The EAS Program Is Providing Air Service to More Communities, but Service Is Costing More and the Number of Carriers Providing Service Is Declining

		EAS Program Obligations and Appropriations Have Generally Increased to Support Service to More Communities and Higher Carrier Subsidies

The number of communities served by the EAS program in the continental  United States has risen in recent years— from 87 communities as of June  1, 2003, to 102 communities as of November 1, 2008. The administration has  requested about $175 million for the program in 2010, which would  represent a further increase in program funding. The number of carriers providing  EAS service has declined from 34 as of February 1987 to 10 in 2009. The EAS Program’s Ability to Provide Service Is Affected by the Financial Viability of Service on EAS Routes

		Program Requirements and Other Factors Appear to Contribute to Increasing Costs of EAS Service for Carriers and Higher Program Subsidies from DOT

Many of the expert panelists and other stakeholders we interviewed stated  that some EAS program requirements significantly add to the cost of  providing subsidized air service to communities. Although fuel prices typically vary over time,  in 2008 fuel began to comprise an increasing portion of airlines’ costs, in  some cases contributing to carriers ceasing operations. Whatever the cause, relatively high fares for EAS flights can  make those flights less attractive, compared to the alternative of driving to  another airport. The growth of low-cost carriers has created alternatives to EAS  service. Options for Modifying the EAS Program and Instituting a Multi- modal Approach to Community Transportation

		Changes to Certain EAS Program Requirements Could Help Carriers Operate More Effectively and Potentially Reduce Program Costs

Congress and others have been aware of the increasing difficulty EAS  carriers face in providing service to communities. Six of  the 17 members of our expert panel who addressed this issue of service  frequency believed such a change would make the program more effective. The 17 members on our panel who addressed this issue all believed that  the EAS program needed substantive change to make it more effective in  supporting small communities’ access to the national transportation  network, and that a multimodal approach to provide financial assistance  to small community transportation could potentially be more responsive  to communities’ needs. Selecting Options for the EAS Program Is Difficult, but Tools Exist for Assessing the Options and Improving Program Evaluation

		Selecting Options to Implement Is Difficult and Depends on How Program Objectives Are Defined

Over the years, Congress has made incremental changes to the program  such as changing the eligibility criteria or funding; however the program’s  approach remains little changed since it was implemented 30 years ago. Using GAO’s Re- examination Approach to Revisit the EAS Program’s Objectives Could Help Clarify the Extent to which Different Options Meet those Objectives

Changes in the aviation industry and the nation’s financial situation over  the past 30 years may make this an opportune time to revisit program  objectives and evaluate design options for the program. For example, defining the  EAS program’s objective as subsidizing scheduled commercial air service  at communities that would not otherwise have air service, as the program  has operated since it began, could lead to one program design and related  performance measures addressing such factors as the number of  communities with subsidized air service, the cost effectiveness of that  service, and various measures for the quality of that service. For example,  Geographic Information Systems (GIS) analysis can be used to evaluate  community access to transportation—both to air service and to other  modes. Rural and small community populations have shifted in the 30 years  since deregulation—the EAS program may not be serving  communities that have the greatest need for subsidized air service,  in terms of other transportation options they may have. Others may not  have an airfield at all.
Why GAO Did This Study

Since 1978, the Essential Air Service (EAS) program has subsidized air service to eligible communities that would otherwise not have scheduled service. The cost of this program has risen as the number of communities being served and subsidies to air carriers have increased. At the same time, the number of carriers providing EAS service has declined. Given continuing concerns over the EAS program's long-term prospects, GAO was asked to review the program. GAO reviewed (1) the characteristics and current status of the EAS program, (2) factors affecting the program's ability to provide air service, (3) options for revising the program, and (4) tools for assessing the program, the options for its revision, and the program's performance. GAO interviewed stakeholders and reviewed the results of an expert panel convened by GAO, Department of Transportation (DOT) data and program documentation, and potential methodologies for assessing federal programs.

What GAO Found

The EAS program has changed relatively little in 30 years, but current conditions raise concerns about whether the program can continue to operate as it has. Over the past 2 years subsidies to carriers have been increasing, along with EAS program obligations to fund those subsidies. In response, the administration is requesting $175 million for the EAS program in fiscal year 2010, a $50 million increase over recent funding levels. At the same time, the number of carriers providing subsidized air service is declining, from 34 in 1987 to 10 in 2009. More than one-third of the EAS-supported communities temporarily lost service in 2008, when 3 carriers ceased operations. Several factors contribute to the increasing difficulty in providing subsidized air service. The EAS program has statutory requirements for minimum aircraft size and frequency of flights, effectively requiring carriers to provide service that may not be "right-sized" for some small markets. Also, the growth of air service especially by low-cost carriers--which today serve most U.S. hub airports---weighed against the relatively high fares and inconvenience of EAS flights, can lead people to bypass EAS flights and drive to hub airports. Moreover, the continued urbanization of the United States may have eroded the potential passenger base in some small and rural EAS communities. While Congress, DOT, GAO, and others have proposed various revisions to the EAS program, Congress has not authorized many changes to program requirements. Proposed Federal Aviation Administration reauthorization legislation would include performance-based incentives, among other changes. GAO and others have suggested increasing flexibility and other changes that could make EAS service more sustainable for smaller communities. Finally, members of an expert panel organized by GAO all believed that small and rural communities would benefit from a multimodal approach to transportation. Generally they believed that other modes of transportation could be more responsive to communities' transportation needs in some cases. Although it is difficult to select options for the EAS program since stakeholders do not always agree on program objectives, certain analytical tools can help policymakers assess the EAS program. Tools include a re-examination framework to revisit the program's objectives, and help evaluate options to make the program more effective. Other analytical tools include an analytical approach GAO developed that, for a sample of small and rural communities, identified their access to different modes of transportation. This approach has the potential for broader application to examinations of communities' access to the national transportation network. Finally, once a change is implemented, performance measures can be used to periodically evaluate program effectiveness.