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Rural Air Subsidy Costs Spiral

Government subsidies for flights in and out of rural communities can reach up to thousands of dollars per passenger, and Congress is moving to increase the budget by almost 30 percent to keep those flights going next year.

Some of the subsidies, to places like Ely, Nev., Cape Girardeau, Mo., and Havre, Mont., are eye-popping.

Ely, in Democratic Senate Majority Leader Harry Reid's state, leads the pack with a $4,500 per passenger subsidy, according to new data from the Senate Appropriations Committee. Just 414 people flew out of Ely last year. That's 0.7 passengers per flight, which means that some planes fly empty of passengers.

For Havre, each of its 359 passengers -- 0.6 passengers per flight -- received an almost $2,900 subsidy.

No matter. On Thursday, the Senate Appropriations Committee approved $175 million for the program, a $39 million increase from current funding. Congress initially provided $123 million in rural air subsidies this year, then added $13 million more as costs spiraled.

The committee warns it really has no idea what the true cost of the program will be this year, so it gave Transportation Secretary Ray LaHood power to shift money out of other programs to make sure the subsidies keep flowing.

Reforms promised by the Obama administration have yet to arrive, but there doesn't seem to be any sense of urgency to fix the situation, either within the administration or on Capitol Hill.

The troubled Essential Air Service program is a product of deregulating the airlines during Jimmy Carter's presidency. It was established to guarantee that small communities would continue to get commercial air services even though the routes were no longer profitable after deregulation.

Presidents from Ronald Reagan to George W. Bush sought unsuccessfully to cut the subsidies that keep flights going to 107 communities in 31 states in the continental U.S. and 45 tiny towns in Alaska, according to the most recent reports. Subsidies are greatest for airports that are more than 210 miles from regional hubs. Communities within 70 driving miles of a hub airport are ineligible.

The budget for the program has bounced around. In the 2001 budget year, it was $50 million, but after the Sept. 11, 2001, terrorist attacks, airlines pulled out of smaller unsubsidized markets, leading more cities to require taxpayer subsidies to keep their flights.

The major airlines have pulled out of the program, leaving smaller, often financially troubled airlines to serve the subsidized communities. There are also fewer and fewer 19-seat airplanes in operation as many airlines turn to more cost-efficient 30-seat planes. But many small communities can't support the larger planes and are being left without air service

The Bush administration tried to cut the subsidies and focus them on the most isolated communities, but the plan went nowhere in Congress.

The program enjoys strong support among lawmakers. In April, 22 senators wrote White House budget director Peter Orszag to demand more money for it.

"Simply put, the Essential Air Service program was a promise made to rural America, and a promise that must be kept," the senators wrote.

Support is particularly strong in the Senate, where rural states have disproportionate strength. "It's a program that is very popular for communities that have very few ways to get in and out of," said Sen. Patty Murray, D-Wash., who chairs the Appropriations Committee's transportation subcommittee.

Flights out of Lebanon, N.H., receive a $137 per passenger subsidy. Nonetheless, the state's Republican senator, Judd Gregg, calls the program "a massive waste of money."

LaHood told lawmakers earlier this year that the program should be updated and made more cost effective to "provide better value for passengers and the American taxpayer."

Pressure on the program keeps building as more and more airlines pull out of cities that don't currently have subsidies. Government subsidies often are needed to get service back.

For example, earlier this month, Mesaba Airlines, a subsidiary of Delta Air Lines, served notice it is ceasing flights to eight cities, including Tupelo, Miss.; Paducah, Ky.; and Eau Claire, Wis. The airline hopes to continue with subsidized service.

Supporters of the program claim it's essential to attracting investment and demonstrating that cities aren't second-class communities.

"If you don't have air transportation into your communities ... those communities are not going to have an opportunity for economic development," said Sen. Ben Nelson, D-Neb. Flights out of Nelson's hometown of McCook get a $468 per passenger subsidy.

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