The U.S. Department of Transportation (DOT) has awarded $21.7 million to 45 community applicants as part of a three-year-old program to develop new air service. The grants through the Small Community Air Service Development Program ranged from $1.5 million for Sarasota, Fla., to $50,000 for Sumter, S.C.

After receiving 108 proposals from 39 states collectively seeking more than $61 million in federal assistance, DOT awarded $19.85 million to 40 communities in 30 states. Another five communities split $1.9 million that had been returned to DOT unspent by previous grant winners. This is the first time DOT made the secondary awards. Only 14 of the applicants applied for the first time.

"This year's applications make it clear that there is still an overwhelming demand from small communities around the country that have been suffering from high air fares and infrequent service for better service," said Brad Van Dam, who monitors legislation for the airports. The program gives local communities the flexibility to craft a program that meet their needs and funding ability, said Van Dam, who is the staff vice president of legislative affairs for American Association of Airport Executives and Airports Council International-North America (AAAE/ACI-NA).

Each community that won a grant is contributing local or state dollars to the airline recruitment efforts and in many cases the local media or the airports have agreed to provide additional in-kind services. DOT did not require a specific ratio of local match to federal dollar as many federal programs do. In some cases, the local contribution is twice the size of the federal grant and in other cases the local share is less than 5 percent.

In the March solicitation package (CRAN, March 22), DOT did pass on a few words of advice: Reliance on travel banks - community pledges to buy future tickets - is not a good source for the local match. "In the two years of the program, despite having awarded several proposals contemplating travel banks, there has yet to be one travel bank that has been developed. Community discussions with air carriers have revealed that many carriers are not interested in travel banks," according to DOT's solicitation.

When it made the awards last month, just two of the 45 winning communities had travel banks, also known as ticket pledges, as part of their packages.

Among the winners, seven of the communities lacked any scheduled airline service and six communities currently participate in DOT's Essential Air Service program, which underwrites minimal air service with federal dollars. Six of the applicants are seeking new service from a regional airline and another 15 are seeking an expansion of flights provided by a regional carrier. Five communities told DOT that they have agreements with Horizon Air to either start new service or expand existing schedules provided they could come up a revenue guarantee. However among the winning proposals, the heaviest emphasis was placed on obtaining less expensive service either by attracting low-fare airlines or subsidizing a carrier so that fares can be reduced.

In making the awards, DOT was looking for "creative solutions. What may work for one community, may not work for another," Van Dam said.

While a detailed study of the first two years of the program has not been undertaken, DOT said more than 30 communities have received new or upgraded service.

If a community is flexible, it is generally successful in securing new service, said Michael Boyd, of the Boyd Group. An industry consultant, Boyd's group wrote 12 winning grant applications, which won 33 percent of the funding pool. Last year, his clients won 20 percent of the funds. He noted that DOT has "bent over backwards to get a program to work. These are the good people in Washington."

However, it appears DOT has learned from the lack of success from some earlier grant winners. Boyd said consortiums of airports this year failed to win a single grant. And only one applicant - the north-south team of South Bend and Evansville, Ind. - was awarded money to attempt to start an intra-state service. The two airports want to hire an airline to connect their two communities via Indianapolis. There is $1 million in local money to match the $1 million grant.

"One thing that has consistently never worked are the applications to start an airline within a region. In the past they have given money to South Dakota, North Carolina, Wyoming, Montana and New Mexico - none of these projects have worked. Intrastate service will not work. The economics just don't come together. To find an airline willing to do it is like trying to find a needle in a haystack," Boyd said.

The EAS communities are using the additional federal funds to better market their air service in hopes of boosting traffic. "The idea is to get these communities back among the ranks of the air service living," he said.

In Congress, Van Dam said a House committee has included $20 million to fund the next round of grants in 2005. DOT's appropriation has yet to clear either chamber for the fiscal year that begins on Oct. 1.

>>Contact: Brad Van Dam, AAAE/ACI-NA, (703) 797-2534; Michael Boyd, Boyd Group, (303) 674-2000. The applications are available on the DOT docket at http://www.dms.dot.gov. Case: OST-2004-17343.<<