Cost-benefit analysis : substituting ground transportation for subsidized essential air services.
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2015-12-01
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Abstract:Since the Airline Deregulation Act of 1978, the U.S. Department of Transportation (DOT) has been subsidizing air service to
small rural communities through the Essential Air Service (EAS) program. The original intent of the program was to maintain
some level of air service to rural communities that would otherwise not have any. The Rural Survival Act of 1996 established the
permanence of the EAS program; the act was fueled by the idea that reliable air services are vital to local rural economies. This
idea has been somewhat challenged in recent studies that found little to no economic impacts of air traffic.
This project entertained the theory that intercity traffic volume, and not air traffic volume alone, is what affects the economic
outcomes of certain geographical areas. A cost-benefit analysis of substituting subsidized air service with a subsidized ground
service is presented and concludes that an intercity ground service network can create substantial cost savings on both a per round
trip basis and a round trip-seat basis.
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