How We Pay $3,700 Per Passenger to Subsidize Airline Tickets
While many of the carriers claim that they are doing a favor by servicing small communities, in fact they use the small commuter planes as a way to funnel passengers to their main airport hubs, thereby collecting additional revenues when the passengers board their larger aircrafts.
Finally, there is the amount of money that goes directly to the airlines. Delta Express, United Express, US Airways Express, and American Eagle are well known companies that collect federal EAS funds.
But the largest single provider of EAS flights in the United States is Great Lakes Airlines, a largely unknown air company based out of Cheyenne, Wyoming. Great Lakes was founded in 1977, a year before the EAS program was started.
Aviation Week reports that last year it received $60 million from the federal government in EAS subsidies. That amount is 50% of the Cheyenne, Wyoming-based company's yearly income, which in 2010 was $125.4 million. Great Lakes' net income is declining and the company is deep in debt to Raytheon, the manufacturer of a large part of its fleet. In fact, Great Lakes operates with thin margins in a market that has seen other small commuter companies folding. As a result the firm is operating on shaky ground and is largely dependent on federal largess for its existence.
With struggling commuter airlines, the question is whether subsidies are affecting the safety of air travel. Great Lakes operates two types of aircraft: the twin turboprop Brazilian Embraer EMB 120 Brasila and the Raytheon Beechcraft Beech 1900. The Embraer carries 30 passengers and the Beechcraft only 19.
While both have good track records, the use of the small aircraft with under-financed companies raises safety concerns about federally subsidized aircraft. Portfolio's Brancatelli writes,
EAS service generally stinks. It is often provided on small (sometimes as tiny as nine-seat) aircraft operated by marginal carriers with dubious safety records and miserable service standards.
Still EAS does have its defenders. Faye Malarkey Black, a vice president for the Regional Airline Association, said she believes few federal programs are worth it.
"They call it essential for a reason," she told the Associated Press. She said her industry group supports "common sense adjustments" for eligibility, but added that rural communities already face many struggles to keep people from leaving."If you take away air service, who wants to live in those communities?" she asked.
But highly subsidized air travel may have seen its day. As the country faces $16.5 trillion in federal debt, will subsidies for inefficient rural air travel survive? Will it be regarded as an antiquated non-essential service?
Recently the U.S. Postal Service announced it was looking to close 3,700 post offices that were inefficient, serving only a few customers. Tough decisions will have to be made -- and political perks will have to go away. Perhaps Mica might be able to muster enough votes in January when the EAS is again up for renewal.
But don't hold your breath.