Airport Aid Program Gets Infusion

In The NewsAirport Aid Program Gets InfusionFAA bill authorizes rise in subsidies for small fields’ flights

 | Quick Take
Oct 5, 2018  | 8 min read | Print Article

WASHINGTON — Legislation that passed the Senate this week gives a five-year lease on life to the Essential Air Service program, which subsidizes commercial flights into four small Arkansas airports.

In its fiscal 2019 budget, the White House had called for deep cuts, but most lawmakers have been reluctant to roll it back, arguing it helps more remote areas remain economically competitive.

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The five-year Federal Aviation Administration reauthorization legislation was approved earlier this week by the House of Representatives and now awaits the president’s signature. It authorizes $158 million in discretionary spending for fiscal 2019, up from $155 million the previous year. It would reach $172 million by fiscal 2023. In addition, the program receives revenue from overflight fees, funds paid for aircraft that fly over the U.S. without taking off or landing in the country.

Including overflight fees, the program received $283 million in fiscal 2016, money that provided subsidies for 173 communities.

Judy McCutcheon, airport manager at the Boone County airport, said the program plays a vital role in Harrison, which receives an annual subsidy of nearly $2.4 million.

“It’s our gateway for our community and economic development,” she said.

The county’s largest employer is FedEx Freight, so daily flights to Memphis, FedEx’s hometown, are a godsend, she said.

“I don’t think we can attract new businesses or maintain and keep the ones we have without having commercial airline service,” she added.

The flights are gaining popularity.

Mississippi-based Southern Airways Express, which offers flights to Harrison, says it’s on track to carry 10,188 passengers to or from there this year. That’s up from 8,596 in 2017.

Travelers who book their tickets far enough in advance can fly round-trip from Boone County to Dallas or Memphis for $78, luggage and parking included.

In July alone, total passengers topped 1,000, according to company chairman and chief executive Stan Little.

That’s up from 281 in July 2016, when the service was provided by SeaPort Airlines.

“The number of local outbound passengers has risen so high that they have had to expand the parking lot. They literally were having to park the passengers on the grass because the enplanement numbers were so high in Harrison,” Little added.

While the tickets are bargains for travelers, the federal government ends up picking up most of the tab. The cost of the subsidy per passenger in Harrison in SeaPort’s final year was $436, according to the U.S. Transportation Department. It has fallen since then and is on track to reach $235.30 this year, Little said.

The flights mean Boone County residents can avoid an 85-mile drive to Springfield, Mo., or a 90-mile journey to Highfill.

There are 18 of the flights out of Harrison each week. There aren’t any middle seats on the nine-seat Cessna Caravan turboprop planes.

The Essential Air Service program springs from the Airline Deregulation Act of 1978, which allowed airlines to set their own fares and to eliminate unprofitable routes.

Communities that were left without flights were able to participate in the program. Besides Harrison, three other Arkansas communities benefit from the arrangement — Hot Springs, with a subsidy of $2.4 million; El Dorado ($2.3 million) and Jonesboro ($2 million, according to the U.S. Department of Transportation).

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Taxpayers for Common Sense, which describes itself as a “national, nonpartisan budget watchdog,” said the program has outlived its usefulness.

“It’s a costly relic of deregulation,” said Steve Ellis, the group’s vice president. “Every year we’re wasting hundreds of millions of dollars on this program. Really, it should just be abolished. It’s more about politics now than it is about passengers.”

Initially, the program was supposed to expire after 10 years. But Congress ended up keeping it.

Over the years, as costs rose, lawmakers have placed limitations on the program. Communities can qualify for subsidies only if they’re more than 70 miles from the nearest “largest or medium hub airport.”

(Large airports had passenger boardings of at least 9.4 million in 2017. Medium hubs had at least 2.2 million passenger boardings that year. Memphis, with just over 2.1 million, barely made the list.)

Proximity to Little Rock, with roughly 1 million boardings or Northwest Arkansas Regional Airport, with roughly 700,000 boardings, doesn’t disqualify the communities from receiving the government aid.

Southern’s contract for Harrison, Hot Springs and El Dorado runs out at the end of February. Air carriers that want the business must file their proposals with the U.S. Department of Transportation by Wednesday.

Air Choice One of Missouri provides service between Jonesboro and St. Louis. Round-trip tickets start at $65.60.

The company serves 10 cities but is looking to expand.

“Our business model is really to build a great airline here in the Midwest corridor and Jonesboro and Arkansas State actually fits the bill. We have bid Harrison, Hot Springs and El Dorado with no success yet, but we’re going to keep pursuing [it],” said company chief executive officer Shane Storz.

The subsidy for Jonesboro is about $193 per passenger, Storz said. That’s a drop from $221 in fiscal 2016.

In July, the airline broke its Jonesboro record, with 1,116 total passengers.

The Essential Air Service program has a few fierce critics in Congress. Last year, U.S. Rep. Tom McClintock, R-Calif., called Essential Air Service “one of the least essential programs in the entire United States government. … Continuing to pay for this obsolete and wasteful program with money we don’t have is obscene.”

Storz says a poorly run airline can squander government resources.

In January 2012, the month before Air Choice One’s arrival, there were only 17 passengers utilizing Essential Air Service flights out of Jonesboro, Storz said.

“If the carrier’s not being reliable and dependable, it’s probably a waste,” he said.

A well-run airline, on the other hand, makes a good community better, he added.

U.S. Sen. John Boozman, a longtime supporter of the Essential Air Service program, also considers it beneficial.

“I think it’s very important for rural states like Arkansas,” said Boozman, a Republican from Rogers.

It sometimes costs more to provide services in less-populated areas, but the money is well-spent, he said.

“It’s OK to subsidize these communities. If not, then you’re going to continue to exacerbate the problem that we’ve got in a lot of Arkansas with [areas] continuing to lose, at even a greater extent, population,” Boozman said.

That population loss “causes all kinds of problems in the future,” he added.

Information for this article was contributed by Noel Oman of the Arkansas Democrat-Gazette.

Business on 10/05/2018