Why the Federal Airline Subsidy Program Needs Revision

CED-77-114: Published: Aug 19, 1977. Publicly Released: Aug 19, 1977.

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The Civil Aeronautics Board's (CAB) subsidy program, which annually pays airlines about $60 million to serve small communities, needs complete revision. The program is directed at sustaining local service airlines rather than providing necessary air service to small communities which cannot support air service without federal subsidy.

The current program finances losses that airlines incur in serving small communities without regard to the appropriateness of routes, flight frequencies, or type of aircraft used. This is the result of the failure of the Board to define specific services which should be subsidized.

Matter for Congressional Consideration

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Matter: Congress should provide CAB with a legislative mandate to restructure the current subsidy program and direct it to: (1) establish standards to measure when a community's air service is inherently unprofitable and warrants federal subsidy; (2) establish a standard of what is adequate service to a community and base subsidies on the actual cost of providing the service; (3) subsidize uncertificated airlines when they can provide necessary small community air service at lower costs; (4) periodically reevaluate air service at all subsidized communities to determine if they continue to merit federal subsidy support; and (5) consider scheduled air service provided by unsubsidized airlines in evaluating the need for and adequacy of air service at small communities.

 

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