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35–916 PDF 2007

ESSENTIAL AIR SERVICE

AND SMALL COMMUNITY

AIR SERVICE DEVELOPMENT PROGRAMS

(110–34)

HEARING

BEFORE THE

SUBCOMMITTEE ON 

AVIATION

OF THE

COMMITTEE ON 

TRANSPORTATION AND 

INFRASTRUCTURE 

HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

APRIL 25, 2007

Printed for the use of the 

Committee on Transportation and Infrastructure

(

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE 

JAMES L. OBERSTAR, Minnesota, Chairman 

NICK J. RAHALL, II, West Virginia 

PETER A. DEFAZIO, Oregon 

JERRY F. COSTELLO, Illinois 

ELEANOR HOLMES NORTON, District of 

Columbia 

JERROLD NADLER, New York 

CORRINE BROWN, Florida 

BOB FILNER, California 

EDDIE BERNICE JOHNSON, Texas 

GENE TAYLOR, Mississippi 

ELIJAH E. CUMMINGS, Maryland 

ELLEN O. TAUSCHER, California 

LEONARD L. BOSWELL, Iowa 

TIM HOLDEN, Pennsylvania 

BRIAN BAIRD, Washington 

RICK LARSEN, Washington 

MICHAEL E. CAPUANO, Massachusetts 

JULIA CARSON, Indiana 

TIMOTHY H. BISHOP, New York 

MICHAEL H. MICHAUD, Maine 

BRIAN HIGGINS, New York 

RUSS CARNAHAN, Missouri 

JOHN T. SALAZAR, Colorado 

GRACE F. NAPOLITANO, California 

DANIEL LIPINSKI, Illinois 

DORIS O. MATSUI, California 

NICK LAMPSON, Texas 

ZACHARY T. SPACE, Ohio 

MAZIE K. HIRONO, Hawaii 

BRUCE L. BRALEY, Iowa 

JASON ALTMIRE, Pennsylvania 

TIMOTHY J. WALZ, Minnesota 

HEATH SHULER, North Carolina 

MICHAEL A. ACURI, New York 

HARRY E. MITCHELL, Arizona 

CHRISTOPHER P. CARNEY, Pennsylvania 

JOHN J. HALL, New York 

STEVE KAGEN, Wisconsin 

STEVE COHEN, Tennessee 

JERRY MCNERNEY, California 

VACANCY 

JOHN L. MICA, Florida 

DON YOUNG, Alaska 

THOMAS E. PETRI, Wisconsin 

HOWARD COBLE, North Carolina 

JOHN J. DUNCAN, JR., Tennessee 

WAYNE T. GILCHREST, Maryland 

VERNON J. EHLERS, Michigan 

STEVEN C. LATOURETTE, Ohio 

RICHARD H. BAKER, Louisiana 

FRANK A. LOBIONDO, New Jersey 

JERRY MORAN, Kansas 

GARY G. MILLER, California 

ROBIN HAYES, North Carolina 

HENRY E. BROWN, JR., South Carolina 

TIMOTHY V. JOHNSON, Illinois 

TODD RUSSELL PLATTS, Pennsylvania 

SAM GRAVES, Missouri 

BILL SHUSTER, Pennsylvania 

JOHN BOOZMAN, Arkansas 

SHELLEY MOORE CAPITO, West Virginia 

JIM GERLACH, Pennsylvania 

MARIO DIAZ-BALART, Florida 

CHARLES W. DENT, Pennsylvania 

TED POE, Texas 

DAVID G. REICHERT, Washington 

CONNIE MACK, Florida 

JOHN R. ‘RANDY’ KUHL, JR., New York 

LYNN A WESTMORELAND, Georgia 

CHARLES W. BOUSTANY, JR., Louisiana 

JEAN SCHMIDT, Ohio 

CANDICE S. MILLER, Michigan 

THELMA D. DRAKE, Virginia 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida 

(II)

SUBCOMMITTEE ON AVIATION

JERRY F. COSTELLO, Illinois, Chairman 

BOB FILNER, California 

LEONARD L. BOSWELL, Iowa 

RICK LARSEN, Washington 

RUSS CARNAHAN, Missouri 

JOHN T. SALAZAR, Colorado 

DANIEL LIPINSKI, Illinois 

NICK LAMPSON, Texas 

ZACHARY T. SPACE, Ohio 

BRUCE L. BRALEY, Iowa 

HARRY E. MITCHELL, Arizona 

JOHN J. HALL, New York 

STEVE KAGEN, Wisconsin 

STEVE COHEN, Tennessee 

NICK J. RAHALL, II, West Virginia 

PETER A. DEFAZIO, Oregon 

ELEANOR HOLMES NORTON, District of 

Columbia 

CORRINE BROWN, Florida 

EDDIE BERNICE JOHNSON, Texas 

ELLEN O. TAUSCHER, California 

TIM HOLDEN, Pennsylvania 

MICHAEL E. CAPUANO, Massachusetts 

DORIS O. MATSUI, California 

MAZIE K. HIRONO, Hawaii 

VACANCY 

JAMES L. OBERSTAR, Minnesota 

(Ex Officio) 

THOMAS E. PETRI, Wisconsin 

HOWARD COBLE, North Carolina 

JOHN J. DUNCAN, JR., Tennessee 

VERNON J. EHLERS, Michigan 

STEVEN C. LATOURETTE, Ohio 

FRANK A. LOBIONDO, New Jersey 

JERRY MORAN, Kansas 

ROBIN HAYES, North Carolina 

SAM GRAVES, Missouri 

JOHN BOOZMAN, Arkansas 

SHELLEY MOORE CAPITO, West Virginia 

JIM GERLACH, Pennsylvania 

MARIO DIAZ-BALART, Florida 

CHARLES W. DENT, Pennsylvania 

TED POE, Texas 

DAVID G. REICHERT, Washington 

CONNIE MACK, Florida 

JOHN R. ‘RANDY’ KUHL, JR., New York 

LYNN A WESTMORELAND, Georgia 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida 

JOHN L. MICA, Florida 

(Ex Officio) 

(III)

(V)

CONTENTS Page 

Summary of Subject Matter .................................................................................... vi 

TESTIMONY 

Courtney, Mark F., A.A.E., Airport Director, Lynchburg Regional Airport ....... 26

Dillingham, Gerald L. Ph.D, Director, Physical Infrastructure Issues, Government Accountability Office .................................................................................. 8

Edwards, Jr., David N., A.A.E., Airport Director, Asheville Regional Airport ... 26

Everett, Hon. Terry, a Representative in Congress from the State of Alabama 5

Grierson, Robert A., A.A.E., Airport Manager, Dubuque Regional Airport ........ 26

Hansell, Hon. Bill, Commissioner, Umatilla County, Oregon .............................. 26

Malarkey, Faye, Vice President, Regional Affairs, Regional Airline Association ........................................................................................................................ 26

Reynolds, Michael W., Deputy Assistant Secretary for Aviation and International Affairs, U.S. Department of Transportation ....................................... 8

Thompson, Hon. Mike, a Representative in Congress from the State of California ..................................................................................................................... 5

PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS 

Braley, Hon. Bruce L., of Iowa ............................................................................... 41

Costello, Hon. Jerry F., of Illinois .......................................................................... 44

Coble, Hon. Howard, of North Carolina ................................................................. 50

Matsui, Hon. Doris O., of California ...................................................................... 51

Mitchell, Hon. Harry E., of Arizona ....................................................................... 52

Oberstar, Hon. James L., of Minnesota ................................................................. 54

Salazar, Hon. John T., of Colorado ........................................................................ 59

PREPARED STATEMENTS SUBMITTED BY WITNESSES 

Courtney, Mark F. ................................................................................................... 62

Dillingham, Gerald L. ............................................................................................. 91

Edwards, Jr., David N. ............................................................................................ 142

Everett, Hon. Terry ................................................................................................. 149

Grierson, Robert A. .................................................................................................. 231

Hansell, Hon. Bill .................................................................................................... 236

Malarkey, Faye ........................................................................................................ 241

Reynolds, Michael W. .............................................................................................. 250

Thompson, Hon. Mike ............................................................................................. 259

SUBMISSION FOR THE RECORD 

Courtney, Mark F., A.A.E., Airport Director, Lynchburg Regional Airport, 

Presentation on 2002 Small Community Air Service Development Program . 69

Dillingham, Gerald L. Ph.D, Director, Physical Infrastructure Issues, Government Accountability Office, Map of Locations of Communities Receiving 

Essential Air Service Subsidies and Small Community Air Service Grants ... 141

Everett, Hon. Terry, a Representative in Congress from the State of Alabama:

Graph of Enplanements - Dothan Regional Airport .......................................... 153

Constituent Letters to the Congressman ........................................................... 154

ADDITION TO THE RECORD 

Airport Minority Advisory Council, William A. Kirk, General Counsel, Written 

Statement ............................................................................................................. 262

Alaska Air Group, Bill Ayer, President and CEO, Written Statement ............... 303

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35916.002
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35916.003
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35916.004
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35916.005
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35916.006
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35916.007
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35916.008
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35916.009
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35916.010
(1)

HEARING ON ESSENTIAL AIR SERVICE AND 

SMALL COMMUNITY AIR SERVICE DEVELOPMENT PROGRAMS 

Wednesday, April 25, 2007, 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE, 

SUBCOMMITTEE ON AVIATION

Washington, DC. 

The committee met, pursuant to call, at 2:00 p.m., in Room 2167, 

Rayburn House Office Building, the Honorable Jerry F. Costello 

[chair of the committee] presiding. 

Mr. COSTELLO. The Subcommittee will come to order. 

The Chair will ask all members, staff and everyone to turn their 

electronic devices off or on vibrate. 

The Subcommittee is meeting today to hear testimony on the Essential Air Service Program and the Small Community Air Service 

Development Program. 

I will give my opening statement and then recognize the Ranking 

Member to give his opening statement. We welcome everyone here 

today at our Subcommittee hearing on the Essential Air Service 

and the Small Community Air Service Development Program. 

As a long-time supporter of these programs, I believe that connecting small communities to the national air transportation system is vitally important for the local communities and should continue to be of national interest. The EAS was created in 1978 as 

part of the Airline Deregulation Act. It was designed to ensure that 

small communities did not lose their air service. 

The EAS program was to last for only 10 years. However, it was 

renewed for another 10 years in 1987 and was made permanent in 

1996. There is widespread support in Congress for this program 

and for attempting to obtain more service to smaller communities. 

It is important that people who live in small communities have access to the national air transportation system, and EAS ensures 

this service, by keeping the cost of rural air service from becoming 

prohibitive to the consumer. 

I was disappointed in the Administration’s fiscal year 2008 budget, which provided only $50 million for the EAS program, $77 million less than authorized by Congress and almost $60 million less 

than provided in the fiscal year 2007 continuing resolution. If the 

Administration’s budget proposal was adopted by the Congress, almost half of the communities that receive EAS funding would be 

dropped from the program. 

2

In its FAA reauthorization proposal, the Administration also proposes to freeze the program at the status quo and limit EAS funding to $50 million per year, which is insufficient to meet the current needs. I strongly oppose freezing the program or limiting funding to $50 million per year. Small towns and rural areas rely on 

reliable air transportation to attract and retain businesses. Limiting essential air service will effectively cut many of these communities off from our air transportation network. I cannot and will not 

support chipping away at important rural air transportation service. 

In previous Subcommittee hearings, some have suggested adjust- ing the $200 per passenger subsidy cap to account for inflation 

since it has not been adjusted since the cap was first proposed by 

the Department of Transportation in 1989. I am interested in hearing from the GAO and other witnesses on this proposal. 

Another program of importance to small and rural communities 

is the Small Community Air Service Development Program. While 

this program is less than 10 years old, it has been very well received by small communities and demand for funding has far exceeded funds available for the program. 

From my experience with the program, it focuses on improvements at individual airports by allocating resources directly to 

those who are most familiar with their needs: the local communities. It is my understanding that the GAO’s review of the program found that the results were mixed. I am interested in hearing 

from our witnesses on further ways to improve and maximize benefits from the program. 

Rural airports are an economic lifeline for small communities, 

encouraging business investment and creating opportunities for 

economic growth in the communities they serve. We must continue 

our commitment to the EAS and the SCASD programs. 

With that, I will recognize the Ranking Member of the Subcommittee, Mr Petri, for any opening statement that he may have, 

and would ask unanimous consent at this time to allow two weeks 

for all members to revise and extend their remarks and to permit 

the submission of additional statements and materials by members. 

Without objection, Mr. Petri is recognized. 

Mr. PETRI. Thank you very much, Mr. Chairman. 

As you pointed out, today’s hearing will focus on air service to 

small communities. Air service is the economic lifeblood of our Nation. It keeps communities, businesses and families connected over 

great distances. Since deregulation, the annual number of commercial air travelers has grown by 137 percent to 740 million passengers in 2006. Overall, airline deregulation has brought better 

service and lower prices to the majority of communities around this 

Country. 

Unfortunately, many small and medium size communities located throughout the Nation have not seen the benefits of deregulation. They have struggled to obtain and retain commercial air passenger service. The few communities that are large enough to sustain a base level of service have been unable to attract multiple 

carriers to provide consumer choice or low fare competition. Since 

9/11, the airline industry, as we all know, has suffered staggering 

financial losses. In the process, airlines have taken steps to cut 

3

costs and reduce capacity, which often includes reducing or eliminating service to the areas that can least afford to lose it. 

Fortunately, the airlines are slowly returning to profitability. I 

hope that this change in the marketplace will result in greater 

service to small communities. 

Witnesses we have before us today will share their views of the 

essential air service and small community air service development 

programs. Some of the witnesses have been involved in innovative 

programs to help stimulate air carrier service and strengthen passenger demand. I look forward to hearing about their experiences. 

I am also interested in the witnesses’ thoughts about the potential impact of very light jets and air taxis on the provision of air 

service to rural communities. 

So I thank you all for participating, and particularly would like 

to welcome our distinguished colleagues from Alabama and California, Terry Everett and Mike Thompson. I yield back, Mr. Chairman. 

Mr. COSTELLO. The Chair thanks the gentleman, and recognizes 

the gentleman from Oregon, Mr. DeFazio, for his opening statement or any comments. 

Mr. DEFAZIO. Thank you, Mr. Chairman. I will be brief. 

I heartily endorse the sentiments expressed both by you and the 

Ranking Member. I think that the key question that confronts the 

Committee now, as it has in the past, is in a deregulated environment, are we going to move toward a system where basically most 

people in America who live outside of a major hub airport have to 

drive for hours to access air service. I don’t think that is an acceptable future for the Country, for our small and mid-size communities, in the deregulated environment. It is going to require Government intervention, and Government intervention in this case 

with these two programs I think can be improved upon. 

I look forward to hearing from the witnesses and gathering suggestions on how we might enhance air service into smaller communities and not just fight a rear guard action on these existing programs. 

Mr. COSTELLO. The Chair thanks the gentleman and recognizes 

the gentleman from Iowa, Mr. Braley, for any opening statement 

or comments he may have. 

Mr. BRALEY. Thank you, Mr. Chairman, and thank you for holding this hearing on the Essential Air Service Program and the 

Small Community Air Service Development Program. I hope to 

hear today how these two programs can continue to assist small 

and rural airports. 

Growing up in a small town of 1,500 that had a general aviation 

airport and knowing how important it was to the lifeblood of my 

community, it is very important as I go forward in my work here 

on behalf of my constituents in Iowa’s First District, my home 

State of Iowa has benefitted tremendously from both of these programs, thanks to the coordination between the airports, airlines, 

communities and Federal Government. 

The Small Community Air Program has been a particular benefit 

and has allowed Iowa air passengers greater prices and flexibility 

in their air fares. I believe the Small Community Air Program is 

essential to ensuring that small and rural communities have access 

4

to our Nation’s air transportation network. As air traffic suffered 

in the wakes of the attacks of September 11th, small and rural airports felt a tremendous impact. When airlines costs go up and 

enplanements go down, the airlines narrow their focus on urban 

areas. While I understand the business principles behind these 

practices, I also understand that there are a lot of families and 

businesspeople in Iowa who need convenient access to air travel. 

The Small Community Air Program is a way to remedy this 

problem, by incentivizing air service to small communities. I 

strongly oppose the Administration’s request as it relates to the 

Small Community Air Program. I feel that this program is highly 

valuable to America’s heartland and I support reauthorization of 

the program. The economic survival of many small communities depends on access to air travel. This access to air travel depends on 

the viability of the small community air program. 

I have invited a resident of Dubuque, Iowa to share with us his 

success story with the Small Community Air Program. Mr. Bob 

Grierson is the Airport Manager at Dubuque Regional Airport and 

has seen first-hand how this program provides direct benefits to 

communities. I look forward to his testimony and I thank him and 

the rest of the witnesses for testifying today. 

Thank you, Mr. Chairman. 

Mr. COSTELLO. Thank you. 

The Chair now recognizes the gentlelady from the District of Columbia, Ms. Norton. 

Ms. NORTON. Well, Mr. Chairman, understand that I am a big 

city girl, so I won’t take much of your time. But I do want to say 

why I think this a very important hearing and reauthorization of 

the EAS program is also of great importance to the entire Congress. After all, I have seen even here and in larger cities how the 

current condition of the airlines makes them clamp down on service 

whenever possible. Everyone knows that small and rural communities would be easy targets without intervention. They need our 

protection or they will simply be cut down and cut off. 

I identify with small and rural communities in another way, because I have been there in the worst way, charter service was cut 

off in the District of Columbia for more than four years. To the 

credit of this Committee, in the strongest bipartisan way, it was finally opened, but only after every other airport in the United 

States had been opened and only after the Chairman and—this is 

in the last Congress—the Ranking Member took the stick to the 

TSA. 

In order to do so, we even had an amendment in their reauthorization, they ignored it. Chairman Young had to threaten to hold 

people in contempt. Finally it was started, but Mr. Chairman, it 

was started in a way that says everything about how far we have 

gotten after 9/11. It was started in a way that makes it close to 

impossible to even want to come in here on charter service. We 

can’t do any better than to require for very small planes to have 

armed guards. What? Should their guns be drawn? We had better 

make sure these regulations go far enough. Armed guards, if you 

come in with an airplane, you have to stop at some gateway airport. What do they do then, frisk you again after frisking you at 

5

the first place? I would think we would be the laughingstock of the 

world if this were better known. 

Mr. Chairman, at a later date, I am going to ask if a hearing can 

be held on the conditions under which people can fly in here. More 

than my complaints, sir, you have three or four members of this 

Committee who have been driven apoplectic because they fly small 

airplanes. I think they should be seen as proxies or representatives 

of those who have now even still been kept from coming into the 

Nation’s capital, because TSA and the Department of Homeland 

Security haven’t been able to figure it out after four years. Woe be 

unto us if it has taken them this long and if this is their remedy. 

I think they can do better if we press them just as the Committee 

pressed them in order to get the airport open in the first place. 

I thank you very much, Mr. Chairman. 

Mr. COSTELLO. The Chair thanks the gentlelady. We would be 

happy to work with you and your staff on attempting to schedule 

a hearing. 

If there are no other opening statements or comments from members, we will move to our first panel, which of course will be to 

hear from our two colleagues, Congressman Terry Everett, from 

Alabama’s Second District and Congressman Mike Thompson from 

California’s First District, who testified before the Subcommittee 

just last week. 

The Chair at this time would recognize our colleague, Congressman Terry Everett. 

TESTIMONY OF THE HONORABLE TERRY EVERETT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ALABAMA; THE HONORABLE MIKE THOMPSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. EVERETT. Thank you, Chairman Costello, Ranking Member 

Petri. 

I would like to begin by thanking you for allowing me to appear 

here today. The issue of rural air service is important to me, and 

it is important one which affects millions of Americans. As many 

of my colleagues from rural and small communities across the 

Country can attest, the weekly flights to and from Washington can 

be a trying experience. The many inconveniences associated with 

these flights are also experienced by our constituents. 

The Essential Air Service and Small Community Air Service Development programs seek to address the problems associated with 

rural air service by providing assistance to small communities 

across the Country. While southeast Alabama does not have a community served by EAS programs, two airports in the Second District have been recipients of the Small Community grant programs. 

These grants have bene helpful to my district. 

In 2003, Dothan, Alabama received a Small Community grant. 

Presently, Atlanta Southeast Airlines, or ASA, is the only airline 

which provides service into Dothan. The Dothan airport used the 

grant to develop a marketing program to increase enplanements, a 

program that was really very successful. I will ask that this record 

of that program be made a part of the record, please. 

Mr. COSTELLO. Without objection, so ordered. 

6

Mr. EVERETT. In 2005, Montgomery, Alabama also received a 

small community grant to expand air services in the State, though 

it has not yet been able to spend any of the money allocated. The 

grant was awarded to increase service between Montgomery and 

Detroit. Under the terms of the grant, the Montgomery Airport Authority would use the money to have a route operated by Northwest Airlines between Montgomery and Detroit. However, Northwest Airlines declared bankruptcy shortly after the grant was 

awarded in 2005. As a result, all new plans for expansion were frozen, because the proposed direct route between Montgomery and 

Detroit would be served by Northwest Airlines. 

Since they are in bankruptcy, when they applied to, the Montgomery Airport Authority applied to be allowed to change the grant 

to another airline, it was informed that the grant was awarded to 

the airport in order to expand services for Northwest Airlines. 

Montgomery said it would like to expend the funds on a new purpose, but it would have to submit a new application. 

While a Small Community grant program provides much-needed 

assistance to provide air service in southeast Alabama, there are 

several problems which are not addressed by these programs. I 

would like to bring some of them to your attention. Air service to 

small and medium size communities, like Dothan and Montgomery, 

are left at the whim of corporate airlines, whose neglect oftentimes 

results in lengthy delays and cancellations. This service impacts 

both business travelers and families, and impedes the ability of the 

communities to attract and retain economic development. 

As I mentioned earlier, Dothan is served by only one airline, 

ASA. According to their own statistics, ASA flights from Dothan to 

Atlanta are delayed 50 percent of the time. It is the only location 

to which ASA flies from Dothan. 

In addition, ASA flights from Atlanta to Dothan are delayed 70 

percent of the time, that is right, 7 out of 10 flights leaving Atlanta 

to Dothan are delayed. This record has led Dothan residents to 

refer to ASA as the Accidentally Scheduled Airlines. 

I was particularly interested in comments of both the Chairman 

and the Ranking Member on how important it is for rural America 

and small towns to have airline service. But I tell you, I really fear 

that things are going to happen in a negative way if a lot of these 

schedules are allowed to continue, not only the delay, but the possibility of price increases. 

Let me real quickly just say that I would like to submit these emails I received of complaints from my constituents for the record, 

and read one quick paragraph. This is toward price schedule, rather than delays. This is from a Mr. Kevin Henson, Dothan, Alabama. It says, for example, in early November, ‘‘I went online to 

book air travel to Las Vegas for a February leadership convention. 

A seat from Dothan to Las Vegas through Atlanta was going to cost 

just over $1,700. Having just moved from Fort Walton Beach, I 

compared their price for their airport and found the same ticket for 

just over $300.’’

That is a $1,400 difference. Fort Walton Beach is only 120 miles 

from Dothan, Alabama. 

So I again thank you, Mr. Chairman and Ranking Member, for 

allowing me to testify here today. I really do fear that unless we 

7

do something that we are going to see small airline service in rural 

America and to small cities disappear. Thank you again. 

Mr. COSTELLO. We thank you for your testimony, and the e-mail 

will be inserted in the record without objection. 

Mr. COSTELLO. At this time, the Chair recognizes the gentleman 

from California, Mr. Thompson. 

Mr. THOMPSON. Thank you, Mr. Chairman, Ranking Member 

Petri and other Committee members. I appreciate the opportunity 

to come back. I think I have spoken before the Committee more in 

the last two weeks than I did when I was on the Committee. I appreciate your indulgence. 

I too support the EAS programs and concur with everything that 

the Chair and the Ranking Member and just about everyone else 

has said. These programs are incredibly important to rural communities and to the people who live in this rural communities. I appreciate the opportunity to be here today to be able to talk about 

a bill that I have, H.R. 237. It is a bill that I introduced with Mr. 

DeFazio. 

This bill specifically helps EAS programs in areas that are in 

worse shape than some others. As everyone knows, airports, small 

ones, big ones and even private ones are able to get Government 

grants. The problem that some of the EAS airports have is they 

can’t come up with their matching portion of the grant. As we 

know, we recognized this as a problem after September 11th, because we reduced it down from 10 percent to 5 percent. 

But even 5 percent is a heavy lift for some of these rural communities. So what this bill does, it exempts from their share of cost 

if they meet a list of very specific and very demanding criteria. The 

criteria are, the unemployment rate in that area, and this is in the 

most recent 24 month period, must be at least 1 percent greater 

than the national average, or the per capita income is 80 percent 

or less than the national average, or a special need occurs. This 

could be a natural disaster, a human disaster, a military base closure, something that really limits the community’s ability to generate these funds. 

This would provide important help for these communities. And I 

don’t think there is anywhere and there are a number of airports 

that fall into this category. As a matter of fact, there are three of 

them on this Committee, other than the ones, the area that Mr. 

DeFazio and I represent. 

But I think our area represents this very, very well. If you look 

at the northernmost part of my district, in Del Norte County, 

which is impacted even more, because about 80 percent of the property up there is owned by the Government and generates no tax 

base. And Mr. DeFazio’s Brookings part of Oregon, these are areas 

that are trying to grow economically. They have great demands for 

tourism. It is just impossible to get there from here. If it weren’t 

for the air service, it would be real tough to conduct any business 

there. It would be tough to get medical help if you need it, in the 

case of a public safety issue. It would be tough to get out of that 

area. 

So a good quality and expanded airport becomes even more necessary. If this bill were adopted, it would be much easier to do that, 

8

and it would benefit the communities all around them a great deal 

and allow them to grow and expand economically. 

So I thank you for the opportunity and I look forward to seeing 

the bill on suspension. 

[Laughter.] 

Mr. COSTELLO. I don’t know who else caught that, but on the suspension calendar. 

The Chair thanks both Congressman Everett and Congressman 

Thompson for your testimony. It is customary, due to our schedules, that we allow you to leave without question at this time. We 

thank you for your testimony and look forward to working with you 

on your bill. 

The Chair would ask the second panel to come forward, please. 

I will introduce the witnesses as they are coming to the table. 

Faye Malarkey—I am sorry. We almost left out Mr. Dillingham, 

who is a regular witness before the Committee. Dr. Gerald 

Dillingham, who is the Director of Physical Infrastructure Issues 

with the Government Accountability Office; Mr. Michael Reynolds, 

the Deputy Assistant Secretary for Aviation and International Affairs at the Department of Transportation. 

Gentlemen, if you are prepared to move forward with your testimony, the Chair would ask both of you to summarize your testimony. Your full statement will be entered into the record. The 

Chair would ask that you summarize your testimony in five minutes or so. Then members will have the opportunity to ask questions. 

Dr. Dillingham, you are recognized at this time. 

TESTIMONY OF GERALD L. DILLINGHAM, PH.D, DIRECTOR, 

PHYSICAL INFRASTRUCTURE ISSUES, GOVERNMENT ACCOUNTABILITY OFFICE; MICHAEL W. REYNOLDS, DEPUTY 

ASSISTANT SECRETARY FOR AVIATION AND INTERNATIONAL AFFAIRS, U.S. DEPARTMENT OF TRANSPORTATION 

Mr. DILLINGHAM. Thank you, Chairman Costello, Mr. Petri, 

members of the Subcommittee. 

My written statement that was submitted for the record discusses some options that the DOT and the Congress could consider 

for reforming the EAS and the Small Community Air Service Development Programs. To provide some context for that discussion, 

the statement first discusses what our studies have shown about 

the development and impact of the two programs. 

With regard to the EAS program, the principal impact of the 

EAS program has been consistent with its legislative objective of 

providing Federal subsidies for eligible communities to ensure that 

they continue to have access to air services. Our studies have 

shown that over the last decade, the number of communities receiving subsidized service has increased significantly. Federal funding 

for the program has also risen by more than four-fold, and the average subsidy per community and per passenger has increased substantially. 

It has also been argued that the program is not providing the 

quality of services or fares to attract local passenger traffic. This 

argument tends to be based on the low number of passengers using 

9

the service and what is called leakage to larger, nearby airports. 

Our work further suggests that if the Federal subsidies were removed, air services would end at many of these communities. 

Mr. Chairman and members of the Subcommittee, as you know, 

the underlying EAS statutes have remained fundamentally unchanged since their inception nearly 30 years ago, while at the 

same time the aviation landscape has changed dramatically, especially with respect to the development of the hub and spoke systems, the growth of regional jets and the expansion of low cost carrier services. These circumstances suggest that there are reasons 

to consider reforming the programs. 

With regard to the Small Community program, during the five 

years that the program has been operating, there have been 182 

grants awarded. To date, 74 grants or about 40 percent of those 

grants, have been completed. When we conducted our review of the 

program in late 2005, 23 grants had been completed. Although our 

analysis has not provided a comprehensive evaluation of the program, it does provide a preliminary look at some of the program’s 

outcomes. 

For those completed grants, we found that the majority of those 

communities reported service or fare improvements, as well as an 

increase in the number of enplanements. We also found that the 

majority of the communities reported that the improvements were 

still in place after the grant was completed, and nearly 50 percent 

of those improvements were self-sustaining. 

Now I want to turn to a discussion of potential reforms and options for these two programs. Our written testimony provides in 

some detail various legislative options to reform the EAS program. 

For example, the current EAS statute requires a one size fits all 

approach as virtually all communities are guaranteed two round 

trips a day with a 15 seat or larger aircraft. 

There are clearly some communities that are receiving subsidized 

services that are within easy driving distance of more frequent and 

less expensive air service. Data shows that passengers are especially willing to drive a couple of hours to a nearby major hub with 

a low fare carrier, such as JetBlue and Southwest. Also, some communities’ traffic data show that they do not need a 15 seat or larger aircraft to provide enough capacity to meet market demands. 

Regarding the Small Community Air Service program, I understand that DOT has recently begun to implement our recommendation from 2005 to evaluate a larger sample of completed programs 

than was available to us at that time. This evaluation should provide some useful information to the Congress and DOT, including 

identification of some additional lessons learned from successful 

projects. 

Mr. Chairman and members of the Subcommittee, in conclusion, 

for many small communities, air service is not and might never be 

economically viable for airlines. However, in many cases there are 

limited alternative means for the residents of small communities to 

connect to the national air transportation system. Reforms to EAS 

and the Small Community Air Service program could incrementally 

improve the programs. But continued subsidies will likely be needed to maintain air service to many small and rural communities. 

It will be the Congress’ weighing of priorities that will ultimately 

10

decide whether or not these programs will continue in their current 

form or whether other options will be pursued. 

Thank you, Mr. Chairman. 

Mr. COSTELLO. Thank you, Dr. Dillingham. 

The Chair now recognizes Mr. Reynolds. 

Mr. REYNOLDS. Mr. Chairman, Ranking Member Petri, thank 

you for inviting me to this hearing. 

I appreciate the opportunity to discuss with you and the Subcommittee the Essential Air Service Program and the Small Community Air Service Development Program. It is clear that air service in this Country has changed dramatically over the past several 

years. Many of these changes have been positive. The growth of low 

fare carriers, for example, has made affordable air transportation 

available to millions of people across the Country. While this is a 

good development overall for consumers, we recognize that it can 

create new challenges for some small communities. Many consumers are willing to drive places with a broader array of air service options, making it more difficult for some individual airports to 

sustain their traffic levels. This leakage can result in a struggling 

community airport, but not necessarily consumers who lack access 

to the national air transportation system. 

The challenge that we face is one of adjusting these programs in 

an efficient and effective manner to account for such changes. All 

of us, including the Federal Government, as well as States and 

local communities themselves, need to reexamine the way we approach small community air service. Recognizing that Federal Government involvement in smaller community air service has not 

kept pace with the changes in the industry, we have initiated some 

important reevaluations of the programs that we manage. 

Let me first address the EAS program. The laws governing our 

administration of this program have not changed significantly since 

its inception nearly 30 years ago, notwithstanding the changes that 

have taken place in the airline industry, as Dr. Dillingham indicated. As currently structured, the EAS program acts only as a 

safety net for some small communities by providing threshold levels of subsidized service. 

The Administration has proposed changes to the EAS program in 

the current FAA reauthorization proposal, as well as in the latest 

budget request. The goal of our proposed changes is to focus the 

program’s resources on the most isolated communities. The first 

change we propose is to limit eligibility to those EAS communities 

that currently receive subsidized air service. Second, we would 

rank all of the communities by their degree of isolation, with the 

most isolated being funded first until available funds were exhausted. Last, we are proposing a $50 million funding level. 

It is important to note the continued growth of the EAS program 

over the last few years. In the three fiscal years before the terrorist 

attacks of September 11th, the Department was subsidizing service 

to about 100 communities and the budget was $50 million a year. 

We are now subsidizing service at 145 communities and our budget 

is $109 million for fiscal year 2007. Over time, we expect that this 

program will continue to expand if it is not reformed. 

On our other program, the Department is now in its sixth year 

of administering the small community air service development proVerDate 0ct 09 2002 11:23 Sep 14, 2007 Jkt 000000 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 P:\DOCS\35916 HTRANS1 PsN: JASON
11

gram, which provides grants to smaller communities to address air 

service and fare issues. For fiscal year 2007, funding for the program is $10 million, and applications for grants are due this Friday. 

Since it began, we have made many awards to communities 

throughout the Country and authorized a wide variety of projects 

seeking to address the diverse types of problems presented to us 

and to test different ideas about how to solve them. Over the past 

six years, the Department has made more than 180 grant awards. 

However, because the majority of the projects involve activities 

over a two to four year period, and because many communities 

have sought and received extensions for their grants, only now are 

some of them coming to the point of completion. In this regard, the 

Department’s Inspector General recently began reviewing the outcomes of the projects that have been completed to date. We hope 

to have at least preliminary results from the IG’s review in June. 

The Federal Government, however, is only one piece of the equation. States and communities will also need to review their air 

service in the context of the changed industry structure and service 

patterns to seek fresh, new solutions to maximize their air service 

potential, including regional intermodal approaches, and expansion 

of public-private partnership to meet these challenges. 

In closing, Mr. Chairman, I can assure you that the Department 

is committed to implementing its Small Community Air Service 

Programs in the best and most efficient manner. We look forward 

to working with you and the members of this Subcommittee and 

full committee as we continue to work toward these objectives. 

Thank you again. I will be happy to answer any of your questions. 

Mr. COSTELLO. We thank you. 

Mr. Reynolds, I am not quite certain that I understand the concept of public-private partnership in dealing with these programs. 

Would you explain what you are looking at as far as a public-private partnership to help small communities? 

Mr. REYNOLDS. I think this is in the vein of the small communities reaching out to the businesses in their regions to help build 

understanding and awareness of the importance of the air service 

and to help promote the local air services that they do have, and 

perhaps attract air services. One of the criteria in the Small Community Air Service Development Program, one of the priorities that 

we give when we are judging applications is for communities that 

have engaged in public-private partnerships. So it is just a matter 

of the local community working with local officials beyond Government officials, so that local businesses are involved as well. 

That is the extent of that. There is no specific idea regarding the 

private sector involvement. 

Mr. COSTELLO. So it is outreach to the local community? 

Mr. REYNOLDS. That and working with the air carriers themselves as private sector entities. 

Mr. COSTELLO. In reading your written testimony, you indicate 

that the EAS program is often viewed as an entitlement as opposed 

to an investment. You talk about how communities, instead of an 

investment of any time and effort, in other words, it is an entitlement program, the community doesn’t have to do anything to get 

12

it, and that needs to be addressed. I assume that is what you are 

talking about, private-public partnership? 

Mr. REYNOLDS. Yes. 

Mr. COSTELLO. Is that correct? 

Mr. REYNOLDS. That is correct. 

Mr. COSTELLO. At the same time, when the Department is recommending in the reauthorization bill that we have built this privatepublic partnership and outreach program and getting the community involved, as opposed to just viewing this as an entitlement, we 

cut the program significantly, which according to our estimation, 

and no one has challenged the figures that we have, that it would 

cut at least in half the number of airports now that receive service 

under the EAS. Would you challenge that or is that roughly a correct figure, that half—is that correct? 

Mr. REYNOLDS. That is correct, at a $50 million funding level, 

yes. 

Mr. COSTELLO. So we are telling these communities, we are going 

to cut you in half, and half of the airports that receive EAS service 

today will not receive it if the FAA reauthorization as proposed by 

the Administration goes through. But we want you to invest in 

your local communities by doing public relations. 

What are we saying to them, we are going to take away the 

money so you are left on your own and you find the money to provide the service? Isn’t that what we are saying in the FAA’s reauthorization proposal? 

Mr. REYNOLDS. I think we are just trying, as a general matter, 

to encourage communities, whether there are Federal dollars involved or not, whether it is the EAS program or the Small Community program, that the local communities need to become more involved in any of the air services that they have. 

Mr. COSTELLO. I think everyone would agree with that. But for 

us to say to them, obviously they would have air service, if they 

could afford to have it. The whole purpose of the creation of the 

program was to fund EAS services in areas that could not afford, 

number one, and it is not profitable for the airlines to come in and 

provide the service. So we created this national program. Your 

agency and the Administration is proposing, to cut it in half but 

start a public relations program, the way I read it. 

Let me ask another question, Mr. Reynolds. Under Vision 100, 

the Department of Transportation was authorized to adjust the 

subsidy paid under the EAS program to carriers if expenses were 

significantly increased. We obviously have seen a major increase in 

fuel in just the past few years. 

That discretion was never exercised by the Department, is that 

correct? 

Mr. REYNOLDS. Yes. 

Mr. COSTELLO. Is there a reason why, or what are your thoughts 

concerning that? 

Mr. REYNOLDS. We received a couple of applications two or three 

years ago, on a couple of routes that carriers wanted the increased 

amounts of money paid under the contract. At the time, we did not 

fund that discretionarily, because we did not believe we had sufficient funds, if all air carriers were to come in, we would not have 

sufficient funds to do that. 

13

More generally, carriers already have an opportunity, if they are 

losing money, if the burden of providing that EAS service because 

of change in circumstances is so great, there is already a provision 

for them to pull out of the community and they can file notice to 

leave. When that is done it would trigger a rebid of service. So they 

could rebid at a higher level. Of course, they would potentially run 

the risk of another carrier coming in and offering it for a lower 

amount. But there is already an existing mechanism for carriers, 

if they are having trouble providing the service, to withdraw and 

potentially get more money under a rebidded contract. 

Mr. COSTELLO. Dr. Dillingham, I mentioned in my opening remarks that some have suggested that we index the $200 per passenger subsidy cap under the EAS program. That has not been adjusted since its creation in 1989. I wonder what your thoughts are 

on the issue? 

Mr. DILLINGHAM. Mr. Chairman, in principle, you would think 

that that is a good idea. You have a set figure that has been in 

place for 20 plus years. I think that the Congress and DOT would 

have to think about the potential consequences of making that kind 

of adjustment. Keeping it at $200, one of the impacts of that is that 

as airline costs grow, it has a tendency to push some communities 

out of the program, because they go over the $200 cap. Now, that 

means that the program gets smaller. 

On the other hand, if you sort of index it, there is a possibility 

that the program will maintain the communities that are in it, but 

also expand as well, because they can meet that $300. So it is in 

principle a good thing. One has to think about the consequences of 

it, how the Congress or DOT wants this to play out. 

Mr. COSTELLO. Thank you. 

Before the Chair recognizes the Ranking Member for any questions that he may have, I would ask that pursuant to Rule 3(d) of 

the Rules of the Committee on Transportation and Infrastructure, 

I ask unanimous consent for the gentleman from North Carolina, 

Congressman Shuler, a member of the full Committee, to participate in today’s Aviation Subcommittee hearing. 

Without objection, so ordered. 

The Chair recognizes the Ranking Member, Mr. Petri. 

Mr. PETRI. Thank you very much. 

I have a couple of questions. One was requested by my colleague 

from North Carolina, Howard Coble. I think it may have been because of a problem he encountered in his own district. Recently we 

have learned that some EAS and Small Community Air Service Development Program airports that have successfully attracted air 

service ran into a problem when the Transportation Security Administration refused to provide screening services. So they go 

ahead and they get their service, but they can’t actually do it, I 

guess, because of not meeting security guidelines. 

Are you aware of that issue? Is there anything we can do to address it? 

Mr. REYNOLDS. Thank you, Ranking Member Petri. I am aware 

of the issue. Of course, the TSA is no longer part of the Department of Transportation. We provide our grants and clearly, this is 

an issue I think maybe a few of the communities have encountered. 

14

I certainly can’t speak for TSA and their ability or inability to 

provide screening where it currently doesn’t exist, if a community 

has been able to do it. We certainly are happy to talk to the TSA 

about it. I know that they have their own issues on the budget 

front as well. We are happy to try and work with them, if that may 

help. But it is not anything that has been brought to our attention 

as a major problem. So I am not sure of anything we could do directly at the Department of Transportation. 

Mr. PETRI. There are two other questions for either of you, if you 

have any thoughts on it. One has to do with what Representative 

Everett mentioned. I experienced years ago in my own district in 

Wisconsin, where you have someone who is providing, I guess, essential air service, and the service is not exemplary. In his case, 

he said 70 percent were not on time. In our case, they would take 

off from another airport and decide to land or not land, depending 

on how many tickets they sold at the other airport and this sort 

of thing. Or at least that was our feeling. The flights never seemed 

to actually arrive on many days. Are there things we could do 

about structuring the program so that we could have some guidelines as to level of service or something and then reopen it for other 

bidders? 

Then the second question has to do with the change in aviation. 

I know there have been small planes for a long time. But there is 

a huge growth now in this new intermediate market, they call it 

air taxis or whatever—these small jets that most businesspeople 

are very enthusiastic about, because they think it will provide real 

access for the business traveler to many small communities. I suspect a lot of fixed-base operators are thinking of leasing or having 

access to those planes so that they can be available. 

So what is essential air service? Would it be better to open up 

the program to provide people with the option of helping put deals 

together to provide this type of service in their communities if it 

would help economic development rather than something for some 

people going on vacation somewhere? This is very nice, but they 

could probably do it out of an airport 50 or 60 miles away and it 

wouldn’t have the impact on business development in that particular community that it is targeting. Should we make the subsidy 

available for people who need it to have very efficient travel, because of getting parts to a factory or because of having to have repair people there or other business needs in an otherwise rural 

area? Do either of you have any comments on either of those questions? I certainly would appreciate it. 

Mr. REYNOLDS. I think we both have some thoughts on that. 

I will let Dr. Dillingham go first. 

Mr. DILLINGHAM. Mr. Petri, in regard to air taxis and the extent 

to which air taxis can be a mechanism for providing services, certainly I think that is a possibility. I think that in the course of 

doing our work we found at least one community in the Small 

Community Development program that had in fact gotten a grant 

to develop an on-demand service. So we know that is possible. 

On the other side of the coin, though, a lot of small communities 

prefer to have scheduled air service as part of that economic development emphasis. If you wanted to do this under the EAS program, then there would have to be some change in the rules in 

15

terms of air taxis. Because the EAS program prescribes 2 a day, 

15 seats or larger, which is not what an air taxi ordinarily is. But 

certainly, the possibility is there. 

Mr. REYNOLDS. Yes, Congressman Petri, to your first question 

about some of the service quality issues, the contracts under EAS 

do come up every two years. One of the things that does weigh into 

consideration when we are looking at the bids is the community 

input. So clearly if a community is very dissatisfied with the quality of the service, that can influence the decision of whom the Department ultimately chooses. 

Secondly, our office is frequently in contact with these communities on a regular basis. When these problems do come up, we do 

try and intercede on their behalf to some degree and work with the 

carriers. If the schedules are truly imbalanced, we try and work 

again with the carrier to see if they can provide more reasonable 

schedules. 

To your second question, yes, I think that very light jets, the new 

breed of aircraft that are becoming available, present a lot of great 

opportunities in the future. They are just now coming online. So it 

is a little early to say what impact they will have. 

But I think that the more service options there are out there, the 

more service providers, the different types of equipment, the more 

possibilities you will have to serve businesses and others in those 

communities. It may be that a small jet, a few times a day, is better and more economical than two flights under the current system, 

or that it is more of an on demand. We don’t have traffic today, 

or the people get together and decide they are going to travel several days a week. 

I think that does present possibilities, and there is a pilot program that unfortunately no one has subscribed to in the law that 

would allow that sort of thing to happen. Maybe with VLJs coming 

online, that may be a greater possibility. 

Mr. COSTELLO. Dr. Dillingham, you wanted to comment? 

Mr. DILLINGHAM. Yes, just as a footnote, I wanted to remind Mr. 

Petri that we have a study underway for you and the Chairman 

looking at the VLJs. One of the issues that we are trying to understand is how can this fit into the current national airspace system 

and where can we make it a useful addition. We hope to have that 

study to you and those findings before the end of the year. 

Mr. COSTELLO. Thank you. 

The Chair recognizes the gentleman from Oregon, Mr. DeFazio. 

Mr. DEFAZIO. Thank you, Mr. Chairman. 

I am a bit puzzled by the position of the Administration in this 

matter. We are saying we can’t afford $50 million to serve approximately 50 communities. First off, with your new standard here, applying the limited budgetary amount, you have talked about cutting the program in half, have you drawn up a list, given your new 

criteria, of what communities would lose their air service? 

Mr. REYNOLDS. Yes, we know which communities would be involved. 

Mr. DEFAZIO. Could we have that list, please? 

Mr. REYNOLDS. Absolutely. 

Mr. DEFAZIO. We would like to have that list. Mr. Chairman, I 

think that would be useful for the Committee. 

16

But then to the point, I was just out at Seattle, saw their wonderful new runway project. Do you know how much Federal money 

went into that, AIP? 

Mr. REYNOLDS. I am not familiar off-hand with that. I know it 

is a significant sum. 

Mr. DEFAZIO. I think it was many hundreds of millions of dollars. So we are going to help out the people of Seattle or the people 

of Chicago or the people of ‘‘name the airport’’ with AIP funds. But 

somehow, there are 50 communities, we are just going to cut them 

off? I just find that to be very shortsighted. If you are going to support deregulation and continue deregulation, and cut off the communities, then you are abandoning the idea of an integrated national system, universal access to an integrated national system of 

air transport. 

Is that the position of the Administration? 

Mr. REYNOLDS. I think the position is to focus the limited resources that we do have, when you are talking about private service providers versus public infrastructure, that it has been 30 years 

since deregulation. The decision was to let the market work its way 

with air services. It has been 30 years since deregulation. It was 

originally——

Mr. DEFAZIO. So your answer is yes, that is the position of the 

Administration, those people should get in their cars and start 

driving a really long way to the airport. 

Dr. Dillingham, what is the term of an EAS contract, how many 

year? 

Mr. DILLINGHAM. I believe it is two years. Yes, two years. 

Mr. DEFAZIO. Do you believe that we might be able to let a more 

competitive, have more competition for contracts if we allowed a 

longer term? 

Mr. DILLINGHAM. Yes, sir, the logic says that that would be the 

case. 

Mr. DEFAZIO. So is the Administration proposing that perhaps to 

save money in the EAS program, get more competition in there, we 

would increase the term? 

Mr. REYNOLDS. Well, increasing the term would reduce the frequency of competitors offering different services. 

Mr. DEFAZIO. But you might get a lower bid. I have had it put 

to me by a number of regional providers that if they were guaranteed more than two years, and had a prospect of being able to build 

a market, that they might be able to, the costs and subsidies required could be less. 

Mr. REYNOLDS. To be honest, I don’t know that we have specifically had a position on whether it could possibly go longer than 

that. Off-hand, I don’t know of any reason why we would be fundamentally opposed to that. I think it just requires a little more 

thought and study. Of course, again, it helps keep more competition if people can more frequently bid on the service. Yes, there is 

perhaps argument to be made on behalf of longer term stability. Of 

course, costs and a lot of other things may change in the interim 

and the carrier could find itself held in for a longer period and be 

unhappy about the longer period as well. It is a balancing issue. 

Mr. DEFAZIO. Right. We could allow, they could bid, we could say 

we will allow contracts up to five years, if you want to bid on a five 

17

year contract, if you think you have enough hedging for your fuel 

costs or whatever else out there, that you can make a predictable 

bid for five years, then go to it. If you want to bid a shorter term, 

no less than two, no more than five. I just have had credible operators within the industry say to me that they would look at other 

contracts than what they currently have if they could be assured 

of a longer term. Otherwise they are not going to make the investment in the aircraft. 

Mr. REYNOLDS. I think we are open to the idea at this point and 

would be happy to think on it further. 

Mr. DEFAZIO. Okay, thank you. Thank you, Mr. Chairman. 

Mr. COSTELLO. I thank the gentleman. 

The Chair recognizes at this time the gentleman from Arkansas, 

Mr. Boozman. 

Mr. BOOZMAN. Thank you very much, Mr. Chairman. 

As somebody from a rural State, certainly this is something that 

really does concern us and I am very interested in. The question 

I would have is, what is the most important thing that we can do 

to help our small airports? What would you say that we need to 

be doing to bolster these? 

Mr. REYNOLDS. That is a good question. It is very difficult. On 

and off for the last 12 years, I have been dealing with these issues 

directly and indirectly. There is clearly no silver bullet to improving services in a lot of smaller communities. Each one has its own 

set of circumstances. 

Again as a general matter, it is very important for local communities to try and become involved. Anything that can provide incentives for local communities, States, local businesses that can become involved in their local air services can make a big difference. 

People tend to sometimes take their air services for granted until 

they are diminished to a very low level or about to go away. Sometimes then it is too late. 

So we are happy to work with this Committee on any ideas that 

it may have going forward, through reauthorization or otherwise, 

in these areas. The Inspector General is making a review of our 

Small Community Air Service Development Program. There may 

be lessons that can be learned from that, from the successes as well 

as the failures, as to what might work for particular communities 

in terms of their involvement of time and resources. 

Mr. DILLINGHAM. Mr. Boozman, we had a chance to look at a 

sample of programs when we looked at the Small Community programs. What we found as a general principle was, to the extent 

that the risk can be mitigated for the airlines, the more likely you 

are to have more enhanced and robust service and fares. The kind 

of risk mitigation things that seemed to work best were revenue 

guarantees or participating in a marketing program. Oftentimes, 

airlines don’t have, these size airlines don’t have the resources to 

conduct a marketing campaign for a small community. But again, 

as Mr. Reynolds said, working with the community, those kinds of 

things that mitigate risk seem to be the most useful things that 

can be done in the short term. 

Mr. BOOZMAN. I guess along that line, it was probably three or 

four years ago, I was with a group with Congressman Mica, Congressman DeFazio. I was referring to our trip out west a few years 

18

ago. In fact, it might have been in your district where they talked 

about banking airline miles to help, they had a situation where 

they actually kind of prepaid the local businesses, prepaid mileage 

and things like that. 

Do we offer suggestions like that? Do we kind of accumulate best 

practice management like that that is made available to our small 

airports in an effort to help them? 

Mr. REYNOLDS. We are just now beginning to do that. Again, the 

Inspector General’s review, which just began, and we hope to have 

preliminary results in a few months, we hope will offer a playbook 

perhaps, or at least a menu, an a la carte menu, if you will, of 

ideas that might work for different communities. Certainly travel 

banks of various sorts are a possibility. That has been explored in 

a few of the Small Community grants that we have given. Some 

have had more success than others. So that certainly is a possibility. So there may be some options there that can be laid out 

more clearly once that review is done, and certainly based on some 

of the earlier look that the GAO did at these grants. 

Mr. BOOZMAN. I am very supportive of the current program. It 

does make sense, though, that regardless of what is done, that that 

type of thing would take pressure off the system. If we can help 

the smaller communities help themselves, again, it seems like it 

would be helpful. 

Thank you very much. Thank you, Mr. Chairman. 

Mr. COSTELLO. The Chair thanks the gentleman from Arkansas. 

At this time, the Chair recognizes the gentleman from Iowa, Mr. 

Braley. 

Mr. BRALEY. Thank you, Mr. Chairman. 

Dr. Dillingham, Vision 100 created a number of pilot programs 

aimed at increasing the effectiveness of the EAS program, including the Alternate Essential Air Service pilot program, the Community Flexibility pilot program, the Code Sharing pilot program and 

others. Yet none of these programs have been used. 

Why do you think these pilot programs were not successful? 

Mr. DILLINGHAM. The first thing I would say is, I wouldn’t say 

they weren’t successful. I would go with your first comment that 

in many cases, they were not used. There are a number of reasons 

that we have found that they were not used. In some cases, DOT 

announced the program and made it known to the communities. 

The communities decided for one reason or another that they did 

not want to participate in the program. 

There were a couple of cases where the programs were not funded. DOT decided not to fund the program. Mr. Reynolds spoke 

about one earlier in terms of the resources they had. They determined that from our reading of it, they wanted to fund the actual 

services that were being requested, rather than these programs. In 

one case, the Congress ordered that the program not be funded. 

We looked at this, because we couldn’t figure this out. Some of 

the reforms that we were thinking made sense were included in 

some of these pilots programs. What we concluded was, we think 

that rather than repeal these programs as is being suggested in the 

current reauthorization, that they might need to be looked at and 

see if they can be incentivized in such a way that they will be useful to the small communities. In other words, try to find out from 

19

the communities, maybe as a part of the DOT IG study, I don’t 

know whether that will be beyond the scope, but ask the communities why they didn’t participate, see if there is an incentive that 

can be changed, so that the communities would be. 

For example, one of the programs said, we will give your community a two year grant if you will give up your EAS subsidy for ten 

years. Well, getting two for ten, communities figured that really 

wasn’t a good exchange. 

So the short answer is, there are lots of reasons. But we think 

there is still some merit to looking at these programs. 

Mr. BRALEY. Well, I am new here, so you will have to forgive me. 

I think back in Iowa, if people were told there was a program that 

was put in place and no one utilized it, that by definition that program is not successful. And if you are talking about ways to incentive small airports from participating in the programs, and you are 

talking about things that could be done, I guess I am confused why 

that input has not been sought so that these programs can be tailored, so that they are successful. 

Mr. DILLINGHAM. I will pass that question over to Mr. Reynolds, 

and he can ask why they did or did not check with the communities in terms of why they didn’t participate. 

Mr. BRALEY. I will give him that chance. I have another question 

for you before I turn to Mr. Reynolds. One of the things that is not 

currently part of the requirements to participate in the EAS service 

plan is that you submit a marketing plan. One of the things I want 

to ask you is whether you believe that requiring a marketing plan 

would be helpful in increasing enplanements under the EAS program. 

Mr. DILLINGHAM. Yes, sir, I think they would be helpful. When 

we looked at the Small Community program, it was one of the leading positive initiatives in terms of that program. So to the extent 

that more people know about the service and the fares and so forth, 

it has to be a positive thing. 

Mr. BRALEY. All right, thank you. 

Mr. Reynolds, one of your recommendations in your testimony, or 

one of the comments you made in your written remarks, was that 

the financial conditions of the network carriers has added further 

uncertainty for the regional co-chair partners. As someone who depends on those regional co-chair partners every time I come out 

here to work, and who has had a nightmare of personal experiences 

dealing with delays, where justifications are provided by regional 

co-chair partners at a rural airport that are inconsistent with the 

delay explanations I receive at a hub airport. 

I would like you to elaborate on your comment and talk about 

what recommendations can be made to improve that instability 

that exists. 

Mr. REYNOLDS. The larger instability of the major carriers is that 

they have obviously gone through a very difficult period since September 11th. We are starting to see some more positive results 

more broadly. I think that the better financial results throughout 

the industry are, we hope, certainly cutting across all sectors, including the regional air carriers, many of which did relatively well 

compared to their larger compatriots during the last few years. 

20

As to the specific issues of the customer service of the regional 

partners, certainly that is a concern. I can’t speak to why they 

were given inconsistent information at different times. That is obviously something that is not very good for either’s customer service, 

and we certainly hope and expect the airlines to do better in terms 

of the information it provides. 

In terms of a healthy, stable airline industry across the board, 

that will probably mean better healthy, stable relationships between the majors and the regionals, as well as just healthier and 

stabler regionals. 

Mr. COSTELLO. The Chair thanks the gentleman and recognizes 

Ms. Norton. 

Ms. NORTON. Thank you, Mr. Chairman. 

I have a question for Mr. Reynolds. Mr. Reynolds, you are the 

Deputy Assistant Secretary for Aviation. You are aware, of course, 

that this hearing is for the purpose of making necessary changes 

in the EAS program as a part of the FAA reauthorization. You may 

also be aware that this Committee, in the strongest bipartisan 

terms in the last FAA reauthorization put in an amendment, it was 

my amendment, that required that the necessary regulations be 

passed to open small charter service general aviation at Reagan 

National Airport, after waiting some time, certainly more than a 

year and I think even more than that. The Committee got angry, 

frankly. The whole notion of ignoring a committee, when in fact 

there is a statutory provision, seemed particularly insulting to the 

entire Committee. 

I mentioned in my opening statement that the Chairman threatened to hold the responsible parties in contempt. Thereafter, there 

came forward a set of regulations that cast real doubt upon the 

ability of the Department to protect the American people. And I say 

this, not only as a member of this Committee, but as a member of 

the Homeland Security Committee, on which I have served since it 

was formed. 

These regulations required a private security guard who was in 

essence the functional equivalent of an air marshal, carrying a gun. 

Someone who had to be hired to carry a gun on a plane, a small 

plane. It required that these small planes, this general aviation be 

screened twice in some cases. First, at the place of origin and them 

come down to a gateway and be screened again. 

These are but the two most flagrant and quite frankly, astonishing requirements. First, I have to ask you, if these requirements 

have been altered at all after now, what is it, five years, has the 

Department learned enough so that it can protect us in the ordinary course of business without such draconian measures? 

Mr. REYNOLDS. I believe the regulations you are referring to, if 

they were promulgated by the Federal Aviation Administration, it 

was probably done in close cooperation with the Department of 

Homeland Security and the Transportation Security Administration. 

Ms. NORTON. It was done in cooperation with GSA, who I must 

tell you, had come forward earlier with some regulations. So they 

had the regulations, but had refused to publish them. But this occurred in the FAA reauthorization. 

21

Mr. REYNOLDS. You will have to forgive me, unfortunately I am 

not intimately familiar with this particular rulemaking, as it was 

in the Federal Aviation Administration. I am certainly aware of it. 

So I can’t speak to what changes may have been made more recently with regard to it or what lessons may have been learned. 

My office tends to focus on the economic regulatory issues associated with the airline industry, rather than the FAA, the operational issues that are the purview of the FAA within the Department of Transportation. I would be happy to try and provide a 

written response on behalf of the Department after I contact the 

Federal Aviation Administration on your question, however. 

Ms. NORTON. I very much appreciate that, Mr. Reynolds. May I 

ask that within 30 days we get a written response, addressed to 

the Chairman and the Ranking Member, concerning the status, 

whether there have been any changes? 

Secondly, how many planes, how much general aviation has 

flown into Reagan National since these regulations were passed, 

and any comments from the public that may be in the position of 

the agency. You heard the Chairman say that we intend to hold a 

hearing. To the extent that we can show that the agency has done 

anything except sit on this as your final answer, to protecting the 

Nation’s capital when planes come in, we would be very pleased to 

know it. 

I must say, I represent the District of Columbia. I have no reason 

to want anything but the most stringent kind of protection for the 

city where I was born, where my father was born, my grandfather 

was born, where my great-grandfather was born. My affection for 

this city knows no end. 

Then I have great responsibility. So it is not likely that I would 

say that I believe, both as a member of this Committee and as a 

member of the Homeland Security Committee that the United 

States of America can do better than that. So I would appreciate 

within 30 days a letter addressed to the Chairman, perhaps a copy 

to me, and of course to the Ranking Member. 

Mr. REYNOLDS. I would be happy to provide that for you. 

Mr. COSTELLO. The Chair thanks the gentlelady and recognizes 

the distinguished Chairman of the full Committee, Chairman Oberstar. 

Mr. OBERSTAR. Well, Mr. Chairman, I greatly appreciate your 

continuing work on aviation and the partnership with the gentleman from Wisconsin, Mr. Petri, and the continued presence of 

the gentleman from Tennessee, former chair of the Subcommittee. 

It is going to take our combined efforts to move this reauthorization along smartly and effectively and in support for the future of 

aviation. 

But essential to the future of aviation is essential air service. I 

would say without a shadow of a doubt that had essential air service language not prevailed in the 1978 Deregulation Act, deregulation might not have occurred. It certainly would not have occurred 

in the way that it has happened, because there would have been 

way more resistance to the notion of taking the Government out of 

market entry and pricing, and protection of community interests. 

As it was, the Deregulation Act raised a number of concerns and 

has continued to over the years. Every time you get a little disrupVerDate 0ct 09 2002 11:23 Sep 14, 2007 Jkt 000000 PO 00000 Frm 00037 Fmt 6633 Sfmt 6633 P:\DOCS\35916 HTRANS1 PsN: JASON
22

tion, a hiccup of some sort, such as the problem with Northwest 

Airlines in Detroit, the problem with JetBlue more recently and the 

carriers don’t seem to learn from one another how they need to conduct their business, there are repeated calls for re-regulation, get 

the Government back in the business of deciding market entry and 

pricing. 

And our Committee completed a five day review of aviation and 

surface transportation matters with European community authorities, with members of the European Parliament committee on 

transportation, the transport minister of the European Community, 

Jacque Barrot, and authorities in France as well. We made very 

clear that the new Open Skies bilateral that does not include ownership and control, it is a good thing and it is going to stay in 

place. And while there are subsequent negotiations, don’t expect 

the Congress to stand still for foreign ownership of U.S. airlines 

that will result in loss of air service to small communities. That is 

clearly what would happen. We know. We have seen it happen just 

with domestic ownership of U.S. airlines. 

I think the vote, 291 to 137, I pointed out to the Europeans, had 

that occurred in European parliamentary action, the government 

would fall, there would be new elections, the landscape would 

change. That is not the way our system works. But it sure sent a 

message to DOT and to the State Department about the interest 

that members of Congress have in protecting air service to their 

vulnerable communities. Essential air service is a critical part of it. 

We have seen it eroding over the years. 

I sat, I don’t know, somewhere down here in 1978, maybe further 

down. We didn’t have as many members on the Committee then. 

I think there were 40 total, 45 total members on the Committee on 

both sides. But I offered the amendment to hold in air service in 

the aftermath of deregulation until succeeding service could be provided. And secondly, essential air service to provide service to small 

towns with limited options, distant from, there wasn’t hub and 

spoke. No one was even talking about hub and spoke service. But 

I knew there was going to be a concentration, most of us know at 

the time, there was going to be a concentration of air service in a 

deregulated environment. 

I concluded my debate with Mr. Howard, was it Howard, the 

Chair? No, Vince Johnson was in the chair. I said, Mr. Chairman, 

if this amendment doesn’t pass, there are towns in my district that 

are so remote that the only way, without air service, to get there 

is to be born there. And the place was full, a big crowd. I don’t 

know how I got the idea, but there it was, and everyone laughed. 

When the laughter subsided, the Chair put the question and the 

amendment passed. It was one of those fortuitous moments of legislative history. 

But it is not a joke. It is a reality. And in 1996, we took essential 

air service a step further with the funding of EAS through the 

over-flight fees. So you have a guaranteed account, a floor of $50 

million. Over time, that number has been increased through general revenues. But it see-saws back and forth over time. Some Appropriations Committee at one time or another put some standards 

in that didn’t go through our Committee, didn’t go through the auVerDate 0ct 09 2002 11:23 Sep 14, 2007 Jkt 000000 PO 00000 Frm 00038 Fmt 6633 Sfmt 6633 P:\DOCS\35916 HTRANS1 PsN: JASON
23

thorization process. It was simply a product of OMB and the appropriators in the House and the Senate. 

So there has been a good deal of arbitrariness to this process of 

assuring air service to small communities. And however good our 

road system is, however good the rail is and where we have intercity passenger rail, the public’s imagination is stirred by aviation. 

We are determined in the reauthorization to strengthen essential 

air service. 

I am puzzling over a new policy or new promulgation by the DOT 

on the grant application form, ‘‘grant funds will not be authorized 

for EAS-subsidized communities to support either additional flights 

by EAS carriers or changes to those carriers’ existing schedules.’’ 

What is the underlying—there was no explanation for it. It just appeared. What is the explanation for it? 

Mr. REYNOLDS. That was consistent with some of our earlier 

guidance that we provided. We didn’t want the small community 

grants to conflict with what is going on in EAS. For example, if you 

provided service on top of existing EAS service, you would basically 

have Federal dollars competing. So you could ultimately damage—for example, someone could go over the $200 cap because the 

EAS paid for service was being hit to the detriment—it was being 

detrimentally affected by the new Smaller Community service to a 

new hub. So we didn’t want them to be competing. 

We have and do provide—EAS communities can receive Small 

Community grants. We just try and prevent them from coming in 

conflict. We just don’t want the Federal dollars working at odds. 

That is really the point there. 

Mr. OBERSTAR. That is not bad if you have enough money in the 

Small Community Grants program. I think that is due to expire 

and that funding has not been sustained at an acceptable level. 

Some communities have done very imaginative things with those 

Small Community grants. They have bene able to create small commuter service airlines and the business community in various 

towns has been energized to provide service. 

But in this era of bankruptcy of carriers, we are seeing scaledback service by major airlines and their regional carriers, changing 

the character of the regional carrier, changing the way they are 

managed. We are just seeing a diminution of air service to small 

towns. In southern Illinois, Mount Vernon Airport, is a good example. I was there a few years ago with our former colleague. All 

around, we need you to put your creative thinking cap on and work 

with the Committee as we shape legislation to strengthen community service airlines. 

Mr. REYNOLDS. I would be happy to do that, Mr. Chairman. 

Mr. OBERSTAR. And there are circumstances I will cite. There 

was a carrier that was interested, under EAS, in providing service 

from Duluth to Chicago. I cite this as a case study. It happened 

elsewhere around the Country. As part of the service, this carrier 

wanted slots, which are hard to obtain at O’Hare. But I smelled 

something going on, just sort of something in the air. I said, fine, 

but those slots do not attach to the carrier. I negotiated with DOT 

and FAA to provide the service, get the EAS funding. But when 

you leave the service, the slots go back into the pool, they do not 

attach to the bank account of the carrier. 

24

Are there other circumstances around the Country where their 

asset values attach to such EAS operations? 

Mr. REYNOLDS. I believe the only EAS point that is going into a 

controlled airport is Lebanon, New Hampshire, going into 

LaGuardia. Other than that, I don’t believe there are any more 

services presently under EAS that are going into Chicago or DCA, 

for example. JFK, of course, really doesn’t cater to that service as 

much, although that is changing as JetBlue and other carriers 

change the nature of their services at JFK. 

So at the moment, there are actually a few slots that are tagged 

for service to West Virginia that no one wanted to avail themselves 

of. If someone wants to provide service to the communities in question, those slots or slot exemptions would be withdrawn from the 

carrier using them now. Because no one wanted them, we didn’t 

want the capacity going unused. So we let other carriers use them 

in the meantime. 

But there are provisions for slots to be provided for essential air 

service, if that is needed. Of course, EAS is not airport specific as 

much as it is community specific, and a determination could say 

that you shall go to New York, which of course could include 

LaGuardia, JFK or even Newark, as opposed to a specific airport. 

Mr. OBERSTAR. Thank you. Does the Administration have a position on one, dollar amount of support for EAS; two, numbers of 

communities to be served in EAS, either spelled out in legislation 

or in some more general fashion? 

Mr. REYNOLDS. The Administration has proposed $50 million to 

fund EAS. 

Mr. OBERSTAR. That is the bare minimum. That is what we are 

getting out of the over-flight fees. 

Mr. REYNOLDS. That is correct, sir. So that would be about 81 of 

the currently 145 communities. 

Mr. OBERSTAR. That is all that the Administration proposes to 

limit by dollar amount? 

Mr. REYNOLDS. That is correct. Of course, as always, as frequently happens, the Administration makes a proposal regarding 

EAS funding and Congress fully funds the program. That seems to 

happen year after year. The reforms that we are proposing, at a 

fully funded program of about $110 million, would cap the program 

at those that are currently being subsidized, as opposed to adding 

any new communities in the future. 

Mr. OBERSTAR. Dr. Dillingham, do you have a view on that issue 

of whether there is a baseline universe of communities that ought 

to be continued in the EAS program or an expansion thereupon? 

Mr. DILLINGHAM. Mr. Chairman, I think we agree with you that 

many small communities need to be connected to the national airspace system, that that in fact was the Congressional intent at that 

point. We don’t have a set number, but we say that things have 

changed since this original legislation was passed, and including 

the fact that the Government is operating at a deficit at this point. 

So we need to find a way to get the maximum use out of the resources that are available. We don’t have a set number, but certainly it should be part of the system. 

Mr. OBERSTAR. Thank you very much. 

Thank you, Mr. Chairman. I appreciate the extra time. 

25

Mr. COSTELLO. Thank you. 

Mr. PETRI. Mr. Chairman, I would ask unanimous consent that 

a statement by our colleague Howard Coble be included in the 

record. 

Mr. COSTELLO. Without objection. 

Mr. COSTELLO. The Chair thanks Dr. Dillingham and Mr. Reynolds for their testimony. We have another panel that we will hear 

from. 

Mr. Reynolds, before you leave, you made a commitment to Ms. 

Norton to respond to her questions in writing. Also, you made a 

commitment to get a list of those essential air service airports that 

will be eliminated under the Administration’s proposal. You indicated that the list is available now, so I would ask that you fax 

that tomorrow, and we will give you a fax number to fax it to, either yet today or tomorrow and then respond to Ms. Norton’s inquiries as well. 

The Chair thanks Dr. Dillingham and Mr. Reynolds, and would 

ask the second panel to come forward, please. 

While the second panel is coming forward, let me mention to 

members and to those who are in the room, we are scheduled to 

go back in the full House at 3:30. We will immediately have five 

recorded votes. So we will get to our witnesses, get as much of the 

testimony as we can. But if need be, we will come back immediately after the last vote. So there are five scheduled votes, after 

the last vote we will come back. 

Let me introduce our witnesses and call on a couple of our colleagues here to introduce witnesses as well. Faye Malarkey is the 

Vice President, Legislative Affairs, Regional Airline Association. 

Bill Hansell is the immediate past President of the National Association of Counties. Mark Courtney, the Airport Director for the 

Lynchburg Regional Airport in Lynchburg, Virginia. 

At this time, the Chair would call on our colleague, Mr. Braley, 

to introduce his witness that his on the panel. 

Mr. BRALEY. Thank you, Mr. Chairman. I would like to introduce 

Bob Grierson, who is the Airport Manager for the Dubuque Regional Airport. I am very pleased that Mr. Grierson has agreed to 

testify because I believe it is important for the Subcommittee to 

hear of the success of the Dubuque Airport. It is also important to 

the City of Dubuque, the Dubuque Chamber of Commerce and the 

Iowa Department of Transportation to have him here representing 

aviation in Iowa. 

So thank you, Mr. Grierson, for joining us, and I am looking forward to your testimony. 

Mr. COSTELLO. The Chair would call on our colleague from North 

Carolina, Mr. Shuler, to introduce Mr. Edwards. 

Mr. SHULER. Thank you, Mr. Chairman. 

On a quick note, after my travels being a freshman to and from, 

I should have actually selected this Committee as a Subcommittee 

because of my travels in airports. I want to thank you for extending the invitation for me to recognize David Edwards, a constituent 

and a great member of our community that we so appreciate. Mr. 

Edwards has 19 years of experience working in airport management, most recently as the Director of Asheville Regional Airport 

in western North Carolina. Prior to his time at Asheville Regional 

26

served at Titusville-Cocoa Airport Authority, Greater Orlando Airport Authority and the Dade County Aviation Department. Mr. Edwards also serves as a board member of the North Carolina Airports Association and President of the Southeast Chapter of American Association of Airport Executives. 

I would like to welcome Mr. Edwards and welcome him to our 

Nation’s capital. 

Mr. COSTELLO. The Chair thanks the gentleman and at this time, 

welcomes our panel and would recognize and ask that each witness 

know that your full statement will be submitted and entered into 

the record. We would ask you to try and summarize your statement 

to five minutes. The Chair recognizes under the five minute rule 

at this time Ms. Malarkey. 

TESTIMONY OF FAYE MALARKEY, VICE PRESIDENT, REGIONAL AFFAIRS, REGIONAL AIRLINE ASSOCIATION; THE 

HONORABLE BILL HANSELL, COMMISSIONER, UMATILLA 

COUNTY, OREGON; DAVID N. EDWARDS, JR., A.A.E., AIRPORT 

DIRECTOR, ASHEVILLE REGIONAL AIRPORT; ROBERT A. 

GRIERSON, A.A.E., AIRPORT MANAGER, DUBUQUE REGIONAL 

AIRPORT; MARK F. COURTNEY, A.A.E., AIRPORT DIRECTOR, 

LYNCHBURG REGIONAL AIRPORT 

Ms. MALARKEY. Chairman Costello, Representative Petri and 

members of the Subcommittee, thank you for this opportunity to 

testify today on this important topic. My name is Faye Malarkey 

and I am Vice President for legislative affairs with the Regional 

Airline Association. 

As you may know, regional airlines link together more than 600 

communities in the United States. At more than 70 percent of 

these communities, regional airlines are the only source of scheduled air service. Nowhere is this service more important than at 

the more than 140 communities across the Country that receive 

service through the EAS program. 

Since 9/11, more than 40 communities have been forced onto the 

EAS rolls and 17 EAS communities have been dropped out of the 

program. As members of the Subcommittee know, EAS was initially created as part of the Airline Deregulation Act of 1978 to ensure communities receiving scheduled air service back then would 

continue to receive it after deregulation. Last year, appropriators in both chambers slated $117 million for 

EAS, but because Congress adjourned before passing a final package, the program continues to receive funding at 2006 levels. Congress also included a provision in the Deficit Reduction Act of 2005, 

appropriating an additional $15 million for EAS in fiscal year 2007 

and 2008. Unfortunately, the revision contained a trigger mechanism permitting the release of funds only if Congress funded the 

program at $110 million. Because Congress simply extended 2006 

funding levels, that level was not met and the additional funding 

has not been released. 

The proposal you heard about this morning from my colleague, 

and also contained in the FAA’s reauthorization package, would severely cut and potentially dismantle the EAS program, telling residents of these communities that convenient, reliable air service is 

a luxury and one they can’t have. Instead, DOT would set up a 

27

tiered system to grant subsidies to communities in descending 

order of distance from hub airports, starting in Alaska, and continuing until the funding runs out, which it is sure to do, long before DOT’s obligation to EAS communities has been fulfilled. 

Of 140 current EAS communities, 85 of them, including 36 in 

Alaska alone, are farther than 210 miles away from a medium or 

large hub airport. Dozens more are farther than 150 miles away 

from the nearest medium or large hub airport. While we have deep 

respect for our colleagues at FAA and DOT, if enacted, this proposal would be very harmful. We urge Congress to reject it. 

One of the greatest factors contributing to small community air 

service loss has been the staggering impact of fuel price increases. 

As part of the competitive EAS application process, carriers negotiate subsidy rates that remain in effect for two years, projecting 

over the same time span for revenues and costs. 

In cases of unexpected cost increases, EAS carriers lack a mechanism to renegotiate rates. Instead, they must file 90 day service 

termination notices in order to seek rates that cover increased 

costs. This fosters a sense of unreliability that undermines community trust in and use of the program. 

This existing mechanism is not acceptable. One of the fundamental tenets of the EAS program states that no carrier should be 

expected to serve any market at a loss. Yet faced with climbing 

costs, carriers are unable to provoke rate changes without filing 

termination notices. Even after these notices are filed, DOT still 

holds carriers in the market at a loss for 180 days while the agency 

undertakes the competitive bidding process all over again. In recent weeks, crude oil has climbed over $60 a barrel. To put 

this in perspective, please consider, EAS contracts have a two year 

life span. A winning carrier who negotiated a competitive contract 

a year ago would have done so based on cost projections of thencurrent fuel rates of $1.80 a gallon. That same carrier would then 

be providing the service with fuel costs at $2 a gallon and climbing. 

Because EAS carriers are strictly limited to 5 percent profit margins, rising fuel costs can turn once-profitable routes into losses 

very quickly. 

Congress addressed the rate adjustment issue already. In Section 

402 of Vision 100, DOT was afforded a rate indexing mechanism 

to make real time adjustments during periods of significantly increased costs. Unfortunately, DOT has been unwilling to implement the program to date, citing a lack of funds. In response, Congress included a provision in the Deficit Reduction Act of 2005, appropriating an additional $15 million to offset costs. 

Unfortunately, the trigger mechanism, detailed earlier in this 

briefing, has not been met, so the funds have yet to be released. 

RAA asks Congress to include language in the expected FAA bill 

to require DOT to make real time rate adjustments and asks that 

Congress reverse the $110 million trigger for release of additional 

funding for fiscal years 2007 and 2008. 

RAA also asks Congress to carefully examine all evidence suggesting that the EAS program is not facing a funding shortfall. The 

demonstrability of funding needs and expenditures relating to the 

program is closely tied to its management. DOT should not be allowed to cut service levels or eliminate points in order to lower exVerDate 0ct 09 2002 11:23 Sep 14, 2007 Jkt 000000 PO 00000 Frm 00043 Fmt 6633 Sfmt 6633 P:\DOCS\35916 HTRANS1 PsN: JASON
28

penditures and retain fund without reinvesting in the program. In 

doing so, DOT trades a funding problem for a service commitment 

problem, one that carriers can do little to reverse. 

In order to fully explore these issues, RAA requests that Congress require an audit on unspent, unobligated funds in the EAS 

coffers. To speak to Congressman DeFazio’s earlier question, with 

respect to the DOT term length, currently with the increasing 

amount of aircraft being sold overseas, there are fewer available 

here in the United States for this type of service. The issue is financing. 

Unfortunately, the airlines’ ability to commit aircraft in a diminishing market has likewise grown more difficult. Aircraft financing 

models are not well suited to two year time commitments. By upgrading EAS contract terms to four or five year service commitments, existing carriers would be better able to review current contracts, and a significant barrier to market entry would be removed. 

A recent press release from the FAA characterized our belief that 

the FAA’s proposal would jeopardize service to small communities 

is a myth. I assure you, the FAA user fee scenario, if enacted as 

is, would certainly and undeniably increase regional airline costs 

and would certainly and undeniably reduce service to smaller communities. 

The FAA’s proposals could also directly affect the EAS program 

by blocking service to congested airports. Carriers simply cannot 

amortize the costs of increased fees over this type of aircraft that 

is typically deployed along EAS routes. 

Mr. COSTELLO. Ms. Malarkey, we will put the rest of your statement in the record and we appreciate your testimony. 

Ms. MALARKEY. Thank you. 

Mr. COSTELLO. The Chair now recognizes Mr. Hansell. 

Mr. HANSELL. Good afternoon, Chairman Costello, Ranking 

Member Petri and members of the Subcommittee on Aviation. My 

name is Bill Hansell, and I am a county commissioner from 

Umatilla County, Oregon. I am here representing the National Association of Counties, NACO, where I serve as immediate past 

president. I want to thank you for the invitation to testify on essential air service. 

The county seat of Umatilla County is Pendleton, Oregon. Pendleton is the only commercial service airport in northeastern Oregon and has EAS service to Portland. Beginning in 2001, 

enplanements on our non-subsidized service provided by our only 

air carrier, Horizon Airlines, dropped dramatically. This was because of 9/11, which caused Horizon to change the flight schedule. 

In 2004, Horizon made the decision to end non-subsidized service. Subsequently, Horizon was selected as the EAS provider. While 

we retain three flights per day, we did not get back our return 

flight from Portland in the late evening that had been earlier 

dropped. A later flight would require an overnight stay in Pendleton and a new crew adding, according to Horizon, $250,000 to 

the cost of their service. 

This means that flying to Portland for the day to do business is 

no longer very practical. Prior to 9/11, Portland was the final destination for many of our passengers. Since then, our data shows 

29

that many of the remaining passengers are simply flying through 

Portland on their way to other destinations. 

There is nothing intrinsically wrong about that, except that our 

area citizens have lost the convenient, business-friendly service, 

and we continue to experience a 50 percent downturn from the pre9/11 levels. Our airport and economic development staff are quite 

confident that Pendleton could return to the 15,000 passengers per 

year if we added a fair and reasonable amount to Horizon’s contract, and we would soon be down the road of leaving the EAS program altogether. 

EAS service is important to our region mainly because of economic development. My county is the number one food producing 

county in Oregon. EAS has allowed Umatilla County to continue to 

be the regional center of northeastern Oregon. For any company 

looking to relocate or expand our community, one of the first questions we are asked is, how far are you from a commercial airport. 

Because of EAS, we have had some success in attracting and retaining industry to our region. 

Let me comment briefly on the Administration’s proposal for EAS program. First and foremost, it would provide only $50 million in 

funding, limiting the program to 70 communities. Cutting 74 communities from the program is a bad idea. Pendleton, Mr. Chairman, would lose its service, as would Williamson County Regional 

Airport in your district, and the Chisholm Hibbing Airport in 

Chairman Oberstar’s district. 

NACO has a number of suggestions for improving the essential 

air service program. Number one, there needs to be more funding. 

It is certainly fair to say that the cost of fuel, equipment and operations of air service has increased. We also need more funds so we 

can subsidize better service. Like any other product or service, EAS 

has to be attractive to the customer. 

Secondly, we believe that the 10 percent match requirement currently in law but never implemented should be eliminated. Many 

of the smaller rural communities that would be required to provide 

a local match are not able to find the tens of thousands of dollars 

the match would require. 

Thirdly, we also ask this Subcommittee to help identify a guaranteed source of revenue for the EAS program. The Airport Improvement Program has it, the highway program, the transportation program, transit program both have it. A dependable source 

that assures communities and air carriers that the program will be 

fully funded would make EAS a stronger program. 

Fourthly, the $200 subsidy cap should be increased and indexed. 

It has been in place since 1989 and while we are not opposed to 

the concept of a cap, one that hasn’t been changed for 18 years 

needs adjustments. 

Fifth, there needs to be more marketing of EAS service to the 

community. Marketing funding should be provided directly through 

the EAS program, and some thought should be given to requiring 

airlines who are bidding on EAS service to include a funded marketing plan in their proposal. 

One final suggestion to improve EAS service is that we need to 

study approaches to encourage more airlines to bid on providing 

EAS service. More competition may result in better service. 

30

As I conclude, let me also indicate NACO’s support for the Small 

Community Air Service program. This program needs to be funded 

at a level that comes close to meeting the demand. This includes 

my testimony. I would be happy to answer any questions the Subcommittee members might have. 

Mr. Chairman, if I also may bear upon your good graces, in order 

for me to get back to rural Eastern Oregon and my EAS airport, 

I have to fly out of Reagan National today at 5:20. So if I may at 

the appropriate time be excused to catch that airplane, I would 

greatly appreciate it. 

Mr. COSTELLO. We would not want you to miss your plane, so 

please, whenever you need to leave, please do so, and we thank you 

for your testimony. 

Mr. HANSELL. Thank you, sir. 

Mr. COSTELLO. Mr. Edwards, you are recognized at this time. 

Again, as you hear the bells going off, we are on a countdown. We 

have about 12 or 13 minutes left. 

Mr. EDWARDS. Chairman Costello, Ranking Member Petri, members and staff of the House Subcommittee on Aviation, thank you 

for allowing me the opportunity to participate in this important 

hearing. 

My name is David Edwards, and I presently serve as the Airport 

Director for the Asheville Regional Airport, located in the pristine 

Blue Ridge Mountains of western North Carolina. I also serve as 

the Chairman of the Small Airports Committee for Airports Council 

International North America. ACINA members enplane more than 

95 percent of the domestic and virtually all of the international and 

cargo traffic in North America. Nearly 400 aviation related businesses are also members of ACINA. 

As you know, this is a critical year for aviation in the United 

States. The expiration of the FAA’s programs, taxes and fees provides a historic opportunity to make the needed changes to enhance 

and strengthen our national air transportation system. 

At the beginning of this year, there were 656 U.S. airports with 

scheduled airline service. More than two-thirds of these airports 

are only served by regional airlines and are generally considered 

small airports. These airports are vital for economic growth nationally and essential for the survival of many smaller communities. 

Unfortunately, the environment in which small airports operate 

continues to remain fierce, high airfares, lack of airline competition, decreasing passenger traffic and leakage to bigger airports are 

just a few of the issues facing smaller airports today. Since its creation, the Small Community Air Service Development program has 

helped smaller communities like Asheville secure enhancements 

that are responsive to communities’ air transportation needs. The 

program should be preserved, not eliminated, and funded at $50 

million annually. 

In 2002, the Asheville Regional Airport received a Small Community Air Service grant in the amount of $500,000. This grant and 

related matching funds were utilized to support new air service by 

Continental Airlines to Houston. I am pleased to inform you that 

the flight continues to successfully operate today, four years from 

its original inception date. 

31

In addition, this grant was instrumental in preserving Continental’s existing Newark service. That service commenced just months 

prior to the terrorist attacks of September 11th and successfully 

continues today. 

Thanks in large part to this grant, during the two years following the inauguration of Houston’s service, Asheville saw explosive growth with 20 percent increases in passenger traffic for both 

2004 and 2005. The airport also attracted Northwest Airlines to 

begin service to Detroit and Minneapolis-St. Paul, as well as Delta 

beginning non-stop service to Orlando. 

Prior to receiving this grant, Asheville was served by two commercial caries with non-stop service to four primary hubs. Today 

the airport has more than doubled those statistics with non-stop 

service to nine cities. The Asheville Regional Airport strongly believes that the original grant provided the impetus for the success 

over the last five years in the airport’s ability to bring new price 

and service competition to western North Carolina. 

Given the proven benefits of the program, the airport community 

was very disappointed that the Administration did not include any 

mention of the program in its proposed reauthorization legislation. 

We agree there are ways to improve the program and hope the 

Subcommittee will incorporate our following suggestions in the program itself in the new FAA reauthorization legislation. 

First, the current program precludes communities that have previously received a grant under the program from seeking another 

grant to support the same or a similar type project. While this rule 

attempts to maintain a form of accountability, small airports that 

have been successful with previous grants should be allowed to expand on those same successful type projects. 

Secondly, airports are barred from using airport revenues for direct air carrier subsidy, which is a permitted use of a Small Community Air Service Development grant funds, allowing airports 

that are eligible for grants under the program to use airport revenues or provide direct air carrier subsidies for a maximum of one 

year would give many small airports the additional flexibility needed to attract, maintain and expand upon the air service needs of 

their community. 

Additionally, the restrictions pertaining the number of applications per State should be eliminated from the program, as several 

States have more than a dozen airports receiving schedule service. 

If an applicant has a sound application, it should stand on its own 

merit and not be limited by the four per State restriction. 

Finally, we do not believe that the current program structure for 

the level of local contribution is appropriate. Small hub airports 

typically have greater access to capital and revenue versus non-hub 

airports. Therefore a sliding scale match contribution should be included within the program. 

Turning to the essential air service program, I urge the members 

of the Subcommittee on Aviation to extend EAS during the reauthorization process and provide $110 million annually for meeting 

the demands and costs of the program. The Government has made 

a commitment to those airports and airlines and the program 

should be funded at least at the current level. The commercial air 

32

transportation system is a system which warrants the support of 

air service to communities of all sizes. 

In addition to both programs previously mentioned, the Airport 

Improvement Program and passenger facility charge remain vitally 

important for the implementation of capital programs at small airports. As such, Congress must approve at lest $3.8 billion in 2008, 

$4 billion in 2009, $4.1 billion in 2010 and the PFCs should be 

raised to only 750 and fully indexed for construction cost inflation. 

In closing, I thank you for the privilege of sharing my experiences and thoughts. I look forward to answering your questions. 

Mr. COSTELLO. We thank you, Mr. Edwards. Mr. Grierson? 

Mr. GRIERSON. Good afternoon, Chairman Costello, Ranking 

Member Petri and members of the House Transportation and Infrastructure Subcommittee. Most particularly, thank you, Representative Braley, for inviting me to come before you today. 

My name is Robert Grierson. I am the Airport Manager for the 

Dubuque Regional Airport and for the City of Dubuque. The Dubuque Regional Airport is a non-hub commercial service airport, located on the eastern Iowa border adjacent to the Wisconsin and Illinois borders, and provides air service and connectivity to the triState region. We are situated 180 miles due west of Chicago’s 

O’Hare International Airport, and we are presently served by one 

airline with eight daily arrivals and departures to and from 

O’Hare. 

In calendar year 2006, Dubuque had 47,000 passenger 

enplanements which reflects a 16.5 percent growth over the previous year. To give you some historical perspective, in calendar 

year 2000, Dubuque generated in excess of 58,000 enplanements, 

boasted three air carriers with service to two major hubs, with 26 

daily arrivals and departures. By 2003, Dubuque was down to one 

carrier and could only generate 38,600 enplanements on six daily 

departures and arrivals. Our community could easily generate 

200,000 passengers. We determined that through a number of ticket studies. 

But we have lost 49 percent of the seats at our airport. We just 

didn’t have the capacity any longer. 

Thanks to the $610,000 grant that the U.S. Department of 

Transportation awarded Dubuque in 2003, we were able to reverse 

that trend. We had two primary goals as part of that grant. Goal 

number one was marketing. And it was simply to focus the awareness of the service being provided by American to the community 

and also to inform the community of the availability of an air carrier at the airport. So it was kind of a two-pronged approach within 

marketing itself. 

To do this, we took $240,000 from the $610,000 grant and began 

working with the chamber of commerce, convention and visitors bureau and local businesses. We received in-kind contributions that 

assisted us to bring it up into billboard marketing, television, radio 

ads, newspaper ads. We continued that for a two-year program. 

From the $240,000, we brought it up to $354,000 worth of value. 

Goal number two required expanding existing services through 

frequency and/or hub access. As I mentioned before, we are only 

dealing with O’Hare at this time. We would like to see an additional hub, but working with American, we sat down with the m 

33

and said, gentlemen, what do we have to do, recognizing that 

American was an inch away from bankruptcy at that time, we said, 

what do we need to do to share the risk of this venture. And they 

said, cover the cost of our fuel. It was a new concept. Nothing I had 

ever dealt with before. And this was handled by my predecessor, 

I do want to point that out. 

So $333,000 were put together in remaining funds and also contributions from the travel bank, which was put together through 

our community. We had a fairly large pot of funds then to cover 

the costs of the fuel for the fourth flight to and from Chicago 

O’Hare. At this time, there is also a transition over to regional jets. 

Today, two years later, we still have this flight in place. We no 

longer have a fuel arrangement. We have over 70 percent load factors on this flight and our numbers are now up to 47,000. I consider Dubuque and this program to be a success story. We wouldn’t 

have this service if it wasn’t for that additional flight and for this 

program. And for that we thank you. 

Now, positive attributes of the program, it is critical for the small 

and non-hub airports to increase service by use of marketing funds. 

These funds are provided to us that give us that impetus and that 

support we need to go forward with this sort of project. 

The negative aspect is working with DOT. They keep recognizing 

this is a pilot program and treat it as a lab experiment. Communities need to have the flexibility to use the program for air service 

development and develop initiatives that fit each situation. As it 

stands, you can’t get a second grant for your plan if it is the same 

or a follow-up to an existing method. In other words, if you market 

to one carrier, you can’t go marketing to another, even if it is to 

a different carrier. That is one of our problems. 

What I believe they need to do is rewrite the guidelines and 

award grants based on need, quality of the plan and community 

participation. While I have six recommendations, they are included 

in my submission, but quickly put, reauthorize the Small Community Air Service program. Do not restrict marketing to only one 

grant. We may seek multiple grants and solicit multiple carriers. 

Reduce the local match portion, I think to be consistent with AIP 

match requirements, but I have to admit, Mr. Edwards brings up 

a very salient point of having a sliding scale. 

I believe in fully funding the program. Allow some flexibly following the award of funds. The aviation industry changes so dramatically and rapidly, you need to have some flexibility to address 

the change in the market. 

Lastly, and this was brought up by your panel itself, we would 

like to get DOT to analyze how the program was working. With 

that, I am free to take any of your questions. 

Mr. COSTELLO. The Chair thanks the gentleman. 

The Subcommittee will stand in recess. We would ask the witnesses to return and we expect in 30 minutes, we would hope that 

you would be back here by 4:30. As soon as we can get back, we 

will hear Mr. Courtney’s testimony and go into questions. 

The Subcommittee stands in recess. 

[Recess.] 

Mr. COSTELLO. The Subcommittee will come to order. 

34

At this time, the Chair recognizes Mr. Courtney under the five 

minute rule. 

Mr. COURTNEY. Thank you very much, Chairman Costello. 

My name is Mark Courtney. I am the Airport Director of Lynchburg Regional Airport. My testimony this afternoon will focus on 

the results and success of our first grant under the Small Community Air Service program back in 2002. 

First of all, Lynchburg Regional Airport is a non-hub airport. We 

are also the primary commercial service airport serving central Virginia, with a population of just over 200,000. To give you an example, out of around 425 commercial service airports in the Country, 

we rank about 247 in terms of passengers. At the same time, we 

also consistently tend to rank about in the top 20 in terms of the 

highest airfares in the Country. 

We applied for our first grant under the program in April of 2002 

specifically to address problems and concerns that we had as a result of Lynchburg being so hard hit after service reductions after 

September 11th. Prior to September 11th, we had a total of three 

airlines, United, U.S. Airways and Delta. Prior to September 11th, 

we had a total of 19 daily departures. That plummeted down to a 

total of just 12 as a result of both service reductions by U.S. Airways as well as the complete elimination of all service by United 

Express. The result, of course, was that our daily departure seats, 

our capacity also plummeted, reaching a low of 305 daily departure 

seats by January of 2002. 

Our traffic, of course, had an impact as well. We saw our traffic 

go down by as much as 40 percent and we bottomed out actually 

in 2003 at less than 100,000 passengers per year. 

We also saw a tremendous increase in the number of our own 

local passengers using other airports. At the time, in September 

2002, when we first went under grant, we were just handling a 

total of just four passengers out of ten in our service area, so just 

41 percent we were capturing from our own service area, with the 

largest loss to Raleigh-Durham and Roanoke. Historically, we have 

been able to capture around 65 percent and 60 percent of our passengers. So that was a tremendous decline and loss of passengers. 

A 2002 program, the proposal revolved around an upgrade in 

service to regional jets, with a minimum of three round trips per 

day. Of course, we wanted to see added seats to address the underserved market needs of the region, as well as an attempt to obtain 

some kind of a fare relief. We targeted the incumbent carriers in 

order to be able to keep our start-up costs as low as possible, and 

had the revenue guarantee go more towards their bottom line. We 

incorporated that public-private partnership with our local chamber of commerce, through formation of the air service development 

partnership. 

We have relied upon a revenue guarantee methodology, we established through negotiation a revenue amount. And then we made 

up the difference. We have looked at it as one year in duration to 

be able to keep with the program to have quick results, and have 

proposed a $500,000 grant with a $100,000 local match. With the 

$500,000 earmarks in revenue guarantee and $100,000 for marketing and promotion, and that was the local portion. 

35

We are one of 40 communities that were originally selected by 

DOT in June of 2002. We were awarded a grant in September of 

2002. Then we went and made proposals to both U.S. Airways and 

Delta. Delta was the first to respond. We entered into an agreement with them in April of 2003. They announced the service actually, though, in March of 2003 and started up the new service in 

May of 2003, with three CRJ regional jet flights a day to Atlanta. 

In terms of our passenger traffic results, we saw an immediate 

increase in the total number of passengers. However, we did not 

see such a related increase in terms of the load factor, the percentage of seats filled. So what we went to Delta with was the idea of 

having a sister city program in terms of pricing. We recognized 

that because of fare disparities with the nearby Roanoke Regional 

Airport, which is about an hour away, we were seeing discontinued 

leakage to Roanoke. We convinced Delta to offer comparable fares 

with Roanoke. They reluctantly agreed, but they did. Shortly thereafter we saw a jump in our load factors. Then by the fall, we were 

seeing load factors in the 70 percent range, which is excellent by 

any standards. 

At the same time, we saw the market share increase. We had a 

better balance of service and more competitive forces at work. 

Finally, you see in the middle there, we had a decrease in our 

fares with the sister city program. That of course stimulated additional passenger traffic. Then even toward the end of the program, 

even though fares started to go up, and again, these went up with 

Roanoke, they were co-rated, our passenger traffic held up relatively strongly, resulting in higher revenues and higher profit for 

the airline. So this is kind of the bottom line that we saw, and that 

we were below the target at the beginning of the program, we saw 

a return or comparable fares with Roanoke, we saw further stimulation because of fare competition, and then we saw revenues in excess of what had been targeted. 

The keys to success for us, we started with a tremendously 

under-served market and we typically have been able to support 

500 daily seats. We were down to 300. We started with a high yield 

revenue base which in essence was a high percentage of business 

travelers, which is very attractive to the airlines. We upgraded to 

jet service, which of course is very attractive to passengers and to 

air travelers. We lowered the air fares and obtained fare parity 

with Roanoke as a result of the sister city program, and then of 

course the local autonomy began to improve. 

Since then, we saw traffic increase. It leveled off in 2006. Service 

levels and quality have remained relatively stable. However, fares 

have risen significantly. Local market demand is increased, but 

without additional capacity, we have seen fares go up substantially. 

Therefore, leakage has worsened, although revenues remain strong. 

We continue to be under-served and we are struggling to maintain 

what we have, even though we have much more potential. 

As a result, we now have a new grant under the 2006 Small 

Community Air Service Development program, and that was 

awarded in September. We are trying to attract a third carrier, 

specifically United Express, back to Dulles. It has been a big challenge for us, but we are hopeful that we will eventually be successful with that. 

36

With that, I would conclude my remarks. Thank you. 

Mr. COSTELLO. We thank you, Mr. Courtney. 

Let me ask you, in the private-public partnership, can you tell 

us what the chamber of commerce did for you? 

Mr. COURTNEY. We have had a partnership with the chamber 

even pre-dating the actual grant program. But because we have a 

strong business community, we partnered with the chamber 

through their, by creation of an air service development partnership, that had as its members the largest users, business users, of 

the airport. What they did specifically for our grant was number 

one, they provided the local match. They individually provided 

matching funds to be able to make the grant possible. 

Mr. COSTELLO. The chamber put up the local match? 

Mr. COURTNEY. The businesses that made up the community, our 

partnership. 

Mr. COSTELLO. They came up with the local share? 

Mr. COURTNEY. That is correct. 

Mr. COSTELLO. Okay. As far as a marketing program, other than 

the chamber going to the business community promoting this and 

the businesses putting up the local match, was there an advertising 

campaign? 

Mr. COURTNEY. We instituted a multi-media advertising program 

that focused on TV, radio, print and billboard. We had a strong 

focus on of course, visually, with the improved service being jet 

service. Then once we had the fare parity, we were able to promote 

new lower fares. That was a key to getting the attention of our 

local air travel market. 

Mr. COSTELLO. How was that funded? 

Mr. COURTNEY. That was funded through the $100,000. But at 

the same time, we were able to augment that through a State 

grant program that the airport has available, so that we could 

maximize the amount of funds that were available when the opportunity was present. 

Mr. COSTELLO. Very good. Ms. Malarkey, let me ask you, you 

state in your testimony that the DOT EAS restructuring proposal 

would severely cut or even eliminate the program altogether. I 

want you to elaborate on that if you will. 

Ms. MALARKEY. As you know, for the past couple of years, we 

have seen the EAS program targeted for cuts by the Administration. It has been done in a variety of ways. It is either the community cost share match, which is, I don’t think is still off the table, 

which would require communities to provide a portion of money 

that they may not have. We are talking about communities that 

are struggling to pay for essential services, trying to pay a significant amount of air service. 

Also, the current proposal that is in the FAA reauthorization 

would set up this tiered system. So you start with Alaska and you 

go from there in the descending order of a nearby hub, you fund 

those communities until it runs out. 

But the exigencies of this plan, first of all, you can’t meaningfully 

fund this program at $50 million a year. Currently it is at $109 

million, and that may or may not be enough this year. So we are 

talking in this Committee about halving it, you are more than 

halving it, you are cutting it by $59 million. 

37

Secondly, there is no safety net for the new communities that 

come on. We think that essentially Congress made a promise to 

EAS communities during deregulation that they wouldn’t lose their 

scheduled air service. We think that this forces Congress to go back 

on that promise and leave those new communities that are losing 

air service high and dry. 

Also, it puts a cap on changing the routes and the frequency 

along routes of existing carriers. We have seen evidence, carriers 

have told me that any time you increase the frequency on a route, 

you increase the community’s perception of reliability and you can 

increase ridership. That can bring the fares down. There were a 

couple of situations that I could provide to you where that actually 

led to some, now, of course, other factors weighed in. But there 

were some routes that became viable under those circumstances. 

Mr. COSTELLO. Thank you. The Chair recognizes the Ranking 

Member, Mr. Petri. 

Mr. PETRI. Thank you very much. I really just have one question 

for maybe each of you to address. That is, what would you think 

would be the single most important thing that we could do to help 

small regional airports in this reauthorization bill? 

Ms. MALARKEY. I will take that first if I may. 

The single most important thing that we need as carriers is to 

know that that service and the promise that we have made, the 

equipment commitments we have made, is going to continue. So we 

want full funding and consistent and stable funding for those programs. We don’t want to feel that it would be subject to these cuts 

that get introduced and then rejected year in and year out. 

Secondly, we want the funding of that Section 402. This becomes more and more important, as I mentioned, with fuel costs at $60 

a barrel and climbing. The Federal Reserve Chairman said that he 

would not be shocked to see them at $3 a gallon by this year. So 

with that in mind, not having an ability to make real-time rate adjustments is really a significant hindrance for carriers that are operating the service. 

Mr. EDWARDS. Mr. Petri, I don’t know that there is just one solution here. I think it is a combination of options, which include the 

EAS program as we discussed and having it fully funded, a fully 

funded Small Community Air Service Development program, a 

fully and well funded AIP program and an increase in the PFC. I 

think if small airports are going to continue to be able to serve 

their communities, we need all of these programs to assist us to be 

successful. 

Mr. GRIERSON. I really have to echo those same comments. Probably the single most important thing from my perspective, since we 

are not an EAS airport, I would say, support the Small Community 

Air Service program. But beyond that scope, you really have to look 

at the overall AIP system, how it is structured, how it is allocated, 

why are large airports getting such a disproportionate share of AIP 

funding, when all the smaller airports traditionally have had to 

scramble for everything they can get. 

Keeping the 95-5 split has been very helpful for these smaller 

airports to be able to come up with that local match. Back when 

it was a 25-75 split, a lot of that money just was left untaken. So 

to me, having an affordable, implementable funding mechanism, 

38

NAIP, I think is probably the single most crucial thing that we 

could have. 

Mr. COURTNEY. For me, one of the things that we have noticed 

in terms of the Small Community Air Service Development Program is of course the fact that there is insufficient funding. But 

there is so much competition under that program, because it is so 

broad. Clearly, there are some essential air service airports that 

may or may not be well suited for this type of program. 

Some of the larger airports, certainly small hubs, have the 

wherewithal, the financial wherewithal to be able to implement 

and come up with the funding and resources to be able to fund 

these kinds of things themselves. There is kind of a range of nonhub airports that have viable markets like ours, however, they cannot get the attention of the airlines and need increasing grant 

funds to be able to get us over the hump when it comes to getting 

the initial service back, because we have a record of success of 

keeping the service and supporting the service once we have it. 

So I have indicated that I think it needs to be a little tighter. 

Mr. COSTELLO. Thank you. The Chair recognizes Mr. Braley. 

Mr. BRALEY. Thank you. 

Mr. Grierson, can you talk a little bit about the links that you 

see between increased access to air service, such as that afforded 

through the Small Community Air program an the overall economic 

viability of the surrounding community, like Dubuque, Iowa? 

Mr. GRIERSON. Certainly, Mr. Braley. Here is what it really 

comes down to for Dubuque and I am sure many other airports as 

well. If you don’t have a major highway going right through your 

community, you are very limited as to how you can get people to 

your business, how you can get them to your State, to your area. 

Dubuque is right on the Mississippi. We get river traffic, but that 

is only good during the summer. So if you are going to get to Dubuque, you are either going to drive or you are going to fly. 

The reality of it is, we have two-lane roads coming from Chicago 

out to Dubuque. Not very good for transporting goods and materials. We have John Deere as a major manufacturer and employer 

in the community. We also have headquarters of McGraw-Hill as 

well as many other major corporations located in our town. Air 

service is critical. The old saying is, if you can’t get there, you can’t 

do business. And that is really the case for Dubuque. 

Mr. BRALEY. Some people have claimed that the Small Community Air Program is not working as well as expected. But the story 

you shared today of Dubuque is one of successes as a direct results 

of this program. Do you have any thoughts on why some other communities have trouble fully utilizing the program and any advice 

for them? 

Mr. GRIERSON. This is where I think having a report from the 

DOT where they could publish the results of what has worked and 

what hasn’t. Five years ago, it was very common for people to recommend a travel bank. Meetings that I had with American Airlines 

two months ago, they said, we don’t want a travel bank. Some communities have undertaken efforts now to procure ground support 

equipment and to even have airport employees providing ticketing 

and baggage handling services and representing an airline. AmerVerDate 0ct 09 2002 11:23 Sep 14, 2007 Jkt 000000 PO 00000 Frm 00054 Fmt 6633 Sfmt 6633 P:\DOCS\35916 HTRANS1 PsN: JASON
39

ican said they don’t want to have that liability placed on the airport. 

So what is working one day is not necessarily working the other. 

But I would really like to see a report come from the FAA to show 

what has worked. In our case, the fuel purchase really worked. And 

the marketing, I think, is always going to be a constant. 

Mr. BRALEY. You mentioned some recommendations in your testimony for the reauthorization. Can you tells how some of those recommendations are likely to increase the success rate of the Small 

Community Air Program? 

Mr. GRIERSON. Some of the key areas of my six recommendations, number two, don’t restrict marketing to only one grant. We 

may seek multiple grants to solicit multiple carriers. Some airports 

may take several years in negotiating with a single carrier. 

You are penalized for your success. In our case we were able to market with $300,000 of the grant fund. Because we used those 

funds, we can never solicit a grant again for marketing. Well, if you 

are not going to market, how else are you going to bring in a carrier? You are being penalized for your own success in this case. So 

I think removing that restriction, recognizing that I may be going 

after American one day and United the next, and it may take me 

several years to get through a full negotiation process. So I think 

that is critical to allow us the flexibility to go after multiple carries 

over a time line. 

Mr. BRALEY. Thank you. 

Ms. Malarkey, in your testimony you mentioned recent DOT initiatives to solicit ideas on EAS reform. Can you tell us some of the 

ideas that you have heard from your members that would be relevant to making that a greater success? 

Ms. MALARKEY. Yes. Our members, the things that we have outlined here in our testimony, of course, are paramount. One is the 

funding, two is the fuel cost adjustment that I have already detailed. Three is the extension of the DOT rates. We talked a little 

bit today about the difficulty of financing aircraft, more and more 

are being sold overseas. 

So a significant barrier for new entrants and the kind of competition that would enhance the program is the inability to finance 

markets for these short-term periods. So we have asked that DOT 

consider a longer rate structure, four or five years, perhaps. Of 

course, it would be important under this rate structure for that 

Section 402 to be implemented, so the carriers could come in and 

get a cost adjustment. 

Some of the other things that we have looked at are distance criteria and understanding that what is a reasonable distance in the 

east may not be a reasonable distance in mountainous terrain and 

other things like that. They tend to get parochial between the 

members. But those are the main issues that our members are discussing. 

Mr. BRALEY. Thank you, Mr. Chairman. I yield back the balance 

of my time. 

Mr. COSTELLO. I thank the gentleman, and the Chair thanks all 

of our witnesses here today. We appreciate your thoughtful testimony and want you to know, as we move forward to the reauthorization, that we will keep your testimony in mind. 

40

With that, the Subcommittee stands adjourned. Thank you. 

[Whereupon, at 4:55 p.m., the subcommittee was adjourned.]

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