Welcome to the Airport Managers Blog, the exciting look into the life of an Airport Manager. Although the blog is primarily about life as an Airport Manager, detailing things about airport life, transportation, and government regulations that affect everyone there will be posts about my life, the things I do in my free time and the things I am interested in. Please feel free to comment on my posts as I’m always open to learning about your view points and what you are interested in.
You may have never heard about Essential Air Service before. In fact many people probably have never even hear of the term, unless they work in the aviation industry and then only a few people many actually know what it is. Fortunately, depending on how you look at it, I am all too aware of what Essential Air Service is.
You may find a good paper on what Essential Air Service by clicking here.In short, before 1978 the United States Government set the rates for all air fare around the country, meaning that a flight from Minneapolis to Omaha would be set by the Federal Aviation Administration or before that the Civil Aeronautics Board with little to no regard to what the cost to maintain the trip was. Typically the fare charged for an airline trip was more then the cost to operate the trip, and the airlines felt they could serve the public better by removing the government from the equation. After a few years of lobbying the government passed the Deregulation Act of 1978, the very next day every airline was bankrupt and most have not seen a profit since then.
I am exaggerating a little, but the entire airline industry was thrown for a loop, and there was a barrage of airline mergers and airlines pulling out of the unprofitable airports. It was felt that some airports around the nation that where unprofitable should still be provided air service because service to those airports was considered essential.Thus the Essential Air Service Program was born and is still alive and kicking today - although threatened continuously. You may be surprised to learn that many airports around the country are on Essential Air Service usually those airports which enplane less than 15,000 passengers are typically essential air service airports. There are exemptions to every situation, but as a guide 15,000 passengers will work.
The E.A.S. program works like an auction that occurs every two years.For airports currently in the Essential Air Service Program every two years the Department of Transportation will request bids for airlines. The D.O.T. receives those bids and asks the local community for their comments on the proposals. The DOT then makes a choice on which airline will supply the service for the next two years.
As you can imagine the local city has a lot of vested interest in how the selection turns out and does everything they can to a). Increase the number of flights, b). Keep flight schedules as they currently are, or make them better, and c). Keep the current airline - unless they don't want the current one. Once the contract is awarded the D.O.T. pays the airline an annual subsidy from their bid to provide service to that airport. Subsidies are usually between 1 and 1.5 million, although higher subsidies are uncommon they do happen every once and awhile.
The fallout of the selection process can mean disaster for airport enplanements, the community, and the economic vitality of the city. This is why the city and community take a vested interest in the outcome of the selection process.Along the way there are many pitfalls the community can fall into, although the Essential Air Service program is a gift from heaven when an airlines threatens to leave your airport, that gift can mean dire consequences down the road on how your air service will operate. Since the D.O.T. is paying the bill to the airline to be at your airport, you have some say in the outcome, but ultimately it is the D.O.T. that makes the selection of the air carrier every two years.
Over the last couple of years the current presidential administration has - in my opinion - made clear its intentions to have the Essential Air Service program trimmed down to almost nothing. The administration has removed money from the Essential Air Service budget, requested that some local communities provide up to 10% to 25% local match to the D.O.T. subsidy amount.
A local match of 10 to 25 percent could mean the city would have to pay somewhere between $250,000 and $500,000 every two years. I do not know any community that has essential air service that could turn around and afford that cost. Its sort of an oximoron (if that's even the word) actually. A community that can afford to spend that much money on air service to their airport I would imagine wouldn't be on Essential Air Service. To that end lobbying groups have been successful in telling congress that no local share will be acceptable. In the end we will have to wait and see how the Essential Air Service program is budgeted and functions in the next couple of years.
Essential Air Service is essential because it could very well be the life blood of an airport. E.A.S. ensures that an airport has air service, but it is more that that E.A.S. creates / keeps jobs, generates sales tax monies, grows the local economy, and provides the citizans of a community air travel to the nearest hub airport. A community 'needs' essential air service because without it an airline would pick up and leave, elimnating jobs, cutting sales tax revenue, limit future economic growth, and could very well mean the ultimate termination of the very airport itself.
In todays aviation climit airlines fit over E.A.S. subsidies like bull dogs, each trying to one up the other for the more lucrative E.A.S. subsidies. E.A.S. provides the airline that wins the contract pure profit with all expenses paid, an airline would have to be a fool not to want at least submit a proposal to the D.O.T.
All in all Essential Air Service is something you may never have heared about before, but now you know alittle more about something that affects more airports than you may have thought.