Should taxpayers subsidize airline service to remote communities?

[kallend 2,146]

www.startribune.com/business/127550853.html

...

The only sure way to survive a canopy collision is not to have one.

[rushmc 23]

Quote

www.startribune.com/business/127550853.html

That is a good question

Why dont you tell us what you think?

BTW, a close friend of mine has done very well building a business doing this

He told me 10 years ago if the public knew what this kind of business got from the gov they would not care about farmers anymore

So, what do you think?

"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln

[VTmotoMike08 0]

I think we need more info. I'm guessing that there really isn't that much economic opportunity at these places, otherwise they would build roads or bus stops. Any the empty planes thing is a loophole that absolutely needs to go

[RonD1120 62]

Maintenance of pilot proficiency and aircraft flight worthiness when it is needed.

Look for the shiny things of God revealed by the Holy Spirit. They only last for an instant but it is a Holy Instant. Let your soul absorb them.

[GeorgiaDon 379]

I'm a bit on the fence about this one. Ridership isn't the only measure of the impact of a service on a community, although it's an important one. I'd like to see an analysis of cost vs benefit (primarily in terms of stimulated economic activity) for this and all government subsidies. Perhaps it would make sense to temporarily subsidize such services, so the carrier can have time to build a stable ridership. It seems from the link Kallend provided that the air service subsidy was intended to be temporary (10 years), but it has been extended. If a carrier hasn't been able to build a stable client base in 10 years, maybe there just isn't enough demand in the community to justify the service?

The airport in Athens GA where I live receives a subsidy. I can commute to Hartsfield Airport in Atlanta, but depending on time of day (and so traffic) that involves a 1 1/2 to 2 1/2 hour drive each way. When I get to the airport I then have to park, which is expensive, and besides that it's not uncommon to find most of the lots full, in which case I have to cruise lots to find one with space, and end up parking far from the terminal and having to wait for a shuttle to pick me up. Once in the terminal, it may take an hour to get through security on a busy day. Add it all up, and to be sure of making my flight I need to leave Athens about 4 hours before my flight. In many cases it's actually faster to drive than to go to Atlanta; for me I figure if I can get to a destination in 6 hrs driving time I'll drive rather than fly if I have to drive to Hartsfield to catch the flight. On the other hand, Atlanta residents can catch a government subsidized train (MARTA) that goes right to the terminal, so for them a subsidized service means no time wasting with traffic or parking.

In contrast, if I fly from Athens to Atlanta on a subsidized flight, I can park for free at the local airport, arrive 20 minutes before the departure time and still have time for a coffee before boarding, and bypass Atlanta security as I've dealt with the TSA in Athens. It's a great deal (for me!), but the airline that runs the service hasn't yet built a profitable local base, in part because of occasional problems that make for a late departure, so the service has a reputation for being less that 100% reliable. Well no airline is, but if you need to be across the country by this evening you don't have a choice but to fly one of the major carriers, but for a shorter flight driving is a viable alternative, just costlier and more wasteful of time, and anyway it's more familiar to most people.


Anyway, there is a large helping of hypocrisy in the whole discussion, on the part of the crowd who argues for "cut expenses, don't raise taxes". The Essential Air Service program costs taxpayers $200 million/year according to Kallend's link. On the other hand, the tax subsidy to purchasers of corporate jets amounts to $300 million/year according to this source. It seems to me to be hard to justify eliminating a service that makes efficient transportation available to millions of people who live in rural areas, while fighting tooth and nail to provide a juicy tax write-off for wealthy corporations. If one goes, the other should go too.

Don

_____________________________________
Tolerance is the cost we must pay for our adventure in liberty. (Dworkin, 1996)
“Education is not filling a bucket, but lighting a fire.” (Yeats)

[Rookie120 0]

I have been screaming for this program to get dumped for some time now. I'll give some other cities. Muskegon MI! They dump EAS dollars into that town and people are still driving to Grand Rapids to fly out. They keep claiming that EAS is the only way people can fly. Well Mike Boyd from The Boyd Group (Aviation Consultant) Crunched the numbers and people are still driving. The CASM and RASM and Load Factors in most of these EAS cities are HORRIBLE! No airline could ever survive going there if it wasnt for EAS. I still believe if people want to fly out of BFE city they need to pay for it and not the tax payer!

If you want to read the numbers on a lot of these cities and read some good articles on EAS go here http://www.aviationplanning.com/

He is a no bullshit look at the numbers aviation guy. I like his articles.

If you find yourself in a fair fight, your tactics suck!

[Rookie120 0]

Quote

I'd like to see an analysis of cost vs benefit (primarily in terms of stimulated economic activity) for this and all government subsidies.

Go to my link and he has the numbers you need to figure that out in terms of loads CASM and stuff.http://www.aviationplanning.com/

Quote

Perhaps it would make sense to temporarily subsidize such services, so the carrier can have time to build a stable ridership.

How long do you want to build the base????Some cities have been EAS since day 1 and been sucking tax dollars for years.

Quote

The airport in Athens GA where I live receives a subsidy. I can commute to Hartsfield Airport in Atlanta, but depending on time of day (and so traffic) that involves a 1 1/2 to 2 1/2 hour drive each way. When I get to the airport I then have to park, which is expensive, and besides that it's not uncommon to find most of the lots full, in which case I have to cruise lots to find one with space, and end up parking far from the terminal and having to wait for a shuttle to pick me up. Once in the terminal, it may take an hour to get through security on a busy day. Add it all up, and to be sure of making my flight I need to leave Athens about 4 hours before my flight. In many cases it's actually faster to drive than to go to Atlanta;

SO you want the taxpayers to pay for your convenience? If you want to fly from Athens you need to the airline and not expect the taxpayers to fund your trip.

Quote

Anyway, there is a large helping of hypocrisy in the whole discussion, on the part of the crowd who argues for "cut expenses, don't raise taxes". The Essential Air Service program costs taxpayers $200 million/year according to Kallend's link.

When I said EAS should be cut people tell me :It's only $200 MIL a year" WTF! So since $200 mil is only a drop in the bucket compared to the big debt problem we shouldnt tackle it? Damn it we have to start somewhere and I am sure there are thousands of BS programs like this one that can be cut. You add them up and now we are taling some serious cash and costs cuts.

If you find yourself in a fair fight, your tactics suck!

[Rookie120 0]

Sorry to slam the thread with back to back posts but here is an article from Boyd on the FAA shutdown and EAS.

http://www.aviationplanning.com/HotFlash.htm

If you find yourself in a fair fight, your tactics suck!

[GeorgiaDon 379]

Quote

Go to my link and he has the numbers you need to figure that out in terms of loads CASM and stuff.http://www.aviationplanning.com/

Thanks for the link, but can you offer a suggestion as to how to find relevant articles there without having to pay to subscribe? I didn't see a search button, and clicking on various buttons didn't reveal any that go to such articles.

Quote

How long do you want to build the base????Some cities have been EAS since day 1 and been sucking tax dollars for years.

I don't know, but the original intent of 10 years seems quite generous. Maybe 5 years should be sufficient.

Quote

SO you want the taxpayers to pay for your convenience? If you want to fly from Athens you need to the airline and not expect the taxpayers to fund your trip.

I did say I was "on the fence" about the Athens subsidy. In fact I personally would be happy to give it up, but that's because I rarely use it. Had you read more/raged less, you would have noted that I said I usually drive rather than fly for trips of up to 6 hours driving time. In the past 5 years, that has amounted to 20-25 airline tickets I have NOT purchased, because flying out of Atlanta is such a pain in the ass. The only reason I would take GeorgiaSkies to Hartsfield is to catch a connecting flight, so anything that makes flying even more of a hassle (such as canceling local air service) will affect the big airlines by dissuading me from using their services. This is an example of what I meant by "economic impact".

Quote

When I said EAS should be cut people tell me :It's only $200 MIL a year" WTF! So since $200 mil is only a drop in the bucket compared to the big debt problem we shouldnt tackle it? Damn it we have to start somewhere and I am sure there are thousands of BS programs like this one that can be cut. You add them up and now we are taling some serious cash and costs cuts.

Cut EAS: savings $200 million (less loss of tax revenue due to people flying less, amount not known).
Cut corporate jet subsidy: savings $300 million (less reduced tax revenue from orders not placed, amount unknown)
Cut both: savings $500 million, less lost tax revenue from reduced seats/jets sold

$500 million > $300 million > $200 million. Why didn't you see fit to mention the corporate subsidy?

Don

_____________________________________
Tolerance is the cost we must pay for our adventure in liberty. (Dworkin, 1996)
“Education is not filling a bucket, but lighting a fire.” (Yeats)

[Rookie120 0]

Quote

$500 million > $300 million > $200 million. Why didn't you see fit to mention the corporate subsidy?

Why did you see fit to talk about coroporate jets when the thread is about EAS?

If you find yourself in a fair fight, your tactics suck!

[GeorgiaDon 379]

Quote

Quote

$500 million > $300 million > $200 million. Why didn't you see fit to mention the corporate subsidy?

Why did you see fit to talk about coroporate jets when the thread is about EAS?

Both are subsidies to the air transport industry. One affects access by regular people, the other a perk directed to the wealthiest individuals/corporations (not too many small businesses with their own corporate jets). Curious that you refuse to take a position on the subsidy to corporate jet owners, I wonder if that's because your employment is related to those corporate jets?

This issue is a miniature of the whole budget debate. One side wants to cut services to the public and preserve tax breaks to the politically well connected (= wealthy). The other side says cut from both. I favor the latter approach.

Any comment on the link to the site you posted earlier? I really would like to see the articles you mentioned.

Don

_____________________________________
Tolerance is the cost we must pay for our adventure in liberty. (Dworkin, 1996)
“Education is not filling a bucket, but lighting a fire.” (Yeats)

[Rookie120 0]

Quote

Any comment on the link to the site you posted earlier? I really would like to see the articles you mentioned.

Here is one article. I know his website is hard to navigate. It's not the most user friendly. Every monday he does a new article in the top right corner of the page labeled Hot Flash

If you find yourself in a fair fight, your tactics suck!

[Andy9o8 2]

Quote

Should taxpayers subsidize airline service to remote communities?

Does it contribute (a) more, or (b) less, to the overall greater good of society?

Whichever it is, most people, in any event, tend not to think that way, preferring the complacency of analyzing issues based on whose ox is getting gored.

[diverborg 0]

I would have to say that I have benefited from this in my community, however, I don't see how its really helped our area economically. At least in my area the program is a waste. If it were helping stimulate growth in anyway, then load factors should at least show some sign of growth. They haven't, and I can't tell you how many times I've had a Saab all to myself and at most 3 others.

There's no way an airline would keep that route if they weren't being subsidized, and if the majority of the people make the hour to 2 hour drive to bigger airports, then so can the other 4 passengers.

[GeorgiaDon 379]

Sorry, I don't see a link or get what you mean by "here". Are you referring to your original link? If so I'll go back and try again to find the article.

And just to be clear about the subsidy issue, I do think it's an example of the type of program that should go, under the present financial circumstances, except perhaps for those communities that are so remote that access to major airports is essentially non-existent. Two hours to get to the airport isn't an insurmountable barrier. There are communities that are so remote that in some cases road access to "major" cities doesn't even exist (some Alaskan communities for example). Without air access there would be no way, except perhaps by very long passage by boat, to get people or goods to and from those communities.

I just think what's good for the goose is good for the gander, and the corporate subsidy should be cut too.

In general I think there are two sets of conditions that could govern whether or not any subsidy is maintained, either 1) the subsidy drives economic development that results in a net "profit" in terms of returns to the taxpayer (such as tax revenue that is greater than the subsidy), or 2) it relates to an essential public service that otherwise will never be feasible for private enterprise to provide given the small population base or distances involved (such as air ambulance for remote communities). Lots of things get subsidized for small and remote communities, such as roads (cost to build and maintain in relation to cars/mile/day is very high compared to big cities), schools (fewer students/class compared to big cities), police, etc. Not providing those basic services would make it all but impossible to live far from big population centers, essentially forcing more and more people into cities and further depopulating rural areas.

Don

_____________________________________
Tolerance is the cost we must pay for our adventure in liberty. (Dworkin, 1996)
“Education is not filling a bucket, but lighting a fire.” (Yeats)

[mnealtx 0]

Quote

Quote

Go to my link and he has the numbers you need to figure that out in terms of loads CASM and stuff.http://www.aviationplanning.com/

Thanks for the link, but can you offer a suggestion as to how to find relevant articles there without having to pay to subscribe? I didn't see a search button, and clicking on various buttons didn't reveal any that go to such articles.

Quote

How long do you want to build the base????Some cities have been EAS since day 1 and been sucking tax dollars for years.

I don't know, but the original intent of 10 years seems quite generous. Maybe 5 years should be sufficient.

Quote

SO you want the taxpayers to pay for your convenience? If you want to fly from Athens you need to the airline and not expect the taxpayers to fund your trip.

I did say I was "on the fence" about the Athens subsidy. In fact I personally would be happy to give it up, but that's because I rarely use it. Had you read more/raged less, you would have noted that I said I usually drive rather than fly for trips of up to 6 hours driving time. In the past 5 years, that has amounted to 20-25 airline tickets I have NOT purchased, because flying out of Atlanta is such a pain in the ass. The only reason I would take GeorgiaSkies to Hartsfield is to catch a connecting flight, so anything that makes flying even more of a hassle (such as canceling local air service) will affect the big airlines by dissuading me from using their services. This is an example of what I meant by "economic impact".

Quote

When I said EAS should be cut people tell me :It's only $200 MIL a year" WTF! So since $200 mil is only a drop in the bucket compared to the big debt problem we shouldnt tackle it? Damn it we have to start somewhere and I am sure there are thousands of BS programs like this one that can be cut. You add them up and now we are taling some serious cash and costs cuts.

Cut EAS: savings $200 million (less loss of tax revenue due to people flying less, amount not known).
Cut corporate jet subsidy: savings $300 million (less reduced tax revenue from orders not placed, amount unknown)
Cut both: savings $500 million, less lost tax revenue from reduced seats/jets sold

$500 million > $300 million > $200 million. Why didn't you see fit to mention the corporate subsidy?

Don

"First used in the months following 9/11, an industry study found accelerated depreciation helped boost sales by 43 percent, and later contributed an additional $2 billion in sales when implemented again in 2003."

2 billion in sales > 300 million.

Mike
I love you, Shannon and Jim.
POPS 9708 , SCR 14706

[GeorgiaDon 379]

Quote

"First used in the months following 9/11, an industry study found accelerated depreciation helped boost sales by 43 percent, and later contributed an additional $2 billion in sales when implemented again in 2003."

I'd like to see the original source for that, and would appreciate a link, thanks. Also, I'm not saying I don't believe the numbers but "an industry study" may not be the most objective source, as they have a vested interest in maintaining the tax write-off. Further, programs that are designed to act as a short-term stimulus (as this was, to help the industry recover from the economic impact of 9/11) have a way of becoming permanent, even when they have outlived their original goals. This difficulty in letting programs expire is a big part of the reason we have the deficit problems we do. Clinton killing the rural electrification program is the only such program I can recall that was actually ended.

Don

_____________________________________
Tolerance is the cost we must pay for our adventure in liberty. (Dworkin, 1996)
“Education is not filling a bucket, but lighting a fire.” (Yeats)

[mnealtx 0]

Quote

Quote

"First used in the months following 9/11, an industry study found accelerated depreciation helped boost sales by 43 percent, and later contributed an additional $2 billion in sales when implemented again in 2003."

I'd like to see the original source for that, and would appreciate a link, thanks.

Link

Quote

Also, I'm not saying I don't believe the numbers but "an industry study" may not be the most objective source, as they have a vested interest in maintaining the tax write-off.

Do you apply the same skepticism to Obama's statement about the tax?

Said tax extended and amplified by the 2009 stimulus bill, by the way. Seems odd that it was good thing then, but a bad thing now.

Mike
I love you, Shannon and Jim.
POPS 9708 , SCR 14706

• Quote

[GeorgiaDon 379]

Thanks for the link, Mike.

Quote

Do you apply the same skepticism to Obama's statement about the tax?

Yep, that's why I'd like to see an independent analysis of the cost/benefit. It's too easy for those with a horse in the race to spin the numbers to their advantage, and that goes both ways.

Quote

Said tax extended and amplified by the 2009 stimulus bill, by the way. Seems odd that it was good thing then, but a bad thing now.

Not so odd. Objectives change. In 2009, the objective was to get the economy moving. Today it's deficit reduction. Reducing the deficit will require eliminating programs that benefit some constituencies, but aren't as high of a priority as other programs. Balancing the budget will be kind of like choosing which two of your kids to feed, and which two to let starve.

What is odd is when people argue that the stimulus plan did nothing, then turn around and argue we can't eliminate subsidies like this one because they create so many jobs! Can't have it both ways.

Don

_____________________________________
Tolerance is the cost we must pay for our adventure in liberty. (Dworkin, 1996)
“Education is not filling a bucket, but lighting a fire.” (Yeats)

[mnealtx 0]

Quote

In 2009, the objective was to get the economy moving.

And it should still be, today. ARRA was supposed to keep unemployment under...what? 8 percent, wasn't it?

Quote

What is odd is when people argue that the stimulus plan did nothing, then turn around and argue we can't eliminate subsidies like this one because they create so many jobs! Can't have it both ways.

Don

ARRA helped the gov't sector a lot more than the private sector. In this case, keeping the accelerated depreciation and adding the bonus depreciation resulted in more corporate jet sales, which helped the aircraft industry and it's supports.

What I find amusing is the grandstanding on the issue - Obama dogs the executives for using their jets to fly to DC for meetings, then gives the executives a tax break for them. Then a couple years later, vilifies the very tax breaks that he gave them.

The Constant Campaigner with another stump speech - that's it.

Mike
I love you, Shannon and Jim.
POPS 9708 , SCR 14706

[mpohl 1]

Let them eat cake!!

If they can't afford to move to a major airline hub, they are undeserving of any government hand-outs. Looseers, tramps, hobos. Who needs them anyways????

P.S.: A message courtesy of the Tea Party.

Quote

www.startribune.com/business/127550853.html

[mnealtx 0]

Quote

Let them eat cake!!

If they can't afford to move to a major airline hub, they are undeserving of any government hand-outs. Looseers, tramps, hobos. Who needs them anyways????

P.S.: A message courtesy of the Tea Party.

Quote

www.startribune.com/business/127550853.html

Nice projection.

Mike
I love you, Shannon and Jim.
POPS 9708 , SCR 14706