Monday, December 31, 2007

$46 flights

Yesterday we ran this piece about the Macon airport, and the $2 million a year federal taxpayers are kind enough to give the airline there to fly back and forth to Atlanta, which would otherwise be a 90 minute drive.

Of course, that's not the only federal subsidy at the airport. It's gotten money to fix runways, money to upgrade the terminal, money for security, etc.

I once tried to add up federal and state subsidies for the entire airline industry, nationwide. I couldn't do it. There were just too many subsidy programs and too much money.

Anyway, I glanced at USA Today at lunch this afternoon, and, lo and behold, this was their cover story:
Imagine an aviation system in which planes fly two-thirds empty, fares are as low as $46 and the government pays up to 93% of the cost of a flight.

You don't have to look far. That system exists in the USA — and quietly is expanding even as most of the nation's 2 million daily air travelers see fares tick upward for increasingly crowded flights.

Each day, about 3,000 passengers enjoy mostly empty, heavily subsidized flights, financed by a 30-year-old program that requires the government to guarantee commercial air service to scores of small communities that can't support it themselves.

It's called Essential Air Service, or EAS, and it's designed to keep airports open in rural communities. The idea is that this is crucial for economic development. The program runs about $110 million a year, according to the USA Today numbers, which I think is in line with what I reported earlier this year when I first learned about EAS grants.

Any way, guess who USA Today picked as one of its top examples. Yep:
In October, the DOT agreed to one of the program's largest subsidies ever — $2 million a year to Atlantic Southeast Airlines. That pays 60% of ASA's cost to fly two round-trips a day between Macon, Ga., and Atlanta's Hartsfield-Jackson International Airport, 81 miles away.

The airline projects that passengers will pay an average of $78 for a one-way ticket — and that flights, typically on planes with fewer than 70 seats, will run 83% empty. That means the DOT will pay $145 per passenger for the 19-minute flight.

"That's a tremendous waste of money," aviation consultant Michael Boyd says, noting that Macon residents can easily drive or take a bus to Atlanta. Groome Transportation, for example, runs hourly vans from Macon to the Atlanta airport. Cost: $31 a ticket.

The nearly $1 billion that Congress has poured into the program since 1999 has helped increase the number of communities with subsidized flights this year to 147 from 100, including 45 in Alaska. That's 28% of the nation's commercial airports.

The increased funding means the government pays an average of $87 per passenger on subsidized flights outside of Alaska, where planes often carry few passengers but deliver mail and supplies to the state's remote islands. The subsidy in 1995 was $49 per passenger.

Also mentioned in the article: Congress recently re-approved funding for it. And Congress rejected cuts suggested by the U.S. DOT, which operates the program. That is correct. A federal department asked for less money, and Congress said no.

I would like to note one other thing, though, for the sake of fairness. I spoke with someone in the airline industry about this earlier this year (can't remember who) and he or she made an interesting point. Air travel may be heavily subsidized, but so is driving.

After all, who do you think built all those roads?

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