Flights of Fancy

The high cost of low-use airports.

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Decatur, Illinois lies approximately 180 miles south of Chicago, but for any Decatur resident who gets an urge to visit Wrigley Field, Chicago is surprisingly accessible. That’s because Air Choice One, the carrier that serves Decatur Airport, is having a Spring Fever Special and the current round-trip fare to O’Hare Airport is $59.50, tax included, which works out to just $29.50 for each leg of the trip. “With prices this low, you can’t afford NOT to fly!” Decatur Airport’s website exclaims, and it’s true. The 14-mile taxi ride from O’Hare to Wrigley would actually cost more than the 180-mile plane trip from Decatur to O’Hare — approximately $30 — and that’s without tipping your cabbie.

   

Air Choice One’s promotion is in part made possible by an obscure 33-year-old federal program known as Essential Air Service (EAS). In 1978, when the federal government was in the midst of deregulating the airline industry, some worried that carriers would exercise their new freedom to focus on popular, profitable routes at the expense of places where few people wanted to go.  Traditionally, the Civil Aeronautics Board had ensured service to lightly traveled communities by  offering direct subsidies to air carriers or granting them access to more lucrative routes if they took on the burden of flying to rural, out-of-the-way destinations a couple times a week.

In the wake of deregulation, EAS emerged as the means by which federal regulators attempt to engineer the public’s air travel behavior. In this system, air carriers bid on two-year contracts to provide a minimal level of service from small, rural airports to a medium-hub or large-hub airport from which further connections to a wide range of eventual destinations can be made. The contracts, awarded by the Department of Transportation, specify exactly how many departures and arrivals a carrier is expected to make each day, where the destinations will be, and the type of aircraft that will be used. The subsidy a carrier receives is designed to make up the difference between how much revenue it expects to generate from ticket sales and how much it expects it will actually cost to maintain these low-demand routes, and to add a 5 percent profit for the effort.

For example, in 2009, Air Choice One estimated that it would cost $4.3 million a year to run a total of 18 round-trip flights per week from Decatur to Chicago and St. Louis, but that it would only collect $1.49 million in revenues from passengers. Thus, it requested and received an annual EAS subsidy of $3.08 million — including approximately $2.86 million to cover its losses and $218,057 to serve as its 5 percent profit.

When EAS was introduced in 1979, it had a budget of $5.26 million (in 2011 dollars). It served 11 communities. It was intended to last just 10 years. Today, it has an annual budget of $181.6 million and serves 153 small airports, including 44 in Alaska. To qualify for the program, a community’s airport must be at least 70 driving miles from a medium-hub or large-hub airport. If it is, then EAS will subsidize the carrier that serves it with as much as $200 per passenger per flight. If the subsidized airport is more than 210 miles away from a medium-hub or large-hub airport, the subsidy limit is waived.

Eliminating EAS – or any other government program measured in millions rather than billions of dollars – would have the same impact on the national debt as a couple of aspirin would have on a brain tumor. And yet amidst calls for austerity and deficit reduction, EAS is on Capitol Hill’s chopping block. In February, the Senate passed a bill that would limit EAS to communities that are at least 90 miles from a medium-hub or large-hub airport, and serve at least 10 travelers a day. In April, the House of Representatives passed a bill that would phase out EAS entirely by 2013, except in Alaska and Hawaii.

According to a quarterly report recently issued by Great Lakes Aviation, the air carrier that currently fulfills about half of all EAS contracts, the Senate’s version of the aviation bill would only eliminate “approximately 10 to 40 communities nationwide” from the program. Until the two bodies achieve consensus, the program’s ultimate fate is up in the air. For now, at least, it remains an Airbus-sized political football. “It makes no sense to choke off rural residents’ access to air travel – and their connection to jobs and family,” exclaimed EAS booster Senator Jay Rockefeller (D – WV). In contrast, Senator Tom Coburn (R – OK) included EAS in his “Guide to Some of the Most Wasteful Government Spending of 2010,” ranking it as more wasteful than a government-sponsored campaign to promote Vidalia onions using the cartoon character Shrek, but not quite as wasteful as a $15-million public shooting range the government built in the desert outside Las Vegas.

Certainly the critics of EAS have the most entertaining statistics on their side. For example, a USA Today investigation determined that EAS flights in 2006 had a load factor, or occupany rate, of just 37 percent, meaning that the federal government paid a handful of small airlines millions of dollars to fill the skies with nearly 2.4 million empty seats. A subsequent analysis by the Government Accounting Office found the same held true in fiscal 2008 — the load factor was again 37 percent. In contrast, the GAO noted, “the average load factor for unsubsidized commercial flights nationwide has averaged about 80 percent in recent years.”

In 2008, EAS granted Great Lakes Aviation a two-year contract, at $1,864,717 per year, to provide six round-trip flights per week from Ely, Nevada to Las Vegas, Denver, or Salt Lake City. According to Department of Transportation (DOT) statistics for 2010, Ely’s airport recorded just 227 enplanements (or passenger boardings) throughout the year. Assuming that Ely’s airport received an equal number of arrivals as departures, this suggests that EAS subsidized service at Ely at the rate of $4,107 per passenger per flight, or $8,214 per passenger per round trip. It also suggests that these flights, which were completed on 19-seat Beech 1900D turboprop planes, carried an average of 1.37 passengers each.

In 2010, EAS subsidized round-trip flights out of Glendive, Montana at the rate of $2,496 per passenger, and round-trip flights out of Alamogordo, Nevada at the rate of $2,487 per passenger. Even to EAS boosters, such subsidies must inspire double-takes – you could actually buy each passenger flying out of Ely a Honda Shadow Spirit 750 motorcycle, give him $1,000 in casino chips, then point him toward Caesars Palace, and you’d still be spending less than what EAS currently spends to subsidize the 434-mile round trip to Las Vegas.

Air travel from Decatur isn’t subsidized at such extravagant rates, but in 2010, the carrier that serves Decatur, Air Choice One, did collect $3,082,403 from EAS – no other carrier received more that year for serving a single community. According to the DOT, Decatur Airport enplaned 2,355 passengers last year. If the number of passengers coming into Decatur was roughly the same, then Air Choice One received a subsidy of roughly $654 per passenger per flight, or $1,308 per passenger per round-trip.

But can we really put a price on keeping our rural backwaters and small-town hellholes connected with the rest of America? To justify its costs, EAS boosters like Senator Carl Levin (D – MI) insist that the program is an “economic lifeline” that allows “less populated communities that are far from major hub airports” to stay “connected to the stream of global commerce.” 

“We need to get our country on a sound fiscal path but we cannot do so by threatening the economic prosperity of some of our most vulnerable communities,” Representative Ron Kind (D – WI) told a Wisconsin TV station.

“The Essential Air Service program is a promise to rural America, which absolutely needs airports for economic development…I will not turn my back on communities that rely on this program as a lifeline,” exclaimed Senator Max Baucus (D – MT).

“Cutting transportation to rural West Virginia will not only hurt our state’s economy, it will also cost jobs and affect people’s quality of life,” Senator Joe Manchin (D – WV)  said in a press release. “Communities in my state rely on the Essential Air Services to conduct business and as a part of their everyday lives — many don’t have other transportation options.”

Do eBay, Amazon Marketplace, and Etsy not work in Michigan? Does FedEx refuse to deliver to Montana? In West Virginia, where allegedly many folks do not have any transportation options except heavily subsidized plane rides, the Greater Clarksburg Convention & Visitors Bureau boasts that “Clarksburg is one of the most accessible city by auto from all regions.” The Chamber of Commerce representing the town of Beckley strikes a similar chord, noting that “many companies have located headquarters and distribution centers [there] as a result of accessibility.” But apparently neither Senator Joe Manchin nor the EAS spend a great deal of time reading Chamber of Commerce websites — in 2010, EAS provided a $1.05 million subsidy to Clarksburg and a $2.09 million subsidy to Beckley.

Then there’s Decatur. While it may lie in the middle of Illinois, that’s not quite the same thing as being in the middle of nowhere. Self-proclaimed soybean capital of the world, Decatur has a population of 76,112, three movie theaters, three golf courses, a zoo, two Walmarts, seven McDonald’s, and nearly 30 pizza places. It’s located relatively near three cities large enough to have their own NFL franchises — there’s Chicago to the north, St. Louis 110 miles to the west, and Indianapolis 170 miles to the east.

If, say, horses hadn’t been invented yet, Decatur might qualify as remote, but until we completely deplete our worldwide reserves of hay (not to mention cars, oil, bicycles, and running shoes), Decatur appears to be pretty well-connected to the rest of the world. If you fill up the tank of your Chevy Impala at the Shell station on North Main — where regular is currently going for $3.89 a gallon — and average 27 miles per gallon on the course of your trip, it would cost you just $26.50 to reach O’Hare, the world’s third-busiest airport, and from there it’s just eight hours to Brussels and 13 hours to Beijing. While Greyhound doesn’t go directly to O’Hare, a standard fare ticket from Decatur to Chicago will get you pretty close to it for $53.

Then there are three other small airports located within an hour’s driving time of Decatur which, together, offer 86 weekly flights to O’Hare. Because they’re not getting the EAS subsidy, their prices are higher than the $59.50 round-trips that Air Choice One is currently offering. At the Abraham Lincoln Capital Airport in Springfield, which is just 40 miles from Decatur, a recent round-trip from Decatur to Chicago cost $219.40, tax included. At Bloomington’s Central Regional Illinois Airport, which is 50 miles from Decatur, a recent round-trip to O’Hare cost $399.40, tax included.

By many accounts, Air Choice One offers excellent customer service and a fun flying experience. But if your ultimate destination is, say, Orlando or Dallas, and you’d like to avoid switching planes in Chicago, Bloomington’s airport offers direct flights to these cities. If you prefer jets over tiny single-prop planes where the bathroom’s a bedpan under your seat, maybe a flight out of Springfield would be more your speed. If your ultimate destination is Los Angeles or Miami — i.e., a city to which none of the local airports offer direct service — but you’d like to avoid rechecking your baggage in Chicago, these other airports are a better option, at least until Air Choice One secures an agreement with a major carrier that will allow its customers to check their baggage in Decatur, then retrieve it wherever their final destination is.

In May 2010, Air Choice One’s six daily departures from Decatur were, according to the Decatur Herald-Review, “averaging one person per flight.” Business has gone up since then. According to DOT statistics, 570 passengers enplaned at Decatur Airport during the first two months of 2011. If Air Choice One stuck to its schedule of 36 departures a week, it carried approximately 1.88 passengers per flight during this period. Even with their higher prices — substantially higher in many cases — its unsubsidized neighbors are attracting far more business, presumably because customers find them more convenient to use, more tuned to their needs and preferences. Bloomington’s Central Illinois Regional Airport enplaned 40,419 passengers in the first two months of 2011. Willard Airport at the University of Illinois in Champaign enplaned 12,211 passengers during this time. Springfield’s Abraham Lincoln Airport enplaned 6703.

If the Senate’s vision for the future of EAS trumps the House’s, EAS service in Decatur will likely persist. Its airport is more than 90 miles from a medium-hub or large-hub airport. With six daily departures and six daily arrivals, it’s already serving more than the 10 passengers a day that the Senate’s version of EAS reform mandates.

To average 10 daily passengers when you’re running as many as six daily departures and six daily arrivals, you only need to average 0.83 passengers per flight. Thus, the Senate’s version of a reformed EAS — a more efficient, more judicious EAS — will still define success as filling the skies above America with aircraft so empty they’d get ticketed in freeway carpool lanes.

Sorry, ozone layer, but we’ve got backwoods tourist economies to stimulate, rural voters to pander to, bucolic business-class pork to dispense. Indeed, despite all the populist rhetoric about “vulnerable communities,” “[no] other transportation options,” and tearing rural families asunder via free-market airfares, EAS ultimately is a discretionary, highly arbitrary form of corporate welfare. Here again, Decatur proves instructive. In 2009, when Air Choice One bid for a two-year contract to serve the city, it requested approximately $1 million more per year than its major competitor. But Decatur Airport officials preferred Air Choice One over more economical alternatives primarily because Air Choice One promised to offer service to O’Hare as well as St. Louis, a factor that Decatur officials, in a letter to the Department of Transportation, described as “critical to Decatur’s extensive corporate travel community.”

EAS approved Decatur’s request without hesitation because, really, what other constituencies were EAS designed to serve? And what was another measly million bucks in the face of America’s long-standing compact with its geographically marginalized soybean executives? When their convenience and travel budgets are in jeopardy, the rest of us open our wallets. • 3 June 2011

Greg Beato is a contributing editor at Reason magazine. Follow @GregBeato on Twitter.
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