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| Source: Evan Sparks's Aviation Policy Blog |
My research question is does the subsidized air travel program influence the way that consumers buy and other organizations sell travel to remote locations?
The article published on the United States Department of Transportation website, Essential Air Service, shows that the Essential Air Service serves smaller communities but costs more than flights to large hubs.
The Essential Air Service (EAS) program was started in the late 1970’s, after the deregulation of the airline industry. The Airline Deregulation Act, passed in 1978, “gave air carriers almost total freedom to determine which markets to serve domestically and what fares to charge for that service”. This worried the government and the people who lived in small communities. They worried that because airlines were no longer required to provide service to certain cities, they would terminate routes that flew to the small less profitable airports and open more large hub routes, as these were more lucrative. This worry led to the passing of Section 419 on the Federal Aviation Act, which created the EAS.
The section concerning the EAS required the Federal Government to pay airlines to run flights to small airports that otherwise would not be flown once deregulation took effect. This is a massive cost, as “Congress increased the authorized appropriation, in addition to the $50 million in overflight fees, from $15 million to $77 million”. While it is small compared to the entire budget of the United States, it still is a large amount and is always subject to budget cuts. The money is distributed in such a way that no one airline can have more than $200 per passenger in subsidies. This allows the ESA to service almost 180 towns across the contiguous United States along with Hawaii and Alaska.
In my next blog post I will be examining the economic impact that the ESA has on the communities that it serves.
I am very intrigued in this topic and hope to read more.
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