Tag Archives for essential air service.
Victoria, Texas is offering residents $100 to book a roundtrip flight from the local airport—an effort to prop up lightly used United regional service to Houston that already draws nearly $7 million in federal subsidy. It’s a perfect snapshot of how the Essential Air Service program has evolved from a “temporary” deregulation bridge into a permanent, growing entitlement—often funding near-empty flights even when bigger airports are a short drive away.
The Department of Transportation just told airlines they can stop serving dozens of small-town airports as the shutdown drags on. A 47-year “temporary” subsidy program may finally unravel—leaving entire communities without air service overnight.
The Essential Air Service program was created in the late 1970s as a temporary measure to soften the blow of deregulation. It provided for a ’10 year transition’ period in which small community service could receive subsidies. And it’s the perfect example of the old axiom that there’s nothing as permanent in life as a temporary government program. The program was supposed to end in 1988.
Instead, the Senate’s FAA reauthorization bill includes a tripling of funding for the program going forward.
A pilot shortage, drawing pilots away from small operators, has left St. Thomas and St. Croix with virtually no air service between the two islands. These islands within the U.S. territory are virtually unconnected by passenger air, and this is the result of U.S. laws which limit the number of pilots, and which prevent world airlines from providing service. That needs to change.
In exchange for $79 billion in direct subsidies from the federal government, airlines agreed not to drop any of the routes they flew before the pandemic without permission from the Department of Transportation.
American Airlines has been threatening to leave small cities if Congress doesn’t extend another $25 billion in payroll support. However one of the provisions of the CARES Act says an airline taking subsidized loans – which American just did – can be ordered by the Secretary of Transportation to continue service to small towns, as well as anywhere that it’s necessary for pharmaceutical supply chains.
No further legislation or subsidy is required to insist on continued air service. Any city losing American Airlines air service now only does so because the federal government has decided to permit it.
American Airlines announced they were going to stop serving 15 cities effective October 7, after government payroll subsidies ran out.
With two of the cities they couldn’t legally drop service because of agreements they’d entered into with the Department of Transportation but forgotten about.
On August 20th American Airlines announced plans to drop air service to 15 cities unless the government forked over another $6 billion in subsidies. The cities were spread across 14 states (28 Senators!) and many of the airports slated to lose service October 7 are represented by members of the House Transportation Committee.
However the plan was too clever by half. No one at American Airlines realized the problems dropping service to 3 of the cities on the list, and just as I’ve predicted they are now backtracking.
American Airlines announced this morning that unless the government gives them another round of CARES Act payroll support, they will drop service to 15 cities October 7.
Except they cannot legally leave two of the cities without giving advance advance notice to the Department of Transportation, which they have not done.
The Essential Air Service program pays airlines to fly routes that aren’t economically viable. Now the program will pay airlines to not fly those same routes.
Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel -- a topic he has covered since 2002.
Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »
