The “Essential Air Service” (EAS) is back in the news, this time in an article in USA Today, which is being batted around the blogosphere at View from the Wing, Marginal Revolution, and elsewhere. If you’re not familiar with EAS, read the article first; it offers a good overview of the program. In this post, I’m going to throw in a few more reasons (and resources) for why EAS is such a crummy deal, both for taxpayers and for the travelers it is supposed to help.
First, EAS was supposed to be temporary–to smooth the transition during deregulation in 1978, when it was expected that airlines would drop small, less profitable routes. EAS was meant to be phased out in 1988. Of course, it proved popular in Washington: Congressmen liked being able offer subsidies to their home districts. Often, congressmen enjoy the subsidized flights themselves. Soon, an industry developed around the subsidies. Airlines make the subsidized flights their primary business, Raytheon sells planes whose only viable market is the subsidized flights, and small airports sought to maintain and increase their subsidies. (I explore these dynamics in an article here.) Needless to say, this program has never lived up to its “temporary” status. In fact, EAS is frozen in time. No matter the state of the current market for air travel, the same communities that were eligible for subsidies in 1978 are eligible today.
Second, there is very low demand for EAS service. The number of communities served has fluctuated between 100 and 150 since 1993 (it’s currently 145). But the total appropriation has risen from $38.6M to $109.4M. Look at the chart below, based on data from a GAO report: even when the appropriation is more than doubled in 2001-2002, the number of communities served only rises by about ten percent over the next two years.
Data from another GAO report shed more light on the subject. Even though subsidies per passenger increased by more than 66 percent in the late nineties, passenger traffic increased by less than 1 percent!
Finally, increasing EAS subsidies crowd out better ways to fund small community air service–namely, the Small Community Air Service Development (SCASD) grant system. It was created in 2000 as a pilot to fund grant applications from small communities seeking ways to attract, retain, and improve credible air service. Whereas EAS subsidizes flights from nowhere to nowhere (only in the EAS system can Omaha be considered a hub), SCASD operates in the real world. Most people who live a couple hours from an airport with jet service to a major hub are going to use that airport over one that is closer but served by EAS-subsidized turboprops and involves multiple stops on the way to a hub. EAS service keeps small communities in rigid stasis and inhibits them from working with their neighbors on crafting regional air travel strategies that would have a chance at a SCASD grant.
You can see the crowd-out effect in SCASD’s funding: it began with $35M and has gone up to $50M, but SCASD’s planned increases were held up by Congress’s failure to pass an FAA reauthorization bill. So while an effective program’s resources remain limited, EAS subsidies continue to pay for people not to fly where they don’t want to go.
The Essential Air Service promotes rent-seeking and pork-barrel politics, doesn’t serve a real need, and crowds out other ways of providing access to air travel in rural areas. It has outlived any usefulness it might have had.
UPDATE: The Cranky Flier has an in-depth examination of EAS waste.
Photo credit: Flickr user Bill on Capitol Hill. Used through a Creative Commons license.