A bill to reauthorize the essential air service program under chapter 471 of title 49, United States Code, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Small Community and Rural Air 
Service Revitalization Act of 2003''.

SEC. 2. REAUTHORIZATION OF ESSENTIAL AIR SERVICE PROGRAM.

    Section 41742(a) of title 49, United States Code, is amended to 
read as follows:
    ``(a) In General.--There are authorized to be appropriated to the 
Secretary of Transportation to carry out the essential air service 
under this subchapter, $113,000,000 for each of fiscal years 2004 
through 2007, $50,000,000 of which for each such year shall be derived 
from amounts received by the Federal Aviation Administration credited 
to the account established under section 45303 of this title or 
otherwise provided to the Administration.''.

SEC. 3. INCENTIVE PROGRAM.

    (a) In General.--Chapter 417 of title 49, United States Code, is 
amended by adding at the end the following:

              ``SUBCHAPTER IV--MARKETING INCENTIVE PROGRAM

        ``Sec. 41781. Purpose.
        ``Sec. 41782. Marketing program.
        ``Sec. 41783. State marketing assistance.
        ``Sec. 41784. Definitions.
        ``Sec. 41785. Authorization of appropriations.
``Sec.  41781. Purposes
    ``The purposes of this subchapter are--
            ``(1) to enable essential air service communities to 
        increase boardings and the level of passenger usage of airport 
        facilities at an eligible place by providing technical, 
        financial, and other marketing assistance to such communities 
        and to States;
            ``(2) to reduce subsidy costs under subchapter II of this 
        chapter as a consequence of such increased usage; and
            ``(3) to provide such communities with opportunities to 
        obtain, retain, and improve transportation services.
``Sec.  41782. Marketing program
    ``(a) In General.--The Secretary of Transportation shall establish 
a marketing incentive program for eligible essential air service 
communities receiving assistance under subchapter II under which the 
airport sponsor in such a community may receive a grant of not more 
than $50,000 to develop and implement a marketing plan to increase 
passenger boardings and the level of passenger usage of its airport 
facilities.
    ``(b) Matching Requirement; Success Bonuses--
            ``(1) In general.--Except as provided in paragraphs (2) and 
        (3), not less than 25 percent of the publicly financed costs 
        associated with the marketing plan shall come from non-Federal 
        sources. For purposes of this paragraph--
                    ``(A) the non-Federal portion of the publicly 
                financed costs may be derived from contributions in 
                kind; and
                    ``(B) State or local matching contributions may not 
                be derived, directly or indirectly, from Federal funds, 
                but the use by a state or local government of proceeds 
                from the sale of bonds to provide the matching 
                contribution is not considered to be a contribution 
                derived directly or indirectly from Federal funds, 
                without regard to the Federal income tax treatment of 
                interest paid on those bonds or the Federal income tax 
                treatment of those bonds.
            ``(2) Bonus for 25-percent increase in usage.--Except as 
        provided in paragraph (3), if, after any 12-month period during 
        which a marketing plan has been in effect, the Secretary 
        determines that the marketing plan has increased average 
        monthly boardings, or the level of passenger usage, at the 
        airport facilities at the eligible place, by 25 percent or 
        more, then only 10 percent of the publicly financed costs 
        associated with the marketing plan shall be required to come 
        from non-Federal sources for the following 12-month period.
            ``(3) Bonus for 50-percent increase in usage.--If, after 
        any 12-month period during which a marketing plan has been in 
        effect, the Secretary determines that the marketing plan has 
        increased average monthly boardings, or the level of passenger 
usage, at the airport facilities at the eligible place, by 50 percent 
or more, then no portion of the publicly financed costs associated with 
the marketing plan shall be required to come from non-Federal sources 
for the following 12-month period.
``Sec.  41783. State marketing assistance
    The Secretary of Transportation may provide up to $50,000 in 
technical assistance to any State within which an eligible essential 
air service community is located for the purpose of assisting the State 
and such communities to develop methods to increase boardings in such 
communities. At least 10 percent of the costs of the activity with 
which the assistance is associated shall come from non-Federal sources, 
including contributions in kind.
``Sec.  41784. Definitions
    ``In this subchapter:
            ``(1) Eligible place.--The term `eligible place' has the 
        meaning given that term in section 41731(a)(1).
            ``(2) Eligible essential air service community.--The term 
        `eligible essential air service community' means an eligible 
        place that--
                    ``(A) submits an application to the Secretary in 
                such form, at such time, and containing such 
                information as the Secretary may require, including a 
                detailed marketing plan, or specifications for the 
                development of such a plan, to increase average 
                boardings, or the level of passenger usage, at its 
                airport facilities; and
                    ``(B) provides assurances, satisfactory to the 
                Secretary, that it is able to meet the non-Federal 
                funding requirements of section 41782(b)(1).
            ``(3) Passenger boardings.--The term `passenger boardings' 
        has the meaning given that term by section 47102(10).
            ``(4) Sponsor.--The term `sponsor' has the meaning given 
        that term in section 47102(19).
``Sec.  41785. Authorization of appropriations
    ``There are authorized to be appropriated to the Secretary of 
Transportation $12,000,000 for each of fiscal years 2004 through 2007, 
not more than $200,000 per year of which may be used for administrative 
costs.''.
    (b) Conforming Amendment.--The chapter analysis for chapter 417 of 
such title is amended by inserting after the item relating to section 
41767 the following:

              ``subchapter iv--marketing incentive program
        ``41781. Purpose.
        ``41782. Marketing program.
        ``41783. State marketing assistance.
        ``41784. Definitions.
        ``41785. Authorization of appropriations.''.

SEC. 4. PILOT PROGRAMS.

    (a) In General.--Subchapter II of chapter 417 of title 49, United 
States Code, is amended by adding at the end the following:
``Sec. 41745. Other pilot programs
    ``(a) In General.--If the entire amount authorized to be 
appropriated to the Secretary of Transportation by section 41785 is 
appropriated for fiscal years 2004 through 2007, the Secretary of 
Transportation shall establish pilot programs that meet the 
requirements of this section for improving service to communities 
receiving essential air service assistance under this subchapter or 
consortia of such communities.
    ``(b) Programs Authorized.--
            ``(1) Community flexibility.--The Secretary shall establish 
        a pilot program for not more than 10 communities or consortia 
        of communities under which the airport sponsor of an airport 
        serving the community or consortium may elect to forego any 
        essential air service assistance under preceding sections of 
        this subchapter for a 10-year period in exchange for a grant 
        from the Secretary equal in value to twice the annual essential 
        air service assistance received for the most recently ended 
        calendar year. Under the program, and notwithstanding any 
        provision of law to the contrary, the Secretary shall make a 
        grant to each participating sponsor for use by the recipient 
        for any project that--
                    ``(A) is eligible for assistance under chapter 471;
                    ``(B) is located on the airport property; or
                    ``(C) will improve airport facilities in a way that 
                would make such facilities more usable for general 
                aviation.
            ``(2) Equipment changes.--
                    ``(A) In General.--The Secretary shall establish a 
                pilot program for not more than 10 communities or 
                consortia of communities under which, upon receiving a 
                petition from the sponsor of the airport serving the 
                community or consortium, the Secretary shall authorize 
                and request the essential air service provider for that 
                community or consortium to use smaller equipment to 
                provide the service and to consider increasing the 
                frequency of service using such smaller equipment. 
                Before granting any such petition, the Secretary shall 
                determine that passenger safety would not be 
                compromised by the use of such smaller equipment.
                    ``(B) Alternative services.--For any 3 aiport 
                sponsors participating in the program established under 
                subparagraph (A), the Secretary may establish a pilot 
                program under which--
                            ``(i) the Secretary provides 100 percent 
                        Federal funding for reasonable levels of 
                        alternative transportation services from the 
                        eligible place to the nearest hub airport or 
                        small hub airport;
                            ``(ii) the Secretary will authorize the 
                        sponsor to use its essential air service 
                        subsidy funds provided under preceding sections 
                        of this subchapter for any airport-related 
                        project that would improve airport facilities; 
                        and
                            ``(iii) the sponsor may make an irrevocable 
                        election to terminate its participation in the 
                        pilot program established under this paragraph 
                        after 1 year.
            ``(3) Cost-sharing.--The Secretary shall establish a pilot 
        program under which the sponsors of airports serving a 
        community or consortium of communities share the cost of 
        providing air transportation service greater than the basic 
        essential air service provided under this subchapter.
            ``(4) EAS local participation program.--
                    ``(A) In general.--The Secretary of Transportation 
                shall establish a pilot program under which designated 
                essential air service communities located in proximity 
                to hub airports are required to assume 10 percent of 
                their essential air service subsidy costs for a 3-year 
                period.
                    ``(B) Designation of communities.--
                            ``(i) In general.--The Secretary may not 
                        designate any community under this paragraph 
                        unless it is located within 100 miles by road 
                        of a hub airport and is not located in a 
                        noncontiguous State. In making the designation, 
                        the Secretary may take into consideration the 
                        total traveltime between a community and the 
                        nearest hub airport, taking into account 
                        terrain, traffic, weather, road conditions, and 
                        other relevant factors.
                            ``(ii) One community per state.--The 
                        Secretary may not designate--
                                    ``(I) more than 1 community per 
                                State under this paragraph; or
                                    ``(II) a community in a State in 
                                which another community that is 
                                eligible to participate in the 
                                essential air service program has 
                                elected not to participate in the 
                                essential air service program.
                    ``(C) Appeal of designation.--A community may 
                appeal its designation under this section. The 
                Secretary may withdraw the designation of a community 
                under this paragraph based on--
                            ``(i) the airport sponsor's ability to pay; 
                        or
                            ``(ii) the relative lack of financial 
                        resources in a community, based on a comparison 
                        of the median income of the community with 
                        other communities in the State.
                    ``(D) Non-federal share.--
                            ``(i) Non-federal amounts.--For purposes of 
                        this section, the non-Federal portion of the 
                        essential air service subsidy may be derived 
                        from contributions in kind, or through 
                        reduction in the amount of the essential air 
                        service subsidy through reduction of air 
                        carrier costs, increased ridership, pre-
                        purchase of tickets, or other means. The 
                        Secretary shall provide assistance to 
                        designated communities in identifying potential 
                        means of reducing the amount of the subsidy 
                        without adversely affecting air transportation 
                        service to the community.
                            ``(ii) Application with other matching 
                        requirements.--This section shall apply to the 
                        Federal share of essential air service provided 
                        this subchapter, after the application of any 
                        other non-Federal share matching requirements 
                        imposed by law.
                    ``(E) Eligibility for other programs not 
                affected.--Nothing in this paragraph affects the 
                eligibility of a community or consortium of 
                communities, an airport sponsor, or any other person to 
                participate in any program authorized by this 
                subchapter. A community designated under this paragraph 
                may participate in any program (including pilot 
                programs) authorized by this subchapter for which it is 
                otherwise eligible--
                            ``(i) without regard to any limitation on 
                        the number of communities that may participate 
                        in that program; and
                            ``(ii) without reducing the number of other 
                        communities that may participate in that 
                        program.
                    ``(F) Secretary to report to congress on impact.--
                The Secretary shall transmit a report to the Senate 
                Committee on Commerce, Science, and Transportation and 
                the House of Representatives Committee on 
                Transportation and Infrastructure on--
                            ``(i) the economic condition of communities 
                        designated under this paragraph before their 
                        designation;
                            ``(ii) the impact of designation under this 
                        paragraph on such communities at the end of 
                        each of the 3 years following their 
                        designation; and
                            ``(iii) the impact of designation on air 
                        traffic patterns affecting air transportation 
                        to and from communities designated under this 
                        paragraph.
    ``(c) Code-sharing.--Under the pilot program established under 
subsection (a), the Secretary is authorized to require air carriers 
providing service to participating communities and major air carriers 
(as defined in section 41716(a)(2)) serving large hub airports (as 
defined in section 41731(a)(3)) to participate in multiple code-share 
arrangements consistent with normal industry practice whenever and 
wherever the Secretary determines that such multiple code-sharing 
arrangements would improve air transportation services. The Secretary 
may not require air carriers to participate in such arrangements under 
this subsection for more than 10 such communities.
    ``(d) Track Service.--The Secretary shall require essential air 
service providers to track changes in service, including on-time 
arrivals and departures.
    ``(e) Administrative Provisions.--In order to participate in a 
pilot program established under this section, the airport sponsor for a 
community or consortium of communities shall submit an application to 
the Secretary in such form, at such time, and containing such 
information as the Secretary may require.''.
    (b) Conforming Amendment.--The chapter analysis for chapter 417 of 
such title is amended by inserting after the item relating to section 
41744 the following:

        ``41745. Other pilot programs''.

SEC. 5. EAS PROGRAM AUTHORITY CHANGES.

    (a) Rate renegotiation.--If the Secretary of Transportation 
determines that essential air service providers are experiencing 
significantly increased costs of providing service under subchapter II 
of chapter 417 of title 49, United States Code, the Secretary of 
Transportation may increase the rates of compensation payable under 
that subchapter within 30 days after the date of enactment of this Act 
without regard to any agreements or requirements relating to the 
renegotiation of contracts. For purposes of this subsection, the term 
``significantly increased costs'' means an average monthly cost 
increase of 10 percent or more.
    (b) Returned Funds.--Notwithstanding any provision of law to the 
contrary, any funds made available under subchapter II of chapter 417 
of title 49, United States Code, that are returned to the Secretary by 
an airport sponsor because of decreased subsidy needs for essential air 
service under that subchapter shall remain available to the Secretary 
and may be used by the Secretary under that subchapter to increase the 
frequency of flights at that airport.
    (c) Small Community Air Service Development Pilot Program.--Section 
41743(h) of such title is amended by striking ``an airport'' and 
inserting ``each airport''.

Summary: Small Community and Rural Air Service Revitalization Act of 2003 - Amends Federal transportation law to reauthorize the essential air service (EAS) program through FY 2007.

Directs the Secretary of Transportation to establish a marketing incentive program for eligible EAS communities receiving assistance under which the airport sponsor in such a community may receive a grant of not more than $50,000 to develop and implement a marketing plan to increase passenger boardings and the level of passenger usage of its airport facilities.

Authorizes the Secretary to provide up to $50,000 in technical assistance to any State within which an eligible EAS community is located to assist them to develop methods to increase passenger boardings.

Directs the Secretary to establish certain pilot programs if the entire amount authorized to be appropriated for EAS pilot programs is appropriated for FY 2004 through 2007.

Specifies among such pilot programs: (1) one for up to ten communities or consortia of communities under which an airport sponsor may elect to forego any EAS assistance for a ten-year period in exchange for a grant equal to twice the annual EAS assistance received for the most recently ended calendar year; and (2) one for up to ten communities or consortia under which, upon receiving the airport sponsor's petition, the Secretary shall authorize and request the EAS provider to use smaller equipment and consider increasing the frequency of service using such equipment.

Requires the Secretary, subject to the same condition, to establish pilot programs under which: (1) airport sponsors share the cost of providing air transportation service greater than basic EAS; and (2) designated EAS communities located in proximity to hub airports are required to assume ten percent of their EAS subsidy costs for a three-year period.

Authorizes the Secretary to increase the rates of compensation payable without regard to any agreements or requirements relating to the renegotiation of contracts, if essential air service providers are experiencing significantly increased costs of providing service (an average monthly cost increase of ten percent or more).