Economic development
Revising the essential air service program could improve efficiency and save over $20 million annually
- Why Area
Is Important - What GAO
Found - Actions
Needed - Framework
for Analysis - Area
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GAO Products
Why Area Is Important
Since 1978, the Essential Air Service (EAS) program, administered by the Department of Transportation, has subsidized air service to eligible communities. In 2010, the program supported air service to about 150 communities nationally. The EAS program was originally established as a 10-year transitional program to ease communities into a deregulated aviation environment. The cost of this program has risen as subsidies to air carriers and the number of communities being served have increased. Over the years GAO has expressed concerns that rising costs may jeopardize the EAS program's long-term viability.
What GAO Found
Revising the EAS program and re-examining the need for air service across the country could increase program efficiency and reduce costs. In fiscal year 2009, Congress appropriated $136.2 million for the EAS program, and in 2010 increased this amount to $200 million.[1]Costs could continue to increase for a number of reasons; for example, some eligible communities may lose existing unsubsidized air service and obtain EAS subsidies. GAO has previously reported on issues related to the EAS program, including the following:
Eligibility criteria are dated and not well targeted. Eligibility for the program was set in 1978 and largely based on communities that had or could have scheduled air service at that time; thus eligibility may bear little relation to current demand for air service. Communities have been added and removed from EAS funding, but the approach to determining EAS eligibility has remained the same and affects the cost of the program. For example, EAS currently uses distance to medium- and large-hub airports as a basis for eligibility. Past GAO analyses have shown that if eligibility criteria considered the distance to small-hub airports, in addition to the current criteria of distance to medium- and large-hub airports, and used a 125 mile distance instead of the current 70 miles, fewer communities would be eligible for EAS. In addition, because communities located near each other are eligible for EAS flights, in some regions duplicate federal subsidies are paid to air carriers when a single subsidy could provide air service. Communities and states have been reticent to select one regional airport to serve needs for a greater region because they do not want to give up the service for which they are eligible.
Operating requirements are inefficient. The program has operating requirements that are inefficient and increase costs. For example, legislation mandates that airlines use larger aircraft when smaller, less expensive to operate, aircraft could in some instances meet passenger demand.[2]In addition, the program requires a certain number of flights, regardless of passenger demand. Past GAO analyses have shown that most EAS flights operate with aircraft that are largely emptysome EAS airports operate with fewer than five passengers per day. In fiscal year 2008, the percentage of available seats filled by passengers was 37 percent on EAS flights.
Alternative transportation options could be more cost-effective in some cases. Some communities have not been able to generate sufficient demand to justify costly air service, resulting in rising per-passenger subsidies. Because potentially cost-effective alternatives, such as bus service to other airports, are not used, subsidies may be higher than necessary to link these communities to the nation's passenger aviation system.
Actions Needed
Congress may wish to consider fundamentally re-examining the design and efficiency of the EAS program. GAO has reported on several potential solutions to these issues facing the EAS program that Congress and the Department of Transportation may wish to consider. All have drawbacks, but they present the opportunity for the government to target and use funds more efficiently.
- Updating eligibility criteria and targeting service. Changing the program criteria to target more remote communities would result in savings. In 2006 GAO found that about $24 million could be saved annually if service were terminated at airports that were within 125 highway miles of a medium- or large-hub airport. Under this approach, more remote communities would have remained eligible for EAS, but less remote communities receiving subsidized service would have been ineligible. In addition, changing program criteria to consolidate subsidized air service to one regional airport could help reduce the number of EAS locations served while maintaining regional connections to the nation's air transportation system. However, this potential solution is controversial at the local level, in part because regionalizing service would require some communities to give up their own service for potentially improved service at a less convenient regional facility
- Revising operating requirements to improve efficiency. Revising operating requirements to better match capacity with community use could improve efficiency and save federal subsidies. Air carriers could reduce unused capacity by using smaller aircraft, for example, by using 9-seat aircraft in place of the 19-seat aircraft typically used, or reducing the number of flights. This would improve the efficiency of the program, but it would also create challenges, since smaller aircraft may not be suitable for certain routes, such as those in mountainous areas that require pressurized cabins. Similarly, reducing the number of flights would mean passengers have fewer options from which to choose. However, as discussed below, passengers could potentially have additional transportation options if given other means of transportation to alternative airports.
- Assessing multimodal solutions to provide communities alternatives to EAS.Other means of transportation might be more cost-effective and practical than EAS subsidies for intercity transportation for small communities that may have limited demand for air service due to the proximity of other airports or limited population. This could include potentially more cost-effective bus service to hub airports or on-demand air service on small aircraft, usually called air taxi service. While communities may be concerned about losing existing scheduled air service, assessing multimodal alternatives could maintain access to the aviation system at a lower cost.
Framework for Analysis
The information contained in this analysis is based on the related products under the "Related GAO Products" tab.
Area Contact
For additional information about this area, contact Gerald Dillingham at (202) 512-2834 or dillinghamg@gao.gov.
