For example, any airport with at least  10,000 passengers is assured at least $1 million in annual grant funding. The program now provides subsidies to  airlines to serve small airports that are (1) at least 70 driving miles from  the nearest medium- or large-hub airport, or (2) requires a per-passenger  EAS subsidy less than $200 unless such point is greater than 210 miles  from the nearest medium- or large-hub airport. Congress also established SCASDP as a pilot program in 2000 in the  Wendell H. Ford Aviation Investment and Reform Act for the 21st Century  (AIR-21), to help small communities enhance their air service. The Airline Industry Is Adapting to Economic Pressures that Creates Challenges to Maintaining Air Service to Small Communities

		Service to Small Communities Has Declined since 2007

Air service to small airports as measured by the number of flights and  seats available has mostly declined since 2007, but so has service to  airports of all sizes. Federal Programs and Policies Support Service to Small Communities but Face Challenges

Two federal programs continue to support air service to small  communities but also face some challenges. In addition, the  appropriations Congress made available to EAS increased from about  $102 million in fiscal year 2003 to about $232 million in fiscal year 2013  (see table 1 below). This was  due, in part, to EAS subsidized service not having the destinations,  frequency, or low fares that passengers prefer. The number of EAS communities being served by airlines with aircraft  smaller than 15-seats doubled from 2009 through 2013. Small Community Grants Have Had Limited Effectiveness in Retaining Air Service

Small-hub and smaller airports are eligible for SCASDP grants provided  the airport is not receiving sufficient air service or had unreasonably high  airfares. We found in 2005 and 2007 that SCASDP grantees  pursued a variety of goals and strategies for supporting air service, and  some of the grants resulted in successfully meeting their intended  purposes.variety of project goals and strategies to improve air service to their  community, including (1) adding flights, airlines, and destinations; (2)  lowering fares; (3) upgrading the aircraft serving the community; (4)  obtaining better data for planning and marketing air service; (5) increasing  enplanements; and (6) curbing the loss of passengers to other airports. Legislation, Regulations, and Airport Policies Affect Service to Small Communities

In addition to the federal programs previously discussed, other legislative  and regulatory policies could affect the provision of air service to small  communities. Multimodal and Nongovernmental Transportation Options Could Help Small Communities

		A Multimodal Approach Could Be Used to Connect Communities

In July 2009, we concluded that a multimodal approach—one that relies  on for example, bus service to larger airports or air taxi service to connect  communities—is an alternative to providing scheduled air-service  connectivity to small communities. For some communities that receive  EAS subsidies—for example, those that have limited demand for the  service due to proximity to other airports or limited population—other  transportation modes might be more cost effective and practical than  these subsidies. When potentially cost-effective alternatives, such as bus service to other  airports, are not used, the costs of subsidies may be higher than  necessary to link these communities to the nation’s passenger aviation  system. Considering options to the current EAS program, such as multimodal  transportation, may help Congress identify opportunities to limit the  financial strain on the EAS program. Local Community Approaches to Attracting Air Service Have Had Some Success

GAO-06-21. In its 2008 review of SCASDP, the DOT OIG  reported that airlines operating in small communities typically have limited  resources to invest in marketing designed to stimulate demand, and using  funds for marketing programs in support of other incentive programs— such as revenue guarantees or cost subsidies—can stimulate demand by  increasing awareness of airport services and mitigate “leakage” of  passengers to surrounding airports.
Why GAO Did This Study

Establishing and retaining reliable air service to small communities has been a challenge for decades. Communities seek access to air transportation services as a driver for attracting investment and generating employment. To incentivize service, Congress established two programs to help support air service to small communities—EAS and SCASDP. Airports are categorized by DOT's Federal Aviation Administration and described in terms of “hub” size based on the number of passengers served annually. Airports range from large hubs with at least 7.3 million passengers in 2012 to nonprimary airports with fewer than 10,000 passengers. Airports receiving subsidized EAS service are either nonhub or nonprimary, and SCASDP airports are small hub or smaller.
This testimony discusses (1) the airline industry factors affecting air service to small communities, (2) the federal programs and policies that support air service to small communities, and (3) other options for improving access to air service for these communities. The testimony is based on previous GAO reports issued from 2003 through 2014; analysis of industry data for years 2007 through 2013; and selected updates on EAS and SCASDP programs. To conduct these updates, GAO reviewed program documentation and interviewed DOT officials and industry representatives.

What GAO Found

Air service to small communities has declined since 2007 due, in part, to higher fuel costs and declining population, and for some communities, compounded by more attractive service (i.e., larger airports in larger cities) within driving distance. In fact, airports of all sizes have lost capacity in the number of available seats, and largely for flights as well. However, medium-hub and small-hub airports have proportionally lost more service than large-hub or nonhub airports (see figure).
The two primary programs, designed to help small communities retain air service, administered by the Department of Transportation (DOT), face challenges.
The Essential Air Service (EAS) program, which received about $232 million in 2013, provided subsidies to airlines that served 117 eligible non-Alaskan communities in 2013. For the most part, only airports in eligible communities that received EAS-subsidized service have experienced an increased number of flights since 2007. However, the service may not always be the most cost-effective option for connecting people to the national transportation network, and the total and per-community EAS subsidies have grown since 2008. Legislation to control costs was recently enacted which limited access to EAS, for example by changing eligibility requirements.
The Small Community Air Service Development Program (SCASDP) is a grant program to help small communities enhance air service at small-hub or smaller airports. DOT can award no more than 40 grants a year, thus SCASDP assists fewer communities than does EAS. Further, unlike EAS, funding for SCASDP—$6 million in 2013—has decreased since the program was created in 2002. Past reviews of SCASDP's effectiveness have found mixed success, with about half or less of the grants achieving their goals.
Multimodal and community-based approaches can be used to help small communities connect to the nation's transportation network. Multimodal solutions, such as bus access to larger airports or air taxi service, could be more cost-effective than current programs. In addition, some communities have had success with attracting air service through methods such as financial incentives and marketing support.