Trump plan threatens to strand rural flights

Melissa Nann Burke
Detroit News Washington Bureau

Washington — Federal subsidies that keep passenger air service flying to nine of Michigan’s most isolated airports are again facing the ax.

President Donald Trump’s budget plan seeks to eliminate funding for what’s known as the Essential Air Service, which last year subsidized commercial flights to 173 rural airports at a cost of about $283 million.

A Sky West airliner prepares for a flight last week at Pellston Regional Airport. The airport, which serves the Up North resort and convention business, has been pulled into the debate over federal funding.

Michigan has more communities in the program than any other state except Alaska. Advocates contend that discontinuing the subsidies could harm tourism and business development in northern Michigan, where the nine airports are located, including five in the Upper Peninsula.

The Trump administration says the program wastes taxpayer dollars on mostly empty flights to places that are within driving distance of larger airports. Other critics of the Essential Air Service say fears about cutting off rural communities from the rest of the world are overblown.

“It’s just not true. No airport has ever closed after losing Essential Air Service subsidies,” said Mike Boyd, an aviation consultant and Michigan State University graduate based in Evergreen, Colorado.

“It’s just simply that these days, with the cost of consumer air service, many of these places just can’t support air service anymore.”

Republican U.S. Rep. Jack Bergman, whose northern Michigan district includes eight of Michigan’s nine EAS communities, says the subsidies provide a level of economic stability and opportunity in sparsely populated areas.

“People in our part of the world up there — especially in the U.P. but also in the northern third of lower Michigan — tourism is a big business. That’s the lifeblood of the economy up there,” said Bergman, a retired pilot for Northwest Airlines from Watersmeet.

Bergman has sent Trump a letter urging him to continue the subsidies, which help the air carriers break even on their trips to rural communities.

In Michigan last year, the subsidies ranged from $23 per passenger in Pellston to $366 per passenger in Ironwood in the western U.P., according to U.S. Department of Transportation data provided to the Congressional Research Service.

“Nobody is getting rich off this deal,” Bergman added.

Sen. Gary Peters, the Bloomfield Township Democrat who sits on the Senate Commerce Subcommittee on Aviation Operations, Safety and Security, said the program is essential to maintaining passenger air service to rural communities because air carriers are unlikely to fly there without subsidies.

“I think the name speaks very well: It’s essential,” said Peters, who led 19 Senate colleagues in a bipartisan letter urging congressional appropriators to maintain the EAS subsidies. “I’m certainly always open to looking at the cost and if there’s the possibility of doing something more efficiently, I would support that. But to just cut them off would have a significant impact on rural America.”

Kelly Smith, manager at Delta County Airport in Escanaba, said the Essential Air Service seems to be in danger every time Congress enters budget negotiations, but there’s additional uncertainty this year with the new administration.

Smith said an average 16,500 passengers fly out of the Escanaba airport a year and, without those flights, the airport would immediately lose 25 jobs that support the service, in addition to the predicted broader impact on the region.

“We need this to back our growth,” Smith said of the subsidies. “If we don’t have our own individual airport, no business is going to come here when they know they have to fly to Green Bay (Wisconsin) and drive two hours to get their people here.”

The Essential Air Service dates to the deregulation of the airline industry in the late 1970s. Congress created the program to ensure air service to small communities would continue.

Pellston is one of nine Michigan airports subsidized by the federal government. That funding could be at risk.

The program is funded in part by overflight fees — $108 million last year — paid to the federal government by foreign aircraft that fly through U.S. airspace. The remainder comes from discretionary appropriations by Congress, which set aside $175 million last fiscal year.

Lawmakers have since narrowed the program’s scope, but spending has increased more than 132 percent since 2008, adjusting for inflation, in part because of rising fuel costs, according to a March report by the Congressional Research Service.

In light of new federal qualification requirements for airline pilots, experts have also raised concerns that small carriers might boost salaries to attract qualified pilots, further adding to program subsidy costs.

At most airports in the program, the government subsidizes two to four round trips a day to a medium-size to large airport such as Detroit or Chicago. The office of Transportation Secretary Elaine Chao, which administers the EAS program, did not respond to multiple requests for comment.

Rural airport managers also worry that if the number of passengers flying out of their communities falls below 10,000 a year, their airports would no longer qualify for $1 million a year in federal capital improvement funds they receive for airport upgrades and maintenance.

Jackie Krawczak, president and CEO of the Alpena Chamber of Commerce, said access to commercial air service is key to recruiting businesses to the area when they’re expanding or relocating.

“A question that we get all the time is: How do I get there? How do my clients get there? Or how do I get out to visit clients?” Krawczak said. “We don’t have passenger rail. We don’t have a freeway coming to our community. So this is a big deal for us to have that method of transportation.”

Carlin Smith, president of the Petoskey Regional Chamber of Commerce, said in recent years Pellston Regional Airport has seen a 4 percent uptick in flights — more than 52,500 origins and departures last year. The airport serves the resort and convention business that includes destinations such as Mackinac Island.

“Someone could argue that, well, you chose to live in a rural area, so get over it,” Smith said. “But people who live in rural communities need to have access to commercial air service.”

Boyd, the aviation consultant, says Pellston is an example of the a small airport getting subsidized air service that is less than a two-hour drive from a medium-sized airport. Cherry Capital Airport in Traverse City is under two hours and roughly 85 highway miles away from Pellston.

Another example he gave is Muskegon County Airport, which is less than an hour’s drive to Ford International Airport in Grand Rapids.

“Very often, those two flights a day just don’t work. In the case of Muskegon — and we’ve worked from Muskegon, love the place — but the fact is, with two flights a day going to Chicago, people can literally drive the hour over to Grand Rapids and have the choice of five airlines to fly almost anywhere in the world,” Boyd said.

“You just can’t compete anymore. Muskegon has outstanding air service, and it’s called Grand Rapids.”

The same argument doesn’t apply to far-flung communities in the U.P. such as Ironwood and Iron Mountain, but he said it’s “hype” to argue for millions of dollars in annual subsidies because their loss could cost jobs.

“The assumption is made too often that this service is well-utilized,” Boyd said. “We’ve worked for years with Michigan on what to do in the U.P. I don’t have an answer to it. But to say that there’s hundreds of jobs dependent on those semi-empty airplanes, that’s just nonsense.”

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Subsidized air service in Michigan

Federal subsidies kept commercial air service running to 173 rural areas last year. Nine of those areas are in Michigan, which has the most communities involved in the Essential Air Service program than any other state, except for Alaska.

*This was the per-passenger subsidy paid to the contracted air carrier as of the fiscal year that ended Sept. 30, 2016.

Source: Congressional Research Service report, March 30, 2017