Remote towns may lose airline subsidy

Posted: Thursday, July 07, 2005

ANCHORAGE - A federal subsidy for airlines providing service in remote communities needs to be reworked to accommodate changes in the aviation industry, U.S. Transportation Secretary Norman Mineta said in Anchorage this week.

Possibilities could include cutting the number of eligible communities and making them pay some of the cost.

The 27-year-old Essential Air Service program was discussed during a U.S. Senate Commerce Committee hearing in Anchorage Tuesday that was chaired by U.S. Sen. Ted Stevens, R-Alaska. Stevens was the only senator at the hearing, which included testimony from Mineta, Federal Aviation Administration chief Marion Blakey as well as local aviation officials and experts.

The subsidy, established when the airline industry was deregulated in 1978, used federal money to lower air-travel costs to 34 Alaska communities and 92 elsewhere in the country. Funding totals $102 million for this budget year. That's down from $113 million in 2003.

The program's aim is to provide a safety-net level of air service to the smallest and most isolated communities. Given that air service remains the only way in or out of many Alaska villages, the Transportation Department regards them as a high priority, Mineta said.

But the program hasn't kept pace with airport improvements and changes in the way airlines fly, which calls for much-needed structural changes, Mineta said.

Changes proposed by the federal Transportation Department include requiring communities to kick in at least 10 percent of the subsidy.

"I am well aware that the proposed requirement of a local contribution has not been well received by many," Mineta said. "But this is one of the few federal programs that does not have any local contribution."

Under the proposal, the amount local communities would have to contribute toward the program would vary. Communities more than 210 miles from the nearest large or medium hub airport would have to provide 10 percent. Those between 100 and 210 miles from a large or medium hub airport would have to provide 25 percent.

Stevens, who helped create the program, said the Alaska communities affected by the changes are some of the poorest in the state and might not be able to afford the proposed required co-payments.

Mineta said state government or local businesses could also pay.

Transportation Department officials are still working through the details, and Stevens said he expects the Commerce Committee to sort through the issue over the next two years.

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