The U.S. Department of Transportation (DOT) has begun soliciting Essential Air Service communities to participate in a newly authorized pilot program. An industry trade group, the Regional Aviation Partners (RAP), is advising these communities to avoid the program because "it is not a good deal."

In the program authorized for the current fiscal year by Congress, DOT is inviting communities to trade the security of the current EAS payment for the flexibility of a grant. Unlike the current payment system where an airline wins the right to provide the air service for a subsidy, the pilot program will pay the community the same amount of money. The communities participating in the pilot program would design their own programs to ensure continued air service, said Bill Moseley, a DOT spokesman.

The new program is based on the success of the Small Communities Air Service Development Program, said Tom Zoeller, vice president for regulator affairs for the American Association of Airport Executives (AAAE). For the third year in a row, more than 100 communities have applied for a piece of the $20-million grant pool. The communities, not limited to those in the EAS program, submit business plans to increase their air service. Plans have ranged from increased advertising, market research and ticket underwriting programs. The key component, Zoeller said is that the community must provide local matching dollars.

In the EAS pilot program, no local match is required.

DOT has set up the program so that there is no deadline and no limit on how many of the 125 EAS communities can participate, Mosely said. The hitch: the EAS pilot grants come from the same pool that pays the EAS subsidies.

Both RAP and the Regional Airline Association (RAA) fought the insertion of the experimental program when the EAS legislation was drafted earlier this year (CRAN, Jan. 26).

The pilot program "will hurt small communities in the long run. Its primary purpose is to eliminate the EAS program," said Maurice Parker, RAP's executive director. Parker's group is made up of regional airlines, airport authorities, local governments and civic associations.

In the fine print of the legislation, Parker said that communities participating in the pilot program are committed for 10 years. "If you opt out after receiving a portion of the grant, you risk being without air service for an unspecified period of time," he said.

In the application, a community would need to spell out just how long it would need the grant, a plan to wean itself off the grant and benchmarks to be used in judging the progress of the experiment. To continue to receive the grant, there must be enough money in the EAS fund. Parker said the government could delay a grant for up to two years if there are cash flow problems with the EAS fund.

While Congress appropriated $113 million for EAS program for the current fiscal year, DOT is asking for only $50 million for the next fiscal year.

A community must remain eligible for the EAS program while participating in the pilot project. Just as with the air carrier subsidy payment, Parker said the cost of providing the service must remain under the $200-per-passenger cap. The cap was set in 1990 and has not been changed, even though the operating costs have continued to climb. Parker added there are efforts under way to change the cap to $400 per passenger in the next budget.

As much as money may be an issue, Zoeller said the challenge is to find an airline interested in providing the service. There are dwindling numbers of nine-passenger planes available to be flown on these routes, he said.

Parker added that "operators cannot afford to operate a twin-engine, 10-plus seater aircraft that Congress originally envisioned as the standard for Essential Air Service because of the significant operating costs under Part 121."

>>Contact: Bill Mosely, DOT, (202) 366-4570; Maurice Parker, RAP, (281) 847-1662; Tom Zoeller, AAAE, (703) 824-0500. DOT Docket: OST-2004-18715.<<