year 
2010 budget request includes increased funding for this upcoming year 
to help cover the costs of increased demand for the program. In 
addition, over the years Congress has expressed concern that changes in 
the aviation industry and rising costs may jeopardize the EAS program's 
long-term viability. Finally, in a 2002 report,[Footnote 1] we also 
identified several factors that were likely in the near term to create 
pressure to increase potential future subsidy requirements of the EAS 
program, and described various options that could promote the long-term 
viability of the program. 

Given continuing concerns over the EAS program's long-term prospects, 
you asked us to review the program. This report addresses (1) the 
characteristics and current status of the program, (2) the factors 
affecting its ability to provide service to communities, (3) options 
for revising the EAS program, and (4) tools for assessing the program, 
options for its revision, and the program's performance. To complete 
this work we reviewed previous reports and studies of the EAS program, 
including previous GAO reports. We also held a panel discussion 
attended by experts on community air service including airline 
officials, program administrators, economists, other transportation 
providers, and state and local officials. These experts discussed the 
factors affecting the EAS program and options for providing service to 
communities across the country, in addition to responding to our 
questions about the federal government's options for assisting 
communities with connecting to the national transportation system. We 
gathered information on the experiences of airports served by the EAS 
program from a national association of airports, and from seven of 
their member airports. We obtained DOT data on the EAS program. Our 
review focuses on communities within the continental United States that 
have received EAS subsidized service. We focused our review on these 
communities because the requirements for communities in Alaska are 
different than for communities in other states, and airports outside 
the contiguous states and are not representative of the program in the 
rest of the country.[Footnote 2] In identifying tools for assessing the 
program, options for its revision, and the program's performance, we 
compared the program status to GAO's re-examination criteria and 
compared DOT's performance measures for this program against the 
criteria of the Government Performance and Results Act of 1993 and the 
Office of Management and Budget's Program Assessment Rating Tool. We 
found DOT's data sufficiently reliable for providing status information 
on the program. 

We conducted this performance audit from March 2008 through July 2009 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believed 
that the evidence obtained provides a reasonable basis for our findings 
and conclusions based on our audit objectives. See appendix I for more 
details on our scope and methodology. 

Background: 

In 1978, Congress deregulated the airline industry, phasing out the 
federal government's control over domestic fares and routes served and 
allowing market forces to determine the price, quantity, and quality of 
service. Free to determine which communities they would serve, as well 
as what fares they would charge, most major carriers became "network" 
carriers, developing "hub-and-spoke" networks and providing service 
from their hubs to many "spoke" cities they served. Anticipating that 
airlines would be free to focus their resources on generally more 
profitable high-density markets, Congress became concerned that major 
carriers would eliminate their less profitable routes serving smaller 
communities, causing these communities to lose air service. In 
response, Congress established the Essential Air Service (EAS) program 
as part of the Airline Deregulation Act of 1978. The EAS program 
subsidizes commercial air service for communities that would otherwise 
have lost service as a result of deregulation. The law specifies that 
if an air carrier cannot continue service to a community without 
incurring a loss, DOT shall then use EAS program funds to award a 
subsidy to that carrier or another carrier willing to provide service. 
Congress initially enacted the program for 10 years, and later extended 
it for another 10 years. In 1996, Congress removed the 10-year time 
limit.[Footnote 3] 

Under the Airline Deregulation Act, communities that were eligible for 
air service on October 24, 1978, are eligible for EAS-subsidized 
service.[Footnote 4] There are EAS-eligible communities in 49 states, 
Puerto Rico, and American Samoa.[Footnote 5] As of November 2008, DOT 
had agreements with carriers to provide subsidized service to almost 
150 communities--102 in the continental United States, 43 in Alaska, 
and 2 in Puerto Rico.[Footnote 6] Not all communities that are eligible 
for EAS service currently receive it; many currently have unsubsidized 
air service. Figure 1 shows the communities that had access to EAS 
service as of January 1, 2009, or are projected to have service 
starting later in the year. 

Figure 1: Location of EAS Communities as of January 1, 2009: 

[Refer to PDF for image: U.S. map] 

Indicated on the map are the locations of 102 EAS communities. 

Source: GAO’s analysis of DOT data. 

[End of figure] 

Communities near airports with EAS service vary in their population. 
For example, 58 percent of the communities within 40 miles of an 
airport with EAS-subsidized service as of January 1, 2009, had a 
population of less than 10,000 while 2 percent had a population of over 
100,000. 

A multistep process is required for subsidized EAS service to begin at 
a community. For a community that is not currently receiving EAS 
subsidies, the process starts when the last air carrier providing 
unsubsidized service to an EAS-eligible community files a Notice of 
Termination, which is a 90-day notice of its intent to suspend, 
terminate, or reduce service below the minimum level of service 
required by law. If no other air carrier is willing to provide 
unsubsidized air service to the community, DOT solicits proposals from 
carriers that would be willing to provide service with a subsidy. 
Carriers requesting a subsidy must document that they cannot profitably 
serve the community without a subsidy by submitting various financial 
data, such as profit-or-loss statements, to DOT. DOT then reviews these 
data along with information about 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. DOT also considers the community's preferences for the 
proposed service. Finally, DOT selects a carrier based on statutory 
selection criteria and sets an annual subsidy amount intended to 
compensate the carrier for the amount by which its projected operating 
costs exceed its expected passenger revenues as well as a profit 
element of at least 5 percent of total operating expenses, according to 
statute.[Footnote 7] Once air service is under way, DOT makes monthly 
subsidy payments to the carrier based on the number of scheduled 
flights completed. DOT's agreement with the carrier 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. 

In general, the law currently requires that an EAS carrier provide the 
following: 

* service to a hub airport, defined as an Federal Aviation 
Administration (FAA)-designated medium-or large-hub airport; 

* two daily round trips, 6 days a week, with not more than one 
intermediate stop to the hub; 

* flights at reasonable times taking into account the needs of 
passengers with connecting flights; 

* service in an aircraft with an effective capacity of at least 15 
passengers, under certain circumstances,[Footnote 8] unless the 
affected community agrees in writing to the use of smaller aircraft; 

* service in aircraft with at least two engines and using two pilots; 
and: 

* service with pressurized aircraft under certain circumstances. 
[Footnote 9] 

Congress and DOT revised the program's eligibility requirements during 
the late 1980s and early 1990s, in response to insufficient program 
funding. For example, in June 1989, Congress prohibited DOT, beginning 
in fiscal year 1990, from subsidizing service to or from any essential 
air service point in the contiguous 48 states where the subsidy 
exceeded $300 per passenger.[Footnote 10] In December 1989, DOT 
implemented a regulation that, among other requirements, would 
eliminate EAS funding for communities that had EAS service with a per- 
passenger subsidy exceeding $200 per person, or that were located less 
than 70 highway miles from the nearest medium-or large-hub airport, if 
appropriations for the EAS program were less than the amount needed to 
maintain EAS service at the communities being served.[Footnote 11] The 
Aviation Safety and Capacity Expansion Act of 1990[Footnote 12] 
superseded this regulation by prohibiting DOT from declaring any 
community ineligible for any reason not specifically set forth in 
statute.[Footnote 13] Finally, in fiscal year 1994, Congress prohibited 
DOT from subsidizing service to communities that (1) are less than 70 
highway miles from the nearest medium-or large-hub airport, or (2) 
require a per-passenger EAS subsidy in excess of $200.[Footnote 14] 
Communities located more than 210 miles from the nearest medium-or 
large-hub community airport are exempt from this $200-per-passenger 
subsidy limit. 

Over the years, several communities have lost eligibility for EAS 
service for various reasons. In some instances--after the requirements 
went into effect--it was because the per-passenger subsidy for their 
service exceeded the allowable limit, or because the community was less 
than 70 miles from a medium-or large-hub airport. Other communities 
lost EAS service in the early 1990s as Congress took actions to address 
program funding constraints. DOT monitors participating air carriers' 
operations to help ensure their service complies with program 
requirements. For example, DOT periodically reviews carriers' 
enplanement data for the EAS routes carriers serve, to determine 
whether the carriers' per-passenger subsidy exceeds the statutory cap 
of $200. Because DOT's subsidy payments to carriers are based on the 
number of flights completed, regardless of the number of passengers on 
board, an EAS route with few passengers has a higher per-passenger 
subsidy than it would have with more passengers. When DOT does find 
that a carrier's subsidy per passenger exceeds $200 for an EAS route, 
the agency warns the community of its tentative decision to terminate 
the route subsidy and allows the community 20 days to object if the 
community finds that DOT has made a mistake in its calculations. Since 
1989, 61 communities have lost EAS service because they became 
ineligible to receive subsidized service. 

* Twenty-six communities lost service in fiscal year 1990 as a result 
of reduced program funding. Six of these communities lost service as 
October 1989 because their carrier's subsidy per passenger exceeded the 
$300 limit then in effect, and 20 more lost service as of January 1990 
because their carrier's per-passenger subsidy was over $200. 

* Twelve communities lost service in fiscal year 1994, a year when 
funding for the EAS program was reduced, because their carrier's per- 
passenger subsidy exceeded $200 or because they were within 70 miles of 
a medium-or large-hub airport. 

* Twenty-two more communities became ineligible at various times since 
fiscal year 1995 because their carrier's per-passenger subsidy exceeded 
$200. 

* One community became ineligible to receive subsidized service in 1995 
because a nearby small hub was reclassified as a medium hub. 

Also, 11 communities that were not receiving EAS-subsidized service 
lost their eligibility for EAS service when the last unsubsidized 
carrier filed to suspend service at their airport and DOT determined 
that the community was ineligible because it was within 70 miles of a 
medium-or large-hub airport. 

Finally, in addition to EAS, other DOT programs can support community 
air service. Congress authorized the Small Community Air Service 
Development Program in 2000 as a pilot program in the Wendell H. Ford 
Aviation Investment and Reform Act for the 21st Century (AIR- 
21)[Footnote 15] to help small communities enhance their air service. 
AIR-21 authorized the program for fiscal years 2002 and 2003, and 
subsequent legislation[Footnote 16] reauthorized the program through 
fiscal year 2008 and eliminated its "pilot" status. Through the Small 
Community Air Service Development Program, DOT may award up to 40 
grants each year to communities with non-or small-hub airports that 
have demonstrated air service deficiencies or higher than average 
fares. Communities use these grants to pursue different strategies to 
enhance air service. Such strategies have included offering subsidies 
or revenue guarantees to airlines, marketing, and hiring personnel. 
[Footnote 17] In addition, under the Airport Improvement Program, small 
airports receive certain funds to make capital improvements--such as 
runway and taxi improvements. 

The EAS Program Is Providing Air Service to More Communities, but 
Service Is Costing More and the Number of Carriers Providing Service Is 
Declining: 

EAS Program Obligations and Appropriations Have Generally Increased to 
Support Service to More Communities and Higher Carrier Subsidies: 

The number of communities served by the EAS program in the continental 
United States has risen in recent years--from 87 communities as of June 
1, 2003, to 102 communities[Footnote 18] as of November 1, 2008. 
[Footnote 19] The subsidies that carriers require to serve those routes 
have also increased since 2003, adding to the long-term cost of the EAS 
program. For example, the average annual subsidy DOT has awarded for 
EAS service per community in the continental United States increased 
from about $883,000 as of June 2003 to about $1,371,000 as of November 
2008. After adjusting this growth for the effects of inflation, the 
average EAS subsidy in 2008 was about 35 percent higher than in 2003. 

In addition, significant increases in carrier subsidies per community 
have come within the past 2 years. Between November 2007 and November 
2008, DOT renewed or awarded agreements to 57 communities in the EAS 
program in the continental United States, with the total annual subsidy 
for those communities increasing from $52.4 million to $86.3 million 
(in nominal dollars)--an increase of 65 percent. For many of these 
routes, the carrier's annual subsidy amount more than doubled. 

While the number of EAS communities and the amount of subsidies have 
increased, annual obligations ranged between $103 million and $114 
million (in nominal dollars) from fiscal year 2003 through fiscal year 
2007.[Footnote 20] In fiscal year 2008, obligations for EAS subsidies 
increased to about $116 million. An additional $31 million in balances 
from completed EAS agreements that could not be retained for the EAS 
program was returned to FAA, bringing total obligations to $147 million 
as shown in figure 2. 

Figure 2: Total Obligations, Fiscal Years 2003-2008: 

[Refer to PDF for image: multiple line graph] 

Fiscal year: 2003; 
Obligated amount: $106.95 million; 
Indexed for inflation: $123.1 million. 

Fiscal year: 2004; 
Obligated amount: $106.96 million; 
Indexed for inflation: $119.96 million. 

Fiscal year: 2005; 
Obligated amount: $102.84 million; 
Indexed for inflation: $111.75 million. 

Fiscal year: 2006; 
Obligated amount: $112.89 million; 
Indexed for inflation: $118.65 million. 

Fiscal year: 2007; 
Obligated amount: $113.94 million; 
Indexed for inflation: $116.56million. 

Fiscal year: 2008; 
Obligated amount: $147.06 million; 
Indexed for inflation: $147.06 million. 

Source: GAO’s analysis of DOT data. 

Note: Includes obligations for the entire program. 

[End of figure] 

EAS program obligations in fiscal year 2008 were less than they 
potentially could have been because DOT did not have to subsidize 
certain EAS carriers that ceased operations and discontinued service to 
several communities. Specifically, in the first 6 months of 2008, three 
carriers serving 37 communities ceased operations.[Footnote 21] Most of 
these communities were without service for several months because 
replacement carriers were not able to start up immediately. 

Keeping pace with the rising financial requirement to manage the 
program, total appropriations for the EAS program have generally 
increased in recent years.[Footnote 22] Total appropriations have 
increased from about $102 million in fiscal year 2003 to just over $124 
million in fiscal years 2007 and 2008. For fiscal year 2009, 
appropriations available for the program include $123 million in fiscal 
year 2009 appropriations and a supplemental appropriations act which 
provides an additional $13.2 million in fiscal year 2009 supplemental 
funding for the EAS program.[Footnote 23] This increases EAS's fiscal 
year 2009 appropriations to $136.2 million.[Footnote 24] The 
administration has requested about $175 million for the program in 
2010, which would represent a further increase in program funding. 

EAS program funding comes from multiple sources. Each year, the EAS 
program receives $50 million in overflight fees.[Footnote 25] Recently, 
Congress also has annually appropriated additional funds from the 
Airport and Airway Trust Fund and has supplemented these EAS program 
funds in 2005, 2007, 2008, and 2009 with additional appropriations, as 
shown in figure 3. DOT had requested additional funding for 2005, 2007, 
and 2008 to account for the higher dollar amounts required to reimburse 
carriers for serving EAS communities. For example, in fiscal year 2005, 
DOT transferred $5 million from the Small Community Air Service 
Development Program, which provides grants to enhance small 
communities' air service, to help fund the EAS program's increased 
costs.[Footnote 26] 

Figure 3: EAS Appropriations, Fiscal Years 2003-2009: 

[Refer to PDF for image: stacked vertical bar graph] 

Fiscal year: 2002; 
Overflight fees: $50 million; 
Congressional appropriations: $63 million; 
Total: $113 million. 

Fiscal year: 2003; 
Overflight fees: $50 million; 
Congressional appropriations: $51.8 million; 
Total: $101.8 million. 

Fiscal year: 2004; 
Overflight fees: $50 million; 
Congressional appropriations: $51.7 million; 
Total: $101.7 million. 

Fiscal year: 2005; 
Overflight fees: $50 million; 
Congressional appropriations: $51.6 million; 
Supplemental appropriations: $5
Total: $106.6 million. 

Fiscal year: 2006; 
Overflight fees: $50 million; 
Congressional appropriations: $59.4 million; 
Total: $109.4 million. 

Fiscal year: 2007; 
Overflight fees: $50 million; 
Congressional appropriations: $59.4 million; 
Supplemental appropriations: $15 million; 
Total: $124.4 million. 

Fiscal year: 2008; 
Overflight fees: $50 million; 
Congressional appropriations: $59.4 million; 
Supplemental appropriations: $15 million; 
Total: $124.4 million. 

Fiscal year: 2009; 
Overflight fees: $50 million; 
Congressional appropriations: $73.0 million; 
Supplemental appropriations: $13.2 million; 
Total: $135.2 million. 

Source: GAO’s analysis of DOT data and appropriations acts. 

[End of figure] 

Recently, DOT officials have been concerned about whether the EAS 
program has sufficient funding to serve both current EAS communities 
and additional communities that may be eligible for subsidized service. 
The EAS program is appropriated a specific amount each fiscal year. 
However, since fiscal year 2005, language has been included in 
appropriations legislation stating that if the annual amount provided 
for EAS is insufficient to meet the costs of the EAS program in the 
current fiscal year, the Secretary of the Department of Transportation 
is required to transfer funds to EAS from any other amounts 
appropriated to or directly administered by the Office of the 
Secretary.[Footnote 27] This would require DOT to draw upon other 
funding sources within the Office of the Secretary to be able to make 
payments to carriers and enter into new service agreements. DOT had to 
do this once, using some Small Community Air Service Development 
Program funding for the EAS program in 2005. In addition, a DOT 
official noted that the EAS program faces a significant potential 
financial liability, in that there are about 40 other EAS-eligible 
communities in the country with airports currently served by a single 
unsubsidized commercial carrier. DOT officials believe that the agency 
would encounter a significant financial liability--about $60 million 
annually--if the airlines serving these single-carrier airports all 
filed a Notice of Termination requiring DOT to subsidize continued 
service. In fact, three communities that have not previously had EAS 
service have come into the program since June 2008, and a fourth is 
expected to obtain subsidized service later this year. 

Carrier Withdrawals from the Program in 2008 Caused Service 
Interruptions for Many Communities, While Others Still Do Not Have EAS 
Service Restored: 

According to a DOT official, the EAS program has recently experienced 
an unusually high level of carrier turnover. In 2008 alone, three EAS 
carriers serving 37 communities ceased operations in the first 6 months 
of the year. According to a DOT official, various factors caused the 
three carriers to cease operations, and recent fuel price increases 
might have accelerated this situation. DOT was able to obtain a 
replacement carrier to continue service, without interruption, for one 
of the 37 communities. However, 30 of the other 36 communities were 
temporarily without EAS air service for up to 10 months, and 6 
communities[Footnote 28] are still without service because the carrier 
that DOT selected in 2008 to serve those communities withdrew before it 
started service. An official of the carrier stated that it withdrew 
because it was unable to finance the refurbishing of aircraft needed to 
serve those routes. In late June 2009, DOT awarded agreements to two 
carriers to provide EAS service to these 6 communities; dates for the 
start of service had not been set. 

A DOT official noted that while the number of communities that 
experienced carrier turnover in 2008 was unprecedented, the number of 
carriers providing air service to communities under the EAS program has 
actually been declining over many years. The number of carriers 
providing EAS service has declined from 34 as of February 1987 to 10 in 
2009. In addition, as the number of carriers has declined, the 
percentage of EAS routes served by just a few carriers has increased. 
In February 1987, the largest number of routes served by any one 
carrier was 13, and the four carriers that served the most communities 
accounted for 33 percent of the EAS routes. At present, four carriers 
serve about 85 percent of the routes in the EAS program, with a single 
carrier serving nearly half of the EAS routes. As noted above, one 
carrier recently withdrew from 6 EAS routes that it was awarded last 
year before it even started service. Also, DOT faces a potential rise 
in the number of communities requiring subsidized air service should 
their single unsubsidized carrier end operations. Should additional EAS 
carriers withdraw from the program or be financially unable to serve 
additional communities seeking EAS service--the remaining carriers may 
not have enough capacity to provide EAS service to all communities that 
qualify. 

The EAS Program's Ability to Provide Service Is Affected by the 
Financial Viability of Service on EAS Routes: 

Program Requirements and Other Factors Appear to Contribute to 
Increasing Costs of EAS Service for Carriers and Higher Program 
Subsidies from DOT: 

Many of the expert panelists and other stakeholders we interviewed 
stated that some EAS program requirements significantly add to the cost 
of providing subsidized air service to communities. For example, 
members of our expert panel thought the EAS mandate requiring carriers 
to use aircraft with a 15-seat capacity for most communities presented 
the biggest challenge to providing and sustaining air service to 
communities under the EAS program.[Footnote 29] The mandate requires 
carriers to use larger aircraft than may be needed to adequately serve 
some communities. In addition, the 15-seat aircraft that this 
requirement was based upon are no longer available. Currently, to 
satisfy the 15-seat minimum, most EAS routes are served by 19-seat twin-
engine turboprop aircraft. (See figure 4 for an example of a 19-seat 
twin-engine turboprop aircraft.) 

Figure 4: Example of a Beechcraft 1900 Series Turboprop Aircraft: 

[Refer to PDF for image: photograph] 

Source: Great Lakes Aviation. 

[End of figure] 

According to industry representatives, these 19-seat turboprop aircraft 
used on many EAS routes are relatively costly to operate. First, the 
aircraft are no longer in production, are in limited supply, and are 
also relatively costly to acquire and refurbish to comply with current 
operating standards. Second, the "Commuter Safety Rule" which FAA 
implemented in 1997, has increased EAS carriers' costs for operating 19-
seat turboprop aircraft. Through the rule, FAA intended to increase 
safety by requiring aircraft in the 10-to-30 passenger range to meet 
more stringent safety requirements.[Footnote 30] The increased safety 
standards made some aircraft, including 19-seat turboprop aircraft, 
more costly to operate, because they required carriers to improve 
ground deicing programs, carry additional safety equipment for 
passengers, and comply with additional operating constraints. For 
example, an industry group, in a petition to DOT for exemptions from 
this rule, provided information showing that one EAS carrier's training 
costs increased by almost 600 percent because of the additional 
training required for its captains by the revised rule. An EAS carrier 
official stated that the carrier's cost to operate 19-seat aircraft, 
calculated as cost per passenger seat mile, is now about twice what it 
was in 1994 primarily due to these additional regulatory requirements. 
According to industry representatives, the increased operating costs 
associated with the required safety upgrades have contributed to some 
carriers' decisions to eliminate their inventory of 19-seat planes. As 
a result, there are fewer airlines with the type of equipment suitable 
to serve most EAS routes. 

The EAS minimum service requirements may also require a carrier to 
provide more service than needed to meet the demands of a community and 
can therefore increase the carrier's operating costs. For example, the 
EAS program statutes stipulate a minimum level of service for EAS 
subsidized routes--two daily round-trip flights, 6 days per week to a 
hub airport. Carriers flying 19-seat aircraft can be effectively locked 
into service that may not be right sized--that is, with capacity 
exceeding passenger demand--for some smaller markets, and possibly more 
costly than necessary to fulfill communities' service needs.[Footnote 
31] If the need to meet EAS program requirements results in carriers 
providing more capacity than some communities might be able to support, 
EAS service to those communities may be too costly for the carrier, 
leading it to withdraw from the EAS program. 

Further, the carriers' 2-year agreements with DOT to provide EAS 
service can complicate the carriers' efforts to lease aircraft to serve 
EAS routes. For example, some industry officials maintain that the 2-
year agreements that DOT enters into with carriers can be too short 
because carriers often must lease aircraft for longer periods, such as 
5 years. Therefore, a carrier entering into a 5-year lease to obtain 
aircraft to serve EAS routes risks having to maintain excess aircraft 
if it loses the routes after 2 years. However, DOT officials note that 
under the EAS program's current funding structure, longer-term 
agreements would still be subject to availability of annual funding, so 
the agreement would not be guaranteed. 

Finally, spikes in fuel prices may add to EAS carriers' costs and make 
it difficult to continue service. Although fuel prices typically vary 
over time, in 2008 fuel began to comprise an increasing portion of 
airlines' costs, in some cases contributing to carriers ceasing 
operations. For example, one EAS carrier reported that its fuel costs 
increased from 28 percent of its operating costs in 2007 to 35 percent 
of its operating costs in 2008, although fuel prices began to decline 
late that year. We also found that last year, selected EAS carriers 
experienced a rapid and dramatic spike in fuel prices, as the average 
per-gallon fuel price for selected EAS carriers more than doubled 
between January 2007 and July 2008, before declining through December 
2008, as illustrated in figure 5. December 2008 was that latest month 
for which fuel price data were available for these carriers. 

Figure 5: Average Fuel Prices for Selected EAS Carriers, Jan. 2007- 
Dec. 2008: 

[Refer to PDF for image: line graph] 

Date: January 2007; 
Dollars per gallon: $1.93. 

Date: February 2007; 
Dollars per gallon: $1.96. 

Date: March 2007; 
Dollars per gallon: $2.06. 

Date: April 2007; 
Dollars per gallon: $2.28. 

Date: May 2007; 
Dollars per gallon: $2.41. 

Date: June 2007; 
Dollars per gallon: $2.29. 

Date: July 2007; 
Dollars per gallon: $2.46. 

Date: August 2007; 
Dollars per gallon: $2.40. 

Date: September 2007; 
Dollars per gallon: $2.48. 

Date: October 2007; 
Dollars per gallon: $2.55. 

Date: November 2007; 
Dollars per gallon: $2.87. 

Date: December 2007; 	
Dollars per gallon: $2.71. 

Date: January 2008; 
Dollars per gallon: $2.78. 

Date: February 2008; 
Dollars per gallon: $2.80. 

Date: March 2008; 
Dollars per gallon: $3.19. 

Date: April 2008; 
Dollars per gallon: $3.39. 

Date: May 2008; 
Dollars per gallon: $3.69. 

Date: June 2008; 
Dollars per gallon: $3.94. 

Date: July 2008; 
Dollars per gallon: $4.04. 

Date: August 2008; 
Dollars per gallon: $3.54. 

Date: September 2008; 
Dollars per gallon: $3.34. 

Date: October 2008; 
Dollars per gallon: $2.77. 

Date: November 2008; 
Dollars per gallon: $2.22. 

Date: December 2008; 
Dollars per gallon: $1.69. 

Source: GAO’s analysis of data from BACK Aviation Solutions, Inc. 

Note: The average fuel price reflects total fuel price and gallons used 
data from Atlantic Southeast Airlines, Horizon Air, SkyWest Airlines, 
Mesaba Airlines, and Mesa Airlines, which provide both EAS subsidized 
and unsubsidized commercial service. Therefore, average fuel prices are 
not based solely on the carriers' EAS operations. 

[End of figure] 

Legislation passed in 2003 explicitly provided DOT with the option of 
adjusting the subsidy paid to an EAS carrier if the carrier's expenses 
substantially increased.[Footnote 32] However, according to an industry 
group that represents regional airlines and the majority of EAS 
carriers, DOT officials are generally not willing to renegotiate EAS 
agreements to reflect increased costs because the DOT officials are 
concerned about retaining sufficient funds to renegotiate the 
agreements and provide service for all the communities that may qualify 
for service. DOT officials indicated they are also concerned that 
establishing a policy of renegotiating subsidies upward for fuel costs 
could lead carriers to underestimate fuel costs in order to be selected 
as the carrier for a route, only to turn around soon after selection 
and ask for fuel rate relief. However, industry officials explained 
that if a carrier is unwilling to continue providing service under an 
EAS agreement because of operating cost increases, the carrier's only 
recourse is to file a formal Notice of Termination with DOT of its 
intent to terminate service. For example, in June 2008, Mesaba Airlines 
filed such a notice informing DOT of its intent to terminate service at 
two communities in Michigan because of fuel price increases. Mesaba 
indicated that it would withdraw the notice if DOT agreed to apply a 
fuel adjustment to bring the EAS subsidy rate for the communities in 
line with current fuel conditions. DOT denied the request and rebid the 
routes. DOT eventually reselected Mesaba Airlines to serve the routes 
and awarded the airline a 28 percent increase over its previous annual 
subsidy for the routes. Still, industry and small airport officials 
said that filing a termination notice is an undesirable option for 
airlines because service interruptions and carrier turnover can 
negatively affect communities' confidence in EAS service, and result in 
a further reduction in ridership. 

The Declining Number of Willing Carriers Reduces Competition for EAS 
Routes: 

As the pool of carriers willing to provide EAS service declines, 
competition for EAS routes has also declined. For example, of the 37 
routes that DOT awarded after three EAS carriers in 2008 ceased 
operations, 20 were awarded without competition, including 7 that were 
awarded to the one viable bidder remaining after the only other bidder 
went out of business. However, DOT officials informed us that their 
sealed-bid process prevents carriers from knowing whether there are 
competing bids from other carriers. They also indicated that they can 
reject bids that they believe are too high, and they can negotiate with 
the carrier. For instance, the officials cited a recent example of one 
carrier's subsidy request of approximately $2.3 million being 
negotiated down to about $1.6 million. Nevertheless, a declining number 
of carriers willing to provide EAS service can reduce the level of 
competition among carriers for EAS routes. 

The Continued Urbanization of the United States and Changing 
Characteristics of the Airline Industry Contribute to Low Ridership of 
EAS Flights: 

The viability of EAS routes also depends on the number of passengers 
that take EAS flights. According to DOT data, some EAS routes do not 
carry many passengers, creating a financial challenge for the carriers 
attempting to serve these communities. During fiscal year 2008, the 
average load factor--the percentage of available seats filled by paying 
passengers--was 37 percent across all EAS flights. By comparison, the 
average load factor for unsubsidized commercial flights nationwide has 
averaged about 80 percent in recent years. Two factors may contribute 
to the lack of passenger traffic on EAS flights. First, the EAS program 
has always served areas with limited population, but demographic shifts 
in the last 30 years may have reduced the population of some EAS 
communities, further limiting the potential passenger base for the 
local airport. Second, the EAS program loses potential passengers and 
fare revenue when low fares or more convenient air service schedules at 
nearby larger airports encourage passengers to bypass EAS service at 
their local airport in favor of driving or taking other transportation 
to the nearby airport. 

Continued Urbanization of the United States May Lead to Reduced 
Passenger Ridership in Some EAS Markets: 

A significant degree of urbanization occurred throughout the 20th 
century as people moved out of rural areas and into cities and suburbs. 
Although much of this migration happened early and in the middle of the 
century, the trend has continued. Geographic areas, especially in the 
Midwest and Great Plains states, lost population between 1980 and 2007, 
as illustrated in figure 6. As a result, certain areas of the country 
are less densely populated than they were 30 years ago when Congress 
initiated the EAS program. Accordingly, some EAS communities' reduction 
in ridership may be attributable, in part, to a smaller population 
base. 

Figure 6: Changes in Population Distribution, 1980-2007: 

[Refer to PDF for image: U.S. map] 

The map depicts the following by color coding areas of the country: 

Percentage Change in Population 1980–2007: 
Increased 100 percent or more; 
Increased less than 100 percent; 
Declined. 

Source: GAO’s analysis of Census data. 

[End of figure] 

Relatively High EAS Fares, Low-Cost Alternatives, and Inconveniences 
Associated with EAS Flights Contribute to Low EAS Ridership: 

Airports generally attract passengers from the surrounding population. 
However, people who live near smaller airports often choose to either 
drive to their destination or use larger airports that are farther away 
than their local airport. This phenomenon is typically referred to as 
"leakage." Surveys of passengers as well as travel agents in 
communities served by small airports suggest that leakage can be 
widespread. For example, a travel agent survey in Arizona estimated 
that the small airports in that state often suffer significant leakage, 
in some cases as much as 90 percent.[Footnote 33] Another study we 
conducted found that EAS airports often serve less than 10 percent of 
the local passenger traffic,[Footnote 34] and that leakage is a 
significant factor.[Footnote 35] Moreover, it appears that some people 
may be willing to drive considerable distances--more than 150 miles--to 
get to a larger airport. The loss of passengers from an EAS route 
reduces the carrier's fare revenues, while increasing the average per- 
passenger subsidy for that EAS service. Therefore, significant 
passenger leakage can lead to (1) the carrier seeking a larger subsidy 
from DOT, (2) the community losing service if the per-passenger subsidy 
rises above the $200 cap, or (3) the route becoming so costly for the 
carrier that it chooses to file a notice of intent to terminate 
service. 

Certain key factors appear to underlie the propensity of travelers to 
bypass small airports in favor of driving to larger airports. 

* Fares for EAS flights are generally high, relative to fares on 
comparable unsubsidized flights. We analyzed calendar year 2007 fares 
on routes involving EAS airports and compared these fares to the fares 
for routes of similar distances involving only non-EAS airports. We 
found that fares for EAS routes tend to be considerably higher--on 
average about 50 percent higher--than fares for similarly distanced non-
EAS routes. Our analysis did not attempt to identify reasons for the 
difference in fares between EAS and unsubsidized flights, but likely 
factors that could include the number of airlines serving the route, 
the number of passengers, and the portion of passengers paying the 
generally higher business fares on that route. Whatever the cause, 
relatively high fares for EAS flights can make those flights less 
attractive, compared to the alternative of driving to another airport. 
Studies of the use of airports in small communities have generally 
found that passengers may drive to nearby larger airports to obtain 
lower fares rather than use EAS service.[Footnote 36] 

* The growth of low-cost carriers has created alternatives to EAS 
service. Fifteen of 18 experts on our panel cited the expansion of low- 
cost carriers as one of the biggest challenges facing EAS providers, 
and 9 of these panelists cited low-cost carrier expansion as the most 
important challenge to EAS providers. In the past decade, low-cost 
carriers have considerably expanded their networks; these carriers' 
share of domestic airline capacity increased from 20 percent in 2000 to 
29 percent in 2007. By 2007, low-cost carriers were serving virtually 
every large and medium-hub airport in the country as well as half of 
the small hubs. As low-cost carriers have extended service to more 
airports around the country, they provide more alternatives for 
community residents who can drive or take other transportation to other 
airports to get lower air fares offered by these carriers. Many 
industry stakeholders have said, and a previous GAO study[Footnote 37] 
has found, that community residents who reside near an EAS airport 
drive to other airports to obtain lower airfares, such as those that 
low-cost carriers offer. 

* Larger airports tend to offer better service than that available at 
EAS airports. Larger airports are generally more attractive to 
travelers than small airports served by EAS flights because they offer 
more frequent flights and more nonstop destinations. EAS communities 
receive at least the required two daily round-trip flights, 6 days per 
week--although some communities receive more. Still, most EAS routes 
connect a community to a single airport. Such limited service may be 
too inconvenient to meet the needs of time-sensitive business 
travelers. Studies have found that a key reason passengers avoid small 
airports is the more frequent flight offerings at larger airports, 
which can be more convenient for travelers.[Footnote 38] So, if driving 
to a larger airport is feasible, a traveler from a community may choose 
that option to get a nonstop flight to his or her destination, instead 
of taking an EAS flight from the local community airport. 

* Difficulties in making useful connections at the hub airports EAS 
carriers serve also discourage potential EAS passengers. For most EAS 
passengers, the hub airport where their EAS flight lands is not the end 
of their trip. Typically, EAS passengers need to transfer to a 
connecting flight to take them to their final destination. If the EAS 
flight takes passengers out of their way and increases their trip time, 
they may seek alternative travel options. Even if the EAS flight takes 
them in the direction of their final destination, limited EAS flight 
schedules may provide poor connection options. A representative of an 
airport in Iowa served by EAS-subsidized flights to Kansas City said it 
is hard to get business people to use the EAS flights because the 
flights often don't match up well with the timing of connecting flights 
at Kansas City, resulting in long waiting times there. These problems 
promote passenger leakage away from EAS flights, when potential EAS 
passengers decide that traveling directly to larger airports is more 
practical. The problem is exacerbated as major carriers cut back their 
flights at the hub airports that are EAS destinations. For example, 
according to an official of one EAS carrier, connecting seats on 
flights out of two of their destination airports have decreased, 
reducing options for connecting flights, making the carrier's EAS 
service to these airports less practical for passengers. As a result, 
the official said the carrier's revenue on the routes serving these 
airports has declined significantly because potential passengers have 
decided to use other transportation to travel to a larger airport. 

* Problems with EAS service reliability are another deterrent to using 
EAS service. Five of the seven representatives of EAS-served small 
airports who responded to our questions noted that the reliability of 
EAS service was a significant concern. According to one of these 
airport representatives, delays, cancellations, and route and schedule 
changes are commonplace in most EAS communities. Another airport 
representative noted that reliability of air service may be even more 
important at small airports than at larger airports, because a canceled 
or delayed EAS flight leaves passengers with no other options. Some 
experts we spoke with indicated that this is a particular disincentive 
to business travelers, who may choose to drive to a larger airport. 

Current Economic Conditions Are Also Decreasing Demand for Air Travel: 

As we noted in our recent report on the financial health of the airline 
industry,[Footnote 39] the current economic recession is contributing 
to decreased industry-wide air travel. Beginning in the second quarter 
of 2008, passenger traffic began to decline, when compared with the 
same quarter in the prior year. By the third and fourth quarter of 
2008, traffic fell off more significantly, and airlines reduced 
capacity to maintain their load factors--which would not be an option 
for EAS carriers, because these carriers cannot reduce service below 
the minimum level required by the program. The downward trend appears 
to be continuing, as industry demand for the first two quarters of 2009 
was less than was expected as of the beginning of the year. Indications 
are that the economy also affects carriers providing EAS service. 
Reported passenger enplanements for the first quarter of 2009 for one 
EAS carrier are down about 26 percent from the same period 1 year ago, 
and the carrier's load factors declined from 46 percent to 32 percent 
for that same period.[Footnote 40] 

Options for Modifying the EAS Program and Instituting a Multi-modal 
Approach to Community Transportation: 

Changes to Certain EAS Program Requirements Could Help Carriers Operate 
More Effectively and Potentially Reduce Program Costs: 

Congress and others have been aware of the increasing difficulty EAS 
carriers face in providing service to communities. Congress, previous 
administrations, and GAO have proposed options to change the EAS 
program that might help address some of the program requirements that 
limit the flexibility of carriers providing EAS service or potentially 
increase costs of providing service--leading to carriers requiring 
higher subsidies from DOT. For example, DOT has proposed a number of 
options, but they have not been included in authorization or 
appropriations legislation. In addition, the House of Representatives' 
proposal for reauthorizing FAA (H.R. 915) includes several options that 
could alter DOT's management of the EAS program and possibly make 
program participation more attractive to carriers. This proposal is not 
yet through the legislative process. We also have described a number of 
similar options that could promote efficiencies in the EAS program. 
Again, none of these options have been adopted. Table 1 summarizes some 
of the key options that have been proposed. 

Table 1: Potential Options to Revise the Essential Air Service Program: 

Option (source): Allow carriers more flexibility for type of aircraft 
and service frequency: Better matching air service capacity with 
community needs. (Previously proposed in DOT FY 2009 budget request, 
and in prior GAO reports); 
Description: Allow carriers more flexibility for type of aircraft and 
service frequency: Better matching air service capacity with community 
needs, by allowing the use of smaller aircraft, or allowing less 
frequent flights. 

Option (source): Award long-term EAS agreements, incorporate financial 
incentives, or allow agreements to be renegotiated: Award long-term EAS 
agreements. (Section 404 - H.R. 915, FAA Reauthorization); 
Description: Allow carriers more flexibility for type of aircraft and 
service frequency: DOT may execute long-term EAS agreements, to 
encourage an air carrier to provide air service to an eligible place, 
if in the public interest. 

Option (source): Award long-term EAS agreements, incorporate financial 
incentives, or allow agreements to be renegotiated: Incorporate 
financial incentives into EAS agreements. (Section 404 - H.R. 915, FAA 
Reauthorization); 
Description: Allow carriers more flexibility for type of aircraft and 
service frequency: DOT may encourage carriers to improve EAS service by 
including financial incentives for meeting specified performance goals 
for factors such as on-time performance, reducing cancellations, 
establishing reasonable fares and convenient connections; and 
increasing marketing efforts. 

Option (source): Award long-term EAS agreements, incorporate financial 
incentives, or allow agreements to be renegotiated: Renegotiation of 
EAS agreements. (Section 417 - H.R. 915, FAA Reauthorization); 
Description: Allow carriers more flexibility for type of aircraft and 
service frequency: Subject to the availability of funds, the Secretary 
may renegotiate agreements to increase compensation to carriers for 
increased aviation fuel costs. 

Option (source): Award long-term EAS agreements, incorporate financial 
incentives, or allow agreements to be renegotiated: Increase subsidy 
cap. (Section 413 - H.R. 915, FAA Reauthorization); 
Description: Allow carriers more flexibility for type of aircraft and 
service frequency: The $200 subsidy cap to be increased by an amount 
necessary to account for the increase, if any, in the cost of aviation 
fuel in the 24 months preceding enactment. 

Option (source): Consolidate EAS flights at a single regional airport: 
Consolidate EAS service at regional airports. (Previously proposed in 
DOT FY 2009 budget request, and in prior GAO reports); 
Description: Allow carriers more flexibility for type of aircraft and 
service frequency: Consolidating EAS service at multiple nearby 
airports into one regional airport, where practical, to provide a 
larger passenger base for more effective service. 

Option (source): Focus EAS assistance on most remote communities: 
Targeting EAS service to the most remote communities. (GAO report); 
Description: Allow carriers more flexibility for type of aircraft and 
service frequency: Increasing the highway distance criteria between EAS-
eligible communities and the nearest qualifying hub airport, and 
expanding the definition of qualifying nearby airports to include small 
hubs. 

Option (source): Focus EAS assistance on most remote communities: 
Targeting EAS service to the most remote communities (Previously 
proposed in DOT FY 2009 budget request); 
Description: Allow carriers more flexibility for type of aircraft and 
service frequency: Ranking EAS-subsidized communities in order of 
decreasing driving distance to their nearest large-or medium-hub 
airport, and funding communities starting with the most isolated, and 
continuing in that order, until funding is exhausted. 

Option (source): Capping EAS program eligibility as of a specified 
date: Limit program size to communities currently receiving EAS 
subsidies. (Previously proposed by DOT officials in 2007 testimony); 
Description: Allow carriers more flexibility for type of aircraft and 
service frequency: The communities eligible for subsidy would be 
limited to those receiving subsidy as of a given date. 

Sources: Indicated in Option column above. 

[End of table] 

Each of the proposed options has potential advantages and 
disadvantages. Some options would be beneficial in certain 
circumstances, but not for all communities or all parts of the country. 
Further, not all stakeholders will likely agree on which options should 
be implemented, especially when different options produce different 
beneficiaries. Finally, different options will have different impact on 
federal program costs--some likely increasing total program costs, 
while others might decrease or limit program costs. 

Allow Carriers More Flexibility on Type of Aircraft: 

The EAS program's current statutory minimum service requirements--such 
as providing service with aircraft of at least 15-seats--may add to the 
cost of providing EAS service as discussed previously. Fifteen of the 
17 members of our expert panel who addressed the issue of aircraft size 
indicated that giving carriers more flexibility to use smaller aircraft 
would make the EAS program more effective. Currently, communities 
entitled to 15-seat or larger aircraft can have EAS service with 
smaller aircraft only when they waive their rights to the larger 
aircraft. According to industry stakeholders, some communities are 
interested in having service from larger, at least 15-seat, planes 
because it is what the law provides for as well as for reasons 
including prestige and perceived concerns about comfort. 

Advantages: 

Without this requirement for minimum aircraft size, a carrier would be 
allowed to "right size" or better match the services it provides with 
the communities' demand, potentially reducing carrier operating costs 
as well as the subsidy needed from DOT and total federal program costs. 
Also, we previously reported that allowing carriers to provide EAS 
service with smaller aircraft could, on certain routes, be cost 
effective and better suit community needs.[Footnote 41] For example, 
officials of one EAS carrier which flies 9-seat Cessna 402 aircraft 
told us that their lower operating costs allow them to provide more 
frequent flights and charge lower fares than the previous carriers 
which flew 19-seat aircraft on those same EAS routes. (See figure 7 for 
an example of a 9-seat twin-engine aircraft.) 

Figure 15: Example of a 9-seat Cessna 402 Aircraft: 

[Refer to PDF for image: photograph] 

[End of figure] 

This change has yielded significantly increased passenger ridership. 
According to the officials, in the first 10 months of service on one of 
their EAS routes, passenger ridership has gone up 143 percent compared 
to the previous EAS carrier's ridership for a comparable period. In 
addition, the EAS program manager stated that if he could make one 
recommendation to Congress, he would suggest that Congress eliminate 
the 15-seat requirement because a few EAS carriers are providing good 
service with smaller aircraft. 

Disadvantages: 

A disadvantage of this option is that smaller aircraft might not be 
suitable for all parts of the country. So, while this could be an 
option for certain routes, it would not fully replace the use of larger 
aircraft. For example, officials of the carrier that operates the 9- 
seat Cessna aircraft told us that the aircraft are not pressurized and 
may not be practical in mountainous areas in the west. Also, one 
airport representative believed that people would be more reluctant to 
fly on such smaller aircraft. In addition, these smaller aircraft 
operate under a different set of safety standards than the larger 19- 
seat turboprop aircraft most frequently used on EAS routes. According 
to industry representatives, this could negatively affect airlines that 
spent money to upgrade their aircraft to meet the safety standards now 
required for the 19-seat aircraft. An official of one EAS carrier that 
primarily flies 19-seat aircraft indicated that acquiring the 
infrastructure and personnel to support an additional type of aircraft 
would be a costly venture and not an option for their company. 

Allow Carriers More Flexibility on Service Frequency: 

The EAS program's current statutory minimum service requirements---such 
as providing at least twice-daily service, 6 days per week at EAS 
communities--potentially add to the cost of providing EAS service. Six 
of the 17 members of our expert panel who addressed this issue of 
service frequency believed such a change would make the program more 
effective. 

Advantages: 

If a community is unable to generate enough passenger traffic to make 
twice daily, 6-day-per-week service viable for a carrier, even with an 
EAS subsidy, less frequent service might be more economically viable 
for the carrier. This change could also reduce the subsidy the carrier 
requires from DOT, assuming that passengers would adjust to the reduced 
schedule, and that overall passenger volume would not significantly 
decline due to increased passenger leakage. 

Disadvantages: 

Some industry experts we spoke to believed that the current minimum 
level of service frequency is already so low that it is inconvenient 
for time-sensitive business travelers, and encourages them to drive to 
other airports. One airport representative commented that service to 
one destination, twice a day, does not really fit the definition of 
"service." Reducing service frequency might only further reduce a 
community's support for EAS service by making that service less 
available and less useful. 

Award Long-term EAS Agreements and Incorporate Financial Incentives: 

Some industry representatives have stated that the 2-year EAS 
agreements are too short, considering that carriers must lease aircraft 
for longer periods of time, such as five years. Five of 17 of our panel 
members identified extending the length of agreements as a way to make 
the program more effective. In addition, representatives of two 
airports served by EAS flights noted that carriers are not penalized 
for poor service--carriers are still compensated when performance is 
poor or unreliable. 

Advantages: 

Some industry representatives we contacted believed that authorizing 
DOT to award EAS agreements for longer than 2 years could better assure 
carriers that they will be able to stay in the program long enough to 
justify the commitments of financing and equipment that they need to 
effectively manage EAS service. This change may also attract more 
carriers willing to participate in the program. Financial incentives 
could also encourage better service by EAS carriers. In the view of one 
airport representative, carriers have spread themselves thin as they 
try to serve many subsidized communities, leading to undependable 
service, including late arrivals and departures. Incentives, or other 
means of linking subsidies to performance, can strengthen carriers' 
commitment to providing reliable service. 

Disadvantages: 

DOT and some communities have expressed concerns about lengthening the 
agreements because DOT would then have less frequent opportunity to 
remove carriers that are providing poor service--such as a large number 
of canceled or delayed flights. Instituting longer agreements would 
also reduce how often a route would be opened to competition, 
potentially reducing DOT's ability to manage program costs. DOT 
officials also pointed out that they could award longer agreements 
under current legislation, but the program is still subject to annual 
appropriations. 

Allow Agreements to Be Renegotiated: 

Carrier and industry officials also said they would like EAS agreements 
to allow DOT to adjust subsidy amounts in response to certain cost 
increases that occur during these agreements. For example, fuel costs 
increases in early 2008 affected EAS carriers' operations. Program 
reauthorization legislation passed in 2003 allows DOT to adjust carrier 
compensation in response to increased costs, but DOT has chosen to not 
use this authority.[Footnote 42] Among our expert panel, 6 of the 17 
individuals who addressed this issue believed allowing renegotiation of 
EAS agreements in response to rising costs would make the program more 
effective. Some industry representatives also believe the $200 per- 
passenger subsidy limit has been in effect for a long time and should 
be increased, even if only to reflect cost inflation. 

Advantages: 

Allowing renegotiation of EAS agreements in response to rising costs 
would enable carriers to continue service when they are faced with 
rising costs rather than file a Notice of Termination which starts the 
process of reawarding the agreement to serve the community. Industry 
representatives have said that having to file a termination notice when 
cost increases make it uneconomic to continue service harms their 
relationship with the community and adds to the perception that service 
is unreliable. The proposal to allow an increase in the subsidy per 
passenger in response to fuel cost increases could allow some 
communities to retain EAS service--in times of rising fuel prices-- 
which might otherwise lose it if carriers needed higher subsidies to 
continue that service. However, it could increase program costs faster 
than they would otherwise increase. 

Disadvantages: 

Although authorized to do so, DOT generally has not adjusted carrier 
subsidies for current EAS agreements, because, according to DOT 
officials, they have limited program funds and reopening agreements 
could jeopardize funding to continue EAS service for all eligible 
communities that might qualify for it. A DOT official we spoke with 
also stated his belief that the $200 per-passenger subsidy cap has been 
effective as a primary tool to control costs. In addition, almost none 
of the experts on our panel believed that increasing the $200 per- 
passenger subsidy cap would make the EAS program more effective. 

Consolidate EAS Flights at Regional Airports: 

We have also described an option of regionalization--essentially 
consolidating EAS service to and from a number of closely located EAS 
communities at a single airport.[Footnote 43] For example, there are 
currently 12 pairs of EAS communities that are within 60 miles of each 
other, and in 5 of these pairs the communities are within 50 miles of 
each other. The previous administration's fiscal year 2009 budget 
request included language that would have supported regionalized air 
service. However this language was not incorporated in DOT's 
appropriation, and was not included in the administration's fiscal year 
2010 budget request for DOT. 

Advantages: 

In more sparsely populated areas, or areas where population has 
declined, this approach would focus EAS program support on one airport, 
and could increase the number of passengers using that airport, 
potentially making the service more viable. With more passengers using 
the airport, expanding service to include more flights, larger 
aircraft, or additional destinations, could be another potential 
benefit. 

Disadvantages: 

Consolidating service at multiple airports into a single airport may 
not be initially popular with the communities that would lose EAS 
service at their local airport; passengers who did use the service 
provided at those airports would be inconvenienced. Also, some airport 
representatives and other experts said this option would depend on 
local circumstances, such as distance between the communities and 
driving conditions. However, if air service for several communities was 
consolidated at a single airport, in connection with support for ground 
transportation between those communities and the airport, it could 
increase the likelihood that communities would accept the 
consolidation. If this option is pursued, a nonpartisan commission may 
need to be established to make the difficult decisions--on an impartial 
basis--about where to provide EAS service. 

Focus EAS Service on the Most Remote Communities: 

The existence of leakage demonstrates passengers' willingness to bypass 
their local EAS service in favor of traveling to a larger airport that 
offers more flight options, more direct flights, and lower fares. 
Currently, to qualify for EAS service, a community must be at least 70 
highway miles from the nearest medium-or large-hub airport. In previous 
reports we discussed the options of both increasing the 70-mile minimum 
qualifying distance, and including small hubs in this criterion. 
[Footnote 44] For instance, DOT information shows three communities 
with EAS service are within 50 miles of a small-hub airport.[Footnote 
45] As another approach to the same issue, DOT's fiscal year 2009 
budget request proposed ranking EAS-subsidized communities in order of 
decreasing driving distance to their nearest large-or medium-hub 
airport, and funding communities starting with the most isolated, and 
continuing in that order, until funding is exhausted, although this 
language was not incorporated in the fiscal year 2009 appropriation and 
not included in the fiscal year 2010 budget request. In addition, 13 of 
the 17 members of our expert panel who addressed this issue believed 
extending the qualifying distance from a hub airport above the current 
70-mile minimum would make the EAS program more effective. 

Advantages: 

Proposals to extend the minimum qualifying distance from an EAS 
community to the nearest hub airport, or to otherwise focus EAS program 
funding on the more remote communities, would allow the EAS program to 
serve communities with relatively poor transportation access, while 
accommodating increasing costs and subsidies in an environment of 
limited program funding. 

Disadvantages: 

Implementing one of these options would mean some communities that 
currently have EAS service would lose it, just as past changes in 
community eligibility requirements have led to some communities being 
dropped from the program. Also, some officials of community airports 
caution that basing eligibility on distance from a hub airport should 
consider local terrain and conditions--even the current 70 miles may 
not be a practical driving distance in mountain terrain, or where there 
is hazardous driving in winter. 

Capping Eligibility of Program as of a Specified Date: 

The cost of the EAS program and the number of communities served has 
grown substantially in recent years, with the potential for more 
communities seeking service in the near future. Essentially the 
communities eligible for subsidy would be limited to those receiving 
subsidy as of a given date. 

Advantages: 

Capping the program at the currently subsidized communities would help 
contain the program's total costs. The stable size of the program would 
make it easier for DOT to manage the program and make funding the 
program more predictable, while not expelling any community currently 
receiving benefits under the program. 

Disadvantages: 

If a community that is currently receiving unsubsidized commercial air 
service should lose that service, that community would not be able to 
get EAS subsidized service if this change was implemented. Since 
communities historically have come into and gone out of the program, 
the decisions about who would be eligible for subsidies would be based 
on the effective date selected for this change. 

A Multimodal Approach to Connecting Communities to the National 
Transportation Network Is Another Option: 

Several of the proposed changes to the EAS program may help to address 
current concerns and enable the program to continue providing air 
service to communities. However, even with changes to the EAS program, 
some EAS communities would still have limited demand for the service, 
due to proximity to other airports or limited population. For such 
communities, other transportation modes might be more cost effective 
and practical than EAS service for connecting communities to the 
transportation network. Our expert panel, in addition to considering 
changes to the EAS program that would make it more effective, also 
considered the potential offered by more fundamental changes to the 
federal government's approach to supporting intercity transportation 
for small communities. The 17 members on our panel who addressed this 
issue all believed that the EAS program needed substantive change to 
make it more effective in supporting small communities' access to the 
national transportation network, and that a multimodal approach to 
provide financial assistance to small community transportation could 
potentially be more responsive to communities' needs. 

GAO and others have also made proposals that would broaden the 
government's approach to small community transportation to include 
other transportation modes. Proposals include support for other types 
of transportation besides scheduled air service and other approaches to 
financial assistance besides subsidies to carriers. For example, as 
part of the Vision 100-Century of Aviation Reauthorization Act in 2003, 
Congress authorized a number of changes to the EAS program, including 
the Community and Regional Choice programs, which allowed DOT to 
provide financial assistance directly to communities to obtain air taxi 
service,[Footnote 46] or pursue other transportation options. According 
to a DOT official, this program generated almost no interest from 
communities, perhaps because communities may believe that air service 
they have under current law is better than the alternatives. We have 
also proposed similar options that might enable the EAS program to 
provide less costly and more sustainable service, including better 
matching air service capacity with community needs by allowing the use 
of "on demand" service such as air taxis and changing the carrier 
subsidies into local grants, thus allowing communities more flexibility 
to determine how to the use the funds to best meet their needs. The 
previous administration's fiscal year 2009 budget request also proposed 
modifying EAS program service requirements to allow program funds to be 
used for air taxi or charter service, or ground transportation. 
Congress did not enact any changes in response to this proposal. 

Most of the panel members thought that allowing the EAS program to fund 
other types of air service, such as air taxis, would make the program 
more effective. For communities with low passenger volume, this may be 
a more practical option than underutilized scheduled service. On-demand 
service could be more useful to some communities because flight 
departures would not be constrained by a limited schedule. Also, 
current EAS routes typically connect a community to just a single 
destination. On-demand service could still take community passengers to 
the hub, but it could also go to any airport within the range of the 
service's aircraft. These features could make air service more useful 
to the community, increase demand, and make the operation more 
commercially viable. However, current EAS statutes require scheduled 
service by carriers and would have to be revised by Congress to 
accommodate air-taxi-type services. Additionally, current commercial 
air taxi services are relatively expensive. It may be hard to predict 
what such a service would cost under EAS, or the level of subsidy it 
would require, until it is tried. 

Alternatively, a community that cannot support EAS service within the 
subsidy limit might be better served through ground transportation. In 
many parts of the country, motorcoach companies and passenger rail 
already deliver passengers to large hub airports. For example, 
according to an American Bus Association official, motorcoach companies 
transport more than 2.5 million passengers annually from Maine, 
Vermont, and New Hampshire to Boston's Logan Airport. The official said 
that about half of the communities currently in the EAS program are 
also served by motorcoach companies, which in some cases even provide 
community-to-hub airport service that competes with EAS service. If a 
community cannot support air service even with an EAS subsidy, it may 
be able to support subsidized motorcoach or other ground 
transportation. 

Experts on our panel, as well as others with whom we spoke recognized 
that there will be difficulties if a multimodal approach to small 
community transportation is adopted. They noted that a multimodal 
approach to providing transportation assistance to small communities 
would likely face opposition from communities if they were to lose air 
service. In addition, it would create concerns about the potential 
source of funding because current DOT funding is largely "stove-piped" 
through funds that support--and are financed by--specific 
transportation modes. For example, federal funding for airports and 
aviation primarily comes from the Airport and Airway Trust Fund, which 
is funded by several aviation-related excise taxes. Federal funding for 
highways is provided through the Highway Trust Fund which is supported 
by motor fuel and other vehicle-related taxes. Experts on our panel and 
others said a multimodal approach can also result in different 
transportation modes "competing" for funds, as advocates for the 
various transportation modes may oppose any change that is seen as 
diverting funds dedicated to one transportation mode to support 
another. Taking a multimodal approach to small community transportation 
will require creative approaches to address these concerns. Finally, 
some of the experts in our panel expected that a true multimodal 
approach to support small community transportation would require more 
federal funding than the EAS program alone provides. 

Selecting Options for the EAS Program Is Difficult, but Tools Exist for 
Assessing the Options and Improving Program Evaluation: 

Selecting Options to Implement Is Difficult and Depends on How Program 
Objectives Are Defined: 

Over the years, Congress has made incremental changes to the program 
such as changing the eligibility criteria or funding; however the 
program's approach remains little changed since it was implemented 30 
years ago. Although Congress, the administration, GAO, and others have 
proposed potential changes to the EAS program, it is difficult for 
policymakers to determine which options to select, since different 
options for modifying the program might affect stakeholders such as 
airlines and community residents differently. For example, supporting 
increased use of smaller planes may increase the cost effectiveness of 
certain routes, but one industry association commented that this would 
penalize carriers who have made the investment in larger aircraft to 
satisfy current program requirements. In addition, as some of the panel 
experts and others recognize, these transportation decisions could 
become politicized. For example, a regional airport may make sense in 
certain geographic areas; however, no community would want to lose its 
local service, along with the assumed prestige and economic benefits to 
another community. 

Further, it is difficult to determine which option or suite of options 
to select, since stakeholders have different opinions on what the 
program is to achieve. When the program was established in 1978, it 
provided subsidized air service to communities that were receiving air 
service at the time and would have lost air service under deregulation, 
so in one sense, the program supports scheduled air service.[Footnote 
47] However, the legislative history accompanying the Airline 
Deregulation Act also describes the program as supporting both 
connectivity to the national air transportation system and the growth 
and economic development of the communities served.[Footnote 48] These 
multiple program objectives make it difficult to assess which options 
to use. For example, if the objective is to continue providing air 
service to communities that were receiving air service at the time of 
deregulation, providing additional funding to cover expected cost 
increases and renegotiating contracts in response to cost increases 
like fuel prices could meet that objective. If the objective is to 
provide cost-effective air service, options such as allowing more 
flexibility for type of aircraft and service frequency or establishing 
regional airports might be appropriate. Or if the objective is to 
provide access to the national transportation system, perhaps a 
multimodal approach or focusing on the most remote communities might be 
better options. 

Using GAO's Re-examination Approach to Revisit the EAS Program's 
Objectives Could Help Clarify the Extent to which Different Options 
Meet those Objectives: 

Changes in the aviation industry and the nation's financial situation 
over the past 30 years may make this an opportune time to revisit 
program objectives and evaluate design options for the program. In 
2005, we reported that federal deficits portended an economically 
unsustainable situation in the long term, making it incumbent upon the 
federal government to periodically re-examine programs to assure they 
are able to meet current and future challenges.[Footnote 49] Certainly, 
the deficit picture has only grown more critical since then, as has the 
need for reviewing and updating federal programs to assure their 
continued effectiveness. In our report 4 years ago, we developed 
several criteria designed to address whether existing programs are 
relevant to the challenges of the 21st century, and to support making 
tough choices in setting priorities. These criteria relate to (1) 
having well-defined goals with direct links to an identified federal 
interest and role, (2) defining and measuring program success, (3) 
targeting benefits, and (4) affordability and cost effectiveness. These 
criteria, which could be used to re-examine the EAS program, are 
summarized below and discussed in more detail in appendix III. 

EAS Program Goals and the Federal Government's Role in Supporting These 
Goals and Objectives: 

The EAS program has multiple objectives, which are in some ways 
conflicting, contributing to a lack of clarity in the federal role. 
Revisiting the goals and objectives of the EAS program would help 
define the federal government's role in the program, that is, what the 
federal government should be doing and how it should be doing it. For 
example, defining the EAS program's objective as subsidizing scheduled 
commercial air service at communities that would not otherwise have air 
service, as the program has operated since it began, could lead to one 
program design and related performance measures addressing such factors 
as the number of communities with subsidized air service, the cost 
effectiveness of that service, and various measures for the quality of 
that service. However, identifying the objective of the program as 
providing rural and small communities with connectivity, including air 
service, to the national transportation network--which was also 
identified as an objective of the EAS program at the time it was 
enacted--could lead to defining a different set of options not limited 
to providing subsidized air service, but also considering multiple 
transportation modes. Supporting the broader objective of connectivity 
would also be consistent with DOT's Strategic Plan, which identifies 
global connectivity as one of the agency's strategic goals. 

Defining and Measuring Program Success in Supporting DOT's Strategic 
Goals: 

The performance measures that DOT has established for EAS relate to 
maintaining uninterrupted service at EAS-subsidized communities and the 
timeliness of processing agreements and making payments to carriers. 
Setting additional measurable targets for what the program is intended 
to accomplish would allow DOT to (1) assess the relative success of the 
program and (2) more effectively manage program resources toward 
achieving program goals or determine what level of resources are needed 
when the program is not achieving its objective. 

Targeting Program Benefits to Improve Program Results: 

Congress has modified eligibility criteria for the EAS program in the 
past. In 1978, the list of communities potentially eligible for EAS 
subsidized service was established. In 1994, Congress added the 
requirement that a community must be at least 70 miles from the nearest 
medium-or large-hub airport to qualify for EAS service. Examining the 
criteria again, given changes in population and the air service 
industry, may help target the benefits of the program to those 
communities that have the least access to the national transportation 
system. 

Analyzing Cost Effectiveness of Existing Program Options: 

Analysis of the cost and affordability of EAS program can support 
decisions that may need to be made to address how and where to use 
existing program resources or if options to revise the program are 
warranted. Given the trend of increasing carrier subsidies and the 
potential for more communities seeking EAS subsidies if they lose their 
unsubsidized service, it is important for policymakers to assess 
whether the EAS program is affordable and financially sustainable over 
the long term, given known trends and risks. Consolidating service from 
two or more closely located EAS communities at a single airport is one 
option that could make service more cost effective. Another option that 
has the potential to improve cost effectiveness of EAS service for some 
communities would be to allow more latitude in determining the type of 
aircraft and flight schedules that would provide the level of service 
the community needs and can support. Finally, establishing a multimodal 
approach could provide cost-effective options for connecting people to 
the national transportation network. 

Analytical Tools Could Help Assess Program Demand and Transportation 
Options: 

Geographic Information Systems Analysis: 

Since the EAS program's basic design is 30 years old, policymakers may 
want to reconsider the characteristics of communities that are provided 
with federal transportation assistance. Reconsidering the design of 
federal programs--such as the EAS program--requires a variety of 
information, and methods exist that can help develop such critical 
data. For example, Geographic Information Systems (GIS) analysis can be 
used to evaluate community access to transportation--both to air 
service and to other modes. In general, GIS applications are tools in 
which varied geographic information is compiled to enable analyses 
based on the relationship of one element, such as communities, to 
another element, in this case, modes of transportation. These tools 
have become critical in the field of transportation planning and 
management over the past 30 years. Such analyses can be used to 
evaluate transportation options, and help develop cost-of-service 
estimates. We analyzed the access that different groups of communities 
have to the various transportation modes by mapping those communities 
along with the availability of the transportation modes. The goal was 
to take a fresh look at community access to transportation networks in 
the geographic context that exists today--a less rural society and 
potentially different transportation options than existed 30 years ago 
when the EAS program was conceived. 

The goal of our analysis is to use information on community 
demographics, access to transportation modes, and other relevant 
factors to illustrate how these key factors could be considered in 
developing an approach to ensuring access to air service or other modes 
of transportation. We examined the proximity of the selected 
communities--community selection depended on community size and 
distance from medium-or large-hub airports--to transportation modes. We 
selected communities that had a population of between 10,000 and 
500,000 people and that were at least 90 miles from the nearest medium- 
or large-hub airport. It would have been possible to select different 
sized communities or those that were either closer or farther from a 
medium or large hub. For selected communities, proximity to various 
types of airports, passenger rail stations, and entry ramps onto major 
highways were considered. This enabled comparisons across the 
communities as to their relative access to varied transportation modes. 
In appendix IV we provide outcomes of the analyses we performed to 
illustrate how GIS analysis can be used to re-evaluate small community 
transportation options. This type of analysis might help determine the 
impact of the option to focus EAS assistance on communities that are 
most distant from alternative hub airports. 

Also, DOT's Bureau of Transportation Statistics has taken steps to 
identify the intermodal connectivity of the population of the United 
States. In 2005, it published work showing that in 2003 about 93 
percent of the rural residents lived within what DOT determined to be a 
reasonable coverage area of at least one of the four (air, bus, rail, 
and ferry) intercity public transportation modes.[Footnote 50] They 
acknowledge that this access may have diminished because of a recent 
reduction of Greyhound bus terminals and a portion of an Amtrak line. 
To get an even better idea of how connected the country is, DOT is 
continuing to work on an intermodal passenger connectivity project that 
involves cataloging and geographically plotting all transportation 
facilities in the United States and indicating what modes serve these 
facilities to develop a database of this information. While this is an 
ongoing project, data DOT has available could provide an additional 
source of information with which to evaluate the extent to which 
certain communities are connected to the national transportation 
network. 

Benefit-Cost Analyses: 

In addition to GIS analysis, the tools and methods of benefit-cost 
analyses can be used to provide information on economic factors that 
may be useful in evaluating options. The cost of providing subsidized 
service to communities may vary considerably depending on the 
communities' location or the type of service provided. Developing data 
to better understand these tradeoffs would help policymakers design the 
most appropriate program for the current circumstances. For example, 
estimates of program costs across various alternative modes and the 
value provided to communities for these services could help to ensure 
that programs are designed to use funds in the most beneficial way. 
Specifically, generating information on the expected demand for 
transportation services from communities could help stakeholders better 
understand the value gained by citizens from having access to service 
across various modes. 

Expanded Performance Measures Would Enhance DOT's Ability to Evaluate 
Program Effectiveness: 

The Government Performance and Results Act of 1993 requires executive 
agencies to develop a long-term strategic plan, prepare annual 
performance plans, and measure progress toward the achievement of the 
goals described in the plans. The annual performance plans should 
establish the connections between the long-term goals outlined in the 
agency's strategic plan and the day-to-day activities of managers and 
staff. In addition, the goals and measures in the plan should address 
program results and how programs help the agency progress toward their 
strategic goals. 

EAS program performance is difficult to assess beyond providing air 
service to eligible communities because DOT does not have performance 
measures that demonstrate the extent to which the program is 
contributing toward DOT's strategic goals of connectivity or congestion 
reduction--the strategic goal where the EAS program is located. 
Further, the Office of Management and Budget most recently evaluated 
the EAS program under its Program Assessment Rating Tool in 2006 and 
found the program does not have enough long-term performance measures 
that focus on outcomes and meaningfully reflect the purpose of the 
program. The EAS program's current annual performance measures include 
one long-term measure that addresses program performance in a specific 
way--maintaining continuous air service at 98 percent of eligible 
communities. Other measures relate to administrative activities, 
including: (1) the percentage of renewal agreements that are 
established before the existing agreement expires, (2) the percentage 
of new agreements processed within 160 days of carriers' notices to 
suspend services, and (3) the percentage of payments to carriers that 
are processed within 15 business days. In 2007, the most recent year 
DOT published information on its performance in these areas, DOT 
exceeded its goals for the percentage of new agreements processed 
within 160 days and renewal agreements established before the existing 
agreement expires. DOT nearly met its goal for processing payments 
within 15 business days, and did not meet its goal for maintaining 
continuous air service at 98 percent of eligible, subsidized 
communities. DOT's single long-term performance measure--maintaining 
continuous air service at 98 percent of eligible communities---reflects 
an important aspect of program operations. But additional performance 
measures, addressing other aspects of program performance, could 
provide a broader perspective on how the EAS program contributes to 
DOT's strategic goals. 

Conclusions: 

For many communities, the EAS program provides a valuable connection to 
the national transportation network. Many EAS routes carry 10,000 or 
more passengers per year. However, low passenger volume and high 
subsidies remain the norm for many EAS communities. Changes in the air 
service industry, including the growth of air travel alternatives 
provided by low-cost carriers, have changed the environment in which 
the EAS program operates. However, some legislative EAS program 
requirements, and the growing cost to operate aircraft for EAS service, 
contribute to the program's inability to maintain service to EAS 
communities. Further, rural population shifts since deregulation, and 
continuing passenger leakage away from small airports with EAS service 
combine to limit passenger ridership on EAS flights. These factors 
contribute to the continuing financial strain on the EAS program which 
brings its long-term viability into question. 

A re-examination of the EAS program, assessing options to make the 
program more sustainable and effective, and the development of 
performance measures to monitor program performance, may be warranted. 
Many options to help address the problems and limitations the current 
program faces exist. However, making these decisions is difficult; and 
Congress has yet to implement any of these options. These decisions are 
difficult because no one option may work for all communities. Options 
to change the program requirements might be necessary to sustain EAS. 
Further, in some locations it might be beneficial to study air taxi and 
multi-modal approaches to ensuring small and rural communities are 
connected to the national transportation network. 

Finally, if decisions are reached to revise the program design, steps 
should be taken to implement and monitor the program. For example, if 
the program design is to be revised the legislation governing the 
program would need to be revised accordingly. In addition, additional 
performance measures to evaluate the program may need to be developed. 

Matters for Congressional Consideration: 

In light of developments related to population shifts, the aviation 
industry, and the national transportation infrastructure, Congress 
should consider re-examining the program's objectives and related 
statutory requirements and seek information from DOT as needed to 
support this effort. Such a re-examination could include (1) 
consideration of the rationale behind existing statutory requirements, 
such as those for 15-seat, 2-engine, 2-pilot aircraft in EAS service; 
(2) the possibility of providing greater flexibility as to plane size, 
frequency of service, eligible communities, or regionalization of 
service; and (3) the possibility of assessing multimodal solutions for 
communities. 

Recommendations for Executive Action: 

We are recommending that the Secretary of Transportation: 

1. Evaluate the reasonableness of: 

* providing transportation service, whether through unscheduled air 
service or surface modes of transportation, when these alternatives 
might better serve communities than current scheduled EAS service, and: 

* DOT's current practices for carrier agreements, including the 2-year 
duration of agreements, and not renegotiating subsidy amounts in 
response to quantifiable cost increases. 

2. Once decisions are made about any changes to the EAS program, DOT 
should determine whether additional performance measures are needed to 
evaluate program outcomes. 

Agency Comments: 

We provided a draft of this report to DOT for its review and comment. 
DOT provided technical comments in an e-mail message on July 6, 2009, 
which we incorporated into this report as appropriate. In reviewing our 
original recommendation calling for additional performance measures for 
the EAS program, DOT officials indicated that some performance measures 
were already in use, and said that they also monitor other performance 
data, such as passengers served. They acknowledged that additional 
performance measures would support operational improvement, and stated 
that they would determine those measures as needed. We believe the 
implementation of any changes to the EAS program--or how the EAS 
program is used to provide communities with access--which result from 
Congressional or DOT action would warrant consideration of additional 
performance measures. As a result of DOT's comments and the possibility 
of changes to the program, we modified our original recommendation. DOT 
concurred with our revised recommendations. 

As agreed with your offices, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 7 days 
from the report date. At that time, we will send copies to appropriate 
congressional committees, to the Secretary of Transportation, and to 
appropriate officials within the Office of the Secretary. We will also 
make copies available to others upon request, and the report will be 
available at no charge on the GAO Web site at [hyperlink, 
http://www.gao.gov]. 

If you have any questions about this report, please contact me at (202) 
512-2834 or at dillinghamg@gao.gov Contact points for our Offices of 
Congressional Relations and Public Affairs may be found on the last 
page of this report. GAO staff who made major contributions to this 
report are listed in appendix V. 

Signed by: 

Gerald L. Dillingham, Ph.D. 
Director, Physical Infrastructure Team: 

[End of section] 

Appendix I: Objectives, Scope and Methodology: 

To describe the status of the Essential Air Service (EAS) program, we 
reviewed Department of Transportation (DOT) data on the EAS program, 
DOT's agreements with airlines to provide service, and financial data 
for the program and selected airlines. We also reviewed relevant 
studies and interviewed industry experts. Our review focused on 
communities within the 48 states of the continental United States that 
have received EAS subsidized service. This is because the requirements 
for communities in Alaska are different than for communities in other 
states. In addition, EAS subsidized service outside of the contiguous 
states are not representative of the program in the rest of the United 
States. 

We obtained DOT data that represented the characteristics and current 
status of the program at specific points in time in order to describe 
trends in EAS service. We obtained DOT data from 2003 through early 
2009 on the number of communities served by the EAS program, the 
subsidies awarded airlines to serve these communities, and the 
passengers enplaned on EAS flights. We selected 2003 as our base year 
because that was the first full year DOT required carriers to file air 
traffic activity in a uniform reporting system.[Footnote 51] DOT 
provided the information about EAS communities, associated subsidies, 
and carrier enplanements in a series of excel schedules. The schedules 
document EAS service only as of a specific dates and therefore do not 
represent a continuous picture of service provided under the EAS 
program. To assess the reliability of the community and subsidy 
information in the schedules, we selected a random sample of the 
subsidy award information in the schedules and traced the information 
back to the DOT order where DOT officially announced its agreement with 
a carrier to serve an EAS route. DOT issues its orders via its docket, 
accessible at [hyperlink, http//www.regulations.gov]. However, we could 
not assess the reliability of the carrier's enplanement data in the 
schedules. To do so would have required a comprehensive review of DOT 
orders to identify the carrier serving each route, the destination hub, 
when the carrier initiated service on each route, and when the carrier 
either suspended or terminated service. Because the schedules do not 
represent a continuous picture of service provided under the EAS 
program, our review of DOT orders would also be incomplete. In 
addition, during the course of our review, we also found we could not 
develop trend information on passengers that board (enplane) subsidized 
EAS flights as well as the agreed-upon subsidies for those flights from 
available DOT data other than the information DOT provided in the 
schedules. 

We also obtained relevant financial data for the EAS program including 
appropriations and expenditures data. We reviewed relevant legislation 
to verify the appropriations information but did not have sufficient 
information to validate the expenditures data. We also obtained data 
documenting fuel use and cost in 2007 and 2008 for selected airlines 
from OAG BACK Aviation Solutions, a private contractor that provides 
online access to U.S. financial, operational, and passenger data with a 
query-based user interface. FAA does not require smaller airlines to 
file information on fuel use and cost, so we could only extract fuel 
data on certain larger airlines providing EAS service. We also compared 
fare data for routes involving EAS flights with fares on comparable 
unsubsidized routes, to assess how EAS fares compared to unsubsidized 
fares. 

We conducted a literature search to obtain research studies that 
examine the role of air service in the economic development of small 
communities and their connections to the national transportation 
network. Where applicable, the research and studies were reviewed by a 
GAO economist to determine that the studies were sufficiently reliable 
for our purposes. We also reviewed previous reports and studies of the 
EAS program including previous GAO, DOT, and other federal agency 
reports. We reviewed studies about the national transportation network 
and how rural communities connect to this network, reports on the 
rationale for the EAS program, and legislation that established and 
extended the program. We reviewed relevant regulations and legislation 
to obtain information on EAS program criteria and requirements for 
communities to be eligible for subsidized service under the EAS 
program. 

Finally, we conducted interviews with DOT officials, industry 
associations and consultants, airlines and community airports, local 
governments, and other relevant officials. 

To identify the factors affecting DOT's ability to provide service to 
communities, we reviewed relevant literature, including previous GAO 
reports as well as other studies of the EAS program and air service to 
small communities. We identified the factors that limit the capacity of 
the EAS program to provide subsidized service to communities. We also 
examined the literature to identify the limitations inherent to small 
communities, aviation industry trends as well as the EAS program 
itself. We also analyzed data on fares charged for EAS flights. 

We held a panel discussion attended by 19 experts on small community 
air service including airline officials, current and former EAS program 
administrators, economists, other transportation providers, and state 
and local officials. We discussed and surveyed these experts on the 
factors affecting the EAS program and options for providing 
connectivity to small communities across the country, including (1) the 
challenges facing air service to communities, (2) the role of the 
federal government in supporting communities' access to the national 
transportation network, and (3) the federal government's options for 
supporting small community transportation. We composed this panel of 
experts representing different types of stakeholders in the EAS 
program, including program officials. Thus, although individual panel 
members were not independent, the panel as a whole was balanced for our 
purposes. See appendix II for a summary of panel responses to questions 
we submitted to them, as well as a list of the panel participants. 

We reviewed Geographic Information Systems (GIS) and Bureau of the 
Census information as well as data from other sources to examine the 
extent to which the rural and small community population has shifted in 
the 30 years since the EAS program began. We identified areas where the 
population has grown as well as areas where the population has 
decreased. Further, we examined the extent to which selected rural 
areas are connected to the national transportation network. See 
appendix IV for further information. 

We identified options for improving the EAS program through a review of 
previous GAO reports, and discussions with officials from DOT and 
industry associations as well as industry consultants. We also 
identified options in proposed legislation that would affect the EAS 
program. We discussed these options with our expert panel, industry and 
program representatives, community officials, and other experts to 
obtain their views on the viability and feasibility of the options for 
providing assistance to remote communities and increasing their 
connectivity to the national transportation network. For example, a 
national association of airports sent questions we developed to seven 
of their member airports[Footnote 52] about their experiences and views 
of the EAS program and forwarded their responses to us. 

To identify tools that may help DOT to re-examine and assess the 
performance of the EAS program, we reviewed literature that discussed 
options for improving the EAS program as well as GAO reports that 
discuss methods for re-examining federal programs in light of budget 
limitations. We reviewed previous GAO reports that discuss our re- 
examination framework to determine how such a framework could aid DOT 
in clarifying the strategic goals and options for the EAS program. We 
further examined DOT's EAS program data and current performance 
measures in light of their usefulness for monitoring and managing the 
program. 

We conducted this performance audit from March 2008 through July 2009 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe that 
the evidence obtained provides a reasonable basis for our findings and 
conclusions based on our audit objectives. 

[End of section] 

Appendix II: Panelist Responses to GAO Questionnaire: 

Table 2 summarizes responses provided by the members of our expert 
panel to the questionnaire we administered during the panel sessions. A 
listing of the panel members follows the summary of questionnaire 
responses. 

Table 2: Responses to GAO's Questionnaire: 

Part 1: Challenges facing air service to small communities--today and 
in the foreseeable future: 

For each question, rank the three most significant factors, from 1 to 
3. 

Question: 1) Which category of challenges is the most significant, in 
terms of its impact on carriers' ability to provide air service under 
the EAS program? (19 panel members addressed this question): 

Challenges in serving the small community market; 
Number of panelists who ranked factor: 1: 3; 
Number of panelists who ranked factor: 2: 8; 
Number of panelists who ranked factor: 3: 0; 
Total that Ranked as 1, 2, or 3: 11. 

Challenges in the air service industry environment; 
Number of panelists who ranked factor: 1: 6; 
Number of panelists who ranked factor: 2: 4; 
Number of panelists who ranked factor: 3: 2; 
Total that Ranked as 1, 2, or 3: 12. 

Challenges in the EAS program; 
Number of panelists who ranked factor: 1: 4; 
Number of panelists who ranked factor: 2: 1; 
Number of panelists who ranked factor: 3: 7; 
Total that Ranked as 1, 2, or 3: 12. 

All of the above are equally important; 
Number of panelists who ranked factor: 1: 
Number of panelists who ranked factor: 2: 
Number of panelists who ranked factor: 3: 
Total that Ranked as 1, 2, or 3: 6. 

None of the above are important; 
Number of panelists who ranked factor: 1: 
Number of panelists who ranked factor: 2: 
Number of panelists who ranked factor: 3: 
Total that Ranked as 1, 2, or 3: 0. 

Question: 2) Which of the following aspects of providing and sustaining 
air service to small community markets present the biggest challenges? 
(19 panelists responded to this question)[A]: 

Small populations limit the market of potential passengers; 
Number of panelists who ranked factor: 1: 6; 
Number of panelists who ranked factor: 2: 5; 
Number of panelists who ranked factor: 3: 3; 
Total that Ranked as 1, 2, or 3: 14 of 19. 

Limited community business activity limits the market of potential 
business passengers; 
Number of panelists who ranked factor: 1: 4; 
Number of panelists who ranked factor: 2: 3; 
Number of panelists who ranked factor: 3: 2; 
Total that Ranked as 1, 2, or 3: 9 of 19. 

Rural and small community populations have shifted in the 30 years 
since deregulation--the EAS program may not be serving communities that 
have the greatest need for subsidized air service, in terms of other 
transportation options they may have; 
Number of panelists who ranked factor: 1: 6; 
Number of panelists who ranked factor: 2: 3; 
Number of panelists who ranked factor: 3: 3; 
Total that Ranked as 1, 2, or 3: 12 of 19. 

EAS carriers may do insufficient marketing so that local residents are 
unaware of service; 
Number of panelists who ranked factor: 1: 0; 
Number of panelists who ranked factor: 2: 3; 
Number of panelists who ranked factor: 3: 2; 
Total that Ranked as 1, 2, or 3: 5 of 19. 

"Leakage," as small community residents bypass their local airports, 
and use other options for travel; 
Number of panelists who ranked factor: 1: 8; 
Number of panelists who ranked factor: 2: 4; 
Number of panelists who ranked factor: 3: 0; 
Total that Ranked as 1, 2, or 3: 12 of 19. 

"Prop avoidance," or travelers' reluctance to fly in smaller turboprop 
aircraft that serve small airports; 
Number of panelists who ranked factor: 1: 0; 
Number of panelists who ranked factor: 2: 3; 
Number of panelists who ranked factor: 3: 2; 
Total that Ranked as 1, 2, or 3: 5 of 19. 

Inadequate financial support, or other commitment, for EAS service from 
local government or the business community; 
Number of panelists who ranked factor: 1: 1; 
Number of panelists who ranked factor: 2: 1; 
Number of panelists who ranked factor: 3: 2; 
Total that Ranked as 1, 2, or 3: 4 of 19. 

Inadequate federal funding for the EAS program; 
Number of panelists who ranked factor: 1: 1; 
Number of panelists who ranked factor: 2: 2; 
Number of panelists who ranked factor: 3: 1; 
Total that Ranked as 1, 2, or 3: 4 of 19. 

Question: 3) What changes in the air service industry environment since 
deregulation have been the biggest challenges to small community air 
service, including EAS service? (18 panel members addressed this 
question): 

Major carriers shifting to a hub-and-spoke route structure; 
Number of panelists who ranked factor: 1: 1; 
Number of panelists who ranked factor: 2: 2; 
Number of panelists who ranked factor: 3: 2; 
Total that Ranked as 1, 2, or 3: 5 of 18. 

The expansion of low-cost carriers, creating more opportunities for 
small community residents to bypass their local airport in favor of 
lower fares at another airport; 
Number of panelists who ranked factor: 1: 9; 
Number of panelists who ranked factor: 2: 4; 
Number of panelists who ranked factor: 3: 2; 
Total that Ranked as 1, 2, or 3: 15 of 18. 

Recent increases in fuel costs; 
Number of panelists who ranked factor: 1: 2; 
Number of panelists who ranked factor: 2: 3; 
Number of panelists who ranked factor: 3: 1; 
Total that Ranked as 1, 2, or 3: 6 of 18. 

Decreasing availability of 19-seat turboprop aircraft used most often 
by EAS carriers; 
Number of panelists who ranked factor: 1: 2; 
Number of panelists who ranked factor: 2: 1; 
Number of panelists who ranked factor: 3: 3; 
Total that Ranked as 1, 2, or 3: 6 of 18. 

EAS carriers' difficulty in obtaining code share agreements with larger 
carriers that would allow passengers to book connecting flights on 
those carriers as part of the same trip; 
Number of panelists who ranked factor: 1: 1; 
Number of panelists who ranked factor: 2: 2; 
Number of panelists who ranked factor: 3: 1; 
Total that Ranked as 1, 2, or 3: 4 of 18. 

Lack of interline arrangements with larger carriers that would allow 
passengers to check bags to their final destination; 
Number of panelists who ranked factor: 1: 1; 
Number of panelists who ranked factor: 2: 2; 
Number of panelists who ranked factor: 3: 1; 
Total that Ranked as 1, 2, or 3: 4 of 18. 

Congestion at hub airports, with fewer slots available for small 
carriers; 
Number of panelists who ranked factor: 1: 2; 
Number of panelists who ranked factor: 2: 2; 
Number of panelists who ranked factor: 3: 3; 
Total that Ranked as 1, 2, or 3: 7 of 18. 

The growth in business owned or leased aircraft, reducing the need for 
commercial business travel; 
Number of panelists who ranked factor: 1: 1; 
Number of panelists who ranked factor: 2: 3; 
Number of panelists who ranked factor: 3: 3; 
Total that Ranked as 1, 2, or 3: 7 of 18. 

Increased post-9/11 security requirements at small airports; 
Number of panelists who ranked factor: 1: 0; 
Number of panelists who ranked factor: 2: 3; 
Number of panelists who ranked factor: 3: 1; 
Total that Ranked as 1, 2, or 3: 4 of 18. 

Question: 4) What EAS program requirements represent the biggest 
challenges to providing and sustaining air service to small communities 
under the EAS program? (16 panel members addressed this question): 

The $200 per passenger subsidy cap (for communities less than 210 miles 
from a medium or large airport); 
Number of panelists who ranked factor: 1: 0; 
Number of panelists who ranked factor: 2: 1; 
Number of panelists who ranked factor: 3: 1; 
Total that Ranked as 1, 2, or 3: 2 of 16. 

The EAS program mandates using 15-seat or larger aircraft; 
Number of panelists who ranked factor: 1: 9; 
Number of panelists who ranked factor: 2: 2; 
Number of panelists who ranked factor: 3: 3; 
Total that Ranked as 1, 2, or 3: 14 of 16. 

Minimum service requirements of two daily round trips, six days a week; 
Number of panelists who ranked factor: 1: 0; 
Number of panelists who ranked factor: 2: 5; 
Number of panelists who ranked factor: 3: 3; 
Total that Ranked as 1, 2, or 3: 8 of 16. 

Two-year EAS agreements are too short; 
Number of panelists who ranked factor: 1: 3; 
Number of panelists who ranked factor: 2: 2; 
Number of panelists who ranked factor: 3: 2; 
Total that Ranked as 1, 2, or 3: 7 of 16. 

No built-in agreement provisions for renegotiating subsidies to reflect 
rising costs (other than carriers filing a notice to terminate service, 
in order to negotiate a higher subsidy); 
Number of panelists who ranked factor: 1: 1; 
Number of panelists who ranked factor: 2: 5; 
Number of panelists who ranked factor: 3: 2; 
Total that Ranked as 1, 2, or 3: 8 of 16. 

Insufficient profit margins (5 percent of operating expenses) allowed 
by the program; 
Number of panelists who ranked factor: 1: 1; 
Number of panelists who ranked factor: 2: 1; 
Number of panelists who ranked factor: 3: 2; 
Total that Ranked as 1, 2, or 3: 4 of 16. 

Eligibility criteria-that a community must have had service at the time 
of deregulation--has not changed since 1978; 
Number of panelists who ranked factor: 1: 2; 
Number of panelists who ranked factor: 2: 3; 
Number of panelists who ranked factor: 3: 3; 
Total that Ranked as 1, 2, or 3: 8 of 16. 

[A] Column totals exceed then number of panelists responding, because 
some respondents may have ranked more than one factor as "1" or "2," 
etc. 

[End of Part 1] 

Part 2: The role of the federal government in supporting small 
communities' access to the national transportation network: 

Question: 1) Should it be the federal government's role to provide 
financial assistance to support small communities' connection to the 
national transportation network? Check One. (17 panel members responded 
to this question): 
Yes; Number of Responses: 13.
No; Number of Responses: 3.
Uncertain; Number of Responses: 1. 

Question: 2) If the federal government should support small community 
transportation, what is the primary reason for doing so? Check one. (17 
panel members responded to this question.) 
Supporting economic sustainability or growth in those communities; 
Number of Responses: 5.
Supporting those communities' connection to the national transportation 
network; Number of Responses: 4.
Both of the above are equally important; Number of Responses: 7.
Neither of the above is important; Number of Responses: 0.
Other comment; Number of Responses: 1. 

Question: 3) Should there be performance goals, or measures of success, 
established for DOT to meet in carrying out transportation assistance 
programs, such as the EAS program? Check one. (17 panel members 
responded to this question.) 
Yes; Number of Responses: 15.
No; Number of Responses: 2. 

Question: 4) What performance standards and measurable goals could be 
established for the EAS program? Check as many that apply. (16 panel 
members responded to this question.) 
Standards for access to the national transportation system; Number of 
Responses: 13.
Standards for community economic development; Number of Responses: 9.
Other; Number of Responses: 5. 

Question: 5) In general, do you believe the federal government should 
prioritize the relative transportation needs for communities, for the 
purpose of deciding which communities get federal funding? Check One. 
(16 panel members responded to this question.) 
Yes; Number of Responses: 10.
No; Number of Responses: 5.
Other; Number of Responses: 1. 

Question: 6) Do you believe a system for assessing communities' 
relative need for transportation, such as the methodology described by 
GAO, would be useful for targeting federal transportation assistance to 
small communities? Check One. (17 panel members responded to this 
question);
Yes; Number of Responses: 14.
No; Number of Responses: 2.
Other; Number of Responses: 1. 

[End of Part 2] 

Part 3: What are the federal government's options for supporting small 
communities' access to the national transportation network? 

Question: 1) Are there any EAS program criteria or requirements that 
should be revised to make the program more effective in supporting 
economic development and connectivity in the communities served? Check 
One. (17 panel members responded to this question); 
Yes; 17.
No; 0. 

Question: 2) If so, what changes might make the program more effective? 
Rank the three most significant, from 1 to 3. (17 panel members 
responded to this question): 

Increase the passenger subsidy cap from $200; 
Number of panelists who ranked factor: 1: 0; 
Number of panelists who ranked factor: 2: 1; 
Number of panelists who ranked factor: 3: 1; 
Number of Responses: Total that Ranked as 1, 2, or 3: 2 of 17. 

Award EAS agreements for longer time periods (e.g., 5 years); 
Number of panelists who ranked factor: 1: 2; 
Number of panelists who ranked factor: 2: 1; 
Number of panelists who ranked factor: 3: 2; 
Number of Responses: Total that Ranked as 1, 2, or 3: 5 of 17. 

Allow agreements to be renegotiated in response to rising costs; 
Number of panelists who ranked factor: 1: 1; 
Number of panelists who ranked factor: 2: 2; 
Number of panelists who ranked factor: 3: 3; 
Number of Responses: Total that Ranked as 1, 2, or 3: 6 of 17. 

Change criteria to focus program resources on more remote communities 
(i.e., increase the minimum 70-mile distance from a medium or large hub 
for a community to qualify); 
Number of panelists who ranked factor: 1: 6; 
Number of panelists who ranked factor: 2: 6; 
Number of panelists who ranked factor: 3: 1; 
Number of Responses: Total that Ranked as 1, 2, or 3: 13 of 17. 

Give carriers more flexibility to use smaller aircraft; 
Number of panelists who ranked factor: 1: 8; 
Number of panelists who ranked factor: 2: 3; 
Number of panelists who ranked factor: 3: 4; 
Number of Responses: Total that Ranked as 1, 2, or 3: 15 of 17. 

Give carriers more flexibility to provide less frequent service; 
Number of panelists who ranked factor: 1: 0; 
Number of panelists who ranked factor: 2: 2; 
Number of panelists who ranked factor: 3: 4; 
Number of Responses: Total that Ranked as 1, 2, or 3: 6 of 17. 

Require carriers to commit funding to local marketing for EAS service; 
Number of panelists who ranked factor: 1: 0; 
Number of panelists who ranked factor: 2: 0; 
Number of panelists who ranked factor: 3: 3; 
Number of Responses: Total that Ranked as 1, 2, or 3: 3 of 17. 

Require carriers to have code share agreements with large carriers at 
destination hubs, to obtain an EAS agreement; 
Number of panelists who ranked factor: 1: 1; 
Number of panelists who ranked factor: 2: 0; 
Number of panelists who ranked factor: 3: 2; 
Number of Responses: Total that Ranked as 1, 2, or 3: 3 of 17. 

Require carriers to have interline agreements with larger carriers, to 
obtain an EAS agreement; 
Number of panelists who ranked factor: 1: 1; 
Number of panelists who ranked factor: 2: 0; 
Number of panelists who ranked factor: 3: 1; 
Number of Responses: Total that Ranked as 1, 2, or 3: 2 of 17. 

Question: 3) Does the EAS program need more substantive change or 
restructuring to make it more effective in supporting small 
communities' access to the national transportation network? Check one. 
(17 panel members responded to this question); 
Yes; 17.
No; 0. 

Question: 4) If so, what changes would make the program more effective? 
Rank the three most significant, from 1 to 3. (17 panel members 
responded to this question): 

Open the program to more communities by dropping the requirement that a 
community must have had air service at the time of deregulation in 
order to qualify for subsidized service; 
Number of panelists who ranked factor: 1: 3; 
Number of panelists who ranked factor: 2: 1; 
Number of panelists who ranked factor: 3: 3; 
Number of Responses: Total that Ranked as 1, 2, or 3: 7 of 17. 

Allow the program to subsidize other types of air service, such as air 
taxi service, as an alternative to regularly scheduled air service; 
Number of panelists who ranked factor: 1: 6; 
Number of panelists who ranked factor: 2: 7; 
Number of panelists who ranked factor: 3: 1; 
Number of Responses: Total that Ranked as 1, 2, or 3: 14 of 17. 

Give eligible communities the option of getting a grant, in lieu of EAS 
service, which can be used to obtain other transportation (e.g., 
subsidizing air taxi, or ground transportation); 
Number of panelists who ranked factor: 1: 5; 
Number of panelists who ranked factor: 2: 3; 
Number of panelists who ranked factor: 3: 2; 
Number of Responses: Total that Ranked as 1, 2, or 3: 10 of 17. 

Require local or state matching funding equal to some percentage of the 
federal funding; 
Number of panelists who ranked factor: 1: 1; 
Number of panelists who ranked factor: 2: 2; 
Number of panelists who ranked factor: 3: 3; 
Number of Responses: Total that Ranked as 1, 2, or 3: 6 of 17. 

Base continued financial assistance upon meeting minimum performance 
standards, or other measures of success; 
Number of panelists who ranked factor: 1: 2; 
Number of panelists who ranked factor: 2: 0; 
Number of panelists who ranked factor: 3: 2; 
Number of Responses: Total that Ranked as 1, 2, or 3: 4 of 17. 

Limit the number of years that a community can receive subsidized 
service under the program; 
Number of panelists who ranked factor: 1: 1; 
Number of panelists who ranked factor: 2: 3; 
Number of panelists who ranked factor: 3: 2; 
Number of Responses: Total that Ranked as 1, 2, or 3: 6 of 17. 

Question: 5) What would be the benefits, if any, of the federal 
government taking a multi-modal approach to providing financial 
assistance to small community transportation? Check as many that apply. 
(17 panel members responded to this question): 

Potentially more responsive to individual community needs; 
Number of Responses: 17. 

Potentially a better return in terms of useful services provided for 
the level of federal investment; 
Number of Responses: 14. 

May promote local and regional transportation planning; 
Number of Responses: 14. 

Other; 
Number of Responses: 1. 

There would be no benefits
Number of Responses: 0. 

Question: 6) What would be the costs or trade-offs, if any, of the 
federal government taking a multi-modal approach to providing financial 
assistance to small community transportation? Check as many that apply. 
(15 panel members responded to this question): 

Would require increased federal funding to be effective; 
Number of Responses: 5. 

Funding may be diverted away from the EAS program; 
Number of Responses: 6. 

Transportation modes will be competing against each other for funding; 
decisions on how funding is used will become increasingly politicized; 
Number of Responses: 7. 

Other; 
Number of Responses: 3. 

There would be no added costs or trade-offs; 
Number of Responses: 4. 

[End of table] 

Panel Participants: 

Ms. Debbie Alke: 
Administrator: 
Montana Department of Transportation, Aeronautics Division: 

Mr. Randy Bennett:
Formerly with the U.S. Department of Transportation: 

Mr. Gerald Bernstein:
Managing Director:
Stanford Transportation Group: 

Mr. Dennis Devany:
Chief, Essential Air Service and Domestic Analysis Division:
U.S. Department of Transportation: 

Mr. John Fischer:
Specialist in Transportation:
Congressional Research Service: 

Mr. Drew Galloway:
National Railroad Passenger Association: 

Mr. Steve Hanvey:
President and CEO:
SATS Air: 

Mr. Clyde Hart:
Vice President for Government Affairs:
American Bus Association: 

Dr. Andrew Isserman:
Professor of Urban and Regional Planning and Professor of Agricultural 
and Consumer Economics:
University of Illinois: 

Ms. Tulinda Larsen:
formerly with OAG BACK Aviation Solutions: 

Mr. David Lee:
Managing Director, Economics:
Air Transport Association: 

Mr. Henry Ogrodzinski:
President and CEO:
National Association of State Aviation Officials: 

Dr. Clinton Oster, Jr.
Professor and Associate Dean:
Indiana University: 

Ms. Robin Phillips:
Senior Director of Policy:
American Bus Association: 

Mr. Tim Rogers:
Airport Director:
Salina Airport Authority: 

Mr. Andrew Steinberg:
Partner:
Jones Day: 

Mr. Bill Swelbar:
Research Engineer:
International Center for Air Transportation:
Massachusetts Institute of Technology: 

Mr. Doug Voss:
President:
Great Lakes Aviation: 

Mr. Charlie Walsh:
Chairman:
Southeast Iowa Regional Airport Authority Board: 

[End of section] 

Appendix III: 21st Century Questions for Program Re-examination: 

In 2005, we reported that federal deficits portended an economically 
unsustainable situation in the long term, making it incumbent upon the 
federal government to periodically re-examine programs to assure that 
they are able to meet current and future challenges.[Footnote 53] Many 
current federal programs and policies were designed decades ago to 
respond to trends and challenges that existed at the time of their 
creation. Much has changed since then. Therefore, we developed criteria 
for policymakers to consider as they address emerging needs by weeding 
out programs and policies that are outdated and ineffective and 
updating existing programs that are still relevant. We framed the 
criteria as questions designed to address the legislative basis for the 
program, its purpose and continued relevance, its effectiveness in 
achieving goals and outcomes, its efficiency and targeting, its 
affordability, its sustainability, and its management. We used these 
criteria to generate specific 21st century questions about those 
programs and priorities already identified. The resultant 21st century 
questions illustrate the kinds of issues that a re-examination and 
review initiative needs to address. 

Relevance and Purpose of the Federal Role: 

* Does it relate to an issue of nationwide interest? If so, is a 
federal role warranted based on the likely failure of private markets 
or state and local governments to address the underlying problem or 
concern? Does it encourage or discourage these other sectors from 
investing their own resources to address the problem? 

* Have there been significant changes in the country or the world that 
relate to the reason for initiating it? 

* If the answer to the last question is 'yes,' should the activity be 
changed or terminated, and if so, how? If the answer is unclear as to 
whether changes make it no longer necessary, then ask, when, if ever, 
will there no longer be a need for a federal role? In addition, ask, 
"Would we enact it the same way if we were starting over today?" Has it 
been subject to comprehensive review, reassessment, and re- 
prioritization by a qualified and independent entity? If so, when? Have 
there been significant changes since then? If so, is another review 
called for? 

* Is the current mission fully consistent with the initial or updated 
statutory mission (e.g., no significant mission creep or morphing)? Is 
the program, policy, function, or activity a direct result of specific 
legislation? 

Measuring Success: 

* How does it measure success? Are the measures reasonable and 
consistent with the applicable statutory purpose? Are the measures 
outcome based, and are all applicable costs and benefits being 
considered? If not, what is being done to do so? 

* If there are outcome-based measures, how successful is it based on 
these measures? 

Targeting Benefits: 

* Is it well targeted to those with the greatest needs and the least 
capacity to meet those needs? 

Affordability and Cost of Effectiveness: 

* Is it affordable and financially sustainable over the longer term, 
given known cost trends, risks, and future fiscal imbalances? 

* Is it using the most cost-effective or net beneficial approaches when 
compared to other tools and program designs? 

* What would be the likely consequences of eliminating the program, 
policy, function, or activity? What would be the likely implications if 
its total funding was cut by 25 percent? 

* When taken together, these questions can usefully illustrate the 
breadth of issues that can be addressed through a systematic re- 
examination process. 

[End of section] 

Appendix IV: Geographic Information Systems Analysis of Small Community 
Transportation Access: 

This appendix provides an overview of the GIS analyses we conducted of 
community access to the transportation network. In this appendix we 
discuss (1) the motivation for the analysis, (2) some key societal and 
industry factors that have changed since deregulation, (3) how we 
generated the set of communities for examination, (4) how an index 
measuring of "access" was defined, and results for communities' access 
to airports, Amtrak, and major roads. 

GIS Analysis Could Aid a Re-examination of Community Access to 
Transportation Network: 

It has been approximately 30 years since the EAS program was developed 
as part of the deregulation of the airline in industry in 1978. The 
program had the particular goal of ensuring that communities that had 
commercial airline service in the regulated era retained that service 
even if the newly deregulated airlines chose not to provide service to 
some of those locations. Given that goal, the communities that were 
eligible for the program were essentially those that had had airline 
service at in 1978. 

Thirty years later much has changed in the industry and in the country. 
The country has experienced demographic shifts, automobiles are of 
better quality, and the airline industry has continually restructured 
itself. If the EAS program--or any program that promotes access to the 
national transportation network--is to be re-examined, consideration of 
these developments is warranted. The goal of our analysis is to use 
information on community demographics, access to transportation modes, 
and other relevant factors to provide illustrations of how these key 
factors could be considered in developing an approach to ensuring 
access to air service or other modes of transportation. Our intent is 
not to point to any particular program structure, but rather to 
illuminate the type of information that can be brought forth to help 
policymakers answer those questions. 

U.S. Settlement Patterns and Key Industry Factors Could be Considered 
in Re-examination of Subsidy Program: 

Throughout the 20th century, a significant degree of urbanization 
occurred as people moved out of rural areas and into cities and their 
suburbs. Although much of this migration occurred during the early and 
middle parts of the 20th century, the trend has continued. Figure 8 
illustrates how rural areas, especially in the Midwest and Great Plains 
states, lost population between 1980 and 2007. This migration left 
areas of the country less densely populated than they were 30 years ago 
when the EAS program was initiated. To the extent that the provision of 
unsubsidized commercial air service is a function of the size of the 
local market, information on the shifting settlement patterns might be 
a useful input into a re-examination of a transportation access 
program. 

Figure 8: Changes in Distribution of Population, 1980 to 2007: 

[Refer to PDF for image: U.S. map] 

The map depicts the following by color coding areas of the country: 

Percentage Change in Population 1980–2007: 
Increased 100 percent or more; 
Increased less than 100 percent; 
Declined. 

Source: GAO’s analysis of Census data. 

[End of figure] 

Along with demographic shifts, the airline industry has changed since 
deregulation. Airlines have continually restructured their route 
networks, fleet mix, and pricing structures. New airlines with varied 
business plans have entered the industry, some airlines have exited the 
industry (sometimes through bankruptcy), airlines have formed 
alliances, and the manner in which airlines meet in the marketplace and 
compete has been dynamic. One of the most significant elements of the 
industry's development has been the entry and growth of low-cost 
carriers over the past decade. These carriers developed different route 
networks than the so-called "legacy" carriers, used different pricing 
structures, and generally charged lower fares. Evidence suggests that, 
to obtain lower fares, passengers are often willing to drive to a 
distant airport where a low-cost carrier offers service. This 
availability may thus have created new travel options for residents of 
remote communities. 

Characterization of Community Access to Transportation Could Be Based 
on Demographic and Geographic Information: 

As noted above, our goal was to evaluate current community access to 
air and other transportation modes. Here, we define access as the point 
at which the traveler begins her journey on an airplane, on an 
interstate highway, or on an intercity passenger train. Because 
travelers from any given community could be going anywhere in the 
world, we do not assess access relative to reaching any particular 
destination. That could be done, say with respect to travel to a major 
medial facility, and could be appropriate depending on how the 
transportation needs of a community are framed. Our intent here is to 
show, in the most general way, how geospatial analysis is a useful 
analytical tool for analyzing EAS or any other program that aims to 
provide access to the national transportation network. 

To allow comparison of communities' access to transportation modes, we 
made a number of informed but ultimately arbitrary assumptions about 
what size communities to include and how to define access to commercial 
air service in terms of distance to an air embarkation point. An 
advantage of geospatial analysis is that these thresholds may be easily 
varied to determine the sensitivity of the results to different 
assumptions. The analysis we describe illustrates the potential for 
this approach to understanding access. 

Specifically, because we know that settlement patterns have shifted 
since the inception of the EAS program, we examine communities in a 
contemporary setting. In particular, we considered all urbanized areas--
based on the most recent Census information--in the lower 48 states; 
there are 3,569 urbanized areas. At deregulation in 1978, Congress was 
specific about which communities would be eligible for subsidies to 
ensure continuation of scheduled air service--the communities were 
those that had or were eligible for scheduled air service under the 
Civil Aeronautics Board's regulatory regime when the industry was 
deregulated and airlines were given the ability to choose what routes 
they would fly. In today's setting, the underlying concept of which 
communities should be ensured service might translate as a concern 
about the vulnerability of communities to loss of commercial air 
service or an inability of communities to attract commercial air 
service. 

So, for our analysis, we asked "Which communities are most likely to 
encounter difficulty attracting, retaining, or expanding air service?" 
We did not consider those with fewer than 10,000 people based on the 
assumption that it would not be feasible, in terms of the federal 
budget or airline operating capacity, to extend service to many 
relatively small places. The remaining 1,284 communities, those with 
populations between 10,000 and less than 500,000, include 36 percent of 
all urbanized areas and account for about 25 percent of the U.S. 
population. 

Within this group of 1,284 communities, there are those that can be 
considered relatively close to an airport of considerable size, defined 
as a medium or large hub. While the EAS program uses a 70-mile 
criterion for that element of eligibility, we ran an analysis using 90 
highway miles. This increase in distance was motivated by the general 
improvement of automobiles over the past 30 years. With this threshold 
in place the number of urbanized areas in our base-case analysis 
dropped to 727. 

Across the 727 communities in the group of interest (with population 
between 10,000 and less than 500,000 and more than 90 miles from a 
medium or large hub), there is variation in access to scheduled 
commercial air service. Some of these communities may be close to small 
air hubs or have some less frequent commercial service. Others may not 
have an airfield at all. However, because communities in this set are 
all distant from the busiest air hubs, their access to air transport is 
vulnerable to reductions or elimination of nearby commercial service or 
is precluded by their inability to retain or to attract service at all. 
Relative to other communities, then, their access to medium-and large- 
hub airports may be compromised by their remoteness. 

Community Access to Transportation Modes Can be Expressed by Means of 
an Index of Relative Access: 

While the community group of interest has been defined with respect to 
access to air service, we want to describe the range of travel options 
available to travelers. So, we consider community access to the 
interstate highway system and to passenger rail service as well as 
airline travel. As with air service, access is defined in terms of the 
driving distance, distance to an on-ramp for interstate access and, for 
passenger rail, distance to an Amtrak passenger station or to a bus 
link to a passenger station. Interstate access may mean travel by car 
or by bus, but that distinction is not made in our analysis because we 
did not have ready access to bus schedules for the 727 communities. In 
addition, we did not make any distinctions regarding level of service, 
including time of day or frequency. For example, if Amtrak stops at a 
community at 3:00 am, this clearly impacts access, but we did not 
consider that limitation. Similarly, service at some medium hubs may 
not be considered very extensive in terms of the number of places one 
can travel to on a nonstop flight. 

Geospatial analysis allows us to compute distances to access points for 
each community, and we can use those distances to measure and compare 
communities' access to one or multiple modes. We constructed a set of 
simple indices that allow characterization of each community's access 
to air, rail, and/or train service relative to the other communities. 
In our analysis, the denominator is the average distance to the 
transportation mode for the 727 communities. 

* For the highway index, the index value would be: 

the distance for community i to an interstate highway; 
divided by: 
average distance across communities to an interstate highway; 
times 100. 

* For the passenger rail index, the index value would be: 

the distance for community i to an Amtrak station; 
divided by: 
average distance across communities to an Amtrak station:
times 100. 

* For the aviation index, the index value would be: 

the distance for community i to a medium or large hub airport; 
divided by: 
average distance across communities to a medium or large hub airport; 
times 100. 

If a community has an index value of 100 for its access to air 
transportation, it means that its distance from a medium-or large-hub 
airport, among the communities evaluated, is average. A higher index 
value signifies a more remote community than average, and a lower index 
value signifies a community is nearer to that mode than average. Figure 
9 shows the 727 communities' access to medium-or large-hub airports as 
measured by this index. Communities denoted with triangles are further 
from a medium-or large-hub airport than is average for the set of 
communities, and communities denoted with circles are closer to such an 
airport than is average for the set of communities. We found that the 
average distance from a medium-or large-hub airport was 173 miles. Of 
these 727 communities, 454 were within 173 miles and 273 were farther 
than 173 miles, some as much as 682 miles away. As can be seen, 
communities that are more remote than the average of 170 miles from air 
transportation are found mainly in the Intermountain West, the Plain 
states, the Mississippi Delta, and in Appalachia. Comparing this result 
with the map documenting shifts in population shows that these areas 
are also the ones that generally experienced population declines 
between 1980 and 2007. 

Figure 9: Access to Transportation: Air Transport Only: 

[Refer to PDF for image: U.S. map] 

The map depicts areas of the country as follows: 

Index of distance to medium/large hub: 
52–100: 454 communities; 
101–395: 273 communities. 

Source: GAO’s analysis of DOT data. 

[End of figure] 

Figures 10 and 11 show the same communities' relative access to 
highways and passenger rail, as represented by index values. 

Figure 10: Access to Transportation: Major Highway Access: 

[Refer to PDF for image: U.S. map] 

The map depicts areas of the country as follows: 

Index of distance to interstate highway: 
0–100: 469 communities; 
101–1,020: 258 communities. 

Source: GAO’s analysis of DOT data. 

[End of figure] 

Figure 11: Access to Transportation: Passenger Rail: 

[Refer to PDF for image: U.S. map] 

The map depicts areas of the country as follows: 

Index of distance to passenger rail: 
0–100: 432 communities; 
101–441: 295 communities. 

Source: GAO’s analysis of DOT data. 

[End of figure] 

Considering access to the interstate highway system (figure 10), for 
these 727 communities, the average distance to an on-ramp is 33 miles. 
Sixty-five percent are within 33 miles (circles), with the other 35 
percent (triangles) more than 33 miles away, and some as many as 335 
miles away. Again, those farthest away from the interstates, in the 
Plains especially, are also areas that have experienced population 
loss. For access to passenger rail (figure 11), the patterns are 
similar to those for access to the interstate. 

To obtain a perspective on communities that are the most remote, for 
figure 12 the index is calculated to characterize access across modes. 
Equal weight is given to access across modes, but it is clearly 
possible to apply different weights to the separate modes' index 
values, reflecting greater emphasis on access to one mode (say, air) 
versus another. Here again, 60 percent of the 727 communities have 
better-than-average access to the transportation network (via any 
mode), while 40 percent are relatively remote. The fact that some 
communities' index values are very large demonstrates the heterogeneity 
in access across the 727, suggesting very different degrees of 
remoteness even among communities that are distant from medium-or large-
hub airports. Because both distance and population density matter in 
the provision of transportation services, this heterogeneity will 
figure importantly in weighing the costs and benefits of supporting or 
subsidizing access to the transportation network. 

Figure 12: Access to Transportation: All modes, Weighted Equally: 

[Refer to PDF for image: U.S. map] 

The map depicts areas of the country as follows: 

Index of distance to any mode: 
20–100: 446 communities; 
101–513: 281 communities. 

Source: GAO’s analysis of DOT data. 

[End of figure] 

Our analysis identified 727 communities within a range of population of 
10,000 to less than 500,000 that are alike in that they do not have 
ready access to the nation's busiest medium-and large-air hubs. We then 
calculated index values that allowed us to characterize the extent of 
remoteness from interstate highways and passenger rail stops. Different 
criteria will produce different groupings of communities in terms of 
how connected they are to the national transportation system. 
Supplementing the information provided by the index values with 
knowledge about actual levels of air service (at small hubs or 
airfields) and about bus and rail service would provide a frame for 
considering transportation policy goals. 

One way this analysis can be useful in considering the EAS program 
specifically is to ask which of these 727 currently are served by EAS 
(defined as being located within 40 miles of an EAS airport). And, 
which EAS communities are not included among the 727, that is, how many 
EAS communities are in proximity to the nation's busiest air hubs, or 
have fewer than 10,000 residents? Figure 13 shows that about 17 percent 
(123) of these communities have EAS service.[Footnote 54] 

Figure 28: Access to Transportation: Current EAS Communities and Other 
Selected Communities' Access to Medium-and Large-Hub Airports: 

[Refer to PDF for image: U.S. map] 

The map depicts areas of the country as follows: 

Communities with access to EAS: 123; 

Communities with access to EAS, Index of distance to medium/large hubs: 
52–100: 392 communities; 
101–369: 212 communities; 

Source: GAO’s analysis of DOT data. 

[End of figure] 

Recognizing the changes in the structure of the airline industry, a 
community's proximity to an airport served by a low-cost carrier might 
be another way of characterizing access to the air transport network. 
In Figure 14, we identify which of the 727 communities are within 150 
driving miles of such an airport. Here, we find that 92 percent have 
access to low-cost carrier at airports outside their communities. 

Figure 14: Access to Transportation: Communities with Access to 
Airports Served by Low-Cost Carriers: 

[Refer to PDF for image: U.S. map] 

The map depicts areas of the country as follows: 

Access to low cost carriers: 
Has access: 671 communities; 
Does not have access: 56 communities. 

Source: GAO’s analysis of DOT data. 

[End of figure] 

With respect to the EAS program as it exists today, our analysis 
suggests that there is heterogeneity across those communities that 
currently have EAS service in terms of size and distance to the 
nation's busiest airports or airports served by low-cost carriers. And, 
it suggests that there are other communities whose relatively limited 
access to the air transport network might warrant consideration of 
alternatives for connection to the nation's transportation network, 
whether air or road or rail. 

This type of analysis does not and cannot answer the policy question 
about what kind of access to a transportation network a remote 
community ought to have. Rather, it serves as a point of departure for 
tackling that question by characterizing the nature of access as it 
exists today. Geospatial findings can be supplemented by information on 
other costs of travel (besides time) and also their benefits to 
evaluate tradeoffs of different levels of access. Here, access is 
measured in terms of driving distance to a point of entry for a mode, 
which is a proxy for a traveler's time. That time could be valued, and 
other costs, such as air or train or bus fares to different 
destinations as well as gasoline prices could be calculated and 
compared. Beyond the perspective of the individual traveler, public 
and/or private sector costs of provision of service could be taken into 
account, as can preferences for the frequency and quality of transport 
services. However, because location figures as a key factor in both 
costs and benefits of travel, geospatial analysis provides a useful 
frame for policy and program analysis. 

[End of section] 

Appendix V: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Dr. Gerald L. Dillingham, (202) 512-2834 or dillinghamg@gao.gov: 

Staff Acknowledgments: 

In addition to the person named above, Cathy Colwell, Assistant 
Director; Amy Abramowitz; Richard Brown; Colin Fallon; David Hooper; 
Don Kittler; Hannah Laufe; John Mingus; Susan Offutt; and Bonnie 
Pignatiello Leer made key contributions to this report. 

[End of section] 

Footnotes: 

[1] GAO, Options to Enhance the Long-term Viability of the Essential 
Air Service Program, [hyperlink, 
http://www.gao.gov/products/GAO-02-997R] (Washington, D.C.: Aug. 30, 
2002). 

[2] EAS operations to communities in Alaska are subject to different 
requirements (e.g., carriers may use smaller aircraft) and special 
provisions. 

[3] Section 278 of the Federal Aviation Reauthorization Act of 1996, 
Pub. L. No. 104-264 (Oct. 9, 1996) amended 49 USC § 41742, eliminating 
an expiration date for the EAS program of September 30, 1998. 

[4] Communities did not have to be actively receiving air service in 
1978 to be eligible for EAS, but they did have to be listed on an air 
carrier certificate. These certificates, issued under 49 USC § 41102, 
authorized a carrier to provide scheduled service along particular 
routes between named communities. 

[5] There are no EAS-eligible communities in Delaware. 

[6] Includes agreements awarded as of November 2008, for which service 
had not yet begun as of that month. 

[7] Air carriers are awarded fixed-rate contracts, subject to 
adjustment based on flights actually completed. The carriers are free 
to set and adjust the fares charged passengers for EAS flights. 

[8] Aircraft with at least 15-passenger capacity are required for 
communities that averaged more than 11 daily boardings in any year from 
1976 through 1986, according to DOT guidance. 

[9] 49 USC 41732(b)(6). Service is to be provided by pressurized 
aircraft, when that service is provided by aircraft that regularly fly 
above 8,000 feet in altitude. 

[10] The Dire Emergency Supplemental Appropriations Act of 1989, Pub. 
L. No. 101-45 (June 30, 1989). 

[11] 14 CFR § 398.11 (1989). 

[12] Pub. L. No. 101-508 (1990). 

[13] Codified in 49 USC § 41731(b). 

[14] Department of Transportation and Related Agencies Appropriations 
Act for fiscal year 1994, Pub. L. No. 103-122 (Oct. 27, 1993). This 
provision was repeated in DOT appropriations acts for fiscal years 1995 
through 1999. The provision was made permanent in the Department of 
Transportation appropriations act for fiscal year 2000. 

[15] Pub. L. No. 106-181 (Apr. 5, 2000). 

[16] Vision 100--Century of Aviation Reauthorization Act, Pub. L. No. 
108-176 (Dec. 12, 2003). 

[17] GAO, Commercial Aviation: Initial Small Community Air Service 
Development Projects Have Achieved Mixed Results, [hyperlink, 
http://www.gao.gov/products/GAO-06-21] (Washington, D.C.: Nov. 30, 
2005). Also, DOT-OIG, The Small Community Air Service Development 
Program, CR-2008-051, May 13, 2008. 

[18] This includes 6 communities for which DOT had an agreement with a 
carrier to begin service, but the carrier subsequently withdrew before 
service began. 

[19] While the number of communities served has increased, the number 
of passengers on EAS flights has been relatively stable in recent 
years, declining somewhat in 2008. According to DOT, approximately 1.04 
million passengers flew EAS flights in fiscal year 2003, compared to 
1.10 million passengers in calendar year 2007. (EAS passenger data were 
not available on a comparable year basis for all years). The number of 
EAS passengers in calendar year 2008 decreased to about 960,000. The 
economic decline toward the end of 2008 and service interruptions in 
2008 may largely account for this decrease. 

[20] While our review focuses on EAS service in the 48 contiguous 
states, obligations are reported for the EAS program as a whole, 
including obligations for Alaska, Hawaii, and Puerto Rico. However, EAS 
service outside of the 48 contiguous states does not represent a large 
portion of EAS program funding--DOT estimates service to these 
locations accounted for about 8 percent of total program subsidies as 
of 2008. 

[21] In addition, a fourth carrier ceased operations in early 2007, 
affecting 11 communities. 

[22] As with obligations data, appropriations data are for the entire 
EAS program, including Alaska, Hawaii, and Puerto Rico. 

[23] Pub. L. No. 111-32, title XII (June 24, 2009). In Pub. L. No. 111- 
32, in addition to $13.2 million being made available for EAS, $13.2 
million was rescinded by Congress from the FY 2008 Airport Improvement 
Program account. 

[24] According to DOT officials, an additional $14 million from 
previous years' appropriations also is available to be expended in 
fiscal year 2009 if needed. 

[25] Beginning in fiscal year 1998, Congress funded the EAS program at 
$50 million a year from overflight fees assessed through the Rural Air 
Service Survival Act, which is part of the Federal Aviation 
Administration Reauthorization Act of 1996, Pub. L. No. 104-264 (Oct. 
9, 1996). Overflight fees are user fees for air traffic control 
services provided by FAA to aircraft that fly over, but do not land in 
the United States. 

[26] Emergency Supplemental Appropriations for Defense, the Global War 
on Terror, and Tsunami Relief, 2005, Pub. L. No. 109-13 § 6064 (May, 
11, 2005). 

[27] See, e.g., the Transportation, Treasury, and Housing and Urban 
Development, the Judiciary, District of Columbia, and Independent 
Agencies Appropriations Act, Fiscal Year 2006. Pub. L. No. 109-115, 119 
Stat. 2396, 2398 (Nov. 30, 2005). Also, Pub. L. No. 109-13 § 6064 (May 
11, 2005). 

[28] El Dorado/Camden, Harrison, Hot Springs, and Jonesboro, Arkansas; 
Jackson, Tennessee; and Owensboro, Kentucky. 

[29] For most EAS-eligible communities, the law requires carriers to 
provide service with aircraft of at least 15-passenger capacity, two 
engines, and carrying two pilots, unless the community served agrees to 
accept service with smaller aircraft. 

[30] The change required these aircraft to meet more stringent FAR part 
121 requirements, rather than part 135 requirements. 

[31] DOT officials indicated there are generally no environmental 
issues with the 19-seat airplanes. Further, historically, turboprop 
aircraft generally are more fuel efficient, and thus have lower 
emissions, than jets. However, flying planes with few passengers may 
not be fuel efficient. 

[32] DOT, using existing general authority under 49 USC § 41733, had 
provided across-the-board rate relief after the first Gulf War and 
after the terrorist attacks of September 11, 2001. 

[33] Arizona DOT, Aeronautics Division, Arizona Air Service Study 
(August 1999). 

[34] GAO, Commercial Aviation: Issues Regarding Federal Assistance for 
Enhancing Air Service to Small Communities, [hyperlink, 
http://www.gao.gov/products/GAO-03-540T] (Washington, D.C.: Mar. 11, 
2003). 

[35] Specifically, over half of 207 small community airport officials 
we surveyed believed that passenger leakage occurred to a great or very 
great extent. GAO, Commercial Aviation: Air Service Trends at Small 
Communities Since October 2000, [hyperlink, 
http://www.gao.gov/products/GAO-02-432] (Washington, D.C.: Mar. 29, 
2002). 

[36] Arizona DOT, cited previously. Also, Pennsylvania DOT, 
Strengthening the Essential Air Service Program--A Pennsylvania 
Perspective, February, 2007. Also, Zhang, Yunlong; and Xie, Yuanchang, 
Small Community Airport Choice Behavior Analysis: A Case Study of GTR, 
Journal of Air Transportation Management, 11, 2006. 

[37] GAO, Commercial Aviation: Factors Affecting Efforts to Improve Air 
Service at Small Community Airports, [hyperlink, 
http://www.gao.gov/products/GAO-03-330] (Washington, D.C.: Jan. 17, 
2003). 

[38] Pennsylvania DOT, cited previously. Also, Hewings, Geoffrey; 
Wiedemann, Randal; and Reynolds-Feighan, Aisling; Economic Evaluation 
of the Impact of Air Service on Small Metropolitan and Rural 
Communities, conducted for the U.S. DOT June 20, 2000. 

[39] GAO, Commercial Aviation: Airline Industry Contraction Due to 
Volatile Fuel Prices and Falling Demand Affects Airports, Passengers, 
and Federal Government Revenues, [hyperlink, 
http://www.gao.gov/products/GAO-09-393] (Washington, D.C.: Apr. 21, 
2009). 

[40] Statistics cited represent the carrier's total operations, not 
only EAS flights. 

[41] GAO, Options to Enhance the Long-term Viability of the Essential 
Air Service Program, [hyperlink, 
http://www.gao.gov/products/GAO-02-997R] (Washington, D.C.: Aug. 30, 
2002). 

[42] Vision 100--Century of Aviation Reauthorization Act, Pub. L. No. 
108-176 (Dec. 12, 2003). 

[43] GAO, Commercial Aviation: Programs and Options for the Federal 
Approach to Providing and Improving Air Service to Small Communities, 
[hyperlink, http://www.gao.gov/products/GAO-06-398T] (Washington, D.C.: 
Sept. 14, 2006). 

[44] [hyperlink, http://www.gao.gov/products/GAO-06-398T]; [hyperlink, 
http://www.gao.gov/products/GAO-02-997R]. 

[45] According to DOT officials, at each of these small hubs at least 
six carriers provide nonstop service to a minimum of 10 destinations, 
with between 38 and 46 weekday departures, primarily with jet aircraft. 

[46] Air taxi services provide on-demand regional air service, using 
small aircraft, and generally fly to and from small airports. For 
example, SATSAir, an air taxi service based in South Carolina, flies 
single engine, single pilot, three-passenger aircraft, and serves nine 
states in the Southeast. 

[47] DOT officials note that prior to deregulation, there was no 
guarantee of air service, and many communities lost air service under 
regulation. 

[48] See Legislative History of the Airline Deregulation Act of 1978, 
Committee Print 96-5, Committee on Public Works and Transportation, 
U.S. House of Representatives, May 1979. Review of Airline Deregulation 
and Sunset of the Civil Aeronautics Board (Essential Air Service 
Program and Small Community Air Service), Hearings before the 
Subcommittee on Aviation of the Committee on Public Works and 
Transportation, U.S. House of Representatives, August 16, 1983, and 
January 31 to February 1, 1984. 

[49] GAO, 21st Century Challenges: Reexamining the Base of the Federal 
Government, [hyperlink, http://www.gao.gov/products/GAO-05-325SP] 
(Washington, D.C.: February 2005) 

[50] DOT, "Scheduled Intercity Transportation: Rural Service Areas in 
the United States," June 2005. 

[51] Effective October 1, 2002, DOT required all carriers to report 
their air traffic activity under the T100 reporting system. Prior to 
that date, small certificated and commuter carriers had reported their 
air traffic activity using the Form 298C. 

[52] Airports contacted were: Bradford (PA) Regional Airport, Cortez 
(CO) Municipal Airport, DuBois (PA) Regional Airport, Huron (SD) 
Regional Airport, Kirksville (MO) Regional Airport, Southern Vermont 
Regional Airport (Rutland, VT), and Shenandoah Valley Regional Airport 
(Staunton, VA). 

[53] GAO, 21st Century Challenges: Reexamining the Base of the Federal 
Government, [hyperlink, http://www.gao.gov/products/GAO-05-325SP] 
(February 2005). 

[54] These communities are within 40 miles of an airport that has EAS 
service, so the number differs slightly from communities that are 
provided service under EAS. 

[End of section] 

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