Since 1978, the Essential Air Service (EAS) program has subsidized air service to eligible communities that would otherwise not have scheduled service. The cost of this program has risen as the number of communities being served and subsidies to air carriers have increased. At the same time, the number of carriers providing EAS service has declined. Given continuing concerns over the EAS program's long-term prospects, GAO was asked to review the program. GAO reviewed (1) the characteristics and current status of the EAS program, (2) factors affecting the program's ability to provide air service, (3) options for revising the program, and (4) tools for assessing the program, the options for its revision, and the program's performance. GAO interviewed stakeholders and reviewed the results of an expert panel convened by GAO, Department of Transportation (DOT) data and program documentation, and potential methodologies for assessing federal programs.
Matter for Congressional Consideration
|In light of developments related to population shifts, the aviation industry, and the national transportation infrastructure, Congress may wish to consider re-examining the program's objectives and related statutory requirements and seek information from DOT as needed to support this effort. Such a re-examination could include (1) consideration of the rationale behind existing statutory requirements, such as those for 15-seat, 2-engine, 2-pilot aircraft in EAS service; (2) the possibility of providing greater flexibility as to plane size, frequency of service, eligible communities, or regionalization of service; and (3) the possibility of assessing multimodal solutions for communities.||In 2009, GAO reported that the Essential Air Service (EAS) program had changed relatively little in 30 years, but current conditions raise concerns about whether the program can continue to operate as it has. Over the prior 2 years, subsidies to carriers had been increasing, along with EAS program obligations to fund those subsidies. At the same time, the number of carriers providing subsidized air service declined, from 34 in 1987 to 10 in 2009. Several factors contributed to the increasing difficulty in providing subsidized air service. The EAS program has statutory requirements for minimum aircraft size and frequency of flights, which effectively required carriers to provide service that may not be "right-sized" for some small markets. Also, the growth of air service especially by low-cost carriers--which today serve most U.S. hub airports--weighed against the relatively high fares and inconvenience of EAS flights, which can lead people to bypass EAS flights and drive to hub airports. Moreover, the continued urbanization of the United States may have eroded the potential passenger base in some small and rural EAS communities. While Congress, DOT, GAO, and others have proposed various revisions to the EAS program, Congress had not authorized many changes to program requirements. GAO and others have suggested increasing flexibility and other changes that could make EAS service more sustainable for smaller communities. Therefore, GAO suggested that Congress consider re-examining the program's objectives and related statutory requirements. In response, Congress passed the FAA Modernization and Reform Act of 2012 (the Act) that among other things revised the eligibility requirements for EAS subsidies. One revision was that to be eligible to receive EAS subsidies, a community must have had an average subsidy per passenger of less than $1,000 during the most recent fiscal year. The Act also revised eligibility requirements so that locations with fewer than an average of 10 enplanements per service day (except in Alaska and Hawaii) and that are less than 175 driving miles from the nearest large or medium airport would not be eligible for EAS subsidies after fiscal year 2012. According to DOT, this revision will most likely result in some communities no longer receiving EAS subsidies. In addition, Congress also eliminated the minimum 15-seat passenger capacity for fiscal year 2012 through the Consolidated and Further Continuing Appropriations Act, 2012 [Pub. L. No. 112-55 (2011)]. This provision was continued for fiscal year 2013 in the Consolidated and Further Continuing Appropriations Act, 2013 [Pub. L. No. 113-6 (2013).] The elimination of this requirement will allow carriers to "right size" or better match the services they provide with the communities' demand. Collectively, these legislative revisions have the potential of reducing carrier operating costs, subsidies and total federal program costs. And, these revisions could help DOT better maintain service at the remaining EAS-eligible airports.|
Recommendations for Executive Action
|Department of Transportation||The Secretary of Transportation should evaluate the reasonableness of (1) providing transportation service, whether through unscheduled air service or surface modes of transportation, when these alternatives might better serve communities than current scheduled EAS service; and (2) DOT's current practices for carrier agreements, including the 2-year duration of agreements, and not renegotiating subsidy amounts in response to quantifiable cost increases.|
|Department of Transportation||Once decisions are made about any changes to the EAS program, DOT should determine whether additional performance measures are needed to evaluate program outcomes.|