Commercial Aviation: Programs and Options for Providing Air	 
Service to Small Communities (25-APR-07, GAO-07-793T).		 
                                                                 
Congress established two key programs to help support air service
to small communities--the Essential Air Service (EAS) providing  
about $100 million in subsidies per year and the Small Community 
Air Service Development Program (SCASDP) that provides about $20 
million per year in grants. As part of its reauthorization of the
Federal Aviation Administration (FAA), the Congress is examining 
the status and outcomes of these programs. This testimony	 
discusses (1) the history and challenges of the EAS program, (2) 
the implementation and outcomes of the SCASDP and (3) options for
reforming EAS and SCASDP. The testimony is based on previous GAO 
reports, interviews with Department of Transportation officials  
and industry representatives as well as program updates.	 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-07-793T					        
    ACCNO:   A68745						        
  TITLE:     Commercial Aviation: Programs and Options for Providing  
Air Service to Small Communities				 
     DATE:   04/25/2007 
  SUBJECT:   Aircraft						 
	     Airports						 
	     Commercial aviation				 
	     Federal aid programs				 
	     Federal grants					 
	     Future budget projections				 
	     Grants to local governments			 
	     Locally administered programs			 
	     Passengers 					 
	     Program evaluation 				 
	     Program management 				 
	     Strategic planning 				 
	     Subsidies						 
	     Community Flexibility Pilot Program		 
	     Essential Air Service Program			 
	     Small Community Air Service Development		 
	     Program						 
                                                                 

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GAO-07-793T

   

     * [1]Background
     * [2]The EAS Program Provides Service to Small Communities While

          * [3]EAS Provides Service to Many Communities Where Certain Facto
          * [4]Demand for EAS Subsidies Has Grown Over the Past Decade
          * [5]EAS Subsidies Vary In Relation to Numbers of Passengers
          * [6]Future Approach to EAS Service Uncertain Due to Changes in A

     * [7]The Small Community Grant Program Has Funded Some Successful

          * [8]SCASDP Grants Show Promise and Warrant Further Evaluation
          * [9]Grantees Used Many Strategies to Improve Air Service in Thei
          * [10]The Number of Grant Applications Has Declined

     * [11]Options Exist for Reforming EAS and Evaluating SCASDP

          * [12]Examine Options for Enhancing EAS

               * [13]Targeting Subsidized Service to More Remote Communities
               * [14]Better Matching Capacity with Community Use
               * [15]Consolidating Subsidized Service Provided to Multiple
                 Commun
               * [16]Changing Carrier Subsidies to Local Grants

          * [17]Vision-100 Small Community Pilot Programs and Initiatives Ha
          * [18]Recently Started DOT Evaluation of the Effectiveness of SCAS

     * [19]Contact Information
     * [20]GAO's Mission
     * [21]Obtaining Copies of GAO Reports and Testimony

          * [22]Order by Mail or Phone

     * [23]To Report Fraud, Waste, and Abuse in Federal Programs
     * [24]Congressional Relations
     * [25]Public Affairs

Testimony

Before the Subcommittee on Aviation, Committee on Transportation and
Infrastructure, U.S. House of Representatives

United States Government Accountability Office

GAO

For Release on Delivery
Expected at 2:00 p.m. EDT
Wednesday, April 25, 2007

COMMERCIAL AVIATION

Programs and Options for Providing Air Service to Small Communities

Statement of Gerald L. Dillingham, Ph.D., Director
Physical Infrastructure Issues

GAO-07-793T

Mr. Chairman and Members of the Subcommittee:

We appreciate the opportunity to testify today on issues related to the
Essential Air Service (EAS) and Small Community Air Service Development
(SCASDP) programs. These are the principal federal programs that have been
established to provide air service to small and underserved communities.
Congressional deliberations on the reauthorization of the Federal Aviation
Administration (FAA) are an opportune time to examine the status of
federal air service to small and rural communities. As you know, small
community air service helps connect small communities to other parts of
the country and the world. However, such service has struggled over the
past decade. The aviation industry has experienced financial losses in the
last few years, though some airlines improved their financial conditions
in 2006. However, the improvement in profitability of some airlines has
not benefited small communities that face decreases in the number of
available seats and scheduled flights. According to a key industry
association, flights to small communities are the first flights to be
eliminated due to their limited profitability. Specifically, in July 2006
scheduled flights for small communities were 26 percent below the number
of scheduled flights in July 2000. This has challenged small communities
to obtain adequate commercial air service at reasonable prices.

Although both EAS and SCASDP are designed to help support air service to
small communities, the programs have several differences.^1 EAS,
established as part of airline deregulation in 1978, is designed to ensure
that small communities that received scheduled passenger air service
before deregulation continue to have access to the nation's air
transportation system. In fiscal year 2007, Congress appropriated about
$109.4 million for the Department of Transportation (DOT) for EAS. These
funds are essentially used to provide subsidies to air carriers who
provide service to small communities. For fiscal year 2008, the
administration, as part of its reauthorization proposal, requested $50
million for the program. Congress established SCASDP in 2000 and has
appropriated $20 million annually from 2002 through 2005 and $10 million
for 2006 and 2007 for DOT to award up to 40 grants each year to
communities that have demonstrated air-service deficiencies or
higher-than-average fares.^2 For fiscal year 2008, the administration did
not request funds for SCASDP.

^1Small community airports also receive other financial support from the
federal government. For example, under the Airport Improvement Program
small airports receive certain funds for addressing capital improvement
needs--such as for runway or taxiway improvements.

While federal programs to support air service to small communities face
increasing financial expenditures, the federal government's financial
condition and long-term fiscal outlook have deteriorated. We have reported
on the nation's long-term fiscal imbalances and the need for a fundamental
and periodic reexamination of the base of government, ultimately covering
discretionary and mandatory programs as well as the revenue side of the
budget.^3 Furthermore, in January 2007, we identified the challenges
federal aviation programs are facing meeting growing infrastructure
demands and constrained resources as part of one of GAO's high risk
areas--namely, financing the nation's transportation system. These federal
fiscal constraints lead to difficult policy choices for the best use of
scarce resources.

In light of these challenges, part of my testimony today will discuss
options for reforming small community air service. But first, I will
address (1) the history and challenges of the EAS program and (2) the
implementation and outcomes of SCASDP. Then I will highlight (3) options
for reforming EAS and SCASDP. My statement is based in part on the reports
that we have issued related to these programs, in addition to recent
interviews with and data from key stakeholders. We obtained information on
the status of projects from the Office of the Secretary of the Department
of Transportation (OST) and obtained information on the current issues in
providing service to small communities from DOT and industry
representatives. Based on assessments conducted during previous reviews,
we concluded that the data are reliable for the purposes of this
testimony. Appendix IV contains a list of our related testimonies and
reports. We conducted our work on EAS from March through December 2002 and
our work on SCASDP from September 2004 through October 2005 and updated
information in April 2007 in accordance with generally accepted government
auditing standards.

^2In fiscal year 2005, DOT transferred $5 million of these funds from
SCASDP to EAS. The Emergency Supplemental Appropriations Act for Defense,
the Global War on Terror, and Tsunami Relief, 2005, Pub. L. No. 109-13,
recognized that the funds appropriated for the EAS may not be sufficient
to meet the service needs of communities encompassed by that program. The
Emergency Supplemental Appropriations Act provided that the Secretary of
Transportation could transfer "such sums as may be necessary to carry out
the essential air service program from any available amounts appropriated
to or directly administered by the Office of the Secretary."

^3GAO, 21st Century Challenges: Reexamining the Base of Federal
Government. [26]GAO-05-325SP (Washington, DC: February 2005).

In summary:

           o EAS provides service to many communities that would otherwise
           not receive air service. Without these subsidies, air service for
           many EAS communities would likely end, since EAS air carriers have
           to prove that they cannot serve EAS communities at a profit to be
           eligible for EAS payments. However, costs and other concerns about
           the program exist. In recent years, a growing number of
           communities have received subsidies under EAS--expanding from 95
           communities in fiscal year 1997 to 145 in fiscal year 2007.
           Similarly, funding for EAS has risen over this 10-year
           period--from $25.9 million in fiscal year 1997 to $109.4 million
           in fiscal year 2007. The median expenditure per passenger is about
           $98; subsidies to communities range from about $13 to $677 per
           passenger. While the total number of communities has risen,
           communities do drop out of the EAS program--some because their
           costs exceeded the program cap on costs per passenger.
           Furthermore, industry and DOT officials have raised concerns about
           the effect of the potential decrease in the number of air carriers
           and smaller aircraft suitable for EAS communities on the future
           EAS program. The limits on the federal budget, the increased costs
           along with concerns about the future of air carriers and planes to
           serve small communities, raise questions about ways to improve the
           program.
           o DOT has awarded 182 grants in the 5 years of the SCASDP
           program--74 of these are currently completed. In our review of the
           23 grants completed in 2005, we found that SCASDP grantees pursued
           a variety of goals and strategies for supporting air service, and
           some completed grants have been successful; however, the number of
           SCASDP grant requests has been declining. The goals grantees are
           pursuing include trying to add flights and destinations, or trying
           to obtain lower fares. The different strategies grantees are
           employing to improve air service include offering subsidies or
           revenue guarantees to airlines, marketing, and hiring personnel.
           We could not assess the overall effectiveness of the program,
           since few projects had been completed at the time; however, we
           found a little less than half had resulted in a self-sustaining
           improvement to air service. In response to our 2005
           recommendation, the Department of Transportation's Inspector
           General (DOT IG) began a review of completed grants in March 2007
           at DOT's request. The results of this review should provide
           further information on successful grants. Finally, although a
           number of communities found the grants helpful in attaining
           self-sustaining service, the number of applications for SCASDP has
           declined--from 179 in 2002 to 75 in 2006.^4 According to officials
           we interviewed, fewer communities might be applying due to a
           number of factors, including the fact that DOT's selection process
           favors communities that provide some matching funds that some
           communities might not be able to fund.

           o We have reported on options for changing EAS to potentially make
           it more efficient, including (1) targeting subsidized service to
           more remote communities, (2) better matching capacity with
           community use, (3) consolidating service to multiple communities
           into regional airports, and (4) changing the form of the federal
           assistance from carrier subsidies to local grants. Although these
           options might make the program more efficient and less costly,
           they could also reduce service to some areas. In addition, the
           2003 Vision 100-Century of Aviation Reauthorization Act
           (Vision-100) provided for a number of initiatives for the EAS
           program including marketing grants and an initiative whereby
           communities who forego their EAS subsidy for 10 years can get a
           grant for twice the amount of one year's EAS subsidy. These
           initiatives have not been implemented due partly to a lack of
           interest from EAS communities and a lack of dedicated funding. The
           administration's FAA reauthorization proposal would repeal some of
           these programs and initiatives. Regarding SCASDP, as we
           recommended, the DOT IG is conducting an evaluation of completed
           projects. The results of such an evaluation will be useful as
           Congress is considering the reauthorization of this program and
           could result in identifying "lessons learned" from successful
           projects. These lessons could be shared with other small
           communities that are trying to improve air service, and, if
           needed, to reform and refocus the program.
		   
		   Background

           Before I discuss these issues in detail, let me sketch the
           background of the EAS and SCASDP programs.

           Mr. Chairman, as you know, Congress established EAS as part of the
           Airline Deregulation Act of 1978 to help areas that face limited
           service. The act guaranteed that for 10 years communities served
           by air carriers before deregulation would continue to receive a
           certain level of scheduled air service^5 by authorizing DOT to
           require carriers to continue providing service at these
           communities. If an air carrier could not continue that service
           without incurring a loss, DOT could then use EAS funds to award
           that carrier a subsidy.^6 In 1987, Congress extended the program
           for another 10 years, and in 1998, it eliminated the sunset
           provision, thereby permanently authorizing EAS.
		   
^4The last SCASDP grants DOT granted were in 2006.

^5Special provisions guaranteed service to Alaskan communities.

^6Subsidies are used to cover the difference between a carrier's projected
revenues and expenses and to provide a minimum amount of profit.
		   
           To be eligible for this subsidized service, communities must meet
           three general requirements. They (1) must have received scheduled
           commercial passenger service as of October 1978, (2) may be no
           closer than 70 highway miles to a medium- or large-hub airport,
           and (3) must require a subsidy of less than $200 per person
           (unless the community is more than 210 highway miles from the
           nearest medium- or large-hub airport, in which case no average
           per-passenger dollar limit applies).^7 Air carriers apply to DOT
           for EAS subsidies. DOT selects a carrier and sets a subsidy amount
           to cover the difference between the carrier's projected cost of
           operation and its expected passenger revenues, while providing the
           carrier with a profit element equal to 5 percent of total
           operating expenses, according to statute.^8

           Funding for EAS has come from a combination of permanent and
           annual appropriations. The Federal Aviation Reauthorization Act of
           1996 (P.L. 104-264) permanently appropriated the first $50 million
           of such funding--for EAS and safety projects at rural
           airports--from the collection of overflight fees. ^9 Congress has
           appropriated additional funds from the general fund on an annual
           basis. The Department of Transportation's reauthorization proposal
           suggests changing the source of program funding to a mandatory
           appropriation of $50 million per year from the Airport and Airway
           Trust Fund. A new, small aviation fuel tax would be used to
           generate this $50 million. Furthermore, according to DOT
           officials, since $50 million would not sufficiently support all
           currently subsidized service, communities would be ranked in order
           of isolation, with Alaskan communities at the top of the list.
           Thus, some of the EAS communities currently receiving EAS
           subsidies under the roughly $100 million Congress has appropriated
           in recent years, might no longer receive air service.
		   
^7The average subsidy per passenger does not equate to a specific portion
of a passenger's ticket price paid for by EAS funds. Ticket pricing
involves a complex variety of factors relating to the demand for travel
between two points, the supply of available seats along that route,
competition in the market, and how air carriers choose to manage and price
their available seating capacity.

^8At any time throughout the year, an air carrier providing unsubsidized
service to an EAS-eligible community can file a notice to suspend service
if the carrier determines that it can no longer provide profitable
service, thus triggering a carrier selection case. In addition, after DOT
selects an air carrier to provide subsidized service, that agreement is
subject to renewal, generally every 2 years, at which time other air
carriers are permitted to submit proposals to serve that community with or
without a subsidy.

^9Overflight fees are user fees for air traffic control services provided
by the Federal Aviation Administration (FAA) to aircraft that fly over,
but do not land in the United States, as authorized by the Federal
Aviation Reauthorization Act of 1996 (P.L. 104-264).

           Turning now to SCASDP, Congress authorized it as a pilot program
           in the Wendell H. Ford Aviation Investment and Reform Act for the
           21st Century (AIR-21),^10 to help small communities enhance their
           air service. AIR-21 authorized the program for fiscal years 2002
           and 2003, and subsequent legislation^11 reauthorized the program
           through fiscal year 2008 and eliminated the "pilot" status of the
           program.

           The Office of Aviation Analysis in DOT's Office of the Secretary
           is responsible for administering the program. The law establishing
           SCASDP allows DOT considerable flexibility in implementing the
           program and selecting projects to be funded. The law defines basic
           eligibility criteria and statutory priority factors, but meeting a
           given number of priority factors does not automatically mean DOT
           will select a project. SCASDP grants may be made to single
           communities or a consortium of communities, although no more than
           four grants each year may be in the same state. Both small hubs
           and non hubs are eligible for this program. Thus, small hubs, such
           as Buffalo Niagara International Airport in Buffalo, New York,
           which enplaned over 2.4 million passengers in 2005, and small,
           nonhub airports, such in Moab, Utah (with about 2,600
           enplanements) are eligible. SCASDP grants are available in the 50
           states, the District of Columbia, Puerto Rico, and U.S.
           territories and possessions. DOT's SCASDP awards have been
           geographically dispersed.

           Figure 1 shows the location of all SCASDP grants awarded as of
           August 31, 2006, as well as communities receiving EAS subsidies as
           of April 1, 2007.

^10P.L. 106-181.

^11Vision 100, P.L. 108-176.

Figure 1: Airports Receiving Essential Air Service as of April 2007 and
All Small Community Air Service Development Program Grantees, through
August 2006

Source: GAO map of DOT data.

The EAS Program Provides Service to Small Communities While Increasing EAS
Subsidies Raise Concerns about the Cost and Efficiency of the EAS Program and
Its Service Providers

Mr. Chairman, as you know EAS provides service to many communities that
otherwise would not receive air service. However, the increase in the
number of communities receiving subsidies and the cost of these subsidies
raise concerns over the funding needed to provide this service in an
environment of federal deficits. For example, the funding for EAS has
grown from $25.9 million in 1997 to $109.4 million in 2007. Furthermore,
the federal median subsidy for providing air service to EAS communities is
about $98 per passenger; the subsidies varied among communities from about
$13 to over $677 per passenger in 2006. Finally, the number of air
carriers flying smaller aircraft suitable for EAS communities may decrease
and some industry officials are beginning to voice concerns about the
availability of appropriate planes to provide small community air service
in the future.

EAS Provides Service to Many Communities Where Certain Factors Make Maintaining
Service in Small Communities Difficult

In fiscal year 2007, EAS provided subsidies to 145 communities. In fiscal
year 2005, the most recent year for which passenger data is available, the
EAS program supported over 1 million passengers. As we have noted in past
reports, if EAS subsidies were removed, air service might end at many
small communities. Since air carriers have to show financial data to
support a subsidy calculation--proving the service is not profitable to
run--it is likely that if the subsidy is no longer available commercial
air service would end.

Several factors may help explain why some small communities, especially
nonhubs, face relatively limited air service. First, small communities can
become cost-cutting targets of air carriers because they are often a
carrier's least profitable operation. Consequently, many network carriers
have cut service to small communities, replaced by regional carriers.^12
Second, the "Commuter Rule" that FAA enacted in 1995 brought small
commuter aircraft under the same safety standards as larger aircraft--a
change that made it more difficult to economically operate smaller
aircraft, such as 19-seat turboprops.^13 For example, the Commuter Rule
required commuter air carriers that flew aircraft equipped with 10 or more
seats to improve ground deicing programs and carry additional passenger
safety equipment. Additionally, the 2001 Aviation and Transportation
Security Act instituted the same security requirements for screening
passengers at smaller airports as it did for larger airports, sometimes
making travel from small airports less convenient than it had been.^14
Third, regional carriers have used fewer turboprops in favor of regional
jets, which had a negative effect on small communities that have not
generated the passenger levels needed to support regional jet service.
Finally, many small communities experience passenger "leakage"--that is,
passengers choosing to drive longer distances to larger airports instead
of using closer small airports. Low-cost carriers have generally avoided
flying to small communities but have offered low fares that encourage
passengers to drive longer distances to take advantage of them.^15

12A network carrier operates a significant portion of its flights using at
least one hub where connections are made for flights on a spoke system.
Regional carriers provide service from small communities primarily using
regional jets to connect the network carriers' hub-and-spoke system.

^13Code of Federal Regulations Title 14 Part 121 (14 CFR Part 121)
provides details on aircraft certification requirements for aircraft that
operate scheduled service with 10 or more seats. The Commuter Rule was
instituted with 60 Fed. Reg. 65832, December 20, 1995.

^14Aviation and Transportation Security Act, Section 110 of P.L. 107-71,
115 Stat. 597 (2001).

Demand for EAS Subsidies Has Grown Over the Past Decade

Mr. Chairman, although less than the 405 communities served with the help
of EAS subsidies in 1980, the number of communities served by EAS has
grown over the past 10 years, as has the amount of funds appropriated for
the program. As shown in table 1, for fiscal year 2007, EAS is providing
subsidies to air carriers to serve 145 communities--an increase of 50
communities over the 1997 low point. The funding for EAS has also grown
from $25.9 million in 1997 to $109.4 million in 2007. Excluding Alaska,
this amounts to an average of about $754,500 per EAS community in fiscal
year 2007. Appendix I lists EAS communities and their current subsidy
amounts.

Table 1: EAS Program Appropriations and Communities Served, Fiscal Years
1993 through 2007

^a As of April 1, 2007

Source: DOT.

^15 Low-cost carriers follow a business model that may include
point-to-point service between high-density city pairs, a standardized
fleet with high aircraft utilization, low fares, and minimal onboard
service.

While the total number of communities receiving service through EAS
subsidies has generally increased, some communities have dropped from the
program. For example, according to DOT officials 11 communities that had
EAS subsidized service in 2006 were no longer in the program in 2007. Four
of these were terminated by DOT because their subsidy rose above the EAS
cap--Bluefield, WV; Enid, OK; Moses Lake, WA; and Ponca City, OK. Seven
communities secured non-subsidized service. These communities included
Hana, HI; Kalaupapa, HI; Kamuela, HI; Pierre, SD; Riverton, WY; Rock
Springs, WY; and Sheridan, WY.

EAS Subsidies Vary In Relation to Numbers of Passengers

The level of subsidy per passenger at EAS communities varies greatly.^16
At some locations, the level of subsidy per passenger is modest. For
example, in 2006, of the 110 airports receiving EAS service for which data
were available, 30 communities had subsidies of less than $50 per
passenger. Some communities with relatively low subsidies per passenger
included Escanaba, MI ($12.96) and Morgantown, WV ($13.68) both with
almost 36 passengers per day. In contrast, 30 communities also had
subsidies per passenger greater than $200. The highest subsidy at that
time was $677 for Brookings, SD, and Lewistown, MT had an average subsidy
of almost $473. These two areas had fewer than 3 passengers per day.
Airports may maintain EAS service when subsidies exceed $200 dollars if
they are more than 210 highway miles from a large or medium hub.

As would be expected, a low number of passengers are associated with high
subsidies. Of the 110 airports receiving EAS service for which data were
available, 17 airports had fewer than 5 passengers per day. Such airports
typically have a subsidy per passenger greater than $200--15 of the 17
exceed the $200 threshold. Communities with less than 5 passengers per day
also constitute half those with subsidies exceeding $200 (15 of 30). In
contrast, 47 communities had at least 20 passengers per day, more than the
capacity of a single 19-seat aircraft flight. All 47 of these airports had
subsidies of less than $100 per passenger. See Appendix II for EAS
Subsidies per Enplanement.

^16We are referring to average daily "enplanements" per day as passengers
per day.

Future Approach to EAS Service Uncertain Due to Changes in Air Carriers and
Equipment

DOT and industry officials we interviewed raised questions about the
future of the EAS service as currently provided. As of April 1, 2007, 12
regional air carriers served the subsidized communities in the continental
United States. The carriers serving the communities in the continental
United States typically used turboprop aircraft seating 19 passengers,
whereas in Alaska and Puerto Rico, the most commonly used aircraft seated
4 to 9 passengers.

DOT and industry officials pointed out that 19-seat aircraft are no longer
being manufactured, and some of the current EAS carriers appear to be
migrating to the use of larger aircraft. DOT officials noted that EAS
carriers are getting out of the business that uses 19-seat aircraft, and
are moving into larger aircraft. In addition, industry consultants noted
that as the current fleet of 19-seat aircraft ages, maintenance costs will
likely rise, which will make operating 19-seat aircraft more expensive.
Because 19-seat aircraft are the backbone of EAS service in the contiguous
48 states, their aging or discontinuation would significantly affect the
program. Figure 2 shows an example of a 19-seat Turbo Prop aircraft
commonly used to provide EAS service.

Figure 2: Picture of 19-Seat Turbo Prop Aircraft

Finally, DOT and industry officials with whom we spoke were not convinced
that the emerging technology of Very Light Jets (VLJs) could fill this
gap, especially in the short term.^17 They noted that current business
models discussed for VLJs did not anticipate their use for the kind of
small communities served by EAS. DOT did provide a SCASDP grant to
Bismarck, ND for developing a business model for point to point,
reservation responsive air service using VLJs. The grantee has developed
the business plan; however, given the lack of operating VLJs, they changed
the type of aircraft the business would use until the aircraft become more
available. We will be completing a more comprehensive report on VLJs for
the subcommittee later this year.

The Small Community Grant Program Has Funded Some Successful Projects

Mr. Chairman, we found that SCASDP grantees pursued several goals and
strategies to improve air service, and that air service was sustained
after the grant expired in a little less than half of the 23 completed
projects in 2005--the time of our initial review. The DOT IG's office
began reviewing completed grants in March 2007 which should provide more
information on the results of completed grants. Although the program has
seen some success, the number of applications for SCASDP grants has
declined for a variety of reasons.

SCASDP Grants Show Promise and Warrant Further Evaluation

At the time of our initial review of SCASDP, in 2005, it was too soon to
determine the overall effectiveness of the program because there was not
much information available about the "post" grant period. Once awarded, it
may take several years for grants to be implemented and completed. There
have been 182 grant awards made in the 5 years of the program. Of these,
74 grants are completed as of April 1, 2007--34 from 2002, 19 from 2003,
and 21 from 2004. No grants from 2005 or 2006 are yet completed. In
addition, as of April 4, 2007, DOT had terminated seven grants it
initially awarded.^18 See Appendix III for a list of all SCASDP grants
from 2002 through 2006.

^17Very Light Jets are new small, lightweight, jet aircraft equipped with
advanced avionics and priced below other business jets.

^18According to DOT officials, the agency initiated only one
termination--for the grant awarded to Casper/Gillette, Wyoming. The
communities awarded the other grants requested the termination of the
grants.

Our review of the 23 projects completed by September 30, 2005, found some
successful results. The kinds of improvements in service that resulted
from the grants included adding an additional air carrier, destination, or
flights; or changing the type of aircraft serving the community. In terms
of numbers, airport officials reported that 19 of the 23 grants resulted
in service or fare improvements during the life of the grant (see fig.3).
In addition, during the course of the grant, enplanements rose at 19 of
the 23 airports. After the 23 SCASDP grants were completed, 14 resulted in
improvements that were still in place. Three of these improvements were
not self-sustaining; thus 11 self-sustaining improvements were in place
after the grants were completed.

Since our review of the 23 completed projects, 51 more have been completed
for a total of 74. We reviewed the fifty-nine available final reports. A
review of the grantees' final reports for these projects indicated that 48
increased enplanements as a result of their SCASDP grant.

Figure 3: Air Service Improvement during the Course of 23 Grants and after
Project Completion

For SCASDP grants DOT awarded from 2002 though 2004, we surveyed airport
officials to identify the goals they had for their grants. We found that
grantees had identified a variety of project goals to improve air service
to their community. These goals included adding flights, airlines, and
destinations; lowering fares; upgrading the aircraft serving the
community; obtaining better data for planning and marketing air service;
increasing enplanements; and curbing the loss of passengers to other
airports. (See fig. 4 for the number and types of project goals identified
by airport directors.)

Figure 4: Project Goals as Identified by Airport Directors for Grants
Awarded 2002 - 2004

Note: The number of airport directors surveyed may exceed the number of
grants in a year because grants are sometimes awarded to consortiums of
airports. We surveyed all grantee airports.

Finally, in our 2005 report, we recommended DOT evaluate the SCASDP grants
after more were completed to identify promising approaches and evaluate
the effectiveness of the program. DOT officials told us that they asked
the DOT IG to conduct such a study, which the IG began in March 2007. DOT
expects to have preliminary observations available by the middle of May.
Results from this work may help identify potential improvements and
"lessons learned."

Grantees Used Many Strategies to Improve Air Service in Their Communities

To achieve their goals, grantees have used many strategies, including
subsidies and revenue guarantees to the airlines, marketing, hiring
personnel and consultants, and establishing travel banks in which a
community guarantees to buy a certain number of tickets. (See fig. 5.) In
addition, other strategies that grantees have used are subsidizing the
start-up of an airline, taking over ground station operations for an
airline, and subsidizing a bus to transport passengers from their airport
to a hub airport. Incorporating marketing as part of the project was the
most common strategy used by airports. Some airline officials said that
marketing efforts are important for the success of the projects. Airline
officials also told us that projects that provide direct benefits to an
airline, such as revenue guarantees and financial subsidies, have the
greatest chance of success. According to these officials, such projects
allow the airline to test the real market for air service in a community
without enduring the typical financial losses that occur when new air
service is introduced. They further noted that, in the current aviation
economic environment, carriers cannot afford to sustain losses while they
build up passenger demand in a market. The outcomes of the grants may be
affected by broader industry factors that are independent of the grant
itself, such as a decision on the part of an airline to reduce the number
of flights at a hub.

Figure 5: Strategies Included in Grant Projects

Note: Since grant agreements were not available at the time of this
analysis, 2006 figures are based solely on proposals.

The Number of Grant Applications Has Declined

Since the inception of the program, there has been a steady decline in the
number of applications. In 2002 (the first year SCASDP was funded) DOT
received 179 applications for grants; and by 2006 the number of
applications had declined to 75. Grant applications for 2007 are not due
until April 27, 2007. According to a DOT official, almost all applications
arrive on the last day, so the number of 2007 applications cannot be
estimated at this time. DOT officials said that the past decline was, in
part, a consequence of several factors, including: (1) many eligible
airport communities had received a grant and were still implementing
projects at the time; (2) the airport community as a whole was coming to
understand the importance DOT places on fulfilling the local contribution
commitment part of the grant proposal; and (3) statutory changes in 2003
that prohibited communities or consortiums from receiving more than one
grant for the same project, and that established the timely use of funds
as a priority factor in awarding grants.^19 According to DOT officials,
DOT has interpreted that a project is the "same project" if it employs the
same strategy. For example, once a community has used a revenue guarantee,
it cannot use a revenue guarantee on another project.

A DOT official noted that, with many communities now completing their
grants, they may choose to apply for another grant. Some communities have
received second grants; however DOT officials indicate first time
applicants get more weight in the grant selection process. Revisiting
selection criteria may increase the access to SCASDP grants and increase
service to small communities.

Options Exist for Reforming EAS and Evaluating SCASDP

Mr. Chairman, let me now turn to a discussion of options both for the
reform of EAS and the evaluation of SCASDP. I raise these options, in
part, because they link to our report on the challenges facing the federal
government in the 21st century, which notes that the federal government's
long-term fiscal imbalance presents enormous challenges to the nation's
ability to respond to emerging forces reshaping American society, the
United States' place in the world, and the future role of the federal
government.^20 In that report, we call for a more fundamental and periodic
reexamination of the base of government, ultimately covering discretionary
and mandatory programs as well as the revenue side of the budget. In other
words, Congress will need to make difficult decisions including defining
the role of the federal government in various sectors of our economy and
identifying who will benefit from its allocation of resources.
Furthermore, given that we have reported that subsidies paid directly to
air carriers have not provided an effective transportation solution for
passengers in many small communities,^21 these programs may be ones for
which Congress may wish to weigh options for reforming EAS and assess
SCASDP's effectiveness once DOT completes its review of the program.

^19The authorizing statute provides one limitation on the timing of
expenditures. If funds are used to subsidize air service, the subsidy
cannot last more than 3 years. However, the time needed to obtain the
service is not included in the subsidy time limit. The statute does not
limit the timing of expenditures for other purposes. In fiscal year 2005,
DOT issued an order specifying that in general, grant funds should be
expended within 3 years.

^20 [27]GAO-05-325SP.

Examine Options for Enhancing EAS

In previous work, we have identified options for enhancing EAS and
controlling cost increases. These options include targeting subsidized
service to more remote communities than is currently the case, improving
the matching of capacity with community use, consolidating service to
multiple communities into regional airports, and changing the form of
federal assistance from carrier subsidies to local grants; all of these
options would require legislative changes. Several of these options formed
the basis for reforms passed as part of Vision-100. For various reasons
these pilot programs have not progressed, so it is not possible to assess
their impact. Let me now briefly discuss each option, stressing at the
outset that each presents potential negative, as well as positive,
impacts. The changes might positively affect the federal government
through lowered federal costs, and participating communities through
increased passenger traffic at subsidized communities, and enhanced
community choice of transportation options. Communities that could be
negatively affected might include those in which passengers receive less
service or might lose scheduled airline service.

  Targeting Subsidized Service to More Remote Communities

One option would be to target subsidized service to more remote
communities. This option would mean increasing the highway distance
criteria between EAS-eligible communities and the nearest qualifying
airport, and expanding the definition of qualifying nearby airports to
include small hubs. Currently, to be eligible for EAS-subsidized service,
a community must be more than 70 highway miles from the nearest medium- or
large-hub airport. In examining EAS communities, we found that, if the
distance criterion were increased to 125 highway miles and the qualifying
airports were expanded to include small-hub airports with jet service, 55
EAS-subsidized communities would no longer qualify for subsidies--and
travelers at those communities would need to drive to the nearby larger
airport to access air service.

^21GAO, Commercial Aviation: Factors Affecting Efforts to Improve Air
Service at Small Community Airports, [28]GAO-03-330 (Washington, D.C.:
January 2003).

Limiting subsidized service to more remote communities could potentially
save federal subsidies. For example, we found that about $24 million
annually could be saved if service were terminated at 30 EAS airports that
were within 125 miles of medium- or large-hub airports. This estimate
assumed that the total subsidies in effect in 2006 at the communities that
might lose their eligibility would not be obligated to other communities
and that those amounts would not change over time. On the other hand, the
passengers who now use subsidized service at such terminated airports
would be inconvenienced because of the increased driving required to
access air service at the nearest hub airport. In addition, implementing
this option could potentially negatively impact the economy of the
affected communities.

The administration's reauthorization proposal also would prioritize
isolated communities, but in a somewhat different way. Under its approach,
if insufficient funding for all communities exists, the communities would
be ranked in terms of driving distance to a medium or large hub, with the
more isolated communities receiving funding before less isolated
communities. This change would protect isolated communities, but could
result in subsidies being terminated for communities with relatively low
per passenger subsidies.

  Better Matching Capacity with Community Use

Another option is to better match capacity with community use. Our past
analysis of passenger enplanement data indicated that relatively few
passengers fly in many EAS markets, and that, on average, most EAS flights
operate with aircraft that are largely empty. In 2005, the most recent
year for which data are available, 17 EAS airports averaged fewer than 5
passenger boardings per day. To better match capacity with community use,
air carriers could reduce unused capacity--either by using smaller
aircraft or by reducing the number of flights.

Better matching capacity with community use could save federal subsidies.
For instance, reducing the number of required daily subsidized departures
could save federal subsidies by reducing carrier costs in some locations.
Federal subsidies could also be lowered at communities where carriers used
smaller--and hence less costly--aircraft. On the other hand, there are a
number of potential disadvantages. For example, passenger acceptance is
uncertain. Representatives from some communities, such as Beckley, West
Virginia, told us that passengers who are already somewhat reluctant to
fly on 19-seat turboprops would be even less willing to fly on smaller
aircraft. Such negative passenger reaction may cause more people to drive
to larger airports--or simply drive to their destinations. Additionally,
the loss of some daily departures at certain communities would likely
further inconvenience some passengers. Lastly, reduced capacity may have a
negative impact on the economy of the affected community.^22

  Consolidating Subsidized Service Provided to Multiple Communities into Service
  at Regional Airports

Another option is to consolidate subsidized service at multiple
communities into service at regional airports. For example, in 2002 we
found that 21 EAS subsidized communities were located within 70 highway
miles of at least one other subsidized community. We reported that if
subsidized service to each of these communities were regionalized, 10
regional airports could serve those 21 communities.

Regionalizing service to some communities could generate federal savings.
However, those savings may be marginal, because the total costs to serve a
single regional airport may be only slightly less than the cost to serve
other neighboring airports. The marginal cost of operating the flight
segments to the other airports may be small in relation to the cost of
operating the first flight. Another potential positive effect is that
passenger levels at the proposed regional airports could grow because the
airline(s) would be drawing from a larger geographic area, which could
prompt the airline(s) to provide better service (i.e., larger aircraft or
more frequent departures).

There are also a number of disadvantages to implementing this option.
First, some local passengers would be inconvenienced, since they would
likely have to drive longer distances to obtain local air service.
Moreover, the passenger response to regionalizing local air service is
unknown. Passengers faced with driving longer distances may decide that
driving to an altogether different airport is worthwhile, if it offers
better service and air fares.

As with other options, the potential impact of regionalization on the
economy of the affected communities is unknown. Regionalizing air service
has sometimes proven controversial at the local level, in part because
regionalizing air service would require some communities to give up their
own local service for the potentially improved service at a less
convenient regional facility. Even in situations where one airport is
larger and better equipped than others (e.g., where one airport has longer
runways, a superior terminal facility, and better safety equipment on
site), it is likely to be difficult for the other communities to recognize
and accept surrendering their local control and benefits. Some industry
officials to whom we spoke indicated regional airports made sense, but
selecting the airports would be highly controversial.

^22As we reported in our 2002 report, although scheduled commercial air
service is positively correlated with local economic activity, we were
unable to locate reliable studies that describe the extent to which
scheduled commercial air service is directly responsible for economic
development in small communities in the United States (i.e., whether air
service precedes, follows, or develops simultaneously with local economic
activity).

  Changing Carrier Subsidies to Local Grants

Another option is to change carrier subsidies into local grants. We have
noted that local grants could enable communities to match their
transportation needs with individually tailored transportation options to
connect them to the national air space system. As we previously discussed,
DOT provides grants to help small communities to enhance their air service
via SCASDP.

Our work on SCASDP identified some positive aspects of the program that
could be beneficial for EAS communities. First, for communities to receive
a SCASDP grant, they had to develop a proposal that was directed at
improving air service locally. In our discussion with some of these
communities, it was noted that this approach required them to take a
closer look at their air service and better understand the market they
serve--a benefit that they did not foresee. In addition, in some cases
developing the proposal caused the airport to build a stronger
relationship with the community. SCASDP also allows for flexibility in the
strategy a local community can choose to improve air service, recognizing
that local facts and circumstances affect the chance of a successful
outcome. In contrast, EAS has one approach--a subsidy to an air carrier.

However, there are also differences between the two programs that make the
grant approach problematic for some EAS communities; these differences
should be considered. First, because SCASDP grants are provided on a
one-time basis, their purpose is to create self-sustaining air service
improvements. The grant approach is therefore best applicable where a
viable air service market can be developed. This viability could be
difficult for EAS communities to achieve because, currently, the service
they receive is not profitable unless there is a subsidy. While some EAS
communities might be able to transition to self-sustaining air service
through use of one of the grants, for some communities this would not be
the case. Such communities would need a new grant each year. In addition,
the grant approach normally includes a local cash match, which may be
difficult for some EAS communities to provide. This approach could
systematically eliminate the poorest communities, unless other sources of
funds--such as state support or local industry support--could be found for
the match, or some provision for economically distressed communities is
made.

Vision-100 Small Community Pilot Programs and Initiatives Have Not Progressed

Congress authorized several pilot programs and initiatives designed to
improve air service to small communities in Vision-100. These programs and
initiatives have not progressed for various reasons. In two cases,
communities have not indicated interest in the programs. In one instance
Congress decided to prevent DOT from implementing the program. In three
cases, DOT officials cited a lack of sufficient funds to implement the
programs.

Vision-100 authorized the Community Flexibility Pilot Program, which
requires the Secretary of Transportation to establish a program for up to
10 communities that agree to forgo their EAS subsidy for 10 years in
exchange for a grant twice the amount of one year's EAS subsidy. The funds
may be used to improve airport facilities. DOT has solicited proposals for
this program; however, according to a DOT official, no communities
expressed any interest in participating. This is likely because no
community was willing to risk the loss of EAS subsidies for 10 years in
exchange for only 2 years of funding. Likewise, the Alternate Essential
Air Service Pilot Program, which allows the Secretary of Transportation to
provide assistance directly to a community, rather than paying
compensation to the air carrier, elicited no interest from communities.
Under the pilot program, communities could provide assistance to air
carriers using smaller aircraft, on-demand air taxi service, provide
transportation services to and from several EAS communities to a single
regional airport or other transportation center, or purchase aircraft. The
administration's draft FAA reauthorization bill would repeal these pilot
programs.

Another program, the EAS Local Participation Program, allows the Secretary
of Transportation to select no more than 10 designated EAS communities
within 100 miles, by road, of a small hub (and within the contiguous
states) to assume 10 percent of their EAS subsidy costs for a 4-year
period. However, Congress has prohibited DOT from obligating or expending
any funds to implement this program since Vision-100 was enacted. The
administration's draft FAA reauthorization bill would repeal this pilot
program.

Three additional initiatives authorized by Vision-100 have not been
implemented, in part due to a lack of dedicated funding. Section 402 of
Vision-100 allows DOT to adjust carrier compensation to account for
significantly increased costs to carriers. For example, an air carrier
that has a contract to provide air service can apply for an adjustment due
to an increase in its costs. If this increase is granted, the air carrier
has increased its revenue without having to competitively bid for the
contract. The initiative also provided for a reversal of this adjustment
if the costs subsequently declined. DOT officials indicated that a concern
they have with this initiative is that an air carrier could win a 2-year
contract with a low estimate, and open it again to obtain more funds
without facing competition.

Also, the Section 410 marketing incentive program, which could provide
grants up to $50,000 to EAS communities to develop and execute a marketing
plan to increase passenger boardings and usage of airport facilities, was
not implemented. DOT officials explained that with the uncertainty of the
number of communities that would need EAS subsidies and the cost of those
subsidies, using EAS subsidy funding for this marketing incentive program
could put the subsidies at risk. One industry group suggested dedicated
funding might improve the use of this program. The administration's draft
FAA reauthorization bill would repeal this marketing incentive program.

Finally, Section 411 of Vision-100 authorized the creation of a National
Commission on Small Community Air Service to recommend how to improve
commercial air service to small communities and the ability of small
communities to retain and enhance existing air service. This provision was
likewise not implemented because funds were not specifically appropriated,
according to DOT officials. Such a commission may have been helpful in
developing approaches to deal with difficult policy decisions, such as
regionalizing air service. DOT plans to host a symposium to bring industry
experts together to identify regulatory barriers and develop ideas for
improving air service to small communities which may be a step in the
right direction. DOT officials acknowledge that this symposium should be
held soon to inform reauthorization deliberations.

Recently Started DOT Evaluation of the Effectiveness of SCASDP Should Add
Information on the Effectiveness of SCASDP

In 2005, we recommended that DOT examine the effectiveness of SCASDP when
more projects are complete; and the DOT IG recently began this
evaluation.^23 Since our report, an additional 48 grants have been
completed and DOT will be able to examine the results from these completed
grants. Such an evaluation should provide DOT and Congress with additional
information about not only whether additional or improved air service was
obtained, but whether it continued after the grant support ended. In
addition, our prior work on air service to small communities found that
once financial incentives are removed, additional air service may be
difficult to maintain. This evaluation should provide a clearer and more
complete picture of the value of this program. Any improved service
achieved from this program could then be weighed against the cost to
achieve those gains.

In conducting this evaluation, DOT could find that certain strategies the
communities used were more effective than others. For example, during our
work, we found some opposing views on the usefulness of certain strategies
for attracting improved service. DOT officials could use the results of
the DOT IG's evaluation to identify strategies that have been effective in
starting self-sustaining improvements in air service and they could share
this information with other small community airports and, perhaps,
consider such factors in its grant award process. In addition, DOT might
find some best practices and could develop some lessons learned from which
all small community airports could benefit. For example, one airport used
a unique approach of assuming airline ground operations such as baggage
handling and staffing ticket counters. This approach served to maintain
airline service of one airline and in attracting additional service. In
addition, the SCASDP program has shown that there is a strong demand on
the part of small community airports to improve enplanements through
various marketing strategies. Successful marketing efforts could increase
enplanements, thus driving down the per passenger subsidy. Sharing
information on approaches like these that worked (and approaches that did
not) may help other small communities improve their air service, perhaps
even without federal assistance.

In conclusion, Mr. Chairman, Congress is faced with many difficult choices
as it tries to help improve air service to small communities, especially
given the fiscal challenges the nation faces. Regarding EAS, I think it is
important to recognize that for many of the communities, air service is
not--and might never be--commercially viable and there are limited
alternative transportation means for nearby residents to connect to the
national air transportation system. In these cases, continued subsidies
will be needed to maintain that capability. In some other cases, current
EAS communities are within reasonable driving distances to alternative
airports that can provide that connection to the air system. It will be
Congress' weighing of priorities that will ultimately decide whether this
service will continue or whether other, less costly options will be
pursued. In looking at SCASDP, I would emphasize that we have seen some
instances in which the grant funds provided additional service, and some
in which the funds did not work. Enough experience has now been gained
with this program for a full assessment, and with that information the
Congress will be in a position to determine if the air service gains that
are made are worth the overall cost of the program.

^23GAO, Initial Small Community Air Service Development Projects Have
Achieved Mixed Results, [29]GAO-06-21 (Washington, D.C.: Nov. 2005).

I would be pleased to answer any questions that you or other Members of
the Subcommittee may have at this time.

Contact Information

For further information on this testimony, please contact Dr. Gerald L.
Dillingham at (202) 512-2834 or [email protected] . Individuals
making key contributions to this testimony and related work include Robert
Ciszewski, Catherine Colwell, Jessica Evans, Colin Fallon, Dave Hooper,
Alex Lawrence, Bonnie Pignatiello Leer, and Maureen Luna-Long.

Appendix I: Essential Air Service Communities and Subsidies as of April 1,
2007 Oklahoma

Table 2: Essential Air Service (EAS) Communities and Their Subsidies
Excluding Alaska, April 1, 2007


Source: DOT officials.

Table 3: Alaskan EAS Communities and Their Subsidies, April 1, 2007

Source: DOT officials.

Appendix II: EAS Subsidies per Enplanement

Table 4: EAS Subsidies per Enplanment

Source: DOT officials.

Notes: Subsidies rates are more recent than enplanement data; however,
this is the most closely timed data sets available.

1/ Incomplete traffic data.

2/ Service hiatus.

Appendix III: Small Community Air Service Development Program Grantees,
Year Grant was Awarded, Grant Amounts and Grant Status as of April 1, 2007

Table 5: SCASDP Grantees and Grant Status

Source: DOT officials.

Appendix IV: Related GAO Products

Airport Finance: Preliminary Analysis Indicates Proposed Changes in the
Airport Improvement Program May Not Resolve Funding Needs for Smaller
Airports. [31]GAO-07-617T Washington, D.C.: March 28, 2007.

Commercial Aviation: Programs and Options for the Federal Approach to
Providing and Improving Air Service to Small Communities. [32]GAO-06-398T
Washington, D.C.: September 14, 2006.

Airline Deregulation: Reregulating the Airline Industry Would Reverse
Consumer Benefits and Not Save Airline Pensions. [33]GAO-06-630
Washington, D.C.: June 9, 2006.

Commercial Aviation: Initial Small Community Air Service Development
Projects Have Achieved Mixed Results. [34]GAO-06-21 Washington, D.C:
November 30, 2005

Commercial Aviation: Survey of Small Community Air Service Grantees and
Applicants. [35]GAO-06-101SP . Washington, D.C.: November 30, 2005

Commercial Aviation: Bankruptcy and Pension Problems Are Symptoms of
Underlying Structural Issues. [36]GAO-05-945 Washington, D.C.: September
30, 2005

Commercial Aviation: Legacy Airlines Must Further Reduce Costs to Restore
Profitability. [37]GAO-04-836 Washington, D.C.: August 11, 2004

Commercial Aviation: Issues Regarding Federal Assistance for Enhancing Air
Service to Small Communities. [38]GAO-03-540T . Washington, D.C.: March
11, 2003

Federal Aviation Administration: Reauthorization Provides Opportunities to
Address Key Agency Challenges. [39]GAO-03-653T . Washington, D.C.: April
l0, 2003

Commercial Aviation: Factors Affecting Efforts to Improve Air Service at
Small Community Airports. [40]GAO-03-330 Washington, D.C.: January 17,
2003

Commercial Aviation: Financial Condition and Industry Responses Affect
Competition. [41]GAO-03-171T . Washington, D.C.: October 2, 2002.

Options to Enhance the Long-term Viability of the Essential Air Service
Program. [42]GAO-02-997R . Washington, D.C.: August 30, 2002.

Commercial Aviation: Air Service Trends at Small Communities Since October
2000. [43]GAO-02-432 . Washington, D.C.: March 29, 2002.

(540148)

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Highlights of [51]GAO-07-793T , a testimony to the Subcommittee on
Aviation, Committee on Transportation and Infrastructure, U.S. House of
Representatives

April 25, 2007

COMMERCIAL AVIATION

Programs and Options for Providing Air Service to Small Communities

Congress established two key programs to help support air service to small
communities --the Essential Air Service (EAS) providing about $100 million
in subsidies per year and the Small Community Air Service Development
Program (SCASDP) that provides about $20 million per year in grants. As
part of its reauthorization of the Federal Aviation Administration (FAA),
the Congress is examining the status and outcomes of these programs.

This testimony discusses (1) the history and challenges of the EAS
program, (2) the implementation and outcomes of the SCASDP and (3) options
for reforming EAS and SCASDP. The testimony is based on previous GAO
reports, interviews with Department of Transportation officials and
industry representatives as well as program updates.

EAS subsidies support air service to many small communities that would
likely not have service if EAS subsidies are discontinued. Since 1997,
funding for EAS has increased from $25.9 million in 1997 to $109.4 million
in 2007 and the number of communities has generally increased. The federal
government is spending a median of about $98 per passenger, with subsidies
ranging from about $13 to $677 per passenger. Concerns exist about the
costs of the program, particularly given the federal government's
long-term structural fiscal imbalance. In addition, according to industry
representatives, the number of air carriers flying aircraft suitable for
EAS communities may decrease, raising concerns about the availability of
appropriate aircraft to provide small community air service in the future.

SCASDP grantees have used their grants to pursue a variety of goals and
have used a variety of strategies, including marketing and revenue
guarantees, to improve air service. Our analysis of the 23 grants
completed by October 1, 2005, found that air service was sustained after
the grant expired in a little less than half of the projects. Finally,
although the program has seen some success, the number of applications for
SCASDP grants has declined--from 179 in 2002 to 75 in 2006.

As we have reported, options for reforming EAS, such as consolidating
service into regional airports might make the program more efficient, but
also could reduce service to some communities. Further, Congress may be
able to use some "lessons learned" from marketing and other successful
SCASDP strategies that may help it make the current programs more
effective.

Example of a 19-seat Turbo Prop Aircraft Serving Small Communities

References

Visible links
  26. http://www.gao.gov/cgi-bin/getrpt?GAO-05-325SP
  27. http://www.gao.gov/cgi-bin/getrpt?GAO-05-325SP
  28. http://www.gao.gov/cgi-bin/getrpt?GAO-03-330
  29. http://www.gao.gov/cgi-bin/getrpt?GAO-06-21
  31. http://www.gao.gov/cgi-bin/getrpt?GAO-07-617T
  32. http://www.gao.gov/cgi-bin/getrpt?GAO-06-398T
  33. http://www.gao.gov/cgi-bin/getrpt?GAO-06-630
  34. http://www.gao.gov/cgi-bin/getrpt?GAO-06-21
  35. http://www.gao.gov/cgi-bin/getrpt?GAO-06-101SP
  36. http://www.gao.gov/cgi-bin/getrpt?GAO-05-945
  37. http://www.gao.gov/cgi-bin/getrpt?GAO-04-836
  38. http://www.gao.gov/cgi-bin/getrpt?GAO-03-540T
  39. http://www.gao.gov/cgi-bin/getrpt?GAO-03-653T
  40. http://www.gao.gov/cgi-bin/getrpt?GAO-03-330
  41. http://www.gao.gov/cgi-bin/getrpt?GAO-03-171T
  42. http://www.gao.gov/cgi-bin/getrpt?GAO-02-997R
  43. http://www.gao.gov/cgi-bin/getrpt?GAO-02-432
  51. http://www.gao.gov/cgi-bin/getrpt?GAO-07-793T
*** End of document. ***