While major airlines often do not serve small  communities directly, many have agreements with smaller regional airlines  to provide air service to small communities. The federal government has assisted  in developing air service both through the EAS program, which subsidizes  air service to eligible communities and the Pilot Program, which provided  grants to foster effective approaches to improving air service to small  communities. Local and State Air Service Improvement Efforts Fall Into Three Main Categories, but Financial Assistance Has Proven Most Effective

Our recent review of nearly 100 small community air service improvement  efforts undertaken by states, local governments, or airports showed that  communities attempted three main categories of efforts (see Table 1):    studies, like those used by communities in Texas and New Mexico, to  determine the potential demand for new or enhanced air service;    marketing, like Paducah, Kentucky’s, “Buy Local, Fly Local” advertising  campaign, used to educate the public about the air service available or  Olympia, Washington’s, presentations to airlines to inform them about the  potential for new or expanded service opportunities; and  financial incentives, such as the “travel bank” program implemented by  Eugene, Oregon, in which local businesses pledged future travel funds to  encourage an airline to provide new or additional service. Financial incentives can attract new or enhanced air service to a  community, but incentives do not guarantee that the service will be  sustained when the incentives end. Two Federal Programs Which Aid Small Communities Face Budgetary Pressures and Questions About Their Effectiveness

The two major federal efforts to help small communities attract or retain  air service are the EAS program and the Pilot Program. Two key factors will likely continue to increase EAS program costs in the  future. First, more communities may require subsidized service. Demand Is Heavy for Pilot Program Funds but It Is Too Early to Assess Program Effectiveness

In its first year of operation, small communities demonstrated an  extraordinary demand for air service development funds. Implications for Future Federal Efforts to Assist Small Communities

As air service to small communities becomes increasingly limited and as  the national economy continues to struggle, questions about the efficacy  of those programs highlight issues regarding the type and extent of federal  assistance for small community air service. Reauthorization provides an opportunity for the Congress to clarify the  federal strategy for assisting small communities with commercial air  service. What role should state and local governments play in  helping small communities secure air service? Options to Enhance the Long-term Viability of the Essential Air Service  Program. Commercial Aviation: Air Service Trends at Small Communities Since  October 2000. Aviation Competition: Challenges in Enhancing Competition in  Dominated Markets.
Why GAO Did This Study

Small communities have long faced challenges in obtaining or retaining the commercial air service they desire. These challenges are increasing as many U.S. airlines try to stem unprecedented financial losses through numerous cost-cutting measures, including reducing or eliminating service in some markets, often small communities. Congress will be considering whether to reauthorize its federal assistance programs for small communities. GAO was asked to describe the kinds of efforts that states and local communities have taken to enhance air service at small communities; federal programs for enhancing air service to small communities; and issues regarding the type and extent of federal assistance to enhance air service to small communities.

What GAO Found

Small communities have taken a variety of steps to try to obtain or improve air service, such as marketing to increase passengers' demand for local service or offering financial incentives to airlines to attract new or enhanced service. At communities GAO studied in depth, financial incentives were most effective in attracting new service. However, the additional service often ceased when incentives ended. The two key federal programs to help small communities with air service face increasing budgetary pressures and questions about their effectiveness. Demand for these programs is heavy and may increase as airlines reduce service to communities. The Essential Air Service program subsidizes carriers that provide air service to eligible small communities. However, program costs have tripled since 1995, and fewer passengers use the subsidized local service. Most choose to drive to their destination or to fly to and from another nearby airport with more service or lower fares. The Small Community Air Service Development Pilot Program, in its first year of operation, provided $20 million in grants to help small communities enhance service. Most programs funded appear similar to those undertaken by communities and may not result in sustainable service enhancements. Questions about the efficacy of these programs highlight issues regarding the type and extent of federal assistance for small community air service. Reauthorization provides an opportunity for the Congress to clarify the federal strategy for assisting small communities with air service.