The White House’s budget proposal includes a request to reduce funding to the EAS program by $308 million—about half the program’s budget.
What do Bar Harbor, Maine; Tupelo, Mississippi; and Crescent City, California, have in common? They all have commercial airline service that’s subsidized by U.S. taxpayers. They’re also cities that could lose airline service if proposed cuts to the subsidy program in the White House’s budget proposal aren’t removed before the budget bill is passed.
But why is the federal government subsidizing airline service when the industry was deregulated in 1978?
Prior to 1978, all airline service and fares were regulated by the federal government. The idea was to promote the health and sustainability of the airline industry in its earliest years, and prevent reckless competition from ultimately making the entire industry unviable for everybody. A government price-fixing organization, the Civil Aeronautics Board (CAB), analyzed air travel demand and awarded route authorities to airlines based on need. Airlines were otherwise unable to operate interstate airline service without route authorities from the CAB.
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By the late 1970s, it became clear the regulations were actually hindering the growth of the industry, and President Carter signed a bill deregulating the industry. This allowed airlines to fly wherever they wished domestically, setting their own fares.
The Essential Air Service (EAS) act was written into the same act that deregulated the industry to protect airline service at small communities where airline service would be economically unviable without subsidy, as a way of fulfilling the government’s obligation to provide access to the national transportation network.
To receive subsidies, airlines submit proposals to the federal government for a set number of cities the government determines as needing subsidies for flights connecting smaller airports to medium or large hub airports. As part of the proposal, airlines provide estimates for how much money they would lose operating the route, requesting government funds to make up the difference, plus a 5% profit margin to account for fluctuations in actual demand. The Department of Transportation (DOT) reviews the proposals, then selects the proposal that best fits the requirements of the law.
The White House’s budget proposal includes a request to reduce funding to the EAS program by $308 million—about half the program’s budget.
The budget request notes, “The EAS program funnels taxpayer dollars to airlines to subsidize half-empty flights from airports that are within easy commuting distance from each other, while also failing to effectively provide assistance to most rural air travelers. Spending on programs is out of control, more than doubling between 2021 and 2025. The Budget reins in EAS subsidies by proposing a mix of reforms to adjust eligibility and subsidy rates to help rural communities’ air transportation needs in a more sustainable manner. This would save American taxpayers over $300 million from the 2025 level.”
Reductions in funding to the EAS program could be reduced, expanded, or eliminated entirely as Congress continues to debate and amend the budget bill.
The proposal doesn’t outline any specific ways subsidies would be reduced, or whether any cities would be eliminated entirely from the program. It’s worth noting there are also a number of criteria for communities to maintain eligibility for EAS subsidies, and there are also per-passenger subsidy caps, depending on how close a city is to an alternate airport.
Carriers are also only compensated for flights that actually operate within the terms of the award—cancelled flights are not subsidized, nor are flights that are operated with smaller aircraft than stipulated in the award. Airlines on EAS routes are also the only carriers on a route by design. If a second airline decides to operate the same route without a subsidy, the subsidy is withdrawn for subsequent flights by the original airline.
The most expensive EAS award in the contiguous United States is for flights from Presque Isle, Maine, for a daily JetBlue flight to Boston, at an annual subsidy rate of $10.4 million. The JetBlue flight is the only commercial passenger flight at the airport, and JetBlue’s bid was the lowest of those received from several carriers, up to $17.3 million.
One possibility for reductions to EAS markets would be to review the current rules surrounding eligibility. Presque Isle is more than 175 miles by car to a medium or large hub airport, and just under 175 miles by car to the nearest airport (Bangor) with unsubsidized commercial airline service, so it seems prudent that subsidized air service keeps the community connected to the nation’s air transport grid.
But what about airports that have closer alternatives, as mentioned in the White House’s budget proposal?
Prescott Regional Airport, in Prescott, Arizona, is 92 miles from the airport at Flagstaff (a non-hub) and 105 miles from Phoenix Sky Harbor. United Express partner airline SkyWest Airlines currently holds the EAS award, receiving an annual subsidy of $5.8 million for regional jet service to Denver. With a metropolitan population of nearly 130,000, is a two-hour drive to a large hub airport enough to consider a community not adequately connected to the national air transportation system?
EAS subsidies are generally politically popular in the states and communities that have them. Currently, 34 states and the territory of Puerto Rico have EAS awards. With few roads, communities in the state of Alaska are heavily dependent on EAS—44% of the current EAS cities are in Alaska.
EAS subsidies have also come under fire as the total expenditure has grown substantially since 1997. Both the first Trump administration and the George W. Bush administration have sought to trim the program’s expenses by tightening eligibility requirements and encouraging state and local governments to contribute funds to the subsidy awards.
