Thursday, February 17, 2011

EAS Funding Side Effects

I know the cut, cut, cut, mentality is all the rage these days in Washington and one of the programs being looked at is the Essential Air Service funding that provides subsidies to allow commercial air service out of smaller cities across the country. The program provides approximately $200 million (or about $182 per passenger) at 140 airports including Watertown ($1.3 Million) and Huron ($1.7 Million) here in South Dakota. These subsidies are often the only thing allowing these smaller cities to provide commercial air service.

Looking at just the numbers there is some obvious problems with how the program is being run. When you see airports like Ely, Nevada getting $5,223 per passenger it is no wonder that the suddenly cost conscious are looking to trim the fat. What you aren't hearing though is some of the possible side effects of completely gutting the program.

If we just look at South Dakota for example. Huron is served by Great Lakes Airlines, and Watertown by Mesaba Airlines, companies whose business model relies on providing small aircraft to service rural airports, most of which rely on EAS funding. Shuttering the EAS program would likely put Great Lakes out of business and possibly Mesaba as well. As our local tea partiers would say, no big deal, if they can't make it without government help then they don't deserve to be in business anyways right?

Of course there is one small problem with that logic. With no Mesaba or Great Lakes Airlines, Aberdeen and Pierre also lose as those carriers are the only ones serving those cities meaning that while EAS funding only directly subsidizes Huron and Watertown, South Dakota could lose so much more. How many state capitols do you know of that don't have commercial air service and how hard will it be to sell our cheap slave labor to out of state businesses when they have to fly into Sioux Falls or Rapid City and then drive 200 miles to get to the top secret Governors hunt?

Our economy is in a world of hurt highlighted by loads of wasteful spending and the EAS program is no exception. Cutting it out completely and saving $200 million right off the bat might look good now, but remember every action usually comes with a reaction and in South Dakota it could be more than we bargained for.

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