When airlines can’t escape the EAS straitjacket

Matthew Swibel has a great story in the current issue of Forbes on another flaw of the very flawed Essential Air Service. The Department of Transportation sets subsidies for flights to each community at a certain level, but with costs rising so precipitously, some airlines can’t make a profit even with a subsidy. What can they do? According to Swibel, Mesaba (an airline mentioned in the article that provides EAS in the upper midwest) “can’t stop flying without a nod from the U.S. Department of Transportation, which is under orders from Congress to keep carriers serving 106 low-density markets. For Mesaba to get out of its two-year contract, it must give dot 90 days’ notice and hope another airline comes along to take over the route (or it can apply for a bigger subsidy). Otherwise the bureaucrats can keep Mesaba flying indefinitely under its locked subsidy.”

Congress has designed a system that makes it difficult or impossible for airlines to continuously offer the service that the program mandates.

Hijacked [Forbes]