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Options to enhance the long-term viability of the Essential Air Service program
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2002-08-30
[PDF-610.35 KB]
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Abstract:Over two decades ago, the Congress deregulated the airline industry, phasing out the federal
government’s control over domestic fares and routes served and allowing market forces to
determine the price, quantity, and quality of service. Concerned that air service to some small
communities would suffer in a deregulated environment, the Congress established the Essential
Air Service (EAS) program as part of the Airline Deregulation Act of 1978. The act guaranteed
that communities served by air carriers before deregulation would continue to receive a certain
level of scheduled air service. Special provisions were provided for guaranteeing service to
Alaskan communities. In general, the act guaranteed continued service by authorizing the Civil
Aeronautics Board, whose duties were later transferred to the Department of Transportation
(DOT), to require carriers to continue providing service at these communities. If an air carrier
could not continue that service without incurring a loss, DOT could then use EAS funds to award
that carrier, or another carrier willing to provide service, a subsidy. These subsidies are intended
to cover the difference between a carrier’s projected revenues and expenses and provide a
minimum amount of profit.
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