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Testimony: 

Before the Subcommittee on Aviation, Committee on Commerce, Science and 
Transportation, U.S. Senate: 

United States Government Accountability Office: 

GAO: 

For Release on Delivery Expected at 10:00 a.m. EDT: 

Thursday, September 14, 2006: 

Commercial Aviation: 

Programs and Options for the Federal Approach to Providing and 
Improving Air Service to Small Communities: 

Statement of Gerald L. Dillingham, Director Physical Infrastructure 
Issues: 

GAO-06-398T: 

GAO Highlights: 

Highlights of GAO-06-398T, a report to the Subcommittee on Aviation, 
Committee on Commerce, Science and Transportation, U.S. Senate 

Why GAO Did This Study: 

Over the last decade, significant changes have occurred in the airline 
industry. Network carriers are facing challenging financial conditions 
and low-cost carriers are attracting passengers away from some small 
community airports. These changes, and others, have challenged the 
ability of small communities to attract adequate commercial air 
service. 

In response to these challenges, Congress has established two key 
funding programs—the Essential Air Service (EAS) and the Small 
Community Air Service Development Program (SCASDP)—to help small 
communities retain or attract air service. However, the sustainability 
of such funding could be affected by the federal government’s fiscal 
imbalance. In addition, GAO reports have raised questions about how 
these programs support commercial air service to small communities. 

Given this environment, this testimony discusses (1) the development 
and impact of EAS, (2) the status of SCASDP and (3) options for 
reforming EAS and evaluating SCASDP. The testimony is based on previous 
GAO research and interviews related to these programs, along with 
program updates. 

What GAO Found: 

The EAS program guarantees that communities that were served by air 
carriers before deregulation continue to receive a certain level of 
scheduled air service, under certain conditions. A growing number of 
communities are receiving subsidies under this program and funding for 
the EAS program has risen more than four-fold over the past 10 years. 
The federal subsidies have resulted in continued air service to the EAS 
communities, but if the subsidies were removed, air service might end 
at many of these communities. 

SCASDP grantees have used their grants to pursue a variety of goals and 
have used a variety of strategies, including marketing and revenue 
guarantees, to improve air service. The program has had mixed results: 
11 of the 23 projects completed as of September 30, 2005, showed self-
sustaining improvements to air service; while the remaining 12 grantees 
either discontinued the improvement or the improvement was not self-
sustaining. Finally, the number of applications for SCASDP grants has 
declined—from 179 in 2002 to 75 in 2006. 

There are options for reforming EAS such as consolidating service into 
regional airports, which might make it more cost-effective, but also 
could reduce service to some communities. In 2003, Congress established 
several programs as alternatives for EAS, but these programs have not 
progressed. The Department of Transportation has agreed to evaluate 
completed SCASDP projects, an effort that will be useful when Congress 
considers the reauthorization of this program in 2008; this could also 
identify “lessons learned” from successful projects. 

Figure: EAS Communities as of May 2006; SCASDP COmmunities, 2002-2006: 

[See PDF for Image] 

Source: GAO. 

[End of Figure] 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-398T]. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Gerald Dillingham at 
(202) 512-2834 or dillinghamg@gao.gov. 

[End of Section] 

Mr. Chairman and Members of the Subcommittee: 

We appreciate the opportunity to testify today on issues related to the 
federal approach to providing air service to small and underserved 
communities. Over the last decade, significant changes have occurred in 
the airline industry that have affected service to small communities. 
Service to small communities decreased as a result of the weak 
financial condition of the airline industry that was exacerbated by the 
events of September 11, 2001. Some network carriers are still facing 
challenging financial conditions which can negatively affect small 
community air service.[Footnote 1] For example, small communities may 
become cost-cutting targets because they are often the carrier's least 
profitable operation. This, as well as other changes, have challenged 
small communities to obtain adequate commercial air service at 
reasonable prices.[Footnote 2] 

Two key federal programs help support air service to small communities-
-the Essential Air Service (EAS) program and the Small Community Air 
Service Development Program (SCASDP).[Footnote 3] EAS, established 
after airline deregulation in 1978, is designed to ensure that small 
communities that received scheduled passenger air service before 
deregulation continue to have access to the nation's air transportation 
system. In fiscal year 2006, Congress appropriated about $109 million 
to the Department of Transportation (DOT) for EAS. For fiscal year 
2007, the administration requested that $50 million be allocated for 
the program and paid for by overflight fees,[Footnote 4] while both the 
House and Senate Appropriations Committees are proposing $117 million 
for the program. Congress established SCASDP in 2000 and has 
appropriated $20 million annually from 2002 through 2005 for DOT to 
award up to 40 grants each year to communities that have demonstrated 
air-service deficiencies or higher-than-average fares. However, in 
fiscal year 2005, DOT transferred $5 million of these funds from SCASDP 
to EAS.[Footnote 5] For fiscal year 2006, Congress authorized $10 
million. For fiscal year 2007, the administration proposed no funding 
for SCASDP while the House and Senate Appropriations Committees are 
proposing $20 million and $10 million, respectively. In addition, we 
have reported that it was too early to assess the effectiveness of 
SCASDP and have raised questions about the current structure of EAS. 

While the airline industry has been facing fiscal challenges, the 
federal government's financial condition and long-term fiscal outlook 
also deteriorated. We have reported on the nation's long-term fiscal 
imbalances and the need for a fundamental and periodic reexamination of 
the base of government, ultimately covering discretionary and mandatory 
programs as well as the revenue side of the budget.[Footnote 6] In 
light of these challenges, we have identified some options for 
reforming EAS and recommended that DOT evaluate SCASDP. 

My testimony today will discuss (1) the development and impact of EAS, 
(2) the status of SCASDP, and (3) options for reforming EAS and 
evaluating SCASDP. My statement is based primarily on the body of 
research that we have conducted related to these programs, program 
updates, and recent interviews with (and data from) key stakeholders. 
We obtained information on the status of projects from the Office of 
the Secretary (OST). Based on assessments conducted during previous 
reviews, we concluded that the data are reliable for the purposes of 
this report. Appendix V contains a list of our related testimonies and 
reports. We conducted our work on EAS from March through December 2002 
and our work on SCASDP from September 2004 through October 2005 in 
accordance with generally accepted government auditing standards. 

In summary: 

* In recent years, a growing number of communities have received 
subsidies under EAS--expanding from 95 communities in fiscal year 1997 
to 152 in fiscal year 2006. Similarly, funding for EAS has risen more 
than four-fold over this 10-year period--from $25.9 million in fiscal 
year 1997 to $109.4 million in fiscal year 2006. In addition, EAS funds 
were used to subsidize about 1 million passenger enplanements in 2004-
-about 0.15 percent of the nation's 706 million annual passenger 
enplanements.[Footnote 7] It is possible that air service might end at 
many of these communities, if these subsidies were removed. 

* Our recent review of SCASDP found that the number of grant 
applications was declining, grantees were pursuing a variety of goals 
and strategies for supporting air service, and completed grants had 
mixed results. Specifically, we found that the number of applications 
for SCASDP has declined--from 179 in 2002 to 75 in 2006. We also found 
that the goals grantees are pursuing include trying to add flights and 
destinations, or trying to obtain lower fares. The different strategies 
grantees are employing to improve air service in their communities 
include offering subsidies or revenue guarantees to airlines, 
marketing, hiring personnel, and conducting studies. Finally, although 
we could not assess the effectiveness of the program, since few 
projects--23 of 157--had been completed at the time of our review, we 
found the results of the completed projects were mixed. Of the 23 
projects, 11 had implemented a self-sustaining improvement to air 
service, while the remaining 12 had not. 

* To ensure the effective use of scarce resources, these programs need 
to be examined and options for program improvement need to be 
addressed. We have previously reported on some options for changing EAS 
to potentially make it more cost-effective. These options include (1) 
targeting subsidized service to more remote communities, (2) better 
matching capacity with community use, (3) consolidating service to 
multiple communities into regional airports, and (4) changing the form 
of the federal assistance from carrier subsidies to local grants. These 
changes require legislative action. Although these options might make 
EAS more cost-effective, they could also reduce service to some areas. 
In 2003, the Vision 100-Century of Aviation Reauthorization Act, 
(Vision-100) provided for several alternative programs for EAS 
communities. However, these programs have not progressed due, in part, 
to a lack of response from EAS communities. Regarding SCASDP, as we 
recommended, DOT plans to conduct a comprehensive evaluation of 
completed projects after fiscal year 2006. The results of such an 
evaluation will be useful when Congress considers the reauthorization 
of this program in 2008 and could result in identifying "lessons 
learned" from successful projects. These lessons could be shared with 
other small communities that are trying to improve air service, and, if 
needed, to reform and refocus the program. 

Background: 

Before I discuss these issues in detail, let me sketch the background 
of air service to small communities and these programs. Air service to 
many small communities has declined in recent years, particularly after 
the September 11, 2001 attacks. As of 2005, scheduled departures at 
small-, medium-, and large-hub airports had largely returned to 2000 
levels. However, departures from nonhub airports continued to decline-
-the number of departures declined 17 percent at nonhub airports 
between July 2000 and July 2005. Small-hub airports actually had more 
scheduled departures in July 2005 than in July 2000, a fact that 
clearly distinguishes them from nonhub airports. 

Several factors may help explain why some small communities, especially 
nonhubs, face relatively limited air service. First, small communities 
can become cost-cutting targets of air carriers because they are often 
a carrier's least profitable operation. Consequently, many network 
carriers have cut service to small communities and regional carriers 
now operate at many small communities where the network carriers have 
withdrawn.[Footnote 8] Second, the "Commuter Rule" that FAA enacted in 
1995 brought small commuter aircraft under the same safety standards as 
larger aircraft--a change that made it more difficult to economically 
operate smaller aircraft, such as 19-seat turboprops.[Footnote 9] For 
example, the Commuter Rule required commuter air carriers who flew 
aircraft equipped with 10 or more seats to improve ground deicing 
programs and carry additional passenger safety equipment. Additionally, 
the 2001 Aviation and Transportation Security Act instituted the same 
security requirements for screening passengers at smaller airports as 
it did for larger airports, sometimes making travel from small airports 
less convenient than it had been.[Footnote 10] Third, regional carriers 
had reduced the use of turboprops in favor of regional jets, which had 
a negative effect on small communities that have not generated the 
passenger levels needed to support regional jet service. Finally, many 
small communities experience passenger "leakage"--that is, passengers 
choosing to drive longer distances to larger airports instead of using 
closer small airports. Low-cost carriers have generally avoided flying 
to small communities but have offered low fares that encourage 
passengers to drive longer distances to take advantage of 
them.[Footnote 11] 

Mr. Chairman, as you know, Congress established EAS as part of the 
Airline Deregulation Act of 1978 to help areas that face limited 
service. The act guaranteed that communities served by air carriers 
before deregulation would continue to receive a certain level of 
scheduled air service.[Footnote 12] In general, the act guaranteed 
continued service by authorizing DOT to require carriers to continue 
providing service at these communities. If an air carrier could not 
continue that service without incurring a loss, DOT could then use EAS 
funds to award that carrier a subsidy.[Footnote 13] Under the Airline 
Deregulation Act, EAS was scheduled to sunset, or end, after 10 years. 
In 1987, Congress extended the program for another 10 years, and in 
1998, it eliminated the sunset provision, thereby permanently 
authorizing EAS. 

Funding for EAS comes from a combination of permanent and annual 
appropriations. The Federal Aviation Reauthorization Act of 1996 (P.L. 
104-264) permanently appropriated the first $50 million of such 
funding--for EAS and safety projects at rural airports--from the 
collection of overflight fees. Congress can appropriate additional 
funds from the general fund on an annual basis. 

To be eligible for this subsidized service, communities must meet three 
general requirements. They (1) must have received scheduled commercial 
passenger service as of October 1978, (2) may be no closer than 70 
highway miles to a medium-or large-hub airport, and (3) must require a 
subsidy of less than $200 per person (unless the community is more than 
210 highway miles from the nearest medium-or large-hub airport, in 
which case no average per-passenger dollar limit applies).[Footnote 14] 
Federal law also defines the service that subsidized communities are to 
receive under EAS.[Footnote 15] For example, carriers providing EAS 
flights are required to use aircraft with at least 15 seats unless the 
community seeks a waiver. In addition, flights are to occur at 
"reasonable times" and at prices that are "not excessive." EAS 
operations to communities in Alaska are subject to different 
requirements (e.g., carriers may use smaller aircraft). 

Air carriers apply directly to DOT for EAS subsidies. Air carriers set 
the subsidy application process in motion when they file a 90-day 
notice of intent to suspend or terminate service. If no air carrier is 
willing to or able to profitably provide replacement air service 
without a subsidy, DOT solicits proposals from carriers who are willing 
to provide service with a subsidy. DOT requires that air carriers 
submit historical and projected financial data, such as projected 
operating expenses and revenues, sufficient to support a subsidy 
calculation. DOT then reviews these data in light of the aviation 
industry's pricing structure, the size of aircraft required, the amount 
of service required, and the number of projected passengers who would 
use this service in the community.[Footnote 16] Finally, DOT selects a 
carrier and sets a subsidy amount to cover the difference between the 
carrier's projected cost of operation and its expected passenger 
revenues, while providing the carrier with a profit element equal to 5 
percent of total operating expenses, according to statute.[Footnote 17] 

Turning now to SCASDP, Congress authorized SCASDP as a pilot program in 
the Wendell H. Ford Aviation Investment and Reform Act for the 21st 
Century (AIR-21),[Footnote 18] to help small communities enhance their 
air service. AIR-21 authorized the program for fiscal years 2002 and 
2003, and subsequent legislation[Footnote 19] reauthorized the program 
through fiscal year 2008 and eliminated the "pilot" status of the 
program. 

The Office of Aviation Analysis in DOT's Office of the Secretary is 
responsible for administering the program. The law establishing SCASDP 
allows DOT considerable flexibility in implementing the program and 
selecting projects to be funded. The law defines basic eligibility 
criteria and statutory priority factors, but meeting a given number of 
priority factors does not automatically mean DOT will select a project. 
DOT also considers many other relevant factors in making decisions on 
projects, and the final selection of projects is at the discretion of 
the Secretary of Transportation.[Footnote 20] (See app. I for a list of 
the factors used in DOT selections.) 

SCASDP grants may be made to single communities or a consortium of 
communities, although no more than four grants each year may be in the 
same state. Consortiums are considered one project for the purpose of 
this program. Inclusion of small hubs for eligibility means that some 
relatively large airports qualify for this program. For example, 
Buffalo Niagara International Airport in Buffalo, New York, and Norfolk 
International Airport in Norfolk, Virginia, are eligible for the 
program; these airports enplaned over 2.4 million and over 1.9 million 
passengers in 2005, respectively. In contrast, small nonhub airports, 
such as those in Moab, Utah (with about 2,600 enplanements) or 
Owensboro, Kentucky (with about 3,600 enplanements) are also eligible. 
SCASDP grants are also available in the 50 states, the District of 
Columbia, Puerto Rico, and U.S. territories and possessions. As shown 
in appendix II, DOT's awards have been geographically spread out-- 
covering all states except Delaware, Hawaii, Maryland, New Jersey, and 
Rhode Island. To date, no communities in Delaware or Rhode Island have 
applied for a grant. Appendix III includes information on all SCASDP 
grants awarded as of August 31, 2006. 

Number of Airports and Amount of EAS Subsidies Has Been Growing: 

Mr. Chairman, demand for EAS subsidies has been growing over the past 
10 years, as has the amount of funds appropriated for the program. As 
shown in table 1, for fiscal year 2006, EAS is providing subsidies to 
air carriers to serve 154 communities--an increase of 57 communities 
over the 1997 low point.[Footnote 21] The funding for EAS has also 
grown from $25.9 million in 1997 to $109.4 million in 2006. This 
amounts to an average of about $720,000 per EAS community in fiscal 
year 2006. Appendix II includes a map showing the locations of current 
EAS communities and appendix IV lists EAS communities and their current 
subsidy amounts. 

Table 1: EAS Program Appropriations and Communities Served, Fiscal 
Years 1992-2006: 

Fiscal year: 1992; 
Number of communities: 130; 
Total EAS appropriations (in millions): $38.6. 

Fiscal year: 1993; 
Number of communities: 126; 
Total EAS appropriations (in millions): 38.6. 

Fiscal year: 1994; 
Number of communities: 112; 
Total EAS appropriations (in millions): 33.4. 

Fiscal year: 1995; 
Number of communities: 107; 
Total EAS appropriations (in millions): 33.4. 

Fiscal year: 1996; 
Number of communities: 97; 
Total EAS appropriations (in millions): 22.6. 

Fiscal year: 1997; 
Number of communities: 95; 
Total EAS appropriations (in millions): 25.9. 

Fiscal year: 1998; 
Number of communities: 101; 
Total EAS appropriations (in millions): 50.0. 

Fiscal year: 1999; 
Number of communities: 100; 
Total EAS appropriations (in millions): 50.0. 

Fiscal year: 2000; 
Number of communities: 106; 
Total EAS appropriations (in millions): 50.0. 

Fiscal year: 2001; 
Number of communities: 115; 
Total EAS appropriations (in millions): 50.0. 

Fiscal year: 2002; 
Number of communities: 123; 
Total EAS appropriations (in millions): 113.0. 

Fiscal year: 2003; 
Number of communities: 126; 
Total EAS appropriations (in millions): 101.8. 

Fiscal year: 2004; 
Number of communities: 140; 
Total EAS appropriations (in millions): 101.7. 

Fiscal year: 2005; 
Number of communities: 146; 
Total EAS appropriations (in millions): 101.6. 

Fiscal year: 2006; 
Number of communities: 154; 
Total EAS appropriations (in millions): 109.4. 

Source: DOT. 

[End of table] 

In addition, in recent years, the number of communities and states 
receiving EAS funding has increased. Since 1998, when a $50 million 
funding level was established, eight additional states now have EAS 
communities. These states include Alabama, Georgia, Kentucky, Maryland, 
Mississippi, Oregon, Tennessee and Virginia. Excluding Alaska, where 
different program rules apply, four states now have had significant 
increases in the total number of communities served by EAS, compared to 
1998. The number of EAS communities in Pennsylvania increased by five, 
West Virginia and Wyoming increased by four, and New York increased by 
three. These states are now among the largest participants in the 
program, in terms of the number of communities served. 

In 2004, slightly more than 1 million passengers enplaned at airports 
that received EAS-subsidized service--about 0.15 percent of the more 
than 706 million passenger enplanements in the United States that 
year.[Footnote 22] As of May 1, 2006, 13 regional air carriers served 
the subsidized communities in the continental United States, and 15 
served those in Alaska, Hawaii, and Puerto Rico. The carriers serving 
the communities in the continental United States typically used 
turboprop aircraft seating 19 passengers, whereas in Alaska, Hawaii, 
and Puerto Rico, the most commonly used aircraft seated 4 to 9 
passengers. 

If EAS subsidies were removed, air service may end at many small 
communities. EAS subsidies have helped communities that were served by 
air carriers before deregulation continue to receive scheduled air 
service. Since air carriers have to show financial data to support a 
subsidy calculation, it is likely that if the subsidy is no longer 
available commercial air service would also end. Furthermore, according 
to a DOT official, once a community receives subsidized air service it 
is rare for an air carrier to offer to provide unsubsidized air 
service. Finally, in previous work, we reported that subsidies paid 
directly to air carriers have not provided an effective transportation 
solution for passengers in many small communities.[Footnote 23] 

The Small Community Grant Program Has Had Mixed Results: 

Mr. Chairman, our previous work was not able to evaluate the overall 
effectiveness of SCASDP; however, we found that SCASDP grantees pursued 
several goals and strategies to improve air service, and that the 
projects have obtained mixed results. In addition, the number of 
applications for SCASDP has declined each year. 

As shown in figure 1, in 2002 (the first year SCASDP was funded) DOT 
received 179 applications for grants; and by 2006 the number of 
applications had declined to 75. DOT officials said that this decline 
was, in part, a consequence of several factors, including: (1) many 
eligible airport communities had received a grant and were still 
implementing projects at the time; (2) the airport community as a whole 
was coming to understand the importance DOT places on a fulfilling the 
local contribution commitment part of the grant proposal; and (3) 
legislative changes in 2003 that prohibited communities or consortiums 
from receiving more than one grant for the same project, and that 
established the timely use of funds as a priority factor in awarding 
grants.[Footnote 24] There have been 182 grant awards made in the 5 
years of the program. Of these, 56 grants are now completed--34 from 
2002, 15 from 2003, and seven from 2004.[Footnote 25] Finally, as of 
August 31, 2006, DOT had terminated seven grants it initially 
awarded.[Footnote 26] 

Figure 1: SCASDP Grant Proposals, Awards, Terminations, and 
Completions, 2002 - 2006: 

[See PDF for image] 

Source: GAO analysis of DOT data. 

Note: DOT granted 6 grants in 2004, from reallocated program funds. 

[End of figure] 

Although at the time of our review it was too soon to determine the 
overall effectiveness of the program, our review of the 23 projects 
completed by September 30, 2005, found mixed results. The kinds of 
improvements in service that resulted from the grants included adding 
an additional air carrier, destination, or flights; or changing the 
type of aircraft serving the community. In terms of numbers, airport 
officials reported that 19 of the 23 grants resulted in service or fare 
improvements during the life of the grant. In addition, during the 
course of the grant, enplanements rose at 19 of the 23 airports. 
However, after the 23 SCASDP grants were completed, 11 grants resulted 
in improvements that were self-sustaining. Three additional 
improvements were still in place, although not self-sustaining; 
thus 14 improvements were in place after the grants were completed. 
(See fig. 2.) 

Charleston, West Virginia provides an example of a successful project. 
With the aid of a SCASDP grant, Charleston was able to add a new 
carrier and new nonstop service to a major market, Houston. At the time 
of our review, and after the grant was completed, this service was 
continuing at the level the grant provided. 

Figure 2: Air Service Improvement during the Course of 23 Grants and 
after Project Completion: 

[See PDF for image] 

Source: GAO. 

[End of figure] 

Finally, for SCASDP grants awarded from 2002 though 2004, we surveyed 
airport officials to identify the types of project goals they had for 
their grants. We found that grantees had identified a variety of 
project goals to improve air service to their community. These goals 
included adding flights, airlines, and destinations; lowering fares; 
upgrading the aircraft serving the community; obtaining better data for 
planning and marketing air service; increasing enplanements; and 
curbing the loss of passengers to other airports. (See fig. 3 for the 
number and types of project goals identified by airport directors.) 

Figure 3: Project Goals as Identified by Airport Directors for Grants 
Awarded 2002 - 2004: 

[See PDF for image] 

Source: GAO survey of grantee airport directors. 

Note: The number of airport directors surveyed may exceed the number of 
grants in a year because grants are sometimes awarded to consortiums of 
airports. We surveyed all grantee airports. 

[End of figure] 

To achieve these goals, grantees have used many strategies, including 
subsidies and revenue guarantees to the airlines, marketing, hiring 
personnel and consultants, and establishing travel banks in which a 
community guarantees to buy a certain number of tickets. (See fig. 4.) 
In addition, grantees have subsidized the start-up of an airline, taken 
over ground station operations for an airline, and subsidized a bus to 
transport passengers from their airport to a hub airport. Incorporating 
marketing as part of the project was the most common strategy used by 
airports. Some airline officials said that marketing efforts are 
important for the success of the projects. Airline officials also told 
us that projects that provide direct benefits to an airline, such as 
revenue guarantees and financial subsidies, have the greatest chance of 
success. According to these officials, such projects allow the airline 
to test the real market for air service in a community without enduring 
the typical financial losses that occur when new air service is 
introduced. They further noted that, in the current aviation economic 
environment, carriers cannot afford to sustain losses while they build 
up passenger demand in a market. The outcomes of the grants may be 
affected by broader industry factors that are independent of the grant 
itself, such as a decision on the part of an airline to reduce the 
number of flights at a hub. 

Figure 4: Strategies Included in Grant Projects: 

[See PDF for image] 

Source: GAO analysis of grantee proposals and grant agreements. 

Note: Since grant agreements were not available at the time of this 
analysis, 2006 figures are based solely on proposals. 

[End of figure] 

Options Exist for Reforming EAS and Evaluating SCASDP: 

Mr. Chairman, let me now turn to a discussion of options both for the 
reform of EAS and the evaluation of SCASDP. I raise these options, in 
part, because they link to our previous report on the challenges facing 
the federal government in the 21st century, which notes that the 
federal government's long-term fiscal imbalance presents enormous 
challenges to the nation's ability to respond to emerging forces 
reshaping American society, the United States' place in the world, and 
the future role of the federal government.[Footnote 27] In our previous 
report, we call for a more fundamental and periodic reexamination of 
the base of government, ultimately covering discretionary and mandatory 
programs as well as the revenue side of the budget. In light of these 
challenges, Congress may wish to weigh options for reforming EAS and 
obtaining additional information about SCASDP's effectiveness-- 
information that could be obtained if DOT follows our recommendation to 
evaluate the program's effectiveness once more grant projects have been 
completed. 

Examine Options for Enhancing EAS: 

In previous work, we have identified options for enhancing the 
effectiveness of EAS and controlling cost increases. These options 
include targeting subsidized service on more remote communities than is 
currently the case, improving the matching of capacity with community 
use, consolidating service to multiple communities into regional 
airports, and changing the form of federal assistance from carrier 
subsidies to local grants; all of these options would require 
legislative changes. Several of these options formed the basis for 
reforms passed as part of Vision-100. For various reasons these pilot 
programs have not progressed, so it is premature to assess their 
impact. Let me now briefly discuss each option, stressing at the outset 
that each presents potential negative, as well as positive, effects. 
The positive effects might include lowered federal costs, increased 
passenger traffic at subsidized communities, and enhanced community 
choice of transportation options. Potential negative effects might 
include increased passenger inconvenience and an adverse effect on 
local economies that may lose scheduled airline service. 

Targeting Subsidized Service to More Remote Communities: 

The first option would be to target subsidized service to more remote 
communities. This would mean increasing the highway distance criteria 
between EAS-eligible communities and the nearest qualifying airport, 
and expanding the definition of qualifying nearby airports to include 
small hubs. Currently, to be eligible for EAS-subsidized service, a 
community must be more than 70 highway miles from the nearest medium-or 
large-hub airport. We found that, if the distance criterion was 
increased to 125 highway miles and the qualifying airports were 
expanded to include small-hub airport with jet service, 55 EAS- 
subsidized communities would no longer qualify for subsidies--and 
travelers at those communities would need to drive to the nearby larger 
airport to access air service.[Footnote 28] 

Limiting subsidized service to more remote communities could 
potentially save federal subsidies. For example, we found that about 
$24 million annually could be saved if service were terminated at 30 
EAS airports that were within 125 miles of medium-or large-hub 
airports. This estimate assumed that the total subsidies in effect in 
2006 at the communities that might lose their eligibility would not be 
obligated to other communities and that those amounts would not change 
over time. On the other hand, the passengers who now use subsidized 
service at such terminated airports would be inconvenienced because of 
the increased driving required to access air service at the nearest hub 
airport. In addition, implementing this option could potentially 
negatively impact the economy of the affected communities. For 
instance, officials from some communities, such as Brookings, South 
Dakota, told us that they are able to attract and retain local 
businesses because of several factors relating to the quality of life 
there--with one important factor being its scheduled air service. 

Better Matching Capacity with Community Use: 

Another option is to better match capacity with community use. Our past 
analysis of passenger enplanement data indicated that relatively few 
passengers fly in many EAS markets, and that, on average, most EAS 
flights operate with aircraft that are largely empty. To better match 
capacity with community use, air carriers could reduce unused capacity-
-either by using smaller aircraft or by reducing the number of flights. 
Carriers could use smaller aircraft. For example, we reported that from 
1995 to 2002, total passenger traffic dropped at 9 of 24 EAS 
communities where carriers added flight frequencies. 

Better matching capacity with community use could save federal 
subsidies. For instance, reducing the number of required daily 
subsidized departures could save federal subsidies by reducing carrier 
costs in some locations. Federal subsidies could also be lowered at 
communities where carriers used smaller--and hence less costly-- 
aircraft. On the other hand, there are a number of potential 
disadvantages. For example, passenger acceptance is uncertain. 
Representatives from some communities, like Beckley and Bluefield, West 
Virginia, told us that passengers who are already somewhat reluctant to 
fly on 19-seat turboprops would be even less willing to fly on smaller 
aircraft. Such negative passenger reaction may cause more people to 
drive to larger airports--or simply drive to their destinations. 
Additionally, the loss of some daily departures at certain communities 
would likely further inconvenience some passengers. Lastly, reduced 
capacity may have a negative impact on the economy of the affected 
community.[Footnote 29] 

Consolidating Subsidized Service Provided to Multiple Communities into 
Service at Regional Airports: 

Another option is to consolidate subsidized service at multiple 
communities into service at regional airports. As of July 1, 2002, 21 
EAS subsidized communities were located within 70 highway miles of at 
least one other subsidized community. We reported that if subsidized 
service to each of these communities were regionalized, 10 regional 
airports could serve those 21 communities. 

Regionalizing service to some communities could generate federal 
savings. However, those savings may be marginal, because the total 
costs to serve a single regional airport may be only slightly less than 
the cost to serve two or three neighboring airports. For example, in 
2002, DOT provided $1.9 million in annual subsidies to Air Midwest, 
Inc., to serve Ogdensburg and Massena, New York, with stops at another 
EAS-subsidized community (Watertown, New York) before arriving at its 
final destination of Pittsburgh, Pennsylvania. According to an official 
with Air Midwest, the marginal cost of operating the flight segments to 
Massena and Ogdensburg are small in relation to the cost of operating 
the flight from Pittsburgh to Watertown. Another potential positive 
effect is that passenger levels at the proposed regional airports could 
grow because the airline(s) would be drawing from a larger geographic 
area, which could prompt the airline(s) to provide better service 
(i.e., larger aircraft or more frequent departures). 

There are also a number of disadvantages to implementing this option. 
First, local passengers would be inconvenienced, since they would 
likely have to drive longer distances to obtain local air service. 
Moreover, the passenger response to regionalizing local air service is 
unknown. Passengers faced with driving longer distances may decide that 
driving to an altogether different airport is worthwhile, if it offers 
better service and air fares. Additionally, as with other options, the 
potential impact on the economy of the affected communities is unknown. 
Regionalizing air service has sometimes proven controversial at the 
local level, in part because regionalizing air service would require 
some communities to give up their own local service for the 
hypothetical benefits of a less convenient regional facility. Even in 
situations where one airport is larger and better equipped than others 
(e.g., where one airport has longer runways, a superior terminal 
facility, and better safety equipment on site), it is likely to be 
difficult for the other communities to recognize and accept 
surrendering their local control and benefits. 

Changing Carrier Subsidies to Local Grants: 

Another option is to change carrier subsidies into local grants. We 
have noted that local grants could enable communities to match their 
transportation needs with individually tailored transportation options 
to connect them to the national air service system. As we previously 
discussed, DOT provides grants to help small communities to enhance 
their air service via SCASDP. 

Our work on SCASDP identified some positive aspects of the program that 
could be beneficial for EAS communities. First, in order for 
communities to receive a Small Community grant, they had to develop a 
proposal that was directed at improving air service locally. In our 
discussion with some of these communities, it was noted that this 
required them to take a closer look at their air service and better 
understand the market they serve--a benefit that they did not foresee. 
In addition, in one case developing the proposal caused the airport to 
build a stronger relationship with the community. SCASDP also allows 
for flexibility in the strategy a local community can choose to improve 
air service, recognizing that local facts and circumstances affect the 
chance of a successful outcome. In contrast, EAS has one approach--a 
subsidy to an air carrier. 

However, there are also differences between the two programs that make 
the grant approach problematic for some EAS communities; these 
differences should be considered. First, because the grants are 
provided on a one-time basis, their purpose is to create self- 
sustaining air service improvements. The grant approach is therefore 
best applicable where a viable air service market can be developed. 
This could be difficult for EAS communities to achieve because, 
currently, the service they receive is not profitable unless there is a 
subsidy. While some EAS communities might be able to transition to self-
sustaining air service through use of one of the grants, for some 
communities this would not be the case. In addition, the grant program 
normally includes a local cash match, which may be difficult for some 
EAS communities to provide. This could systematically eliminate the 
poorest communities, unless other sources of funds--such as state 
support or local industry support--could be found. 

Vision-100 Small Community Programs Have Not Progressed: 

In Vision-100, Congress authorized several programs relevant to small 
communities. These programs have not progressed for various reasons. 
The Alternate Essential Air Service Pilot Program allows the Secretary 
of Transportation to provide assistance directly to a community, rather 
than paying compensation to an air carrier. Under the pilot program, 
communities could provide assistance to air carriers using smaller 
aircraft, fund on-demand air taxi service, provide transportation 
services to and from several EAS communities to a single regional 
airport or other transportation center, and purchase aircraft. Vision- 
100 also authorized the Community Flexibility Pilot Program, which 
requires the Secretary of Transportation to establish a program for up 
to 10 communities that agree to forgo their EAS subsidy for 10 years in 
exchange for a grant twice the amount of the EAS subsidy. The funds may 
be used to improve airport facilities. (The grants can be used for 
things other than general aviation.) DOT has solicited proposals for 
projects in both of these programs. However, according to a DOT 
official, no communities expressed any interest in participating in 
these programs. Finally, the EAS Local Participation Program allows the 
Secretary of Transportation to select no more than 10 designated EAS 
communities within 100 miles, by road, of a small hub (and within the 
contiguous states) to assume 10 percent of their EAS subsidy costs for 
a 4-year period. However, Congress has prohibited DOT from obligating 
or expending any funds to implement this program since Vision-100 was 
enacted. 

Evaluate the Effectiveness of SCASDP before Reauthorization: 

We recently recommended that DOT examine the effectiveness of this 
program when more projects are complete.[Footnote 30] Such an 
evaluation would provide DOT and Congress with information about 
whether additional or improved air service was not only obtained, but 
whether it continues after the grant support has ended. This may be 
particularly important since our work on the limited number of 
completed projects found that, 11 of 23 grantees reported that the 
improvements were self-sustaining after the grant was complete. In 
addition, our prior work on the air service to small communities found 
that once financial incentives are removed, additional air service may 
be difficult to maintain. Since our report, an additional 33 grants 
have been completed and DOT's plans to examine the results from these 
completed grants should provide a clearer and more complete picture of 
the value of this program. Any improved service achieved from this 
program could then be weighed against the cost to achieve those gains. 
This information will be important as Congress considers the 
reauthorization of this program in 2008. 

In addition to the benefit of providing Congress with information upon 
which to evaluate the merits of SCASDP, the evaluation would likely 
have additional benefits. In conducting this evaluation, DOT could 
potentially find that certain strategies the communities used were more 
effective than others. For example, during our work, we found some 
opposing views on the usefulness of travel banks[Footnote 31] and some 
marketing strategies as incentives for attracting improved service. As 
DOT officials identify strategies that have been effective in starting 
self-sustaining improvements in air service, they could share this 
information with other small community airports and, perhaps, consider 
such factors in its grant award process. In addition, DOT might find 
some best practices and could develop some lessons learned from which 
all small community airports could benefit. For example, one airport 
used the approach of assuming airline ground operations such as baggage 
handling and staffing ticket counters. This approach served to maintain 
airline service of one airline and to attract additional service from 
another airline. Sharing information on approaches like this that 
worked (and approaches that did not) may help other small communities 
improve their air service, perhaps even without federal assistance. 

In conclusion, Mr. Chairman, Congress is faced with many difficult 
choices as it tries to help improve air service to small communities, 
especially given the fiscal challenges the nation faces. Regarding EAS, 
I think it is important to recognize that for many of the communities, 
air service is not--and might never be--commercially viable and there 
are limited alternative transportation means for nearby residents to 
connect to the national air system. In these cases, continued subsidies 
will be needed to maintain that capability. In some other cases, 
current EAS communities are within reasonable driving distances to 
alternative airports that can provide that connection to the air 
system. It will be Congress' weighing of priorities that will 
ultimately decide whether this service will continue or whether other, 
less costly options will be pursued. In looking at SCASDP, I would 
emphasize that we have seen some instances in which the grant funds 
provided additional service, and some in which the funds did not work. 
When enough experience has been gained with this program, the Congress 
will be in a position to determine if the air service gains that are 
made are worth the overall cost of the program. I would be pleased to 
answer any questions that you or other Members of the Subcommittee may 
have at this time. 

Contact Information: 

For further information on this testimony, please contact Gerald L. 
Dillingham at (202) 512-2834 or dillinghamg@gao.gov. Individuals making 
key contributions to this testimony and related work include Robert 
Ciszewski, Catherine Colwell, Daniel Concepcion, Brandon Haller, Dave 
Hooper, Stuart Kaufman, Alex Lawrence, Bonnie Pignatiello Leer, Maureen 
Luna-Long, John Mingus, and Glen Trochelman. 

[End of section] 

Appendix I: Additional Department of Transportation Selection Factors 
for SCASDP Grants: 

Table: 

Service-related Factors: How many carriers are serving the community?. 

Service-related Factors: How many destinations are served?. 

Service-related Factors: What is the frequency of flights?. 

Service-related Factors: What size aircraft service the community?. 

Service-related Factors: Has the level of service been increasing or 
decreasing over the past 3 years?. 

Service-related Factors: Have enplanements been increasing or 
decreasing over the past 3 years?. 

Service-related Factors: Is the Metropolitan Statistical Area 
population increasing or decreasing?. 

Service-related Factors: Is the per-capita income increasing or 
decreasing?. 

Service-related Factors: Are the number of businesses in the area 
increasing or decreasing?. 

Service-related Factors: What is the proximity to larger air service 
centers?. 

Service-related Factors: What is the quality of road access to other 
air service centers?. 

Service-related Factors: Does the community lack service in identified 
top origin and destination markets?. 

Service-related Factors: Is the proposal designed to provide: 

* First air service,; 
* Second carrier service,; 
* New destinations,; 
* Larger aircraft, or; 
* More frequent flights?. 

Service-related Factors: If this is an air service project, has the 
community selected a carrier that is willing and committed to serve?. 

Service-related Factors: Service-related Factors: If this is an air 
service project, does the community have a targeted carrier that would 
serve?.  

Source: GAO table based on DOT information. 

[End of table]

Project-related Factors: Do demographic indicators and the business 
environment support the project?. 

Project-related Factors: Does the community have a demonstrated track 
record of implementing air service development projects?. 

Project-related Factors: Does the project address the stated problem?. 

Project-related Factors: Does the community have a firm plan for 
promoting the service?. 

Project-related Factors: Does the community have a definitive plan for 
monitoring, modifying, and terminating the project, if necessary?. 

Project-related Factors: Does the community have a plan for continued 
support of the project if self-sufficiency or completion is not 
attained after the grant expires?. 

Project-related Factors: If it is mainly a marketing proposal, does the 
community have a firm implementation plan in place?. 

Project-related Factors: Is the applicant a participating consortium?. 

Project-related Factors: Is the project innovative?. 

Project-related Factors: Does the project have unique geographical 
traits or other considerations?. 

Project-related Factors: Is the amount of funding requested reasonable 
compared with the total amount of funding available?. 

Project-related Factors: Is the local contribution reasonable compared 
with the amount requested?. 

Project-related Factors: Can the project be completed during the 
funding period requested?. 

Project-related Factors: Is the applicant a small hub now?. 

Project-related Factors: Is the applicant a large nonhub now?. 

Project-related Factors: Is the applicant a small nonhub now?. 

Project-related Factors: Is the applicant currently subsidized through 
Essential Air Service?. 

Project-related Factors: Is the project for marketing only?. 

Project-related Factors: Is the project a study only?. 

Project-related Factors: Does the project involve intermodal services?. 

Project-related Factors: Is the project primarily a carrier incentive?. 

Project-related Factors: Is the project primarily air fare focused?. 

Project-related Factors: Does the project involve a low-fare service 
provider?. 

Project-related Factors: Does the proposal shift costs from the local 
or state level to the federal level?. 

Project-related Factors: Does the proposal show that proximity to other 
service would detract from it?. 

Project-related Factors: Project-related Factors: Is the applicant 
geographically close to a past grant recipient?. 

Source: GAO table based on DOT information. 

[End of table] 

[End of section] 

Appendix II: Essential Air Service Airports and Small Community Air 
Service Development Program Grantees: 

Figure 5: Airports Receiving Essential Air Service (EAS) as of May 2006 
and All Small Community Air Service Development Program (SCASDP) 
Grantees, through August 10, 2006: 

[See PDF for image] 

Source: GAO. 

Note: Alaska, Hawaii and Puerto Rico are not to scale. 

[End of figure] 

[End of section] 

Appendix III: Status of SCASDP Grants Awarded, 2002 - 2006: 

Table: 

2002 Grant Year. 

Location: Abilene, TX; 
Grant amount: $85,010; 
Status as of August 31, 2006: Completed. 

Location: Akron/Canton, OH; 
Grant amount: 950,000; 
Status as of August 31, 2006: Completed. 

Location: Aleutians East Borough, AK; 
Grant amount: 240,000; 
Status as of August 31, 2006: Completed. 

Location: Asheville, NC; 
Grant amount: 500,000; 
Status as of August 31, 2006: Completed. 

Location: Augusta, GA; 
Grant amount: 759,004; 
Status as of August 31, 2006: Terminated. 

Location: Baker City, OR; 
Grant amount: 300,000; 
Status as of August 31, 2006: Terminated. 

Location: Beaumont/Port Arthur, TX; 
Grant amount: 500,000; 
Status as of August 31, 2006: Completed. 

Location: Bellingham, WA; 
Grant amount: 301,500; 
Status as of August 31, 2006: Ongoing. 

Location: Binghamton, NY; 
Grant amount: 500,000; 
Status as of August 31, 2006: Completed. 

Location: Bismarck, ND; 
Grant amount: 1,557,500; 
Status as of August 31, 2006: Ongoing. 

Location: Brainerd, St Cloud, MN; 
Grant amount: 1,000,000; 
Status as of August 31, 2006: Completed. 

Location: Bristol/Kingsport/Johnson City, TN; 
Grant amount: 615,000; 
Status as of August 31, 2006: Completed. 

Location: Cape Girardeau, MO; 
Grant amount: 500,000; 
Status as of August 31, 2006: Completed. 

Location: Casper, Gillette, WY; 
Grant amount: 500,000; 
Status as of August 31, 2006: Terminated. 

Location: Charleston, WV; 
Grant amount: 500,000; 
Status as of August 31, 2006: Completed. 

Location: Chico, CA; 
Grant amount: 44,000; 
Status as of August 31, 2006: Completed. 

Location: Daytona Beach, FL; 
Grant amount: 743,333; 
Status as of August 31, 2006: Completed. 

Location: Fort Smith, AR; 
Grant amount: 108,520; 
Status as of August 31, 2006: Completed. 

Location: Fort Wayne, IN; 
Grant amount: 398,000; 
Status as of August 31, 2006: Completed. 

Location: Hailey, ID; 
Grant amount: 600,000; 
Status as of August 31, 2006: Completed. 

Location: Lake Charles, LA; 
Grant amount: 500,000; 
Status as of August 31, 2006: Completed. 

Location: Lake Havasu City, AZ; 
Grant amount: 403,478; 
Status as of August 31, 2006: Completed. 

Location: Lamar, CO; 
Grant amount: 250,000; 
Status as of August 31, 2006: Completed. 

Location: Lynchburg, VA; 
Grant amount: 500,000; 
Status as of August 31, 2006: Completed. 

Location: Manhattan, KS; 
Grant amount: 388,350; 
Status as of August 31, 2006: Completed. 

Location: Marion, IL; 
Grant amount: 212,694; 
Status as of August 31, 2006: Completed. 

Location: Mason City, IA; 
Grant amount: 600,000; 
Status as of August 31, 2006: Terminated. 

Location: Meridian, MS; 
Grant amount: 500,000; 
Status as of August 31, 2006: Completed. 

Location: Moab, UT; 
Grant amount: 250,000; 
Status as of August 31, 2006: Completed. 

Location: Mobile, AL; 
Grant amount: 456,137; 
Status as of August 31, 2006: Completed. 

Location: Paducah, KY; 
Grant amount: 304,000; 
Status as of August 31, 2006: Completed. 

Location: Presque Isle, ME; 
Grant amount: 500,000; 
Status as of August 31, 2006: Completed. 

Location: Rapid City, SD; 
Grant amount: 1,400,000; 
Status as of August 31, 2006: Completed. 

Location: Reading, PA; 
Grant amount: 470,000; 
Status as of August 31, 2006: Completed. 

Location: Rhinelander, WI; 
Grant amount: 500,000; 
Status as of August 31, 2006: Completed. 

Location: Santa Maria, CA; 
Grant amount: 217,530; 
Status as of August 31, 2006: Completed. 

Location: Scottsbluff, NE; 
Grant amount: 950,000; 
Status as of August 31, 2006: Completed. 

Location: Somerset, KY; 
Grant amount: 95,000; 
Status as of August 31, 2006: Completed. 

Location: Taos/Ruidoso, NM; 
Grant amount: 500,000; 
Status as of August 31, 2006: Completed. 

Location: Telluride, CO; 
Grant amount: 300,000; 
Status as of August 31, 2006: Completed. 

Location: 2002 Grant YearLocation: Total; 
Grant amount: 2002 Grant Year Grant amount: $19,999,056; 
Status as of August 31, 2006: [Empty]. 

Source: GAO analysis of DOT data. 

[End of table] 

Table: 

2003 Grant year. 

Location: Aguadilla, PR; 
Grant amount: $626,700; 
Status as of August 31, 2006: Ongoing. 

Location: Aleutians East Borough, AK; 
Grant amount: 70,000; 
Status as of August 31, 2006: Ongoing. 

Location: AZ Consortium, AZ; 
Grant amount: 1,500,000; 
Status as of August 31, 2006: Ongoing. 

Location: Bakersfield, CA; 
Grant amount: 982,513; 
Status as of August 31, 2006: Ongoing. 

Location: Bangor, ME; 
Grant amount: 310,000; 
Status as of August 31, 2006: Ongoing. 

Location: Charleston, SC; 
Grant amount: 1,000,000; 
Status as of August 31, 2006: Terminated. 

Location: Cut Bank, MT; 
Grant amount: 90,000; 
Status as of August 31, 2006: Completed. 

Location: Dickinson, ND; 
Grant amount: 750,000; 
Status as of August 31, 2006: Completed. 

Location: Dothan, AL; 
Grant amount: 200,000; 
Status as of August 31, 2006: Completed. 

Location: Dubuque, IA; 
Grant amount: 610,000; 
Status as of August 31, 2006: Ongoing. 

Location: Duluth, MN; 
Grant amount: 1,000,000; 
Status as of August 31, 2006: Ongoing. 

Location: Elmira, NY; 
Grant amount: 200,000; 
Status as of August 31, 2006: Ongoing. 

Location: Erie, PA; 
Grant amount: 500,000; 
Status as of August 31, 2006: Completed. 

Location: Fresno, CA; 
Grant amount: 1,000,000; 
Status as of August 31, 2006: Ongoing. 

Location: Friday Harbor, WA; 
Grant amount: 350,000; 
Status as of August 31, 2006: Completed. 

Location: Gainesville, FL; 
Grant amount: 660,000; 
Status as of August 31, 2006: Completed. 

Location: Grand Island, NE; 
Grant amount: 380,000; 
Status as of August 31, 2006: Ongoing. 

Location: Greenville, MS; 
Grant amount: 400,000; 
Status as of August 31, 2006: Terminated. 

Location: Gunnison, CO; 
Grant amount: 200,000; 
Status as of August 31, 2006: Completed. 

Location: Joplin, MO; 
Grant amount: 500,000; 
Status as of August 31, 2006: Ongoing. 

Location: Knoxville, TN; 
Grant amount: 500,000; 
Status as of August 31, 2006: Terminated. 

Location: Laredo, TX; 
Grant amount: 400,000; 
Status as of August 31, 2006: Ongoing. 

Location: Lewiston-Nez Perce, ID; 
Grant amount: 675,000; 
Status as of August 31, 2006: Ongoing. 

Location: Mountain Home (Baxter), AR; 
Grant amount: 574,875; 
Status as of August 31, 2006: Ongoing. 

Location: Muskegon, MI; 
Grant amount: 500,000; 
Status as of August 31, 2006: Completed. 

Location: NC Consortium, NC; 
Grant amount: 1,200,000; 
Status as of August 31, 2006: Ongoing. 

Location: Owensboro, KY; 
Grant amount: 500,000; 
Status as of August 31, 2006: Ongoing. 

Location: Parkersburg-Marietta, WV/OH; 
Grant amount: 500,000; 
Status as of August 31, 2006: Ongoing. 

Location: Pierre, SD; 
Grant amount: 150,000; 
Status as of August 31, 2006: Completed. 

Location: Redmond, OR; 
Grant amount: 515,000; 
Status as of August 31, 2006: Completed. 

Location: Savannah, GA; 
Grant amount: 523,495; 
Status as of August 31, 2006: Completed. 

Location: Shreveport, LA; 
Grant amount: 500,000; 
Status as of August 31, 2006: Completed. 

Location: Staunton, VA; 
Grant amount: 100,000; 
Status as of August 31, 2006: Ongoing. 

Location: Taos Consortium, NM; 
Grant amount: 1,400,000; 
Status as of August 31, 2006: Completed. 

Location: Tupelo, MS; 
Grant amount: 475,000; 
Status as of August 31, 2006: Completed. 

Location: Victoria, TX; 
Grant amount: 20,000; 
Status as of August 31, 2006: Completed. 

Location: Total; 
Grant amount: $19,862,583; 
Status as of August 31, 2006: [Empty]. 

Source: GAO analysis of DOT data. 

[End of table] 

Table: 

2004 Grant Year. 

2004 Grant Year: Location: Albany, GA; 
Grant amount: $500,000; 
Status as of August 31, 2006: Ongoing. 

Location: Alpena, MI; 
Grant amount: 583,046; 
Status as of August 31, 2006: Ongoing. 

Location: Beckley/Lewisburg, WV; 
Grant amount: 300,000; 
Status as of August 31, 2006: Ongoing. 

Location: Bloomington, IL; 
Grant amount: 850,000; 
Status as of August 31, 2006: Ongoing. 

Location: Butte, MT; 
Grant amount: 360,000; 
Status as of August 31, 2006: Ongoing. 

Location: Champaign-Urbana, IL; 
Grant amount: 200,000; 
Status as of August 31, 2006: Completed. 

Location: Charlottesville, VA; 
Grant amount: 270,000; 
Status as of August 31, 2006: Ongoing. 

Location: Chattanooga, TN; 
Grant amount: 750,000; 
Status as of August 31, 2006: Ongoing. 

Location: Clarksburg/Morgantown (reallocation), WV; 
Grant amount: 372,286; 
Status as of August 31, 2006: Ongoing. 

Location: Columbus, MS; 
Grant amount: 260,000; 
Status as of August 31, 2006: Ongoing. 

Location: Del Rio, TX; 
Grant amount: 318,750; 
Status as of August 31, 2006: Ongoing. 

Location: Dubois, PA; 
Grant amount: 400,000; 
Status as of August 31, 2006: Ongoing. 

Location: Eau Claire, WI; 
Grant amount: 500,000; 
Status as of August 31, 2006: Ongoing. 

Location: Elko, NV; 
Grant amount: 222,000; 
Status as of August 31, 2006: Completed. 

Location: Evansville/South Bend, IN; 
Grant amount: 1,000,000; 
Status as of August 31, 2006: Ongoing. 

Location: Farmington, NM; 
Grant amount: 650,000; 
Status as of August 31, 2006: Ongoing. 

Location: Hot Springs (reallocation), AR; 
Grant amount: 195,000; 
Status as of August 31, 2006: Completed. 

Location: Huntsville, AL; 
Grant amount: 479,950; 
Status as of August 31, 2006: Completed. 

Location: Kalamazoo, MI; 
Grant amount: 500,000; 
Status as of August 31, 2006: Ongoing. 

Location: Lafayette, LA; 
Grant amount: 240,000; 
Status as of August 31, 2006: Ongoing. 

Location: Latrobe, PA; 
Grant amount: 600,000; 
Status as of August 31, 2006: Ongoing. 

Location: Lebanon, NH; 
Grant amount: 500,000; 
Status as of August 31, 2006: Ongoing. 

Location: Lincoln, NE; 
Grant amount: 1,200,000; 
Status as of August 31, 2006: Ongoing. 

Location: Logan City, UT; 
Grant amount: 530,000; 
Status as of August 31, 2006: Ongoing. 

Location: Marquette, MI; 
Grant amount: 700,000; 
Status as of August 31, 2006: Ongoing. 

Location: McCook/North Platte, NE; 
Grant amount: 275,000; 
Status as of August 31, 2006: Ongoing. 

Location: New Haven, CT; 
Grant amount: 250,000; 
Status as of August 31, 2006: Ongoing. 

Location: Pocatello, ID; 
Grant amount: 75,000; 
Status as of August 31, 2006: Completed. 

Location: Redding/Arcata, CA; 
Grant amount: 500,000; 
Status as of August 31, 2006: Ongoing. 

Location: Richmond, VA; 
Grant amount: 950,000; 
Status as of August 31, 2006: Ongoing. 

Location: Rutland (reallocation), VT; 
Grant amount: 240,000; 
Status as of August 31, 2006: Ongoing. 

Location: Salem, OR; 
Grant amount: 500,000; 
Status as of August 31, 2006: Ongoing. 

Location: Santa Rosa, CA; 
Grant amount: 635,000; 
Status as of August 31, 2006: Ongoing. 

Location: Sarasota, FL; 
Grant amount: 1,500,000; 
Status as of August 31, 2006: Ongoing. 

Location: Sioux City, IA; 
Grant amount: 609,800; 
Status as of August 31, 2006: Ongoing. 

Location: Sioux Falls, SD; 
Grant amount: 350,000; 
Status as of August 31, 2006: Ongoing. 

Location: Steamboat Springs, CO; 
Grant amount: 500,000; 
Status as of August 31, 2006: Ongoing. 

Location: Sumter, SC; 
Grant amount: 50,000; 
Status as of August 31, 2006: Completed. 

Location: Syracuse (reallocation), NY; 
Grant amount: 480,000; 
Status as of August 31, 2006: Ongoing. 

Location: Tyler, TX; 
Grant amount: 90,000; 
Status as of August 31, 2006: Ongoing. 

Location: Visalia (reallocation), CA; 
Grant amount: 200,000; 
Status as of August 31, 2006: Ongoing. 

Location: Walla Walla, WA; 
Grant amount: 250,000; 
Status as of August 31, 2006: Ongoing. 

Location: Waterloo, IA; 
Grant amount: 550,000; 
Status as of August 31, 2006: Ongoing. 

Location: Wilkes-Barre/Scranton, PA; 
Grant amount: 625,000; 
Status as of August 31, 2006: Completed. 

Location: Worcester (reallocation), MA; 
Grant amount: 442,615; 
Status as of August 31, 2006: Ongoing. 

Location: Youngstown, OH; 
Grant amount: 250,000; 
Status as of August 31, 2006: Ongoing. 

Location: Total; 
Grant amount: $21,803,447; 
Status as of August 31, 2006: [Empty]. 

Source: GAO analysis of DOT data. 

Note: Program funds from 2002 and 2003 were reallocated to six cities 
in 2004. 

[End of Table] 

Table: 

Location: Aberdeen, SD; 
Grant amount: : $450,000; 
Status as of August 31, 2006: Ongoing. 

Location: Alexandria, LA; 
Grant amount: 500,000; 
Status as of August 31, 2006: Ongoing. 

Location: Bradford, PA; 
Grant amount: 220,000; 
Status as of August 31, 2006: Ongoing. 

Location: CA Consortium, CA; 
Grant amount: 245,020; 
Status as of August 31, 2006: Ongoing. 

Location: Cedar City, UT; 
Grant amount: 155,000; 
Status as of August 31, 2006: Ongoing. 

Location: Durango, CO; 
Grant amount: 750,000; 
Status as of August 31, 2006: Ongoing. 

Location: Fargo, ND; 
Grant amount: 675,000; 
Status as of August 31, 2006: Ongoing. 

Location: Florence, SC; 
Grant amount: 500,000; 
Status as of August 31, 2006: Ongoing. 

Location: Great Falls, MT; 
Grant amount: 220,000; 
Status as of August 31, 2006: Ongoing. 

Location: Greenville, NC; 
Grant amount: 450,000; 
Status as of August 31, 2006: Ongoing. 

Location: Gulfport/Biloxi, MS; 
Grant amount: 750,000; 
Status as of August 31, 2006: Ongoing. 

Location: Hancock/Houghton, MI; 
Grant amount: 516,000; 
Status as of August 31, 2006: Ongoing. 

Location: Hibbing, MN; 
Grant amount: 485,000; 
Status as of August 31, 2006: Ongoing. 

Location: Huntington, WV; 
Grant amount: 500,000; 
Status as of August 31, 2006: Ongoing. 

Location: Idaho Falls, ID; 
Grant amount: 500,000; 
Status as of August 31, 2006: Ongoing. 

Location: Ithaca, NY; 
Grant amount: 500,000; 
Status as of August 31, 2006: Ongoing. 

Location: Jacksonville, NC; 
Grant amount: 500,000; 
Status as of August 31, 2006: Ongoing. 

Location: Killeen, TX; 
Grant amount: 280,000; 
Status as of August 31, 2006: Ongoing. 

Location: Knox County, ME; 
Grant amount: 555,000; 
Status as of August 31, 2006: Ongoing. 

Location: Lawton/Ft. Sill, OK; 
Grant amount: 570,000; 
Status as of August 31, 2006: Ongoing. 

Location: Macon, GA; 
Grant amount: 507,691; 
Status as of August 31, 2006: Ongoing. 

Location: Marathon, FL; 
Grant amount: 750,000; 
Status as of August 31, 2006: Ongoing. 

Location: Marshall, MN; 
Grant amount: 480,000; 
Status as of August 31, 2006: Ongoing. 

Location: Massena, NY; 
Grant amount: 400,000; 
Status as of August 31, 2006: Ongoing. 

Location: Modesto, CA; 
Grant amount: 550,000; 
Status as of August 31, 2006: Ongoing. 

Location: Monterey, CA; 
Grant amount: 500,000; 
Status as of August 31, 2006: Ongoing. 

Location: Montgomery, AL; 
Grant amount: 600,000; 
Status as of August 31, 2006: Ongoing. 

Location: Oregon/Washington Consortium, OR/WA; 
Grant amount: 180,570; 
Status as of August 31, 2006: Ongoing. 

Location: Rockford, IL; 
Grant amount: 1,000,000; 
Status as of August 31, 2006: Ongoing. 

Location: Ruidoso, NM; 
Grant amount: 600,000; 
Status as of August 31, 2006: Ongoing. 

Location: Somerset, KY; 
Grant amount: 950,000; 
Status as of August 31, 2006: Ongoing. 

Location: Stewart (Newburgh), NY; 
Grant amount: 250,000; 
Status as of August 31, 2006: Ongoing. 

Location: Vernal, UT; 
Grant amount: 40,000; 
Status as of August 31, 2006: Ongoing. 

Location: Williamsport, PA; 
Grant amount: 500,000; 
Status as of August 31, 2006: Ongoing. 

Location: Wyoming Consortium, WY; 
Grant amount: 800,000; 
Status as of August 31, 2006: Ongoing. 

Location: Total ; 
Grant amount: $17,429,281; 
Status as of August 31, 2006: [Empty]. 

Source: GAO analysis of DOT data. 

[End of table] 

Table: 

2006 Grant Year. 

2006 Grant Year: Location: Abilene, TX; 
Grant amount: $465,100. 

Location: Big Sandy Region, KY; 
Grant amount: 90,000. 

Location: Brunswick, GA; 
Grant amount: 500,000. 

Location: Cedar Rapids, IA; 
Grant amount: 200,000. 

Location: Chico, CA; 
Grant amount: 472,500. 

Location: Fairbanks, AK; 
Grant amount: 500,000. 

Location: Gallup, NM; 
Grant amount: 600,000. 

Location: Garden City/Dodge City/Liberal, KS; 
Grant amount: 150,000. 

Location: Gary, IN; 
Grant amount: 600,000. 

Location: Grand Forks, ND; 
Grant amount: 350,000. 

Location: Harrisburg, PA; 
Grant amount: 400,000. 

Location: Jackson, MS; 
Grant amount: 400,000. 

Location: Jamestown, NY; 
Grant amount: 150,000. 

Location: Jamestown/Devil's Lake, ND; 
Grant amount: 100,000. 

Location: Kalispell, MT; 
Grant amount: 450,000. 

Location: Longview, TX; 
Grant amount: 225,000. 

Location: Lynchburg, VA; 
Grant amount: 250,000. 

Location: Melbourne, FL; 
Grant amount: 800,000. 

Location: Monroe, LA; 
Grant amount: 50,000. 

Location: Montrose, CO; 
Grant amount: 450,000. 

Location: North Bend, OR; 
Grant amount: 400,000. 

Location: Palmdale, CA; 
Grant amount: 900,000. 

Location: Springfield, IL; 
Grant amount: 390,000. 

Location: Toledo, OH; 
Grant amount: 400,000. 

Location: Tuscaloosa, AL; 
Grant amount: 400,000. 

Location: Total; 
Grant amount: $9,692,600. 

Source: DOT data. 

[End of table] 

[End of section] 

Appendix IV: Essential Air Service Communities and Subsidies as of May 
1, 2006: 

Table 2: Essential Air Service (EAS) Communities in the Contiguous 
United States, Hawaii, and Puerto Rico: 

States and communities: Alabama: Muscle Shoals; 
May 1, 2006 annual subsidy amounts: $1,364,697. 

States and communities: Arizona: Kingman; 
May 1, 2006 annual subsidy amounts: 1,001,989. 

States and communities: Arizona: Page; 
May 1, 2006 annual subsidy amounts: 1,057,655. 

States and communities: Arizona: Prescott; 
May 1, 2006 annual subsidy amounts: 1,001,989. 

States and communities: Arizona: Show Low; 
May 1, 2006 annual subsidy amounts: 779,325. 

States and communities: Arkansas: El Dorado/Camden; 
May 1, 2006 annual subsidy amounts: 923,456. 

States and communities: Arkansas: Harrison; 
May 1, 2006 annual subsidy amounts: 923,456. 

States and communities: Arkansas: Hot Springs; 
May 1, 2006 annual subsidy amounts: 1,385,183. 

States and communities: Arkansas: Jonesboro; 
May 1, 2006 annual subsidy amounts: 923,456. 

States and communities: California: Crescent City; 
May 1, 2006 annual subsidy amounts: 816,025. 

States and communities: California: Merced; 
May 1, 2006 annual subsidy amounts: 696,788. 

States and communities: California: Visalia; 
May 1, 2006 annual subsidy amounts: 450,000. 

States and communities: Colorado: Alamosa; 
May 1, 2006 annual subsidy amounts: 1,083,538. 

States and communities: Colorado: Cortez; 
May 1, 2006 annual subsidy amounts: 853,587. 

States and communities: Colorado: Pueblo; 
May 1, 2006 annual subsidy amounts: 780,997. 

States and communities: Georgia: Athens; 
May 1, 2006 annual subsidy amounts: 392,108. 

States and communities: Hawaii: Hana; 
May 1, 2006 annual subsidy amounts: 774,718. 

States and communities: Hawaii: Kamuela; 
May 1, 2006 annual subsidy amounts: 395,053. 

States and communities: Hawaii: Kalaupapa; 
May 1, 2006 annual subsidy amounts: 331,981. 

States and communities: Illinois: Decatur; 
May 1, 2006 annual subsidy amounts: 954,404. 

States and communities: Illinois: Marion/Herrin; 
May 1, 2006 annual subsidy amounts: 1,251,069. 

States and communities: Illinois: Quincy; 
May 1, 2006 annual subsidy amounts: 1,097,406. 

States and communities: Iowa: Burlington; 
May 1, 2006 annual subsidy amounts: 1,077,847. 

States and communities: Iowa: Fort Dodge; 
May 1, 2006 annual subsidy amounts: 1,080,386. 

States and communities: Iowa: Mason City; 
May 1, 2006 annual subsidy amounts: 1,080,386. 

States and communities: Kansas: Dodge City; 
May 1, 2006 annual subsidy amounts: 1,379,419. 

States and communities: Kansas: Garden City; 
May 1, 2006 annual subsidy amounts: 1,733,997. 

States and communities: Kansas: Great Bend; 
May 1, 2006 annual subsidy amounts: 621,945. 

States and communities: Kansas: Hays; 
May 1, 2006 annual subsidy amounts: 1,540,392. 

States and communities: Kansas: Liberal; 
May 1, 2006 annual subsidy amounts: 1,008,582. 

States and communities: Kansas: Manhattan/ Ft. Riley; 
May 1, 2006 annual subsidy amounts: 487,004. 

States and communities: Kansas: Salina; 
May 1, 2006 annual subsidy amounts: 487,004. 

States and communities: Kentucky: Owensboro; 
May 1, 2006 annual subsidy amounts: 1,127,453. 

States and communities: Maine: Augusta/Waterville; 
May 1, 2006 annual subsidy amounts: 1,065,475. 

States and communities: Maine: Bar Harbor; 
May 1, 2006 annual subsidy amounts: 1,065,475. 

States and communities: Maine: Presque Isle; 
May 1, 2006 annual subsidy amounts: 1,116,423. 

States and communities: Maine: Rockland; 
May 1, 2006 annual subsidy amounts: 1,065,475. 

States and communities: Maryland: Hagerstown; 
May 1, 2006 annual subsidy amounts: 649,929. 

States and communities: Michigan: Escanaba; 
May 1, 2006 annual subsidy amounts: 290,952. 

States and communities: Michigan: Ironwood/Ashland, WI; 
May 1, 2006 annual subsidy amounts: 409,242. 

States and communities: Michigan: Iron Mountain/Kingsford; 
May 1, 2006 annual subsidy amounts: 602,761. 

States and communities: Michigan: Manistee/Ludington; 
May 1, 2006 annual subsidy amounts: 776,051. 

States and communities: Minnesota: Chisholm/Hibbing; 
May 1, 2006 annual subsidy amounts: 1,279,329. 

States and communities: Minnesota: Thief River Falls; 
May 1, 2006 annual subsidy amounts: 777,709. 

States and communities: MIssissippi: Laurel/Hattiesburg; 
May 1, 2006 annual subsidy amounts: 1,100,253. 

States and communities: Missouri: Cape Girardeau; 
May 1, 2006 annual subsidy amounts: 1,147,453. 

States and communities: Missouri: Columbia/Jefferson City; 
May 1, 2006 annual subsidy amounts: Order 2006-4-6 requested proposals 
for Columbia/ Jefferson City. 

States and communities: Missouri: Fort Leonard Wood; 
May 1, 2006 annual subsidy amounts: 683,201. 

States and communities: Missouri: Joplin; 
May 1, 2006 annual subsidy amounts: 755,762. 

States and communities: Missouri: Kirksville; 
May 1, 2006 annual subsidy amounts: 840,200. 

States and communities: Montana: Glasgow; 
May 1, 2006 annual subsidy amounts: 922,103. 

States and communities: Montana: Glendive; 
May 1, 2006 annual subsidy amounts: 922,103. 

States and communities: Montana: Havre; 
May 1, 2006 annual subsidy amounts: 922,103. 

States and communities: Montana: Lewistown; 
May 1, 2006 annual subsidy amounts: 922,103. 

States and communities: Montana: Miles City; 
May 1, 2006 annual subsidy amounts: 922,103. 

States and communities: Montana: Sidney; 
May 1, 2006 annual subsidy amounts: 1,306,313. 

States and communities: Montana: West Yellowstone; 
May 1, 2006 annual subsidy amounts: 247,122. 

States and communities: Montana: Wolf Point; 
May 1, 2006 annual subsidy amounts: 922,103. 

States and communities: Nebraska: Alliance; 
May 1, 2006 annual subsidy amounts: 655,898. 

States and communities: Nebraska: Chadron; 
May 1, 2006 annual subsidy amounts: 655,898. 

States and communities: Nebraska: Grand Island; 
May 1, 2006 annual subsidy amounts: 1,198,396. 

States and communities: Nebraska: Kearney; 
May 1, 2006 annual subsidy amounts: 1,166,849. 

States and communities: Nebraska: McCook; 
May 1, 2006 annual subsidy amounts: 1,502,651. 

States and communities: Nebraska: North Platte; 
May 1, 2006 annual subsidy amounts: 870,504. 

States and communities: Nebraska: Scottsbluff; 
May 1, 2006 annual subsidy amounts: 494,887. 

States and communities: Nevada: Ely; 
May 1, 2006 annual subsidy amounts: 784,463. 

States and communities: New Hampshire; Lebanon; 
May 1, 2006 annual subsidy amounts: 998,752. 

States and communities: New Mexico: Alamogordo/Holloman; 
May 1, 2006 annual subsidy amounts: Order 2006-3-26 requested proposals 
on an emergency basis. 

States and communities: New Mexico: Carlsbad; 
May 1, 2006 annual subsidy amounts: 599,671. 

States and communities: New Mexico: Clovis; 
May 1, 2006 annual subsidy amounts: 859,057. 

States and communities: New Mexico: Hobbs; 
May 1, 2006 annual subsidy amounts: 519,614. 

States and communities: New Mexico: Silver City/Hurley/Deming; 
May 1, 2006 annual subsidy amounts: 859,057. 

States and communities: New York: Jamestown; 
May 1, 2006 annual subsidy amounts: 1,217,414. 

States and communities: New York: Massena; 
May 1, 2006 annual subsidy amounts: 585,945. 

States and communities: New York: Ogdensburg; 
May 1, 2006 annual subsidy amounts: 585,945. 

States and communities: New York: Plattsburgh; 
May 1, 2006 annual subsidy amounts: 753,964. 

States and communities: New York: Saranac Lake; 
May 1, 2006 annual subsidy amounts: 753,964. 

States and communities: New York: Watertown; 
May 1, 2006 annual subsidy amounts: 585,945. 

States and communities: North Dakota: Devils Lake; 
May 1, 2006 annual subsidy amounts: 1,329,858. 

States and communities: North Dakota: Dickinson; 
May 1, 2006 annual subsidy amounts: 1,697,248. 

States and communities: North Dakota: Jamestown; 
May 1, 2006 annual subsidy amounts: 1,351,677. 

States and communities: Oklahoma: Enid; 
May 1, 2006 annual subsidy amounts: 636,279. 

States and communities: Oklahoma: Ponca City; 
May 1, 2006 annual subsidy amounts: 636,279. 

States and communities: Oregon: Pendleton; 
May 1, 2006 annual subsidy amounts: 649,974. 

States and communities: Pennsylvania: Altoona; 
May 1, 2006 annual subsidy amounts: 893,774. 

States and communities: Pennsylvania: Bradford; 
May 1, 2006 annual subsidy amounts: 1,217,414. 

States and communities: Pennsylvania: DuBois; 
May 1, 2006 annual subsidy amounts: 643,818. 

States and communities: Pennsylvania: Johnstown; 
May 1, 2006 annual subsidy amounts: 464,777. 

States and communities: Pennsylvania: Lancaster; 
May 1, 2006 annual subsidy amounts: 1,611,707. 

States and communities: Pennsylvania: Oil City/Franklin; 
May 1, 2006 annual subsidy amounts: 683,636. 

States and communities: Puerto Rico; Mayaguez; 
May 1, 2006 annual subsidy amounts: 688,551. 

States and communities: Puerto Rico: Ponce; 
May 1, 2006 annual subsidy amounts: 622,056. 

States and communities: South Dakota: Brookings; 
May 1, 2006 annual subsidy amounts: 1,039,364. 

States and communities: South Dakota: Huron; 
May 1, 2006 annual subsidy amounts: 1,039,364. 

States and communities: South Dakota: Pierre; 
May 1, 2006 annual subsidy amounts: 449,912. 

States and communities: South Dakota: Watertown; 
May 1, 2006 annual subsidy amounts: 1,211,589. 

States and communities: Tennessee: Jackson; 
May 1, 2006 annual subsidy amounts: 1,179,026. 

States and communities: Texas: Victoria; 
May 1, 2006 annual subsidy amounts: 510,185. 

States and communities: Utah: Cedar City; 
May 1, 2006 annual subsidy amounts: 1,068,608. 

States and communities: Utah: Moab; 
May 1, 2006 annual subsidy amounts: 783,608. 

States and communities: Utah: Vernal; 
May 1, 2006 annual subsidy amounts: 555,771. 

States and communities: Vermont: Rutland; 
May 1, 2006 annual subsidy amounts: 849,705. 

States and communities: Virginia: Staunton; 
May 1, 2006 annual subsidy amounts: 650,123. 

States and communities: Washington: Ephrata/Moses Lake; 
May 1, 2006 annual subsidy amounts: 1,698,922. 

States and communities: West Virginia: Beckley; 
May 1, 2006 annual subsidy amounts: 977,858. 

States and communities: West Virginia: Clarksburg/Fairmont; 
May 1, 2006 annual subsidy amounts: 306,109. 

States and communities: West Virginia: Greenbrier/Lewisburg/White; 
Sulphur Springs; 
May 1, 2006 annual subsidy amounts: 540,579. 

States and communities: West Virginia: Morgantown; 
May 1, 2006 annual subsidy amounts: 306,109. 

States and communities: West Virginia: Parkersburg; 
May 1, 2006 annual subsidy amounts: 439,115. 

States and communities: West Virginia: Princeton/Bluefield; 
May 1, 2006 annual subsidy amounts: 977,858. 

States and communities: Wyoming: Laramie; 
May 1, 2006 annual subsidy amounts: 397,400. 

States and communities: Wyoming: Riverton; 
May 1, 2006 annual subsidy amounts: 394,046. 

States and communities: Wyoming: Rock Springs; 
May 1, 2006 annual subsidy amounts: 390,488. 

States and communities: Wyoming: Sheridan; 
May 1, 2006 annual subsidy amounts: 336,701. 

States and communities: Wyoming: Worland; 
May 1, 2006 annual subsidy amounts: 797,844. 

Source: DOT: 

[End of table] 

Table 3: Alaskan EAS Communities: 

Community: Adak; 
May 1, 2006 annual subsidy: $1,617,923. 

Community: Akutan; 
May 1, 2006 annual subsidy: 350,381. 

Community: Alitak; 
May 1, 2006 annual subsidy: 106,054. 

Community: Amook Bay; 
May 1, 2006 annual subsidy: 16,622. 

Community: Atka; 
May 1, 2006 annual subsidy: 336,303. 

Community: Cape Yakataga; 
May 1, 2006 annual subsidy: 30,920. 

Community: Central; 
May 1, 2006 annual subsidy: 61,421. 

Community: Chatham; 
May 1, 2006 annual subsidy: 6,433. 

Community: Chisana; 
May 1, 2006 annual subsidy: Order 2006-4-13 held in 40 -Mile Air and 
Requested Proposals. 

Community: Circle; 
May 1, 2006 annual subsidy: 61,421. 

Community: Cordova; 
May 1, 2006 annual subsidy: 1,763,179. 

Community: Elfin Cove; 
May 1, 2006 annual subsidy: 108,297. 

Community: Excursion Inlet; 
May 1, 2006 annual subsidy: 9,212. 

Community: Funter Bay; 
May 1, 2006 annual subsidy: 6,433. 

Community: Gulkana; 
May 1, 2006 annual subsidy: 199,839. 

Community: Gustavus; 
May 1, 2006 annual subsidy: 732,217. 

Community: Healy Lake; 
May 1, 2006 annual subsidy: 51,781. 

Community: Hydaburg; 
May 1, 2006 annual subsidy: 54,733. 

Community: Icy Bay; 
May 1, 2006 annual subsidy: 30,920. 

Community: Karluk; 
May 1, 2006 annual subsidy: 38,880. 

Community: Kitoi Bay; 
May 1, 2006 annual subsidy: 16,622. 

Community: Manley; 
May 1, 2006 annual subsidy: 24,768. 

Community: May Creek; 
May 1, 2006 annual subsidy: 69,759. 

Community: McCarthy; 
May 1, 2006 annual subsidy: 69,759. 

Community: Minto; 
May 1, 2006 annual subsidy: 24,768. 

Community: Moser Bay; 
May 1, 2006 annual subsidy: 16,622. 

Community: Nikolski; 
May 1, 2006 annual subsidy: 173,603. 

Community: Olga Bay; 
May 1, 2006 annual subsidy: 16,622. 

Community: Pelican; 
May 1, 2006 annual subsidy: 108,297. 

Community: Petersburg; 
May 1, 2006 annual subsidy: 732,217. 

Community: Port Alexander; 
May 1, 2006 annual subsidy: 48,746. 

Community: Port Bailey; 
May 1, 2006 annual subsidy: 16,622. 

Community: Port William; 
May 1, 2006 annual subsidy: 16,622. 

Community: Seal Bay; 
May 1, 2006 annual subsidy: 16,622. 

Community: Uganik; 
May 1, 2006 annual subsidy: 15,715. 

Community: West Point; 
May 1, 2006 annual subsidy: 16,622. 

Community: Wrangell; 
May 1, 2006 annual subsidy: 732,217. 

Community: Yakutat; 
May 1, 2006 annual subsidy: 1,763,179. 

Community: Zachar Bay; 
May 1, 2006 annual subsidy: 16,622. 

Source: DOT. 

[End of table] 

[End of section] 

Related GAO Products: 

Airline Deregulation: Reregulating the Airline Industry Would Reverse 
Consumer Benefits and Not Save Airline Pensions. GAO-06-630 Washington, 
D.C.: June 9, 2006. 

Commercial Aviation: Initial Small Community Air Service Development 
Projects Have Achieved Mixed Results. GAO-06-21 Washington, D.C: 
November 30, 2005. 

Commercial Aviation: Survey of Small Community Air Service Grantees and 
Applicants. GAO-06-101SP. Washington, D.C.: November 30, 2005: 

Commercial Aviation: Bankruptcy and Pension Problems Are Symptoms of 
Underlying Structural Issues. GAO-05-945 Washington, D.C.: September 
30, 2005. 

Commercial Aviation: Legacy Airlines Must Further Reduce Costs to 
Restore Profitability. GAO-04-836 Washington, D.C.: August 11, 2004: 

Commercial Aviation: Issues Regarding Federal Assistance for Enhancing 
Air Service to Small Communities. GAO-03-540T. Washington, D.C.: March 
11, 2003: 

Federal Aviation Administration: Reauthorization Provides Opportunities 
to Address Key Agency Challenges. GAO-03-653T. Washington, D.C.: April 
l0, 2003. 

Commercial Aviation: Factors Affecting Efforts to Improve Air Service 
at Small Community Airports. GAO-03-330 Washington, D.C.: January 17, 
2003: 

Commercial Aviation: Financial Condition and Industry Responses Affect 
Competition. GAO-03-171T. Washington, D.C.: October 2, 2002. 

Options to Enhance the Long-term Viability of the Essential Air Service 
Program. GAO-02-997R. Washington, D.C.: August 30, 2002. 

Commercial Aviation: Air Service Trends at Small Communities Since 
October 2000. GAO-02-432. Washington, D.C.: March 29, 2002. 

Proposed Alliance Between American Airlines and British Airways Raises 
Competition Concerns and Public Interest Issues. GAO-02-293R. 
Washington, D.C.: December 21, 2001. 

"State of the U.S. Commercial Airlines Industry and Possible Issues for 
Congressional Consideration," Speech by Comptroller General of the 
United States David Walker. The International Aviation Club of 
Washington: November 28, 2001. 

Financial Management: Assessment of the Airline Industry's Estimated 
Losses Arising From the Events of September 11. GAO-02-133R. 
Washington, D.C.: October 5, 2001. 

Commercial Aviation: A Framework for Considering Federal Financial 
Assistance. GAO-01-1163T. Washington, D.C.: September 20, 2001. 

Aviation Competition: Restricting Airline Ticketing Rules Unlikely to 
Help Consumers. GAO-01-832 Washington, D.C.: July 31, 2001. 

Aviation Competition: Challenges in Enhancing Competition in Dominated 
Markets. GAO-01-518T. Washington, D.C.: March 13, 2001. 

Aviation Competition: Regional Jet Service Yet to Reach Many Small 
Communities. GAO-01-344 Washington, D.C.: February 14, 2001. 

Airline Competition: Issues Raised by Consolidation Proposals. GAO-01- 
402T. Washington, D.C.: February 7, 2001. 

Aviation Competition: Issues Related to the Proposed United Airlines-US 
Airways Merger. GAO-01-212, Washington, D.C.: December 15, 2000. 

Essential Air Service: Changes in Subsidy Levels, Air Carrier Costs, 
and Passenger Traffic. RCED-00-34, Washington, D.C.: April 14, 2000. 

FOOTNOTES 

[1] The U.S. network carriers are Alaska Airlines, American Airlines, 
Continental Airlines, Delta Air Lines, Northwest Airlines, United 
Airlines, and US Airways. 

[2] The nation's commercial airports are categorized into four main 
groups based on annual passenger enplanements--large hubs, medium hubs, 
small hubs, and nonhubs. The 30 large hubs and 37 medium-hub airports 
together enplaned about 89 percent of the almost 703 million U.S. 
passengers in 2004. In contrast, the 69 small hubs enplaned about 8 
percent, and the 374 nonhub airports enplaned about 3 percent of U.S. 
passengers. 

[3] Small community airports also receive other financial support from 
the federal government. For example, under the Airport Improvement 
Program small airports receive certain funds for addressing capital 
improvement needs--such as for runway or taxiway improvements. 

[4] Overflight fees are user fees for air traffic control services 
provided by the Federal Aviation Administration (FAA) to aircraft that 
fly over, but do not land in the United States, as authorized by the 
Federal Aviation Reauthorization Act of 1996 (P.L. 104-264). 

[5] The Emergency Supplemental Appropriations Act for Defense, the 
Global War on Terror, and Tsunami Relief, 2005, Pub. L. No. 109-13, 
recognized that the funds appropriated for EAS may not be sufficient to 
meet the service needs of communities encompassed by that program. The 
Emergency Supplemental Appropriations Act provided that the Secretary 
of Transportation could transfer "such sums as may be necessary to 
carry out the essential air service program from any available amounts 
appropriated to or directly administered by the Office of the 
Secretary." 

[6] GAO, 21st Century Challenges: Reexamining the Base of Federal 
Government. GAO-05-325SP. (Washington, DC: 2005). February 2005. 

[7] The analysis is based on 2004 national enplanement data--the most 
recent data available. 

[8] A network carrier operates a significant portion of its flights 
using at least one hub where connections are made for flights on a 
spoke system. Regional carriers provide service from small communities 
primarily using regional jets to connect the network carriers' hub-and- 
spoke system. 

[9] Code of Federal Regulations Title 14 Part 121 (14 CFR Part 121) 
provides details on aircraft certification requirements for aircraft 
that operate scheduled service with 10 or more seats. The Commuter Rule 
was instituted with 60 Fed. Reg. 65832, December 20, 1995. 

[10] Aviation and Transportation Security Act, Section 110 of P.L. 107- 
71, 115 Stat. 597 (2001). 

[11] Low-cost carriers follow a business model that may include point- 
to-point service between high-density city pairs, a standardized fleet 
with high aircraft utilization, low fares, and minimal onboard service. 

[12] Special provisions guaranteed service to Alaskan communities. 

[13] Subsidies are used to cover the difference between a carrier's 
projected revenues and expenses and to provide a minimum amount of 
profit. 

[14] The average subsidy per passenger does not equate to a specific 
portion of a passenger's ticket price paid for by EAS funds. Ticket 
pricing involves a complex variety of factors relating to the demand 
for travel between two points, the supply of available seats along that 
route, competition in the market, and how air carriers choose to manage 
and price their available seating capacity. 

[15] 49 USC 41732. 

[16] DOT officials said that they check the reasonableness of the cost 
and revenue information received from the air carriers against other 
data reported to DOT and in documents filed with the Securities and 
Exchange Commission. 

[17] At any time throughout the year, an air carrier providing 
unsubsidized service to an EAS-eligible community can file a notice to 
suspend service if the carrier determines that it can no longer provide 
profitable service, thus triggering a carrier selection case. In 
addition, after DOT selects an air carrier to provide subsidized 
service, that agreement is subject to renewal, generally every 2 years, 
at which time other air carriers are permitted to submit proposals to 
serve that community with or without a subsidy. 

[18] P.L. 106-181. 

[19] Vision-100, P.L. 108-176 

[20] DOT must give priority consideration to communities that (1) have 
air fares higher than average for all communities, (2) provide a 
portion of the cost of the project from local sources other than 
airport revenues, (3) have--or plan to establish--a public-private 
partnership to facilitate air carrier service to the public, (4) will 
provide material benefits to a broad segment of the public that has 
limited access to the national air transportation system, and (5) will 
use the assistance in a timely manner. 

[21] The highest number of communities served during the program's 
history was 405 in 1980. 

[22] DOT did not have ridership data available for all EAS communities. 

[23] GAO, Commercial Aviation: Factors Affecting Efforts to Improve Air 
Service at Small Community Airports, GAO-03-330 (Washington, D.C.: 
2003). January 17, 2003. 

[24] The authorizing legislation provides one limitation on the timing 
of expenditures. If funds are used to subsidize air service, the 
subsidy cannot last more than 3 years. However, the time needed to 
obtain the service is not included in the subsidy time limit. The 
legislation does not limit the timing of expenditures for other 
purposes. In fiscal year 2005, DOT issued an order specifying that in 
general, grant funds should be expended within 3 years. 

[25] We considered a grant to be complete when the activities 
associated with the grant were finished and FAA had made final 
reimbursements of allowable costs. 

[26] According to DOT officials, the agency only initiated the 
termination for the grant awarded to Casper/Gillette, Wyoming. The 
communities awarded the other six grants requested the termination of 
the grants. 

[27] GAO-05-325SP 

[28] This information was current as of January 2006. 

[29] As we reported in our 2002 report, although scheduled commercial 
air service is positively correlated with local economic activity, we 
were unable to locate reliable studies that describe the extent to 
which scheduled commercial air service is directly responsible for 
economic development in small communities in the United States (i.e., 
whether air service precedes, follows, or develops simultaneously with 
local economic activity). 

[30] GAO, Initial Small Community Air Service Development Projects Have 
Achieved Mixed Results, GAO-06-21 (Washington, D.C.: Nov. 2005). 

[31] Businesses or individuals deposit or promise future travel funds 
to a carrier providing new or expanded service. Contributing businesses 
and individuals can then draw down from this account. 

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