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USA Today On EAS Program Costs & Benefits  
User currently offlineVictorKilo From United States of America, joined Jul 2006, 314 posts, RR: 0
Posted (6 years 10 months 5 days 5 hours ago) and read 2910 times:

The front page article in today's USA Today is about the Essential Air Services program, focusing on the high costs ($110 Million) of the program, and questioning the benefit of the program in many cases.

http://www.usatoday.com/news/washington/2007-12-30-cheap-flights_N.htm

Quote:
The Department of Transportation (DOT) pays a few small airlines $110 million a year total so they can profitably carry as few as four passengers per day to nearby hubs, often for rock-bottom fares. For example, a round-trip in Montana from Miles City to Billings - a two-hour drive away - costs passengers just $88 with a 30-day advance purchase on Big Sky Airlines because the government kicks in $779.

Flying round-trip from Lewistown, Mont., to Billings - also a two-hour-drive -  costs $88 as well on Big Sky. The government cost: $1,343 per passenger. Just two people a day took the Lewistown-to-Billings flights on average in 2006, according to the DOT.

The article quotes Mesa's Jonathan Ornstein as saying that EAS flying isn't profitable, with Mike Boyd saying that at these level of fares, the flying should be profitable.

It is interesting to me that the article completely fails to mention that Big Sky is ending its flying operations and the withdrawal of several companies from the 19-seat business. These market forces may do more to contain the size of the EAS program than any public pressure on Congress due to articles such as this.

13 replies: All unread, jump to last
 
User currently offlineSimairlinenet From United States of America, joined Oct 2005, 918 posts, RR: 2
Reply 1, posted (6 years 10 months 5 days 5 hours ago) and read 2867 times:

I nearly wrote a letter to that journalist, pointing out the Big Sky issue. It's especially bad because Big Sky is the first three examples he points out.

In addition,

Quote:
In Athens, Ga., Air Midwest gets $1 million a year for 13 weekly round trips to Charlotte-Douglas International Airport. It's a 60- to 65-minute flight. In about 90 minutes, Athens residents could drive 82 miles to Atlanta's airport, the busiest in the world, with twice as many flights a day as Charlotte.
...
In Jonesboro, Ark., 79 miles from Memphis International Airport, Air Midwest gets $937,000 a year for 12 round-trip flights a week to Dallas/Fort Worth International Airport. The 19-seat planes carried an average of five passengers per flight in 2006, according to a USA TODAY analysis of DOT data.

the author decries the Athens-Charlotte route because Atlanta is the world's busiest airport and has twice as many flights, yet ignores the fact that Dallas/Ft. Worth is the world's sixth busiest, with twice as many flights a day as Memphis.


User currently offlineIowaman From United States of America, joined May 2004, 4424 posts, RR: 6
Reply 2, posted (6 years 10 months 4 days 23 hours ago) and read 2751 times:
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Very true, however $110 million is a drop in the bucket for the federal budget.

User currently offlineTootallsd From United States of America, joined Apr 2006, 562 posts, RR: 0
Reply 3, posted (6 years 10 months 4 days 23 hours ago) and read 2734 times:
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Quoting Iowaman (Reply 2):
Very true, however $110 million is a drop in the bucket for the federal budget.

True enough but you'll never tame the beast unless all these necessities are challenged and only allowed to exist when the need is real.


User currently offlineDc-9-10 From United States of America, joined Jul 1999, 585 posts, RR: 0
Reply 4, posted (6 years 10 months 4 days 22 hours ago) and read 2695 times:



Quoting Tootallsd (Reply 3):
True enough but you'll never tame the beast unless all these necessities are challenged and only allowed to exist when the need is real.

You can never tame the beast, only change the beast, but it is still a beast. The government can either waste money on EAS or they can waste money on some other pointless program, take your pick.


User currently offlineFlighty From United States of America, joined Apr 2007, 8655 posts, RR: 2
Reply 5, posted (6 years 10 months 4 days 22 hours ago) and read 2676 times:

The EAS program could be redesigned. It's all well and good to pour $110 million into subsidizing small communities. But clearly, some of these flights are useful to NO ONE.

There is a better way to allocate a bunch of 19-seat propliners, which could be very useful to Americans. Numerous routes would be highly traveled, if the prices were lower. The problem is, today's markets have been choked to the point where no one is willing to PAY to ride on these government SUBSIDIZED flights. Because it's too expensive! Talk about ridiculous.

So, the fares should be regulated. After all, this is a government-provided service. The idea is to move citizens around and promote commerce. Airline economics be damned. By its own goals, the EAS program is a failure and should be redesigned to help more Americans travel and do business.

I am surprised people like Air Midwest do not come forward with suggestions to redesign the EAS program.

Take this as an example -- Columbia, MO. A university town of around 100,000 people. Virtually all of them drive to STL or MCI. STL is 100 miles distant, plus traffic; MCI is 138 miles away. By this measure, COU qualifies for EAS. But they have crap service. They need ORD or MSP, and it should be slightly subsidized by the government. But their EAS service (I believe to MCI) is priced too high. So nobody uses it!

EAS should be aligned with market demand, to satisfy the largest number of Americans in the most useful way. This might mean subsidizing S340s on COU-MSP, and mandating that they be 60% full on average (putting a cap on prices). It could also be a cost-plus contract; guaranteed 10% profit margins. Whatever is needed.

The EAS program is a great opportunity to increase commerce and well-being in America's small cities. I know lots of people who would benefit from EAS, if it were more affordable to the passenger. Our nation's small airports are an important resource that should be used more heavily.


User currently offlineMSYtristar From , joined Dec 1969, posts, RR:
Reply 6, posted (6 years 10 months 4 days 21 hours ago) and read 2633 times:



Quoting Flighty (Reply 5):
The EAS program could be redesigned. It's all well and good to pour $110 million into subsidizing small communities. But clearly, some of these flights are useful to NO ONE.

Yea, they should give the money to Amtrak to add new service instead of wasting it on puddle jumpers which carry five passengers per flight. That's the mostly anti-rail American government at work for you.  Yeah sure


User currently offlineA330323X From United States of America, joined Oct 2003, 3039 posts, RR: 44
Reply 7, posted (6 years 10 months 4 days 21 hours ago) and read 2613 times:



Quoting Flighty (Reply 5):
Take this as an example -- Columbia, MO. A university town of around 100,000 people. Virtually all of them drive to STL or MCI. STL is 100 miles distant, plus traffic; MCI is 138 miles away. By this measure, COU qualifies for EAS. But they have crap service. They need ORD or MSP, and it should be slightly subsidized by the government. But their EAS service (I believe to MCI) is priced too high.

Air Midwest charges $59 one-way for local traffic on COU-MCI, and yet you think that is too high?  Confused



I'm the expert on here on two things, neither of which I care about much anymore.
User currently offlineTornado82 From , joined Dec 1969, posts, RR:
Reply 8, posted (6 years 10 months 4 days 3 hours ago) and read 2452 times:



Quoting MSYtristar (Reply 6):

Yea, they should give the money to Amtrak to add new service instead of wasting it on puddle jumpers which carry five passengers per flight. That's the mostly anti-rail American government at work for you. Yeah sure

Intercity rail is impossible with the travel distances. The only place Amtrak should be receiving money are the corridors, like the Northeast Corridor, the Chicago regional stuff, the West Coast stuff, etc. There's no reason to subsidize a train from Chicago to Seattle via every podunk town in the Dakotas and Montana. A 3 day long rail trip is not used for any necessary travel... it's just a vacation thing. Amtrak is by far more mismanaged than EAS.


User currently offlineMSYtristar From , joined Dec 1969, posts, RR:
Reply 9, posted (6 years 10 months 4 days 2 hours ago) and read 2422 times:



Quoting Tornado82 (Reply 8):
There's no reason to subsidize a train from Chicago to Seattle via every podunk town in the Dakotas and Montana.

Yet the train which run that route has posted record high passenger totals since it's "relaunch" a couple of years back. Those podunk towns fill the train. The long distance trains are rarely filled with end point to end point traffic.


User currently offlineTornado82 From , joined Dec 1969, posts, RR:
Reply 10, posted (6 years 10 months 4 days 2 hours ago) and read 2409 times:



Quoting MSYtristar (Reply 9):
Yet the train which run that route has posted record high passenger totals since it's "relaunch" a couple of years back. Those podunk towns fill the train. The long distance trains are rarely filled with end point to end point traffic.

And as is the case with many flights... just because it's full doesn't mean its anywhere near profitable.


User currently offlineMSYtristar From , joined Dec 1969, posts, RR:
Reply 11, posted (6 years 10 months 4 days 1 hour ago) and read 2389 times:

Quoting Tornado82 (Reply 10):
And as is the case with many flights... just because it's full doesn't mean its anywhere near profitable.

You can't compare the profitability of passenger rail to passenger air, because passenger rail is, and likely never will be, profitable. Other nations have realized that and have funded their rail network adequately because they know it serves a puropse. Not everyone can fly, wants to fly, or can afford to fly. An Amtrak train is a godsend for hundreds of small communities across the U.S.

[Edited 2008-01-01 13:18:05]

User currently offlineFlighty From United States of America, joined Apr 2007, 8655 posts, RR: 2
Reply 12, posted (6 years 10 months 4 days 1 hour ago) and read 2371 times:



Quoting A330323X (Reply 7):
Air Midwest charges $59 one-way for local traffic on COU-MCI, and yet you think that is too high?

In short, yes, the general pricing COU-LGA and COU-MCO is too high. MCI local is not a viable air travel route, so its price won't matter much. Easier to drive on the highway for anything under 200 miles, IMO.

Midwest Airlines has 717 service from MCI-LGA. It should be an easy connection but it appears to be very expensive (+$400 RT leisure). Meanwhile, MCI-LGA is around $200 off-peak, sometimes as low as $178 RT. So people drive to MCI from COU to ride the nonstop to LGA, saving money.


You know it's true for many EAS routes. All domestic destinations are $400-$800 RT. If they were cheaper, those little B1900s would run 80% load factors, and that helps 4x as many Americans as a 20% load factor.


User currently offlineKnope2001 From United States of America, joined May 2005, 2951 posts, RR: 30
Reply 13, posted (6 years 10 months 3 days 19 hours ago) and read 2266 times:

The USAToday story is essentially the same one that has been rehashed several times over the years. Update some dollar amounts and cities, freshen up the anecdotes, and voila, a new story.

The most common slant on EAS stories is to find the most absurd examples and present them as norm, and this story is no exception. Even casual, occasional visitors to north/northcentral Georgia know that both Macon and Athens travelers nearly all drive to ATL (They are nearly suburbs of Atlanta.) And the Montana airports mentioned are among the very least-used in the entire EAS system in the lower 48. In spite of these examples there are many airports that are not such obvious pork (or pork-appearing) places.

First, the notion that the EAS-supported airports serve next to no passengers is not accurate in most cases. Here are the average weekly passengers served at EAS cities in 2006.

623 Presque Isle ME
591 Columbia MO
562 Laurel MS
550 Decatur IL
540 Manhattan KS
516 Greenbirar WV
505 Macon GA
458 Mason City IA
453 Marion IL
449 West Yellowstone MT
431 Garden City KS
430 Crescent City CA
422 Joplin MO
410 Johnstown PA
391 Larramie WY
387 Bar Harbor ME
379 Scottsbluff NE
370 Lebanon NH
360 Cortez CO
355 Escanaba MI
355 Hays KS
349 Hibbing MN
337 North Platte NE
335 Kearney NE
334 Victoria TX
328 Grand Island NE
324 Dubois PA
318 Fort Leonard Wood MO
302 Cape Girardeau MO
300 Burlington IA
300 Merced CA
299 Quincy IL
298 Iron Mountain MI
292 Cedar City UT
284 Pendleton OR
262 Fort Dodge IA
254 Athens GA
249 Parkersburg WV
246 Rockland ME
245 Muscle Shoals AL
237 Altoona PA
234 Watertown SD
232 Alamosa CO
225 Page AZ
209 Dickensen ND
204 Shenandoah Valley VA
200 Clarksburg WV
193 Dodge City KS
188 Pueblo CO
178 Show Low AZ
176 Visalia CA
176 Morgantown WV
176 Owensboro KY
175 Harrison AK
175 Ely NV
174 Jamestown NY
165 Watertown NY
165 Ponce PR
163 Augusta ME
156 Liberal KS
146 Hot Springs AR
143 Mayanguez PR
139 Prescott AZ
137 Carlsbad NM
134 Bradford PA
131 Jackson TN
128 Thief River Falls MN
127 Ironwood MI
126 Devils Lake ND
123 Jonesboro AR
122 Sidny MT
114 Massena NY
111 Saranac Lake NY
108 Manistee MI
100 Worland WY
91 Jamestown ND
91 Kingman AZ
90 Clovis NM
90 Silver City NM
90 McCook NE
87 Chadron NE
83 Rutland VT
81 Salina KS
79 Plattburgh NY
77 Vernal UT
74 Frankln PA
72 Eldorado AR
71 Hobbs NM
69 Moab UT
69 Glasgow MT
68 Wolf Point MT
67 Alliance NE
66 Kirksville MO
64 Ogdensburg NY
63 Huron SD
58 Haver MT
46 Miles City Mt
40 Glendive MT
31 Great Bend KS
26 Lewiston MT

About 3/4 of the EAS airport serve more than 100 passnegers per week. Most EAS airports receive between 12 and 18 departures per week. So even an airport with only about 100 passengers per week might be around 50% load factor because many of the smallest airports share their flights with another small community.

For example, Ironwood MI served on average 127 passengers per week. Doesn't sound like that many. But since their subsidized service is only 12 departues per week (24 total flights) with 19 seat aircraft, and those trips are shared with another community (Rhinelander WI), Ironwood only has about 228 total seats to fill each week
(24 * 19 / 2). So a relatively paltry 127 passengers per week at Ironwood meant a load factor of over 55%.

Certainly there are some small airports that do just board a couple of people per flight, and in some cases go out with zero. But people the perception is that "nobody uses these flights", and in many cases that is far from accurate.


The second notion about EAS is that in most cases they serve communities where the travelers have already voted with their feet (so to speak) by using a nearby airport with much better service. To be sure there are some examples where it seems that a community with EAS subsidy is easily within the natural catchment area of a big airport.
Yet that's hardly a universal condition of today's EAS subsidy airports.

Some really are quite remote from the nearest medium or large hub. Just a few examples:

Presque Isle ME is well over 6 hours to Boston,
Dodge City KS is nearly 5 hours to Oklahoma City
Crescent City CA is over 6 hours from Sacarmento
Devils Lake ND is over 6 hours from Minnepolis

In some cases there are closer airports with regular unsubsidized service, but in many cases those airports have very limited service themselves. Presque Isle is just under 3 hours from Bangor, but BGR has flights to just a handful of cities with a few flights each. Same with Dodge City's relation to Wichita, Crescent City to Eureka, and Devils Lake to Grand Forks.

Finally, an airport might justify service even when it isn't 4-6 hours to a large airport. Laurel/Hattiesburg MS undoubtedly sees a lot of their traffic spill to airports in New Orleans and Jackson where Southwest has low-fare service. HIgh volume leisure market travelers to places like Orlando and Las Vegas from those communities likely drive a couple of hours for those cheap nonstop seats. Yet PIB (Laurel/Hattiesburg) still serves dozens of passengers day in and day out because there is demand in spite of very limited schedules and likely higher fares to avoid the drive. At a really remote community like Presque Isle, less-frequent and bargain-seeking travelers may regularly drive 4-5 hours to Portland to get cheap JetBlue or AirTran flights. But that does not necessarily mean all PQI traffic should be expected to do the same.



EAS is undoubtedly a flawed program, and there are definitely examples which seem rather unreasonable. But mixed among those are many communities where subsidized service *may* be a worthwihle endeavor.

Some will undoubtedly argue that only the market should determine where airline service exists, and subsidy is never justified. Purists who believe this probably are not likely to be swayed even by pointing out many other things which are in essence subsidized (direction, indirectly via regulation, etc.) But if one believes that there *may* be instances where subsidy is justified, then it comes down to how to reform subsidy, eligibility, source of funds, and the like. What's happening now really isn't working and is trending downhill quickly. One wonders if things will come to a head and force a change as economics continue to deteriorate, subsidize rocket, and bids from EAS-interest carriers evaporate.


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