Small Community Air Service Development dead?

I missed this news item a week ago from AAAE:

AAAE expressed concern that of the $10 million that Congress appropriated for Small Community Air Service Development Program, only $6.8 million is slated to go to small communities that need assistance. According to DOT’s order, the other $3.2 million will be used to cover “current and future administrative support costs.”

The real story here, according to aviation consultant Mike Boyd, is that SCASD is dead (scroll down to September 15):

The DOT last week announced what will be the final awards of the Small Community Development Grant program.

They clutched, and failed to award about a third of the funds appropriated to the program. They noted that they needed to hold back the money for “administrative” expenses. Reason: there will be no 2009 SCASD appropriation from congress.

Stick a fork in it. After seven years, the SCASD program now sleeps with the fishes.

Past grants, including those made this year, will be administered, but it’s a political reality that there won’t be any more congressional gelt showered on this program. The award docket made that point very clear, and our sources in Washington tell us the same thing. It may not be announced as being “cancelled,” but take it to the bank. This boat has sailed.

That’s a real shame. SCASD wasn’t perfect, but it was miles ahead of Essential Air Service in responding to actual service needs and priorities in small communities. Even so, Boyd notes that the program had achieved as much success as could be expected, especially with a rapidly changing economic environment for regional jets. “SCASD was a noble experiment that’s run its course,” he says. “But the people at the DOT who administered the program should roundly congratulate themselves for a job very well done.”

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Aviation08: The Obama aviation plan

Welcome, new readers! For more blogging on aviation politics, click here.

First of all, big props to Obama and his campaign team for actually having a transportation agenda [PDF]. The McCain campaign devotes a whole section to manned space exploration but can’t spare a word for aviation. So, to Obama, an A for effort.

Now let’s dig into the plan:

As our society becomes more mobile and interconnected, the need for 21st-century transportation networks has never been greater. However, too many of our nation’s railways, highways, bridges, airports, and neighborhood streets are slowly decaying due to lack of investment and strategic long-term planning. Barack Obama believes that America’s long-term competitiveness depends on the stability of our critical infrastructure. As president, Obama will make strengthening our transportation systems, including our roads and bridges, a top priority.

Barack Obama believes that it is critically important for the United States to rebuild its national transportation infrastructure — its highways, bridges, roads, ports, air, and train systems — to strengthen user safety, bolster our long-term competitiveness and ensure our economy continues to grow. Investing in national infrastructure is especially important in our efforts to bolster our homeland security to meet international terrorism and natural disaster threats. . . .  Barack Obama will address the infrastructure challenge by creating a National Infrastructure Reinvestment Bank to expand and enhance, not supplant, existing federal transportation investments. This independent entity will be directed to invest in our nation’s most challenging transportation infrastructure needs. The Bank will receive an infusion of federal money, $60 billion over 10 years, to provide financing to transportation infrastructure projects across the nation.

Worthy goals. One of the core functions of government is to provide for infrastructure development and maintenance. How will this money be allocated? By DOT, or by Congress? Political realities mandate, for example, that Airport Improvement Fund monies go disproportionately to airports that do not need them as much as the highly trafficked and congested commercial hubs. How it gets allocated is key.

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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]

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Rethinking small community air service

In a post several months ago, I wrote that the rigid Essential Air Service crowds out better, more flexible ways of funding credible and realistic service to small communities, such as the Small Community Air Service Development (SCASD) program. A year ago, the Government Accountability Office reported that although it could not sufficiently evaluate SCASD because it was such a young program, but based on the completed grants they did evaluate, “SCASD grants show promise and warrant further evaluation.” Of twenty-three grants they evaluated, fourteen saw improvements through the end of the grant period and eleven saw these improvements become self-sustaining after the end of the grant period. This suggests that a lot of these grants are unworkable from the start, but almost half saw the intended improvements. (Whether these were self-sustaining in the face of spiking jet fuel prices is questionable, but all other things being equal, SCASD wasn’t a total failure.)

In April 2007, the GAO called on the Department of Transportation’s inspector general to conduct a further assessment of SCASD. It has, and the full report is available here. (Thanks to Benet Wilson, whose blog alerted me to it.) The DOT’s picture is more pessimistic. Surveying the stated goals of forty grants, it found that 12.5 percent are canceled before even getting underway, 50 percent fail, 7.5 percent see partial success, and only 30 percent see full success. But while that makes for a nice headline, there are some interesting dynamics in the numbers.

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CBS News on the Essential Air Service

I was interviewed for a segment on tonight’s CBS Evening News. The “Follow the Money” segment exposed the tens of millions of dollars wasted on empty flights to the middle of nowhere.

Here are links to:

• The text of the broadcast
• Video of the segment
• One of my posts about the problematic EAS program

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Essential air service: neither essential, nor much of a service

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.

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Your humble blogger on TV

I was recently interviewed about the Essential Air Service by Medill News for a TV station in West Virginia. You can watch the video here.

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