Why the Federal Airline Subsidy Program Needs Revision

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

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

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

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