The federal government’s Essential Air Service is fast becoming the metaphoric poster boy for wasteful government spending, entrenched interests, political gridlock, and a greedy airline industry. Joe Brancatelli shares secrets and proven tips for first- and business-class road warriors. From airport-security pat-downs, to new rights for airline passengers stuck on the tarmac, to new rules for credit cards, business travelers confronted a wealth of contradictions on the road this year. The new war between legacy airlines like American and Delta against online travel agents like Expedia and CheapOair isn’t about protecting consumers. It’s all a fight over money and power. 
Unable to process terms like or the concept that the entire nation might default and be downgraded to junk-bond status? Me, too, so let’s talk about a nice round number ($200 million) and just one government program, the Essential Air Service.
Created in 1978 to ease the transition of rural airports and small communities to a deregulated airline system, the so-called EAS was supposed to expire in 10 years. But more than 30 years later, it’s still with us and costs taxpayers nearly $200 million a year. It is also fast becoming the metaphoric poster boy for wasteful government spending, entrenched interests, political gridlock, and (surprise!) an airline industry so completely clueless that it demands money to operate the supposedly “essential” flights even as the nation is struggling to find ways to spend less.
The Essential Air Service is such a perfect microcosm of our current governance woes that it even led to the partial shutdown of the Federal Aviation Administration over the weekend, a squabble over tax revenue, and partisan bickering over blame.
Let’s handle that last bit first because it is a bizarre sideshow worth a moment of our time. Parts of the FAA shut down on Friday night because the House and Senate couldn’t reconcile competing versions of a temporary extension of the agency’s budget. That wouldn’t be notable except for the fact that the FAA hasn’t had a budget since 2007. Without much ruckus, however, the House and Senate have passed 20 interim spending measures to keep the agency handling crucial operations (air-traffic control), collecting air taxes, and running ephemera like the Essential Air Service.
But in the currently poisonous Washington climate, temporary reauthorization No. 21 got hung up over some EAS spending cuts and a Republican attempt to reverse a recent National Mediation Board ruling that makes it easier for airline unions to organize. With no budget extension, about 4,000 FAA employees were laid off and, among other things, the FAA’s authority to collect some taxes on airline tickets expired. That led virtually all airlines to raise fares by the exact amount of the expired taxes, but not before some alleged travel “experts” took to the media over the weekend proclaiming a one-time windfall of fare reductions. Rather than admit they got it wrong, the “experts” then erroneously claimed that the airlines were grabbing tax revenues for themselves.
Now back to the Essential Air Service. According to Department of Transportation records, about 140 communities and airports receive federal subsidies. The money is paid to airlines and, in exchange, they agree to fly into airports like Macon, Georgia; Pierre, South Dakota; Thief River Falls, Minnesota; Mason City, Iowa; Jamestown, New York; Hagerstown, Maryland; and Lancaster, Pennsylvania. EAS money is also paid to communities in Hawaii, where flights are the only way off an island, and Alaska, where roads don’t exist or are impassable in winter.
This bizarre grab bag of subsidies is due to expire in 2013, but that’s deceptive because, as noted, the original legislation that created the EAS envisioned its demise after just a decade. Yet the Essential Air Service survives because it’s a tasty bit of pork that legislators on both sides of the aisle like to bring home to their constituents.
The problems with EAS, however, are legion. For starters, why are taxpayers doling out $200 million in subsidies at all? With the possible exception of Alaska and Hawaii, EAS airports have had more than three decades to adjust to the realities of deregulated air service.
Secondly, EAS service generally stinks. It is often provided on small (sometimes as tiny as nine-seat) aircraft operated by marginal carriers with dubious safety records and miserable service standards. Even the well-regarded carriers that provide EAS flights—one airline, Great Lakes Aviation, counts on EAS payments for nearly half of its $125 million in annual revenue—have trouble making money on these operations.
Essential Air Service is also expensive. Passengers in EAS communities pay far more than average Americans to fly. One example from Nevada: The fare from Ely to Las Vegas is $149 one-way (or 67 cents a mile) even though Great Lakes receives $1.86 million in EAS subsidies to fly the route. So few travelers use the Ely-Las Vegas service that the subsidy works out to more than $3,000 per flyer. By contrast, Southwest sells Las Vegas to Chicago nonstops for as little as $153 one-way—about 10 cents per mile.
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