Essential Air Service (EAS): Frequently Asked Questions

Essential Air Service (EAS): Frequently Asked Questions

Essential Air Service (EAS):
Frequently Asked Questions
Rachel Y. Tang
Analyst in Transportation and Industry
February 3, 2014
Congressional Research Service
7-5700
www.crs.gov
R41666

Essential Air Service (EAS): Frequently Asked Questions

Contents
Introduction ...................................................................................................................................... 1
What Is Essential Air Service? ......................................................................................................... 1
What Are the Eligibility Requirements? .......................................................................................... 2
How Is EAS Funded? ...................................................................................................................... 3
How Does DOT Select EAS Carriers? ............................................................................................ 3
What Is EAS Hold-In Authority? ..................................................................................................... 4
How Many Communities Receive EAS Subsidies? ........................................................................ 4

Tables
Table 1. Essential Air Service Funding (FY2011-FY2015) ............................................................. 3
Table 2. List of Subsidized EAS Outside of Alaska ........................................................................ 5
Table 3. List of Subsidized EAS in Alaska ...................................................................................... 9

Contacts
Author Contact Information........................................................................................................... 10

Congressional Research Service

Essential Air Service (EAS): Frequently Asked Questions

Introduction
On February 14, 2012, President Obama signed into law a four-year reauthorization of Federal
Aviation Administration (FAA) programs, the FAA Modernization and Reform Act of 2012 (P.L.
112-95; the 2012 Act). The act is the first long-term authorization for federal civil aviation
programs since 2007, and was enacted following 23 short-term extensions.
The Essential Air Service (EAS) program was a focus of controversy during the FAA
reauthorization process. The final legislation included policy reforms and changes to the funding
of the EAS program. The Consolidated Appropriations Act of 2014 (P.L. 113-76), signed into law
by the President on January 17, 2014, provided funding for FY2014, along with some relatively
minor changes to the program.
This report provides an overview of the EAS program and discusses the changes introduced by
the FAA reauthorization bill and the Consolidated Appropriations Act of 2014.1
What Is Essential Air Service?
The Airline Deregulation Act of 1978 (P.L. 95-504) 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 added Section 419 to the Federal Aviation Act,2 which
established the EAS program to ensure that smaller communities could retain a link to the
national air transportation system. The purpose of the EAS program was to provide a continuation
of service to those small communities that were served by certificated air carriers before
deregulation, with subsidies if necessary. It continues to ensure at least a minimum level of air
service to small communities which would otherwise be unprofitable for commercial airlines to
serve.
The EAS program is administered by the Office of the Secretary of the U.S. Department of
Transportation (DOT), which determines the minimum level of service required at each eligible
community by specifying
• a hub through which the community is linked to the national network;
• a minimum number of round trips and available seats that must be provided to
that hub;
• certain characteristics of the aircraft to be used; and
• the maximum permissible number of intermediate stops to the hub.

1 The major sources for this report are information and data from the U.S. Department of Transportation, Office of
Aviation Analysis, http://www.dot.gov/policy/aviation-policy/small-community-rural-air-service/essential-air-service,
as viewed on January 21, 2014.
2 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. Sections 41731-41742.
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Essential Air Service (EAS): Frequently Asked Questions

Where necessary, DOT provides federal subsidies to a carrier to ensure that the specified level of
service is provided.
What Are the Eligibility Requirements?
The Airline Deregulation Act of 1978 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 approximately 200 in Alaska.
Over the years, Congress and DOT have worked to limit the scope of the program, mostly by
eliminating subsidy support for communities within a reasonable driving distance of a major hub
airport. The 2012 FAA Reauthorization Act adopted additional EAS reform measures, including
Section 421, which amended the definition of an “EAS eligible place”3 to require a minimum
number of daily enplanements.
Under the 2012 Act, for locations to remain EAS-eligible they must have participated in the EAS
program at any time between September 30, 2010, and September 30, 2011. An EAS-eligible
place is now defined as a community that, during this period, either received EAS for which
compensation was paid under the EAS program or received from the incumbent carrier a 90-day
notice of intent to terminate EAS following which DOT required it 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.
This change limits EAS subsidies to those already receiving them and, in effect, eliminates the
eligibility of airports that were formerly eligible but did not receive subsidies at any time between
September 30, 2010, and September 30, 2011.
These EAS communities from FY2011 remain eligible for EAS subsidy if4
• they are located more than 70 miles from the nearest large or medium hub
airport;
• they require a rate of subsidy per passenger of $200 or less, unless the
community is more than 210 miles from the nearest hub airport;
• the average rate of subsidy per passenger is less than $1,000 during the most
recent fiscal year at the end of each EAS contract, regardless of the distance from
hub airport; and
• the communities have an average of 10 or more enplanements per service day
during the most recent fiscal year beginning after September 30, 2012, unless
these locations are more than 175 driving miles from their nearest medium or
large hub airport or unless DOT is satisfied that any decline below 10
enplanements is temporary.

3 49 U.S.C. §41731.
4 The Department of Transportation Appropriations Act of 2000 (P.L. 106-69) Section 332 enacted the 70-mile rule and
the $200-per-passenger subsidy rule.
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Essential Air Service (EAS): Frequently Asked Questions

These limitations apply only to the contiguous 48 states and Puerto Rico. EAS communities in
Alaska and Hawaii are exempt from these requirements.
Further, the Consolidated Appropriations Act of 2014 (P.L. 113-76) directed that no EAS funds
should 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 may affect two communities currently receiving EAS subsidies that are within a
40-mile distance from a small hub airport: Lancaster, PA, and Pueblo, CO.
How Is EAS Funded?
The EAS program is funded through annual transfers of overflight fees paid to FAA by foreign
aircraft that fly through U.S. airspace but do not land in the country, supplemented by annual
appropriations of varying size.
Section 428 of the FAA Modernization and Reform Act authorizes appropriations for the
discretionary portion of EAS funding of $143 million for FY2012; $118 million for FY2013;
$107 million for FY2014; and $93 million for FY2015. It also authorizes all overflight fee
revenues, rather than just the $50 million provided historically, to be made immediately available
to the EAS program.
The Consolidated Appropriations Act of 2014 provided $249 million in total EAS funding for
FY2014, including $100 million in mandatory funding and $149 million in discretionary
appropriations. This appropriated level exceeds the amount appropriated in the 2012 Act by $42
million. Annual EAS funding from FY2011 to FY2015 is shown in Table 1.
Table 1. Essential Air Service Funding (FY2011-FY2015)
(in millions)

FY2011 FY2012 FY2013 FY2014 FY2015
Discretionary
Appropriations
$150 $143 $118 $149 $93
Overflight Fee Collections
$50
$50
$75
$100
$100
Total
Funding
$200 $193 $193 $249 $193
Source: U.S. Department of Transportation.
Note: Projected overflight fee col ections provided by Office of Management and Budget
(OMB) Max Database.
How Does DOT Select 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. However,
DOT does not automatically select the carrier submitting the lowest bid. It is required by law to
use the following four criteria when selecting air carriers to serve EAS communities:
• service reliability;
• contractual and marketing arrangements with a larger carrier at the hub;
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Essential Air Service (EAS): Frequently Asked Questions

• interline arrangements with a larger carrier at the hub; and
• community views.
The RFPs from DOT 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
hubs) that would be appropriate for the community given its location and traffic history. Once the
carrier proposals are received, DOT formally solicits the views of the communities as to which
carrier and option they prefer.
After receiving the communities’ input, DOT issues a decision designating the selected air carrier
and specifying the specific service pattern (routing, frequency, and type of aircraft), annual
subsidy rate, and effective period of the rate. DOT generally establishes a two-year EAS service
contract, which allows for the competitive bidding process and gives communities and DOT
flexibility to switch carriers.
What Is EAS Hold-In Authority?
If the last air carrier serving an EAS community wants to discontinue service, it must first file a
90-day notice of its intent to suspend service under the EAS statutes. Hold-in authority prevents
the incumbent carrier from suspending service until a replacement carrier begins service.
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.
The incumbent carrier is eligible for compensation for being held in after the end of its original
90-day notice period, if it was serving a community subsidy-free. If the incumbent was already
serving a community with EAS subsidy, that carrier would continue to receive the same subsidy
rate for six months, at which time it is eligible for a rate increase.5
How Many Communities Receive EAS Subsidies?
DOT currently subsidizes air service to serve 160 communities across the country that otherwise
would not receive any scheduled commercial air service. As of January 1, 2014, DOT was
subsidizing service at 117 communities in the contiguous 48 states, Hawaii, and Puerto Rico, and
43 communities in Alaska. In general, DOT subsidizes two to four round trips a day with small
aircraft from an EAS community to a major hub airport.
Table 2 provides a list of the subsidized EAS communities in the contiguous 48 states, Hawaii,
and Puerto Rico, together with their annual subsidy rates, as of January 1, 2014. Table 3 lists the
subsidized EAS communities in Alaska and their annual subsidy rates (as of January 1, 2014).

5 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.
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Essential Air Service (EAS): Frequently Asked Questions

Table 2. List of Subsidized EAS Outside of Alaska
Number of
EAS Subsidy
Per Passenger
EAS
Rate as of
Subsidy YE
State
Communities EAS
Community
Hub(s)
Jan. 1, 2014
Sept. 30, 2013
Alabama 1
Muscle
Shoals
ATL
$2,603,365
$655
Arizona 4
Kingman LAX
$1,635,180
$984
Arizona
Page
DEN/PHX
$2,472,028
$196
Arizona
Prescott LAX/DEN
$2,094,325
$194
Arizona
Show
Low
PHX/LAX
$1,672,000
$224
Arkansas 4
El
Dorado/Camden
DAL/MEM $1,977,153
$255
Arkansas
Harrison MEM/MCI $2,251,207
$204
Arkansas
Hot
Springs
DAL/MEM
$1,637,012
$306
Arkansas
Jonesboro
STL
$1,717,781
$175
California 4
Crescent
City
SFO
$1,996,959 $79
California
El
Centro BUR/SAN $1,943,751
$327
California
Merced LAX
$1,698,878
$353
California
Visalia
LAX
$1,697,929
$251
Colorado 3
Alamosa DEN
$2,078,676 $149
Colorado
Cortez DEN
$2,240,766
$137
Colorado
Pueblo DEN
$1,592,276
$174
Georgia 2
Athens BNA
$1,630,410
$443
Georgia
Macon ATL/MCO
$1,998,696
$805
Hawai 2
Kalaupapa
HNL/MKK
$932,509
N/A
Hawaii
Kamuela
OGG $494,291
N/A
Illinois 3
Decatur
ORD/STL
$2,667,922
$208
Illinois
Marion/Herrin
STL $2,104,616
$105
Illinois
Quincy STL $1,956,856
$94
Iowa 5
Burlington
ORD/STL
$1,917,566
$148
Iowa
Fort
Dodge
MSP $1,798,693
$307
Iowa
Mason
City
MSP $1,174,468
$166
Iowa
Sioux
City
ORD $1,512,799
$30
Iowa
Waterloo
ORD $1,541,824
$40
Kansas 6
Dodge
City
DEN $1,688,598
$144
Kansas
Garden
City
DFW $2,919,026
$64
Kansas
Great
Bend
DEN $1,082,020
$546
Kansas
Hays DEN $2,164,041
$120
Kansas
Liberal/Guymon
DEN $2,555,150
$211
Kansas
Salina MCI $1,490,479
$317
Kentucky 2
Owensboro
STL
$1,529,913 $198
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Essential Air Service (EAS): Frequently Asked Questions

Number of
EAS Subsidy
Per Passenger
EAS
Rate as of
Subsidy YE
State
Communities EAS
Community
Hub(s)
Jan. 1, 2014
Sept. 30, 2013
Kentucky
Paducah ORD
$2,034,160 $51
Maine 4
Augusta/Waterville
BOS $1,362,616
$121
Maine
Bar
Harbor
BOS $1,631,223
$160
Maine
Presque
Isle/Houlton
BOS $3,892,174
$179
Maine
Rockland
BOS $1,420,545
$97
Maryland 1
Hagerstown
IAD
$1,785,638
$738
Michigan 9
Alpena DTW/MSP
$3,098,472 $96
Michigan
Escanaba DTW $2,833,558 $98
Michigan
Hancock/Houghton
ORD
$690,976 $14
Michigan
Iron
MSP $2,512,971
$134
Mountain/Kingsford
Michigan
Ironwood/Ashland
MSP
$1,747,326
$345
Michigan
Manistee/Ludington
MDW $2,055,781
$427
Michigan
Muskegon
ORD
$1,389,952 $44
Michigan
Pellston DTW $1,077,413 $20
Michigan

Sault Ste. Marie
DTW
$1,676,136
$40
Minnesota 5
Bemidji
MSP
$1,338,293 $30
Minnesota
Brainerd MSP
$1,356,764 $47
Minnesota
Chisholm/Hibbing
MSP
$2,517,770 $120
Minnesota
International
Falls
MSP
$1,107,900 $40
Minnesota

Thief River Falls
MSP
$1,881,815
$435
Mississippi 4
Greenville ATL
$3,522,398 $604
Mississippi
Laurel/Hattiesburg
ATL
$2,965,667 $251
Mississippi
Meridian ATL
$2,417,808 $178
Mississippi
Tupelo
ATL
$3,522,398 $308
Missouri 4
Cape
STL $1,627,966
$134
Girardeau/Sikeston
Missouri

Fort Leonard Wood
STL
$2,905,794
$173
Missouri
Joplin DFW
$342,560 $7
Missouri
Kirksville STL
$1,649,248
$145
Montana 7
Butte
SLC
$735,956 $14
Montana
Glasgow BIL
$2,046,800
N/A
Montana
Glendive BIL
$1,944,467
N/A
Montana
Havre BIL
$2,036,254
N/A
Montana
Sidney BIL
$3,777,579
N/A
Montana
West
Yellowstone
SLC
$535,141 $50
Montana
Wolf
Point
BIL
$2,145,326
N/A
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Essential Air Service (EAS): Frequently Asked Questions

Number of
EAS Subsidy
Per Passenger
EAS
Rate as of
Subsidy YE
State
Communities EAS
Community
Hub(s)
Jan. 1, 2014
Sept. 30, 2013
Nebraska 7
Alliance DEN
$1,309,865 $406
Nebraska
Chadron DEN
$1,309,865
$290
Nebraska
Grand
Island
DFW
$1,837,021 $41
Nebraska
Kearney DEN
$1,752,904 $66
Nebraska
McCook DEN
$1,976,338
$510
Nebraska
North
Platte
DEN
$1,697,510
$102
Nebraska
Scottsbluff DEN
$1,398,351 $73
New
1 Lebanon/White
River
BOS/HPN $2,347,744 $120
Hampshire
Jct.
New Mexico
3
Carlsbad
ABQ
$1,397,081
$260
New Mexico

Clovis
DEN
$1,954,490
$622
New Mexico

Silver
PHX $2,098,460
$749
City/Hurley/Deming
New York
6
Jamestown
CLE
$1,940,272
$307
New York

Massena
ALB/BOS
$2,090,949
$215
New York

Ogdensburg
ALB/BOS
$1,702,697
$160
New York

Plattsburgh
BOS
$2,470,834
$168
New York

Saranac Lake/Lake
BOS $1,366,538
$130
Placid
New York

Watertown
ORD
$3,356,349
$88
North Dakota
2
Devils Lake
MSP
$2,797,467
$501
North Dakota

Jamestown
MSP
$1,987,655
$383
Oregon 1
Pendleton
PDX
$1,834,708
$215
Pennsylvania 6
Altoona
IAD
$1,998,594 $255
Pennsylvania
Bradford
CLE
$1,940,272 $452
Pennsylvania
DuBois
CLE
$2,587,029 $264
Pennsylvania
Franklin/Oil
City
CLE
$1,293,515 $413
Pennsylvania
Johnstown IAD
$1,998,594 $163
Pennsylvania
Lancaster IAD
$2,504,174 $635
Puerto Rico
1
Mayaguez
SJU
$1,198,824
$111
South Dakota
3
Aberdeen
MSP
$1,198,222
$24
South Dakota

Huron
MSP
$1,929,349
$554
South Dakota

Watertown
MSP
$1,710,324
$193
Tennessee 1
Jackson
BNA/MEM $1,115,210 $229
Texas 1
Victoria
IAH $2,294,036
$352
Utah 3
Cedar
City
SLC $2,317,439
$98
Utah
Moab DEN $1,798,772
$208
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Essential Air Service (EAS): Frequently Asked Questions

Number of
EAS Subsidy
Per Passenger
EAS
Rate as of
Subsidy YE
State
Communities EAS
Community
Hub(s)
Jan. 1, 2014
Sept. 30, 2013
Utah
Vernal
DEN $1,297,615
$78
Vermont 1
Rutland BOS
$1,360,481
$126
Virginia 1
Staunton IAD
$3,394,629
$120
West Virginia
5
Beckley
IAD
$2,512,494
$335
West Virginia

Clarksburg/Fairmont
IAD
$1,728,125
$147
West Virginia

Greenbrier/W.
ATL/IAD $3,484,710
$254
Sulphur Springs
West Virginia

Morgantown
IAD
$1,728,125
$85
West Virginia

Parkersburg/Marietta
CLE
$2,587,029
$158
Wisconsin 2
Eau
Claire ORD
$1,546,536 $40
Wisconsin
Rhinelander
MSP
$1,519,619 $45
Wyoming 3
Cody
SLC
$627,696 $23
Wyoming
Laramie DEN
$1,635,346 $74
Wyoming
Worland DEN
$1,987,148
$356
Total
117

$223,977,011
$655
Source: Office of Aviation Analysis, U.S. Department of Transportation.
Note: Airports marked N/A experienced a change of carrier during the fiscal year or otherwise have insufficient
data to determine annual cost per passenger. EAS subsidy rates are subject to change. Airports more than 210
miles from their respective nearest hub airports are exempt from the $200-per-passenger subsidy rate cap.
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Essential Air Service (EAS): Frequently Asked Questions

Table 3. List of Subsidized EAS in Alaska
EAS Subsidy Rate
Alaskan EAS Community
Hub(s)
as of Jan. 1, 2014
Adak ANC $2,057,114
Akutan DUT
$579,220
Alitak ADQ $11,333
Amook Bay
ADQ
$11,333
Angoon JNU
$145,734
Atka DUT $822,445
Central FAI
$152,902
Chatham JNU
$11,472
Chisana TOK
$81,040
Circle FAI
$152,902
Cordova
ANC/JNU
$2,145,356
Diomede OME/WAA
$188,760
Elfin Cove
JNU
$75,391
Excursion Inlet
JNU
$27,111
Funter Bay
JNU
$13,416
Gulkana ANC
$269,189
Gustavus
JNU
$536,339
Healy Lake
FAI
$104,703
Hydaburg KTN
$151,773
Kake JNU $177,574
Kitoi Bay
ADQ
$11,333
Lake Minchumina
FAI
$102,300
Manley FAI
$45,534
May Creek
GKN
$103,099
McCarthy GKN
$103,099
Minto FAI
$45,534
Moser Bay
ADQ
$11,333
Nikolski DUT
$324,998
Olga Bay
ADQ
$11,333
Pelican JNU
$185,721
Petersburg JNU/KTN $1,738,290
Port Alexander
SIT
$75,293
Port Bailey
ADQ
$11,333
Port Williams
ADQ
$11,333
Rampart FAI
$76,416
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Essential Air Service (EAS): Frequently Asked Questions

EAS Subsidy Rate
Alaskan EAS Community
Hub(s)
as of Jan. 1, 2014
Seal Bay
ADQ
$11,333
Tatitlek ANC
$93,080
Tenakee JNU
$135,576
Uganik ADQ
$11,333
West Point
ADQ
$11,333
Wrangell JNU/KTN
$1,738,290
Yakutat ANC/JNU
$2,145,356
Zachar Bay
ADQ
$11,333
Total

$14,729,690
Source: Office of Aviation Analysis, U.S. Department of Transportation.
Note: EAS subsidy rates are subject to change.

Author Contact Information

Rachel Y. Tang

Analyst in Transportation and Industry
rtang@crs.loc.gov, 7-7875

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