EAS & SCASD – Obsolete Thinking
Federal Air Service Programs:
They’re Political Footballs, Mostly
Here’s what you won’t hear from other consultants, particularly the ones that feast on selling “air service development” programs…
It is time that federal air service programs were either brought into reality, or cancelled completely. They assume an air transportation industry that no longer exists. As it stands today, they tend to distort the free market and mislead communities away from developing true programs to access the global economy.
In the case of Essential Air Service, it has mostly degenerated into a system where a “hunter-gatherer” operator (one that is mostly in the business of taking on subsidized service, instead of having its own route system) gets paid to fly into a selected airport, simply because the obsolete belief is that just having “flights” is the same as “air service.
Result: hundreds of millions of taxpayer dollars wasted on flights that pander to political ends, not air transportation.
SCASD is built on the assumption that without air service at the local airport, small communities are cut off from the world. It also assumes that there are lots of airlines with the fleets and route systems just waiting for a grant before they enter the market. Both are bogus assumptions.
In fact, it is relatively well-served mid-size airports that have gained the benefits of the SCASD program, which is very positive. But it also shows that there must be other communication modes pursued for small rural communities. The program should be continued, but without the misleading sham that it can bring air service to “small airports.”
Fix Them. Or Cancel Them. Fact: air transportation as a modality today represents hard realities that both the EAS and SCASD programs – not to mention dozens of “air service development” programs – completely ignore.
Let’s take a look:
Reality One: The Airline System Is Not A Mystery. It’s Transparent
In 99% of cases, with the consolidated system of 2017, it isn’t necessary to inflict “market studies” on communities to identify potential carriers – or, in many instances, the non-existence of a potential carrier.
What this means is that in most cases it’s an outreach to the obvious carrier, comparing its strategies and fleets with what the community can deliver. Then should come any further analyses – if the carrier is interested, that is.
Recently, a small airport in the Midwest announced that they were seeking to “lure” carriers – apparently any carriers – to operate flights to Denver and Dallas-Ft. Worth. That certainly doesn’t take a study to identify the targets, although they were probably convinced otherwise.
For a small community, the only option to DFW is the AA system, and to Denver it’s United. End of search. The don’t need the perfunctory consultant voodoo of a “point-of-sale” analysis of “real market study” to discover this.
That’s it, because the local O&D at small and mid-size airports isn’t enough to support nonstops to places such as Denver and DFW without connect traffic, and – something apparently not disclosed to the airport – there are no other carriers in existence with the fleets, the strategy, or the network that would chase after such a route.
But, if the community is advised of these facts right up front, it would shortstop a lot of consultant study revenue.
The same is with the application of EAS and SCASD dollars – it is the responsibility of the community to clearly understand the airline business realities before chasing off to recruit air service.
More importantly, it is the fully responsibility of the DOT to know the airline business and have a reasonable expectation that the intended application has a reasonable chance of success, within the realities of the airline industry, instead of outdated assumptions of an airline system that no longer exists. That is not the case today.
Reality Two: The Goal Is Not Scheduled Service. It’s Global Access
The assumption is made, both within the foundation of EAS and SCASD programs and in many ASD adventures, that having scheduled flights at the local airport is the goal. Wrong.
What missing with this belief is the entire objective for air service in the first place: a transportation option that gets consumers to and from the rest of the globe.
For example, a couple of Cessna Caravans to Nashville might satisfy the local politicians, but it isn’t “air service” because it can transparently connect to nothing – WN doesn’t interline, and no carrier banks flights for connectivity there.
Therefore, most of the EAS program is geared to deliver “flights” and not air access. That must change. If there isn’t an entity that can provide meaningful connectivity, an EAS subsidy is a giant waste of money, and should not be awarded.
This means the criteria for EAS service needs to change from just “flights” to “access.”
Reality Three: Air Travel Is Multi-Modal. And It’s Often More Efficient Than Local Service
Today, the EAS and SCASD programs are based on the assumption that service at the local airport is always more consumer-preferred and consumer-efficient than other options, such as a 60-90 minute drive to another airport.
Flat out wrong – and an assumption that inflicts millions of wasted dollars on the taxpayer.
It’s amazing to see communities convinced to do unscientific “surveys” that generally only ask the question “Would you use the local airport” and then trumpet the results as proof that United or American or Delta, or one of those mythical “other airlines,” should come to town.
Of course there’s nothing in the survey regarding things like schedules, airline brands, type of service v other options, etc., making the whole survey useless.
It’s also a de facto disservice to small communities not to fully disclose what the competitive options are compared to any proposed local service, before doing an “air service development” project. In fact, this should be a prime new criterion for the award of any EAS or SCASD dollars.
In our Air Service Access Workshop presented at the 22nd International Aviation Forecast Summit, we used Topeka as an example. A SCASD grant was used to support the implementation of two United flights to that carrier’s global connecting hub at ORD.
Unfortunately, the superior air service options open to consumers at MCI effectively rendered the FOE-ORD program DOA. To virtually any destination, the 60-75 minute drive still represented more time-effective transportation than consumers trying to shoehorn their travel to fit the two connecting flights over Chicago.
Apparently, this reality was overshadowed by the obsolete notion that local air service is always preferable. Message to the DOT and to ASD providers: that’s yesterday’s thinking.
Where From Here – Essential Air Service
In the Lower 48, the DOT must immediately re-structure the EAS program to assure that it delivers connectivity, not just scheduled flights. (Alaska is an entirely different situation and should be taken separately from the current EAS program.)
Twenty years ago, at an early BGI Aviation Summit, the point was made that EAS should be for flights to a connecting carrier’s hubsite, on the brand of that carrier.
Today, the only EAS markets that are even vaguely successful are those that meet that very set of criteria.
However, there are clouds even in these cases.
Typically, where there is AA or UA-branded EAS service, it is made possible only by the fact that the operator has some 50-seaters that are excess to their fleet needs and which will be coming off lease. When that happens, these airports are back to the pool of independent, mostly turboprop “hunter-gatherer” operators who are in the business of simply taking on subsidy flying.
What we are ultimately facing is that the EAS program is becoming a financial millstone on the DOT, fully unable to deliver core air service access.
Rural areas need to get prepared now for what is already a reality in many places: other modes of transportation will need to be relied upon. Air transportation does not work, anymore.
For places where EAS money is being wasted due to other and better regional options that consumers are now actually using, such as Muskegon and Pueblo, the hit of losing EAS funding won’t be a hit at all. It’s already been experienced. Consumers are happily driving to Grand Rapids from MKG and to COS from Pueblo.
But for communities that are truly isolated, such as regions of Wyoming, Montana, Kansas and Colorado, there is a bullet that needs to get chomped on very soon: The air service cavalry is not coming. That means reliance on ground transportation will be the future norm.
Where From Here – Small Community Air Service Grant Program
There have been demonstrable successes with the SCASD program, and Boyd Group International is proud to have assisted clients in gaining over $24 million since the program’s inception in 2002.
However, the SCASD program has never been funded properly, and it is still based on the fundamentally-flawed assumption that every small airport should have scheduled flights. Furthermore, the basic qualifications for submitting a grant are out of date, based on airport passenger rankings of 20 years ago.
Let’s cut to the chase. The ability of a $500K to $1.5 million grant attracting viable air service into a small rural community that has very low population is zero. Zero.
To begin with, there are no airliners that can make it work, anymore. Secondly, as noted with the EAS program, as well as the SCASD experience in places like Topeka demonstrate that the potential for meaningful improvement at rural airports is overshadowed by the realities of the economics of airline operations.
But where the SCASD program has shown success has been at mid-size, relatively well-served airports that have been allowed into the program. Spokane has flights to Los Angeles today because of the SCASD program. Charleston, WV received nonstops to Houston, etc. Here, SCASD has been a success, albeit not for small rural airports.
Therefore the SCASD program should be widened to be one that can be applied for by a wider range of communities. We’ll be blunt: No SCASD grant is going to bring viable scheduled service to Sand Point. But it has opened Bangor to access to United’s hub at Chicago.
That is he lesson from almost two decades of the SCASD program. As a vehicle to get more service to small rural airports, it’s largely been a dud. But for a bit larger, currently-served airports within a shrinking airline system, it’s done well.
Direction: Forget the intention of bringing service to small airports where nobody can use it and where economically-viable connectivity is not possible.
In effect, with past grant awards at places such as BGR, GEG, and CRW, SCASD awards have been consistent with the #1 trend in air service access: regionalization.