In a small victory for taxpayers, the Department of Transportation (DOT) last week issued an order terminating Essential Air Service (EAS) support at two airports in Montana starting July 16, 2013: Lewistown and Miles City. The annual savings from this move is less than $3 million, but it does strike a symbolic blow against a program that is long overdue for elmination. DOT's action is the latest axe to fall as a result of changes to the EAS program made in last year’s Federal Aviation Administration (FAA) reauthorization bill intended to weed out the airports with the very highest subsidies and the very lowest passenger numbers.

To be considered an eligible airport for EAS funding, Congress mandated a subsidy of no more than $1,000 per passenger. According to figures compiled by TCS, Lewistown and Miles City were the two most expensive remaining EAS airports on a per passenger basis, since service to Ely, NV was terminated by DOT earlier this year. Since our numbers are based on 2011 passenger totals (the most recent publicly released data) and the DOT is working with the 2012 numbers, things actually look worse at these two airports than we thought. The cost to taxpayers per passenger from Lewistown was $2,009 and from Miles City was $2,337. The Miles City number was markedly higher than our calculation due to a significant drop in passengers in 2012.

According to the DOT order, subsidized service will continue through July 15, 2013, at which point Silver Airways is free to drop the service or continue it subsidy-free. It would appear highly unlikely the airline could continue the service.

At least one other airport also likely exceeds the $1,000 per passenger limit: Macon (GA). According to DOT the airport served 1,389 passengers between October 2011 and September 2012. Based on that passenger number, the per-passenger cost to taxpayers at Macon is just shy of $1,500. In addition to exceeding the $1,000 cap, Macon is also afoul of a second change Congress made, which mandates an eligible airport to support 10 enplanements per day. Macon currently supports only 2.2 enplanements per day. Despite these low totals, DOT earlier this year released a request for proposals to continue the service, stating it “will monitor both the subsidy per passenger rate and the 10-enplanement threshold during this upcoming contract to ensure compliance with the statute.” Despite the woeful performance of this airport, taxpayers can apparently look forward to providing continued subsides into the forseeable future.

EAS is a federal subsidy program created in the 1970s as part of airline deregulation. The program provides smaller airports that meet certain criteria with subsidies to airlines to provide service to larger, hub airports. Though the program was intended to be temporary, taxpayers across the nation now spend more than $200 million each year so that a privileged few in just 117 (soon to be 115) communities can be guaranteed convenient air service.