The Silly Waste of the Small Community Air Service Development Program

Cranky Flier, in his BNet column, takes issue with some of the Small Community Air Service Development Program grant winners.

The federal government takes grant applications from small communities to spend in a variety of ways promoting air service.

Tunica, Mississippi — 40 miles from Memphis — got $500,000 to subsidize bringing gamblers to town four times a week via Atlanta on Airtran.

Rockford, Illinois’ airport — which calls itself Chicago Rockford to emphasize just how close and convenient they are to Chicago, which has plenty of air service as a hub for United and DeltaAmerican (O’Hare) and a busy low cost carrier hub for the likes of Southwest (Midway) — got $500,000 to support non-stop flights to business destinations from Rockford to LA, Minneapolis, Dallas, Atlanta, Washington, and/or New York.

Now, Rockford has some modest service on the likes of Allegiant and Apple Vacations to leisure destinations. But flights out of Rockford on low cost carriers tend to need to support themselves on origin and destination traffic. Rockford itself won’t have low enough fares or enough traffic to support regular service across the country. If they wanted to funnel business traffic, they’d likely have flights to major carrier hubs, but there’s a reason that they don’t — Rockford is pretty close to Chicago, and folks drive there and it gives them non-stop access to the world.

Agreed, pouring tax dollars into subsidizing additional service that the market doesn’t demand into Rockford is silly.

On the other hand, Cranky does like much likes two of the 19 grants that were given out, but I’m not convinced.

The little Manu’a Islands in American Samoa were awarded $169,000 for something that seems incredibly basic. I told the sad tale of the Manu’a Islands last year, and I’m genuinely happy to see them get the award. What is it they want? They just want to buy some ground power equipment… they’re having trouble getting regular air service. Part of that is because there just isn’t much demand yet, but the other problem is that costs are high. Since there is no ground equipment at the airport, airplanes have to keep one prop spinning when they land and that uses precious fuel – up to $125 worth. Give them ground power, and they can keep costs down.

A $169,000 grant that saves $125 per flight? That would take 1352 flights to break even. Yes, I realize it’s more complicated than that, but remember that the equipment has maintenance and upkeep costs and labor cost to operate so that’ll mitigate against additional savings as well.

Airlines don’t choose not to service the Manu’a Islands because of the need to keep one prop spinning at a cost of $125 per flight.

Back in 2006, the Governor of American Samoa wanted to kick Hawaiian Airlines off Pago Pago because their fares were too high and they didn’t offer DigE Players. But no one else wanted to service the island from the U.S., even with subsidies… (independent Samoa on the other hand has service to the US, New Zealand, Australia, and elsewhere).  The problem across Samoa isn’t technological, DigE Players notwithstanding.

Cranky also liked:

The other proposal that stood out among the winners is that of Eldorado, Harrison, and Jonesboro in Arkansas. Those communities are jointly the lucky recipients of $150,000. What will they do with this money? Spend it on marketing.

Call me crazy, but when you have to convince people to use an already-subsidized service, that service probably shouldn’t exist in the first place.

As Cranky concedes, it’s been

nearly a year and a half without air service and now it’s heading the opposite direction (east). During that time, the people in the communities learned to drive elsewhere. Now that service is back, they need to tell people about it and get them to start considering flying locally again.

Hardly a compelling case for a subsidy, and if that’s the best of the bunch one really has to wonder about this program.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

More articles by Gary Leff »

Comments

  1. O’Hare isn’t a hub for Delta (they serve eight destinations out of ORD), but it is a hub for AA.

    I agree with you and CF that the program is a giant waste of money.

    To be fair, though, the argument for airports like Rockford isn’t that people in that area can’t get to ORD. Rather, the argument is that a smaller airport like Rockford can offer an easier hassle-free alternative for suburban flyers who don’t want to deal with the time, cost, and frustration of getting to and flying out of O’Hare. It’s the same argument that the LA/Palmdale Regional Airport used to receive federal grants for United air service in 2007. (The LA area already has five! airports offering commercial aviation.)

    Just like Palmdale ultimately failed (because not enough people chose to use it over LAX, BUR, ONT, LGB, and SAN), so will Rockford. With O’Hare, Midway, Madison and General Mitchell (in Milwaukee) within easy driving distance, this just doesn’t make sense. You just can’t make the argument that without federally-funded air service, the people of Rockford, IL are isolated.

  2. Gary – Very glad to see the potential for a good conversation here. Most people aren’t interested in talking about the Tunicas and Rockfords of the world!

    But we seem to agree on those, so I thought I’d point to the Manu’a Islands and Arkansas for more discusssion. I will say that I was trying to pick the best of what was there – that doesn’t mean I would go and drop my money on it. That being said, I think there is some merit here.

    If there was an easy payback for the people on the Manu’a Islands, they could get this financed on their own. So, we have to expect something that doesn’t have a tremendous payback if we’re going to bother subsidizing it.

    Now, I am far from an expert on island operations, but these are very short segments with small airplanes. They’re flying 19 seaters to one of the islands and when they were flying to the outer ones, they were on 9 seaters. (These are for the 9 seater destinations, I believe.) So we’re talking about needing one less person per roundtrip to make money and that’s a big deal.

    Also, the money is really going to be spread out as follows:
    *2 ground power units – $68k
    *2 tugs – $54k
    *2 baggage carts – $14k
    *6 jacks – $24k
    *housing – $7k
    *shipping – $12k
    *marketing – $10k

    As for the Arkansas one, I am a sucker for these, as I said. People have strong habits that can build in a year and a half, so I would expect to see it be a tough sell to get them to change their behavior.

    But yeah, if these are the best ones, then I agree that we do have to wonder. Every so often, these work out stunningly. For example, Horizon’s successful air service to Santa Rose is thanks to a SCASD grant. Maybe we’ll be able to say the same about AirTran in Huntsville – that starts soon.

Leave a Reply

Your email address will not be published. Required fields are marked *