Essential Air Service (EAS)

Updated December 19, 2018 (R44176)
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Contents

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Tables

Appendixes

Summary

The Airline Deregulation Act of 1978 gave airlines almost total freedom to determine which domestic markets to serve and what airfares to charge. This raised the concern that communities with relatively low passenger levels would lose service as carriers shifted their operations to serve larger and often more profitable markets. To address this concern, Congress established the Essential Air Service (EAS) program to ensure that small communities that were served by certificated air carriers before deregulation would continue to receive scheduled passenger service, with subsidies if necessary.

The EAS program is administered by the Office of the Secretary of the U.S. Department of Transportation (DOT), which enforces the eligibility requirements and determines the level of service required at eligible communities. By the end of FY2018, 174 communities in the United States received subsidized service under EAS.

Over the years, Congress has limited the scope of the program, mostly by eliminating subsidy support for communities within a specified driving distance of a major hub airport and capping subsidies under certain criteria. The FAA Modernization and Reform Act of 2012 included additional EAS reform measures, including the requirement that a community have a minimum number of daily enplanements to remain eligible for subsidy. Further, the Consolidated Appropriations Act of 2014 (P.L. 113-76) and the Continuing Appropriations Resolution of 2015 (P.L. 113-164) introduced additional measures to shrink the program. The FAA Reauthorization Act of 2018 (P.L. 115-254) changed certain requirements regarding application of subsidy caps and would discontinue the Air Transportation to Noneligible Places (ATNEP) program in 2020.

Despite these efforts to limit spending for EAS subsidies, inflation-adjusted program expenditures have risen 132% since 2008. Some factors contributing to the rising program costs are external, such as high aviation fuel prices from 2008 through 2014 and the prospect of higher pilot wage costs due to changes in federal regulations. However, certain features of the EAS program itself may have contributed to the challenge of controlling costs. The statute governing EAS does not list cost among the four factors that DOT must consider when evaluating air carriers' bids to provide subsidized EAS service, and neither the carriers nor the communities receiving subsidized service are obliged to select service options that minimize the government's costs.

EAS traditionally has been authorized in laws reauthorizing the Federal Aviation Administration and other civil aviation programs. The 2018 FAA reauthorization act reauthorized the program through FY2023.


Introduction

The Airline Deregulation Act of 1978 (P.L. 95-504) granted U.S. passenger airlines almost total freedom to determine which domestic markets to serve and what airfares to charge. With the advent of deregulation, there were concerns that small communities would lose air service because airlines would shift their operations to serve larger and often more profitable markets. To address these concerns, Congress established the Essential Air Service (EAS) program in the Airline Deregulation Act to ensure continuous air service to small communities.

Initially, approximately 746 communities were eligible. However, not all eligible communities required EAS subsidies. Some communities have been receiving unsubsidized service because air carriers have been willing to offer service without subsidy; some have been receiving subsidized service under EAS from the very beginning; others initially supported unsubsidized service, but later sought subsidies, or vice versa; some were subsidized but later lost their eligible status and are no longer in the program.

Over time, Congress has tightened the conditions under which communities can receive subsidized air service. Nonetheless, program expenditures have increased, more than doubling in inflation-adjusted terms between 2008 and 2018. At the end of FY2018, a total of 174 communities received subsidized EAS service.

Legislative History

Section 419 of the Federal Aviation Act,1 as amended by the Airline Deregulation Act in 1978, established a program to continue airline service to small communities. The program was initially seen as transitional and was set to expire after 10 years. This program was originally administered by the Civil Aeronautics Board (CAB), whose duties were later transferred to the U.S. Department of Transportation (DOT). The Airline Deregulation Act authorized CAB to require carriers to continue providing scheduled service at eligible communities after deregulation,2 with subsidies if necessary.

The Airline Deregulation Act made communities receiving scheduled air service from a certificated carrier on October 24, 1978, eligible for EAS benefits. At that time, there were 746 eligible communities, including 237 in Alaska and 9 in Hawaii. According to a DOT estimate, nearly 300 of these 746 communities received subsidized service under EAS at some point between 1979 and 2016.

As the original 10-year expiration date approached in 1988, Congress extended EAS for another 10 years. In the Federal Aviation Reauthorization Act of 1996 (P.L. 104-264), Congress removed the 10-year time limit, extending the program indefinitely.3

For the first 12 years of the program, the sole criterion for EAS eligibility was whether the community was receiving scheduled air service on October 24, 1978, the date that the Airline Deregulation Act was signed into law. Over the following years, Congress has worked to limit the scope of the program, mostly by eliminating subsidy support for communities within a specified driving distance of a major hub airport.

The Department of Transportation and Related Agencies Appropriations Act of 2000 (P.L. 106-69, §332) enacted two EAS eligibility requirements, prohibiting subsidies to carriers for service provided to (1) communities in the 48 contiguous states that are located fewer than 70 highway miles from the nearest large or medium hub airport; or (2) communities that require a per-passenger subsidy rate in excess of $200 unless such point is greater than 210 miles from the nearest large or medium hub airport.

In 2003, Vision 100—Century of Aviation Reauthorization Act (P.L. 108-176, §405) directed DOT to establish Community and Regional Choice Programs as alternatives to the traditional EAS service. In the following year, DOT established two pilot programs designed to allow communities to explore options that better suit their transportation needs while keeping costs under control. EAS eligibility requirements were not changed. For more on these two pilot programs, see the section "Measures to Shrink the Program."

In 2011, the Airport and Airway Extension Act (P.L. 112-27, Part IV) prohibited DOT from providing EAS to communities with annual per-passenger subsidies of over $1,000, regardless of their distance from the nearest hub airport. Also in 2011, the Consolidated and Further Continuing Appropriations Act, 2012 (P.L. 112-55) waived the requirement that carriers provide EAS flights using aircraft with 15 or more seats, allowing the use of smaller planes where passenger counts are low.

The Federal Aviation Administration Modernization and Reform Act of 2012 (P.L. 112-95) adopted additional EAS reform measures, including Section 421, which amended the definition of an "EAS eligible place"4 to require a minimum number of daily enplanements. The 2012 act also provided that for locations outside of Alaska and Hawaii to remain EAS-eligible, they must have participated in the EAS program at some time between September 30, 2010, and September 30, 2011. This officially overrode the original list of eligible communities (except for those in Alaska and Hawaii) and capped the number of communities that are eligible for EAS.

The FAA Extension, Safety, and Security Act of 2016 (P.L. 114-190) reauthorized the program through FY2017 without program modification. The FAA Reauthorization Act of 2018 (P.L. 115-254) reauthorized the program through FY2023 and introduced several legislative measures, including Section 453, which amends 49 U.S.C. §41736 to sunset the Air Transportation to Noneligible Places (ATNEP) program in 2020. The law also requires the Secretary of Transportation to waive application of the subsidy-per-passenger cap under certain conditions. See the section "Measures to Shrink the Program" for details.

Current Eligibility Requirements

Except in Alaska and Hawaii, an EAS-eligible place is now defined as a community that, between September 30, 2010, and September 30, 2011, either received EAS for which compensation was paid or received from the incumbent carrier a 90-day notice of intent to terminate EAS following which DOT required the carrier to continue providing service to the community (known as "holding in" the carrier). Starting October 1, 2012, no new communities can enter the program should they lose their unsubsidized service, except in Alaska and Hawaii. Airports that were formerly eligible but did not receive subsidized service during the specified year are no longer eligible for subsidized service and may not reenter the program.

A community receiving subsidy during FY2011 remains eligible for EAS subsidy if

EAS Communities in Alaska and Hawaii

Communities in Alaska and Hawaii are generally exempt from almost all EAS eligibility requirements, except one measure established by the Consolidated Appropriations Act of 2014 (P.L. 113-76) and the Continued Appropriations Resolution of 2015 (P.L. 113-164). Both laws directed that no EAS funds "shall be used to enter into a new contract with a community located less than 40 miles from the nearest small hub airport before the Secretary has negotiated with the community over a local cost share."

This requirement does not affect any Alaska EAS communities since none is within 40 miles of the nearest small hub airport. However, one community in Hawaii, Kamuela, was affected and entered a cost-sharing arrangement in 2018.

Alaska

There were 237 Alaska communities on the original list of EAS-eligible communities. At the end of FY2018, 63 communities in Alaska received subsidized service (see Appendix B), leaving 174 unsubsidized communities eligible for EAS subsidies. This represents a considerable increase from the 44 subsidized communities in 2015. The increase is due to additional Alaskan communities requesting subsidized service, which is permitted by law.

Diomede, a community in Alaska that was not on the original list, is receiving service from EAS funds via ATNEP (49 U.S.C. §41736), a program under which a state or local government may propose to the Secretary of Transportation that DOT provide compensation to an air carrier to serve a place that is not EAS-eligible, with a 50% local share.5 Section 453 of the FAA Reauthorization Act of 2018 (P.L. 115-254) would sunset the ATNEP program in two years, within which no more communities will be admitted into the program. Diomede, the only community currently in ATNEP, would become a full EAS community, meaning no local cost share would be required after the current agreement ends June 30, 2020.

The number of passengers served by EAS flights in Alaska is not readily available. The EAS program office does not compile this information as there are no requirements regarding minimum enplanement figures or per-passenger subsidies in Alaska.

Hawaii

At the end of FY2018, two communities in Hawaii, Hana and Kamuela, received subsidized service under EAS (see Appendix A). There are 10 EAS-eligible communities in Hawaii—nine on the original list of EAS communities plus Kalaupapa, which came into the EAS program via ATNEP and became a permanent EAS community with the 2012 FAA reauthorization.6

Program Administration

The EAS program is administered by the Office of the Secretary of Transportation, which determines the minimum level of service required at each eligible community by specifying

In general, DOT subsidizes two to four round trips a day with small aircraft from an EAS community to a large or medium hub airport, but in some cases it subsidizes flights to more than one hub.

Selection of EAS Carriers

DOT issues a request for proposals (RFP) to all scheduled carriers to provide service to an eligible community and institutes a carrier selection proceeding using a bid system. It is required by law to use the following four key criteria when considering carriers' proposals to provide subsidized service to EAS communities:7

The RFPs advise air carriers that their proposals for subsidy should be submitted on a sealed bid, "best and final" basis, and set forth the level of service (frequency, aircraft size, and potential hubs) that would be appropriate for the community given its location and traffic history. DOT typically receives one to three proposals per RFP. Once the carrier proposals are received, DOT formally solicits the views of the community as to which carrier and option it prefers.

After receiving the communities' input, DOT issues a decision designating the selected air carrier and specifying the service pattern (routing, frequency, and type of aircraft), annual subsidy rate, and effective period of the rate. DOT generally establishes two-year EAS service contracts, which allows for frequent bidding and gives communities as well as DOT flexibility to switch carriers.

Payment Procedures

DOT pays the air carriers in arrears at the end of every month. Carriers submit invoices based on the number of flights actually completed in conformance with the contract. They are paid according to the per-flight rate established in the contract, not according to passenger numbers.

If ad hoc service adjustments are made because of operational exigencies, the carrier reports those deviations on its invoice, and DOT makes appropriate adjustments in payment to the carrier.

EAS Hold-In Authority

By statute, if the air carrier serving an EAS community wants to discontinue service, it must first file a 90-day notice of its intent to suspend service. Hold-in authority prevents the incumbent carrier from suspending service until a replacement carrier begins service. DOT uses this authority to avoid service disruptions.

During the 90-day period, DOT will try to find a carrier willing to enter the market on a subsidy-free basis. If unsuccessful, DOT issues an order prohibiting the suspension and requesting proposals for replacement service, either with or without subsidy.

If it was serving an EAS-eligible community without subsidy, the incumbent carrier is eligible for compensation for being held in after the end of its original 90-day notice period. If the held-in carrier was already serving a community with EAS subsidy, it would continue to receive the same subsidy rate for six months, at which time it would be eligible for a rate increase.8

Program Costs

The EAS program is funded from overflight fees paid to the Federal Aviation Administration by foreign aircraft that transit U.S. airspace without landing in or taking off from the United States.9 Since FY2002, Congress has supplemented the overflight fees with discretionary annual appropriations of varying size.

Figure 1. Annual EAS Expenditures, FY1985-FY2018

Source: CRS and U.S. Department of Transportation.

Notes: Inflation adjustment based on Bureau of Economic Analysis Price Index for Government Consumption Expenditures and General Government Gross Output, National Income and Product Accounts Table 3.10.4, Line 12, "Federal consumption expenditures."

Figure 1 shows that total EAS program expenditures have increased sharply over time. In constant 2018 dollars, spending has increased 600% since 1996 and 132% since 2008. Spending has spiked sharply on two occasions, one after the 2001 terrorist attacks that temporarily disrupted the aviation market and led to an economic downturn and the other in 2008 and 2009, when oil prices rose sharply during a deep recession.

The FAA Modernization and Reform Act of 2012 sought to reduce discretionary spending on EAS through FY2015. Section 428 authorized appropriations for the discretionary portion of EAS funding of $143 million for FY2012, declining to $93 million for FY2015. However, the law also authorized all overflight fee revenues, rather than just the $50 million provided historically, to be made immediately available to the EAS program. This has had the effect of increasing total outlays for EAS subsidies, contrary to the expressed intent of at least some members of Congress.

The Consolidated and Further Continuing Appropriations Act of 2015 (P.L. 113-235) provided $263 million in total EAS funding for FY2015, including $108 million in funding from overflight fees and $155 million in discretionary appropriation. The FAA Extension, Safety, and Security Act of 2016 (P.L. 114-190) reauthorized the program at the existing level through FY2017. The FAA Reauthorization Act of 2018 (P.L. 115-254) authorized appropriations for the discretionary portion of EAS funding of $155 million for FY2018; $158 million for FY2019; $161 million for FY2020; $165 million for FY2021; $168 million for FY2022; and $172 million for FY2023. The program's total funding, including both appropriations and overflight revenues, was $288 million in FY2018.

Annual EAS funding from FY2012 to FY2018 is shown in Table 1.

Table 1. Essential Air Service Funding, FY2012-FY2018

(in millions of nominal dollars)

 

FY2012

FY2013

FY2014

FY2015

FY2016

FY2017

FY2018

Discretionary Appropriation

$ 143

$ 135

$ 149

$ 155

$175

$150

$155

Overflight Fee Collections

$ 50

$ 98

$ 119

$ 108

$108

$122

$133

Total Funding

$ 193

$ 233

$ 268

$ 263

$283

$272

$288

Source: U.S. Department of Transportation.

Between FY2012 and FY2018, annual EAS expenditures rose more than 49% in nominal dollars. These increases have occurred despite the numerous measures Congress has adopted over the years to contain program spending. Certain features of the program may have contributed to the challenge of controlling costs:

In FY2017, EAS subsidies in the contiguous 48 states plus Puerto Rico ranged from $9 to more than $778 per passenger. DOT does not have readily available data allowing calculation of changes in individual communities' per-passenger subsidy rates over time.

Two tables at the end of this report provide information about subsidies to individual EAS communities as of September 2018. Appendix A provides a list of the subsidized communities in the contiguous 48 states, Hawaii, and Puerto Rico. Appendix B lists the subsidized EAS communities in Alaska.

Measures to Shrink the Program

Over the years, Congress has sought to limit the scope of the EAS program, mostly by eliminating subsidy support for communities within a reasonable driving distance of a major hub airport and by imposing a cap on the per-passenger subsidy. Although numerous communities have been removed from the program, these efforts have generally failed to contain overall spending on EAS.

Some provisions in effect since the passage of the 2012 FAA reauthorization (P.L. 112-95) could delay, if not negate, the law's attempt to shrink the program. For example, Section 426(c) authorizes the Secretary of Transportation, subject to the availability of funds, to grant waivers to communities exceeding the $200 subsidy-per-passenger cap on a case-by-case basis; Section 421(e) authorizes an unlimited number of waivers that may be granted, on an annual basis, to communities not meeting the minimum daily enplanement requirement; and Section 425 permits restoration of EAS eligibility to a community determined ineligible for subsidized EAS once these conditions are met.

The FAA Reauthorization Act of 2018 included some provision requiring the Secretary of Transportation to waive application of the $200 subsidy-per-passenger cap under certain conditions (see section titled "$200 Subsidy Cap" for details).

70-Mile Rule

The Department of Transportation and Related Agencies Appropriations Act of 2000 prohibited DOT from subsidizing carriers that provide EAS service to communities in the 48 states plus Puerto Rico that are located fewer than 70 highway miles from the nearest large or medium hub airport. As a result, a few communities lost eligibility to receive EAS subsidy, including Hagerstown, MD, which is within 70 driving miles of Washington Dulles International Airport, and Lancaster, PA, which is within 70 driving miles of Philadelphia International Airport.12 However, Section 409 of Vision 100 (P.L. 108-176) allowed these two communities to petition DOT to review their mileage determinations. Based on certifications from the governor of each state that their communities were more than 70 miles from the nearest medium or large hub via the "most commonly used route," DOT reinstated both communities' eligibility for EAS subsidy. Since then, the "most commonly used route" standard has been extended multiple times, leaving both communities eligible for subsidized flights. The FAA Reauthorization Act of 2018 (P.L. 115-254) extended their eligibility through FY2023.13 The annual per-passenger subsidy in FY2017 was approximately $344 for Hagerstown and $268 for Lancaster, both of which have EAS flights to both Baltimore-Washington International Airport and Pittsburgh International Airport.

$1,000 Subsidy Cap

A 2011 law, the Airport and Airway Extension Act (P.L. 112-27), further limited EAS subsidies to $1,000 per passenger, regardless of the distance from the nearest hub airport, except for communities in Alaska and Hawaii. This resulted in eight communities with per-passenger subsidy over $1,000 becoming ineligible: Alamogordo/Holloman Air Force Base, NM; Ely, NV; Lewistown, MT; Miles City, MT; Kingman, AZ; Great Bend, KS; Huron, SD; and Worland, WY. Unlike other EAS statutory requirements, the $1,000-per-passenger subsidy limit may not be waived by the Secretary of Transportation.

$200 Subsidy Cap

During the late 1980s and early 1990s, EAS program eligibility requirements were revised by Congress and DOT in response to insufficient program funding. The Dire Emergency Supplemental Appropriations Act of 1989 (P.L. 101-45) prohibited DOT from subsidizing air service after September 30, 1989 to and from any EAS point in the contiguous 48 states for which subsidy exceeded $300 per passenger. As a result, six communities became ineligible for subsidized EAS service.14

This $300 cap was lowered to $200 for FY1990 in P.L. 101-164, and that cap was repeated in several later appropriations acts through the 1990s. It was made permanent by the Department of Transportation and Related Agencies Appropriations Act of 2000,15 which set a maximum subsidy of $200 per passenger, except in Alaska and Hawaii, unless the community is more than 210 miles from the nearest large or medium hub airport. DOT has routinely provided notice of this statutory mandate to communities that appeared to be at risk of exceeding the cap, with the expectation that they would work with prospective EAS air carriers to keep the subsidy per passenger below the $200 cap. Between 1990 and 2006, 33 communities lost their eligibility because their per-passenger EAS subsidy exceeded the $200 maximum.

In late 2006, there were no communities whose subsidies were over the $200 cap. For the following eight years, DOT stopped enforcing the $200 cap in response to a number of shocks that affected the EAS program during that time. These included the cessation of operations by four air carriers in 2008, prolonged lapses in scheduled service at more than 35 EAS communities, and higher subsidy requests from carriers resulting from higher fuel prices.16

On May 20, 2016, DOT issued order 2016-5-17, finding 30 communities had exceeded the $200-per-passenger subsidy cap in FY2015. Among these 30 communities, eight had experienced service hiatus and received waivers from DOT (Order 2016-8-21). The remaining 22 communities all submitted petitions for a waiver and eventually received waivers, per DOT Order 2016-11-8. All continued to receive subsidized EAS service or remain eligible to participate in the community and regional choice pilot programs.

In September 2017, DOT indicated in Order 2017-9-23 that 27 communities exceeded the subsidy cap in FY2016, among which six also failed to meet the daily 10-enplanment requirement.17 Among these 27 communities, waivers were granted to eight communities that had experienced service hiatus during FY2016. On December 29, 2017, in its final Order 2017-12-2, DOT granted waivers to 18 of the 19 communities seeking waivers to one or both eligibility requirements. It denied the petition for waiver from Jamestown, NY, which failed to comply with either requirement but has the closest proximity (76 driving miles) to a medium hub airport, Buffalo Niagara International Airport. In FY2016, Jamestown had the second-highest per-passenger subsidy ($460) and the lowest average daily enplanements (seven) among EAS communities.

On May 11, 2018, DOT issued Order 2018-5-14, finding that 25 communities did not meet one or both statutory eligibility requirements during FY2017. Four of these communities had service hiatus in FY2017 and were therefore granted waivers. The remaining 21 communities submitted petitions for a waiver and received waivers in August 2018, per DOT Order 2018-8-2.

The FAA Reauthorization Act of 2018 requires the Secretary of Transportation to waive application of the subsidy-per-passenger cap if the community's subsidy per passenger for a fiscal year is lower than its subsidy per passenger for any of the three previous fiscal years. The law also requires the Secretary to waive application of the subsidy-per-passenger cap if a community's per-passenger subsidy for a fiscal year is less than 10% higher than its highest subsidy per passenger in any of the three previous fiscal years, but this may be waived only once per community. This means the communities that meet the criteria would be exempt from the $200 per-passenger subsidy cap, while the ones that do not meet the criteria may still petition DOT for a waiver.

Minimum Daily Enplanement

The FAA Modernization and Reform Act of 2012 amended 49 U.S.C §41731(a)(1)(B) to change the definition of "eligible place" for EAS, such that a community must maintain an average of 10 or more enplanements per day to be eligible. This requirement, however, does not apply to locations in Alaska and Hawaii or to communities more than 175 driving miles away from the nearest large or medium hub airport.18 The Secretary of Transportation may also waive, on an annual basis, the 10-enplanement requirement if a community demonstrates to the Secretary's satisfaction that its low average daily enplanement level is caused by a temporary decline in enplanements.19

On April 24, 2014, DOT issued a tentative order20 indicating its intention to enforce the 10-passengers-per-day rule. Based on FY2013 EAS data, this would have ended subsidized service to 13 communities: Athens, GA; Bradford, PA; El Centro, CA; Fort Dodge, IA; Franklin/Oil City, PA; Greenville, MS; Hagerstown, MD; Jackson, TN; Lancaster, PA; Kingman, AZ; Macon, GA; Merced, CA; and Muscle Shoals, AL.

All the communities except Athens, GA, filed petitions for waivers. On September 26, 2014, DOT issued Order 2014-9-21, granting these 12 communities temporary waivers. DOT indicated that these communities' compliance with the 10-passengers-per-day requirement would be reassessed based on FY2015 data. EAS service to Athens, GA, ended on September 30, 2014.

In May 2015, DOT issued another tentative order21 indicating its intention to enforce the 10-passengers-per-day rule based on FY2014 data. This would have affected subsidized service to three communities: Mason City, IA; Show Low, AZ; and Victoria, TX. All three communities filed petitions for a waiver. DOT granted waivers to all three, per order 2015-11-19. In DOT order 2016-5-17, mentioned previously, DOT found that in FY2015, 12 of the 30 communities that had exceeded the $200 subsidy cap also failed to meet the requirement of at least 10 enplanements per day. Four communities were in the group of eight that had experienced service hiatus. DOT Order 2016-8-21 granted waivers to these communities. The remaining eight communities filed for and were granted waivers by DOT Order 2016-11-8. They continue to receive subsidized EAS service or remain eligible to participate in the community and regional choice pilot programs.

In September 2017, DOT's Order 2017-9-23 stated that six communities failed to meet the average daily 10-enplanment requirement. DOT later updated the traffic data and determined that one community, Bradford, PA, met the enplanement requirement. Among the remaining five communities, waivers were granted to all except Jamestown, NY.22 EAS service to Jamestown, NY, ended on January 16, 2018.

On May 11, 2018, DOT indicated in Order 2018-5-14 that 25 communities did not meet one or both statutory eligibility requirements in FY2017. Four of these communities had service hiatus in FY2017 and were therefore tentatively granted waivers. Among the remaining 21 communities, four did not meet the requirement of an average of 10 daily enplanements. They submitted petitions and were granted waivers in August 2018.23

Cost Sharing If Near a Small Hub

The Consolidated Appropriations Act, 2014, the Continued Appropriations Resolution, 2015, and the Consolidated Appropriations Act, 2018, directed that no EAS funds "shall be used to enter into a new contract with a community located less than 40 miles from the nearest small hub airport before the Secretary has negotiated with the community over a local cost share." This requirement does not exempt communities in Alaska and Hawaii. This would affect two communities that are within a 40-mile distance of a small hub airport—Lancaster, PA, and Kamuela, HI.24

Lancaster's EAS contract was extended for an additional six-month duration three times after it expired on September 30, 2017. This was caused by the uncertainty of Lancaster's eligibility during the multiple short-term extensions of EAS authority before the passage of the FAA Reauthorization Act of 2018, which made DOT unable to go through the regular request-for-proposal process. After Lancaster's eligibility was confirmed in the FAA Reauthorization Act, DOT issued a request for proposals with local cost sharing.25 A one-year cost-share agreement for Kamuela was reached among DOT, the County of Hawaii, and the selected air carrier, with the County of Hawaii paying 5% of the subsidy cost.26

Community and Regional Choice Pilot Programs

Section 405 of Vision 100—Century of Aviation Reauthorization Act directed DOT to establish certain Community and Regional Choice Programs to provide communities with alternatives to traditional EAS service. In the following year, 2004, DOT established two pilot programs: the Alternate Essential Air Service Pilot Program (Alternate EAS)27 and the Community Flexibility Pilot Program.28 All communities receiving subsidized EAS at the time of application can participate.

Alternate EAS (AEAS) allows communities to forgo subsidized EAS for a prescribed amount of time in exchange for a grant to spend on options that may better suit their transportation needs. These options include more frequent air service with smaller aircraft, on-demand air taxi service, scheduled or on-demand surface transportation, or purchasing an aircraft. The maximum grant amount may not exceed the annual EAS subsidy at the time of application to the program. Participating communities still need to meet the statutory eligibility criteria for EAS. Currently, AEAS has seven participants: Beckley, WV; Crescent City, CA; Macon, GA; Manistee/Ludington, MI; Page, AZ; Parkersburg, WV/Marietta, OH; and Tupelo, MS. All are using the proceeds to secure public charter service.29

The Community Flexibility Pilot Program allows as many as 10 communities that are receiving subsidized EAS to forgo EAS for 10 years in exchange for a grant equal to no more than two years' EAS subsidy. The grant can be used for a wide range of airport projects. Currently, Visalia, CA, which entered the program in March 2017, is the only participating community.30

Issues and Options

The rate of increase in EAS spending remains a central issue of concern to Congress. However, program spending should be examined in conjunction with the number of communities served. According to a GAO report, 95 communities received subsidized EAS service in 1995 and 150 in 2008.31 In 2018, this number was 174 (see Appendix A).

Nevertheless, the growth rate of average subsidy per EAS community over the years has been significant. The average annual EAS subsidy in non-Alaska communities rose from $1 million per community in FY200232 to $2.6 million in FY2018.33

In addition to multiple contributing factors previously discussed, government regulations may affect the provision of air service to small communities. For example, a 2013 FAA pilot qualification rule34 increased the qualification requirements for airline pilots. Many pilots working for regional airlines did not meet the new minimum qualifications. The rules appear to have forced small carriers to raise salaries in order to attract qualified pilots, potentially raising EAS subsidy costs as well.35

In a 2009 report, GAO offered a number of options for modifying the EAS program:36

The first three options were adopted and included in federal laws. GAO also suggested that a multimodal approach to provide financial assistance could potentially be more responsive to communities' needs.37 It reiterated this recommendation in its 2014 report, suggesting that multimodal solutions, such as bus service to large airports or air taxi service to connect communities, could be more cost-effective than the current EAS program.38

Despite the changes that have been made to limit communities' eligibility for EAS and to permit the use of smaller aircraft, it appears that eligible communities, air carriers, and DOT may lack incentives to minimize program expenditures. The changes adopted in recent years, including in the FAA Modernization and Reform Act of 2012, have not proven effective in controlling program costs, in part because communities that fail to meet certain eligibility requirements almost always are granted waivers upon request. The FAA Reauthorization Act of 2018 provides that certain eligibility requirements will not apply to a number of these communities as long as they meet certain criteria.

Appendix A. Subsidized EAS Outside of Alaska

State

Number of EAS Communities

EAS Community

Hub(s)

Annual Subsidy Rate as of Sept. 1, 2018

 

 

 

 

 

Alabama

1

Muscle Shoals

ATL/BNA

$2,778,811

Arkansas

4

El Dorado/Camden

DFW

$2,306,627

Arkansas

 

Harrison

DFW/MEM

$2,397,188

Arkansas

 

Hot Springs

DFW

$2,378,312

Arkansas

 

Jonesboro

STL

$2,040,947

Arizona

3

Page

LAS/PHX

$4,398,924

Arizona

 

Prescott

DEN/LAX

$3,983,055

Arizona

 

Show Low

PHX

$1,673,267

California

3

Crescent City

OAX

$3,310,503

California

 

El Centro

LAX

$2,488,824

California

 

Merced

LAX/OAK

$3,249,944

Colorado

3

Alamosa

DEN

$2,593,050

Colorado

 

Cortez

DEN/PHX

$3,580,480

Colorado

 

Pueblo

DEN

$2,548,067

Georgia

1

Macon

BWI

$4,687,979

Hawaii

2

Hana

OGG

$114,099

Hawaii

 

Kamuela

OGG

$377,584

Iowa

4

Burlington

ORD/STL

$2,439,963

Iowa

 

Fort Dodge

MSP/STL

$2,949,904

Iowa

 

Mason City

MSP/ORD

$2,949,904

Iowa

 

Waterloo

ORD

$1,727,411

Illinois

3

Decatur

ORD/STL

$2,915,273

Illinois

 

Marion/Herrin

STL

$2,840,958

Illinois

 

Quincy/Hannibal, MO

ORD

$2,659,328

Kansas

5

Dodge City

DEN

$3,621,182

Kansas

 

Garden City

DFW

$873,861

Kansas

 

Hays

DEN

$3,123,573

Kansas

 

Liberal/Guymon, OK

DEN

$3,747,998

Kansas

 

Salina

DEN/ORD

$2,995,087

Kentucky

2

Owensboro

STL

$2,107,191

Kentucky

 

Paducah

ORD

$2,787,695

Maryland

1

Hagerstown

BWI/PIT

$1,785,638

Maine

4

Augusta/Waterville

BOS

$2,045,122

Maine

 

Bar Harbor

BOS

$3,177,651

Maine

 

Presque Isle/Houlton

EWR

$4,780,955

Maine

 

Rockland

BOS

$2,127,026

Michigan

9

Alpena

DTW

$2,348,781

Michigan

 

Escanaba

DTW

$2,832,133

Michigan

 

Hancock/Houghton

ORD

$2,024,076

Michigan

 

Iron Mountain/Kingsford

DTW/MSP

$3,924,019

Michigan

 

Ironwood/Ashland, WI

MSP/ORD

$3,513,814

Michigan

 

Manistee/Ludington

MDW

$2,990,575

Michigan

 

Muskegon

ORD

$2,608,523

Michigan

 

Pellston

DTW

$1,346,679

Michigan

 

Sault Ste. Marie

DTW/MSP

$1,998,416

Minnesota

5

Bemidji

MSP

$1,309,684

Minnesota

 

Brainerd

MSP

$1,653,672

Minnesota

 

Chisholm/Hibbing

MSP

$2,792,813

Minnesota

 

International Falls

MSP

$3,274,852

Minnesota

 

Thief River Falls

MSP

$3,350,312

Missouri

4

Cape Girardeau/Sikeston

ORD

$2,984,760

Missouri

 

Fort Leonard Wood

STL

$3,182,419

Missouri

 

Joplin

DFW

$839,513

Missouri

 

Kirksville

STL

$1,989,635

Mississippi

4

Greenville

BNA/DFW

$2,724,153

Mississippi

 

Laurel/Hattiesburg

DFW/ORD

$3,133,072

Mississippi

 

Meridian

DFW/ORD

$2,985,821

Mississippi

 

Tupelo

BNA

$3,932,032

Montana

7

Butte

SLC

$881,665

Montana

 

Glasgow

BIL

$2,194,011

Montana

 

Glendive

BIL

$2,132,813

Montana

 

Havre

BIL

$2,212,162

Montana

 

Sidney

BIL

$4,124,531

Montana

 

West Yellowstone

SLC

$580,957

Montana

 

Wolf Point

BIL

$2,327,384

North Dakota

3

Devils Lake

DEN

$3,935,087

North Dakota

 

Dickinson

DEN

$4,162,080

North Dakota

 

Jamestown (ND)

DEN

$2,688,493

Nebraska

7

Alliance

DEN

$2,273,850

Nebraska

 

Chadron

DEN

$2,066,589

Nebraska

 

Grand Island

DFW

$907,348

Nebraska

 

Kearney

DEN

$3,675,276

Nebraska

 

McCook

DEN

$2,462,456

Nebraska

 

North Platte

DEN

$3,575,926

Nebraska

 

Scottsbluff

DEN

$3,152,294

New Hampshire

1

Lebanon/White River Jct.

BOS/HPN

$3,343,904

New Mexico

3

Carlsbad

ABQ/DFW

$3,041,207

New Mexico

 

Clovis

DFW

$4,281,129

New Mexico

 

Silver City/Hurley/Deming

ABQ/PHX

$3,368,032

New York

5

Massena

BOS

$2,870,608

New York

 

Ogdensburg

ALB/BOS

$2,721,962

New York

 

Plattsburgh

IAD

$3,371,895

New York

 

Saranac Lake/Lake Placid

BOS

$2,045,854

New York

 

Watertown (NY)

PHL

$3,949,646

Oregon

1

Pendleton

PDX

$2,273,823

Pennsylvania

6

Altoona

BWI/PIT

$2,371,942

Pennsylvania

 

Bradford

PIT

$2,045,826

Pennsylvania

 

DuBois

BWI/PIT

$2,967,587

Pennsylvania

 

Franklin/Oil City

PIT

$1,442,788

Pennsylvania

 

Johnstown

BWI/PIT

$2,912,558

Pennsylvania

 

Lancaster

BWI/PIT

$2,504,174

Puerto Rico

1

Mayaguez

SJU

$1,550,803

South Dakota

3

Aberdeen

MSP

$1,389,795

South Dakota

 

Pierre

DEN

$4,651,586

South Dakota

 

Watertown (SD)

DEN

$2,406,155

Tennessee

1

Jackson

ATL/STL

$1,884,399

Texas

1

Victoria

AUS/IAH

$2,660,000

Utah

3

Cedar City

SLC

$2,645,932

Utah

 

Moab

DEN

$3,991,840

Utah

 

Vernal

DEN

$3,097,656

Virginia

1

Staunton

IAD/ORD

$2,992,903

Vermont

1

Rutland

BOS

$1,360,481

Wisconsin

2

Eau Claire

ORD

$2,464,972

Wisconsin

 

Rhinelander

MSP

$1,714,307

West Virginia

5

Beckley

CLT

$2,828,034

West Virginia

 

Clarksburg/Fairmont

IAD/ORD

$2,850,452

West Virginia

 

Greenbrier/W. Sulphur Sps

IAD/ORD

$3,994,423

West Virginia

 

Morgantown

BWI/PIT

$2,989,432

West Virginia

 

Parkersburg/Marietta, OH

CLT

$1,938,219

Wyoming

2

Cody

DEN

$850,000

Wyoming

 

Laramie

DEN

$2,182,244

Total

111

 

 

$293,612,625

Source: Department of Transportation, Non-Alaska U.S. Carriers Subsidy Reports, September 2018.

https://www.transportation.gov/office-policy/aviation-policy/essential-air-service-reports.

Appendix B. Subsidized EAS in Alaska

Alaska EAS Community

Hub(s) Served

Annual Contract Subsidy Rate as of September 1, 2018

 

 

 

Adak

ANC

$2,907,935

Akhiok

AKN

$238,460

Akutan

DUT

$890,001

Alitak

ADQ

$36,655

Amook Bay

ADQ

$36,655

Angoon

JNU

$303,298

Atka

DUT

$990,578

Central

FAI

$162,474

Chatham

JNU

$6,048

Chignik

AKN

$362,099

Chignik Lake

AKN

$362,099

Chisana

TKJ

$96,810

Circle

FAI

$162,474

Clark's Point

DLG

$120,978

Cordova

ANC/JNU

$3,107,161

Diomede*

OME/WAA

$190,476

Egegik

AKN

$386,567

Ekwok

DLG

$102,288

Elfin Cove

JNU

$124,795

Excursion Inlet

JNU

$30,792

False Pass

CDB

$228,927

Funter Bay

JNU

$14,040

Gulkana

ANC

$206,128

Gustavus

JNU

$776,790

Healy Lake

FAI

$113,203

Hydaburg

WFB

$195,319

Igiugig

AKN

$200,933

Kake

JNU

$181,621

King Cove

CDB

$638,087

Kitoi Bay

ADQ

$36,655

Koliganek

DLG

$314,029

Lake Minchumina

FAI

$102,300

Levelock

AKN

$188,636

Manley

FAI

$43,333

Manokotak

DLG

$308,849

May Creek

GKN

$130,964

McCarthy

GKN

$130,964

McGrath

ANC

$669,103

Minto

FAI

$43,333

Moser Bay

ADQ

$36,655

New Stuyahok

DLG

$103,877

Nikolski

DUT

$331,986

Olga Bay

ADQ

$36,655

Pelican

JNU

$348,103

Perryville

AKN

$647,373

Petersburg

JNU/KTN

$470,525

Pilot Point

AKN

$212,971

Port Alexander

SIT

$99,364

Port Bailey

ADQ

$36,655

Port Heiden

AKN

$491,662

Port Williams

ADQ

$36,655

Seal Bay

ADQ

$36,655

South Naknek

AKN

$143,791

St. George

SNP/ANC

$354,910

Tatitlek

MRI

$102,779

Tenakee

JNU

$152,127

Twin Hills

DLG

$233,103

Uganik

ADQ

$36,655

Ugashik

AKN

$212,971

West Point

ADQ

$36,655

Wrangell

JNU/KTN

$470,525

Yakutat

ANC/JNU

$3,107,161

Zachar Bay

ADQ

$36,655

Total: 63

 

$22,918,323

Source: U.S. Department of Transportation, Alaskan Subsidized EAS Reports, September 2018.

https://www.transportation.gov/office-policy/aviation-policy/essential-air-service-reports.

Author Contact Information

[author name scrubbed], Analyst in Transportation and Industry ([email address scrubbed], [phone number scrubbed])

Footnotes

1.

Effective June 1994, the Federal Aviation Act was recodified as subtitles II, III, and V-X of 49 U.S.C., "Transportation." The former Section 419 of the Federal Aviation Act is now 49 U.S.C. §§41731-41742.

2.

Before deregulation, air carriers' operating certificates for most of these communities required carriers to provide two daily round trips. The prospect of allowing carriers to terminate scheduled service without federal approval raised concern in Congress that communities with relatively low traffic levels would lose air service entirely as airlines shifted their operations to larger and potentially more profitable markets.

3.

P.L. 104-264 §278 amended 49 U.S.C. §41742, eliminating the EAS program expiration date of September 30, 1998.

4.

49 U.S.C. §41731.

5.

http://www.gpo.gov/fdsys/pkg/USCODE-2011-title49/pdf/USCODE-2011-title49-subtitleVII-partA-subpartii-chap417-subchapII-sec41736.pdf. Absent from the original list of EAS communities in Alaska, Diomede is not considered an EAS community, but it is receiving subsidized air service via ATNEP, which is administered by the EAS program office and the DOT finance office. The federal share for Diomede comes out of the EAS program budget.

6.

DOT order 91-4-6, OST-00-6773-3. Kalaupapa became an eligible community because it received a termination notice between September 30, 2010, and September 30, 2011, and DOT held the incumbent carrier in while it selected a replacement carrier.

7.

49 U.S.C. §41733(c)(1). In addition, the Consolidated Appropriations Act, 2016 (P.L. 114-113), provided that when "determining between or among carriers competing to provide service to a community, the Secretary may consider the relative subsidy requirements of the carriers."

8.

The six-month period discourages carriers from deliberately submitting below-cost proposals to get selected and immediately coming back to DOT hoping to get a higher subsidy rate.

9.

The Federal Aviation Administration Reauthorization Act of 1996 (P.L. 104-264) authorized the collection of overflight fees.

10.

49 U.S.C. §41732 sets forth minimum requirements for EAS service, typically two daily round trips six days a week to a hub airport with convenient connecting service to a substantial number of destinations.

11.

GAO-14-454T, Commercial Aviation: Status of Air Service to Small Communities and the Federal Programs Involved, April 30, 2014, p. 11.

12.

DOT Order 2004-3-26 (Lancaster, PA) and DOT Order 2005-4-17 (Hagerstown, MD).

13.

P.L. 115-254 §457.

14.

DOT order 89-9-37, effective October 1, 1989.

15.

P.L. 106-69, 113 Stat. 986.

16.

Email correspondence between CRS and DOT.

17.

DOT Order 2017-12-2. The list of six communities not meeting the 10-enplanement requirement was later adjusted down to five, after DOT received updated enplanement numbers.

18.

49 U.S.C. §41731(c) & (d).

19.

49 U.S.C. §41731(e).

20.

DOT Order 2014-6-6.

21.

DOT Order 2015-5-14 finds four communities not compliant with the 10-passengers-per-day requirement: Jamestown, NY; Mason City, IA; Show Low, AZ; and Victoria TX. Later, DOT order 2015-5-20 confirmed that Jamestown, NY, averaged more than 10 enplanements per day in FY2014 and, therefore, remains EAS-eligible.

22.

DOT Order 2017-12-2.

23.

DOT Order 2018-8-2.

24.

Driving distance between Lancaster, PA, and its nearest small hub airport, Harrisburg International airport, is under 40 miles, as is the distance between Kamuela, HI, and its nearest small hub airport, Kona International Airport.

25.

DOT Order 2018-11-1.

26.

DOT Order 2018-4-14.

27.

Docket OST-2004-18715.

28.

Docket OST-2000-8556

29.

https://www.transportation.gov/office-policy/aviation-policy/dot-regulation-14-cfr-380-public-charters.

30.

DOT order 2017-1-2. Visalia will forgo participation in the traditional EAS Program for a 10-year period, beginning March 1, 2017, in exchange for a grant to provide funding for the construction of airport hangers.

31.

GAO-09-753, National Transportation System: Options and Analytical Tools to Strengthen DOT's Approach to Supporting Communities' Access to the System, July 2009, p. 4.

32.

GAO-14-454T, Commercial Aviation: Status of Air Service to Small Communities and the Federal Programs Involved, April 30, 2014, p. 9.

33.

CRS calculations based on DOT data in Appendix A.

34.

Required by Airline Safety and FAA Extension Act of 2010, P.L. 111-216 §217 (c)(1), 124 Stat. 2348, 2368.

35.

Statement of Russell "Chip" Childs, President and CEO, SkyWest, Inc., before House Committee on Transportation and Infrastructure, Subcommittee on Aviation, hearing "Building a 21st Century Infrastructure for America: Air Transportation in the United States in the 21st Century," March 8, 2017.

36.

GAO-09-753, National Transportation System: Options and Analytical Tools to Strengthen DOT's Approach to Supporting Communities' Access to the System, July 2009, pp. 25-33.

37.

Ibid., pp. 34-36.

38.

GAO-14-454T, Commercial Aviation: Status of Air Service to Small Communities and the Federal Programs Involved, April 30, 2014, pp. 18-19.