Rural air subsidies test resolve to cut spending

[February 03, 2011]  WASHINGTON (AP) -- A program that subsidizes air service to small airports, often in remote communities, is shaping up as an early test in the new Congress of conservatives' zeal for shrinking the federal government.

Sen. John McCain, R-Ariz., has proposed an amendment to an aviation bill pending before the Senate in order to eliminate the $200 million annual essential air service program. The program pays airlines to provide scheduled service to about 150 communities, from Muscle Shoals, Ala., to Pelican, Alaska.

In the House, the Republican Study Committee -- a group of conservative lawmakers -- has also proposed killing the program.

Subsidies per airline passenger as of June 1, 2010, ranged as high as $5,223 in Ely, Nev., to as low as $9.21 in Thief River Falls, Minn., according to Transportation Department data for the lower 48 states.

The program was created to ensure that less-profitable routes to small airports wouldn't be eliminated when airline service was deregulated in 1978. But critics say the airports often serve too few people to merit the amount of money spent in subsidies. Urban growth over the past three decades has also placed transportation alternatives -- other airports, trains and bus service -- within a reasonable distance of some communities receiving subsidies.

Studies show that in a lot of those communities people drive to larger airports to get better service at a lower cost than they can get at the smaller airport, even with subsidized air service, said Severin Borenstein, a University of California-Berkeley business professor who is an expert on airline competition.

"Some communities can make a credible claim they need the service, particularly in Alaska, but I think those are a relatively small part of the program," he said.

The program has been remarkably resilient, partly due to the protection it receives from lawmakers from rural states and districts. It has been proposed for cuts or elimination many times over the years, but continues to grow.

"It's exactly in the political sweet spot," Borenstein said. Lawmakers don't feel it's worth upsetting the few people the program serves to achieve what amounts to a modest savings in federal budget terms, he said.

Supporters say the small airports and their air service are important to the communities' ability to attract investment and jobs.

Four Democratic senators -- Mark Begich of Alaska, Ben Nelson of Nebraska, Robert Casey of Pennsylvania and Joe Manchin of West Virginia -- are circulating a letter among their colleagues for signature. It urges McCain to give up his attempt to kill the program, citing potential economic consequences.

"Eliminating the program will have a devastating impact on the economies of rural communities," their letter says.

"At a moment when the nation's economic recovery is starting to gain momentum, it makes little sense to reduce personal and business travel volume by cutting off residents of rural areas," the letter says. "And at a time when jobs are already so hard to come by in our rural communities, it makes even less sense to enact cuts that will only make the problem worse."

One of the program's biggest supporters is Sen. Jay Rockefeller, D-W.Va., chairman of the Senate Commerce, Science and Transportation Committee and the main sponsor of the pending aviation bill. It would increase rather than decrease funding for the program and give the Transportation Department more flexibility in structuring contracts with airlines to improve it. Rockefeller would also let the department adjust contracts to take into account rising fuel costs. There are five communities in West Virginia with subsidized service.

Several conservative senators from rural states declined to discuss McCain's amendment when approached by The Associated Press.

"I'll have to see it first. I haven't seen the amendment," said Sen. John Barrasso, R-Wyo. Two communities in Wyoming -- Laramie and Worland -- receive subsidized service, according to the Transportation Department.

"I just don't know about that," echoed Sen. Orrin Hatch, R-Utah. Three communities in Utah -- Moab, Vernal and Cedar City -- receive subsidized service.

[Associated Press; By JOAN LOWY]

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