The House Transportation-Treasury Committee approved its $67.8 billion FY07 Appropriations bill on June 6. The funding levels were generous, given the current budget environment, according to the Regional Airlines Association.

The Committee-passed bill is $200 million higher than the President's requested $67.6 billion and the bill provides the Federal Aviation Administration (FAA) with $15.2 billion, a full $1.4 billion above President Bush's request. It also provides $20 million for the Small Community Air Service Development Program, a marked increase over the $10 million provided last year, especially considering the President requested no funding for the program. The bill also provides $117 million for the Essential Air Services program, $67 million above the President's request for the program.

"RAA is extremely pleased with this funding level and feels it is a clear sign that members in both chambers have heard our message about rising EAS carrier costs and the importance of fully funding the program so carriers can continue providing this important service," said Vice President Legislative Affairs Faye Malarkey. "Support for the EAS program has been traditionally higher in the Senate; however this year the Senate is under pressure to stay within tight discretionary spending caps."

Malarkey indicated that while the Senate sees EAS as an important program that offers a tremendous benefit at a relatively low cost, the fight for limited resources will be intense, making support in the House even more important. RAA is also pleased that, once again, the bill prohibits DOT from implementing the President's recommended cost-sharing requirement for local communities.

As with last year, the bill gives DOT authority to reallocate up to $10 million to EAS from other DOT accounts if necessary. An amendment originally offered by Representative John Peterson (R-PA) was accepted. The Peterson language provides DOT authority to reallocate $1 million dollars for marketing grants for up to $50,000 to up to 20 communities in order to help communities market EAS services with an eye to increasing enplanements and decreasing subsidy reliance.

RAA is continuing to push Congress to mandate Section 402 of Vision 100, a provision allowing DOT to make real-time rate adjustments for carriers facing significant cost increases. The higher funding level is a step in the right direction to achieving this mandate. DOT has the authority to make adjustments for such cost increases as fuel but Congress has previously provided no funding for it and, according to Regional Aviation Partners, the fuel cost adjustments have been virtually ignored.

Fuel is continuing its devastating impact on the most vulnerable airlines - those that serve small rural areas. The largest EAS operator, Great Lakes Aviation (GLUX), noted that the Department of Transportation (DOT) is required to reimburse subsidized carriers for increases in fuel beyond 10 percent. However, it is consistently unclear exactly how much carriers will ultimately recover from the department. The airline said a one-cent increase or decrease in the per-gallon price increases or decreases the company's fuel expense by about $79,000 annually. In its first quarter 10Q, filed with the SEC, Great Lakes said the average cost of fuel increased from $1.81 per gallon in the first quarter of 2005 to $2.25 per gallon in the first quarter of 2006. The effect of the $0.44 increase in cost per gallon was an increase in total cost of $900,000 in 2006 from price changes only.