Essential Air Service (EAS)

Summary

The Airline Deregulation Act of 1978 gave airlines almost total freedom to determine which domestic markets to serve and what airfares to charge. This raised the concern that communities with relatively low passenger levels would lose service as carriers shifted their operations to serve larger and often more profitable markets. To address this concern, Congress established the Essential Air Service (EAS) program to ensure that small communities that were served by certificated air carriers before deregulation would continue to receive scheduled passenger service, with subsidies if necessary.

The EAS program is administered by the Office of the Secretary of the U.S. Department of Transportation (DOT), which enforces the eligibility requirements and determines the level of service required at eligible communities. As of June 1, 2015, 159 communities in the United States received subsidized service under EAS.

Over the years, Congress has limited the scope of the program, mostly by eliminating subsidy support for communities within a specified driving distance of a major hub airport and capping subsidies under certain criteria. The FAA Modernization and Reform Act of 2012 (P.L. 112-95) included additional EAS reform measures, including the requirement that a community have a minimum number of daily enplanements to remain eligible for subsidy. Further, the Consolidated Appropriations Act, 2014 (P.L. 113-76), and the Continuing Appropriations Resolution, 2015 (P.L. 113-164), introduced additional measures to shrink the program. As of yet, some of these measures have not been fully enforced.

Despite these efforts to limit spending for EAS subsidies, program expenditures have risen 123% since 2008, after adjusting for inflation, and are projected to continue rising through FY2016. Some factors contributing to the rising program costs are external, such as unusually high aviation fuel prices from 2008 through 2014 and the prospect of higher pilot wage costs due to changes in federal regulations. However, certain features of the EAS program itself may have contributed to the rising costs. The statute governing EAS does not list cost among the four factors DOT must consider when evaluating air carriers’ bids to provide subsidized EAS service, and neither the carriers nor the communities receiving subsidized service are obliged to select service options that minimize the government’s costs.

EAS traditionally has been authorized in laws reauthorizing the Federal Aviation Administration (FAA) and other civil aviation programs. The current authorization act expires September 30, 2015. EAS is likely to be among the subjects of debate as Congress considers extending the current law or writing a new authorization act.