"EAS: Remote towns may need to aid in airline subsidy"

Thursday, July 7, 2005

Remote towns may need to aid in airline subsidy 
HEARING: Funds help keep prices down for 34 Alaska communities. 
By RICHARD RICHTMYER
The Anchorage (AK) Daily News 


A 27-year-old federal subsidy for airlines that fly to remote communities
needs to be overhauled to catch up with changes in the aviation industry,
U.S. Transportation Secretary Norman Mineta said Tuesday. The overhaul could
include paring back the number of communities eligible and making them bear
some of the cost. 

The Essential Air Service program, established in 1978, was one of several
topics discussed during a U.S. Senate Commerce Committee hearing in
Anchorage. Alaska Sen. Ted Stevens, the committee chairman, was the only
senator at the hearing, which lasted just over an hour and half and included
testimony from Mineta, FAA Administrator Marion Blakey as well as local
aviation officials and experts.

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

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

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

Changes the Transportation Department is proposing include requiring
communities to kick in at least 10 percent of the subsidy.

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

Under the Transportation Department's proposal, the amount local communities
would have to contribute toward the program would vary, based on their
proximity to the national transportation system.

Communities more than 210 miles from the nearest large or medium hub airport
would have to provide 10 percent. Those between 100 and 210 miles from a
large or medium hub airport would have to provide 25 percent.

Stevens, who helped create the program, pointed out that the Alaska
communities affected by the changes are some of the poorest in the state and
might not be able to afford the required co-payment under the Transportation
Department's proposal.

Mineta said the local contributions wouldn't have to be made by the local
governments. State government or local businesses could pay, he said.

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

In a press conference following Tuesday's hearing, Stevens attributed the
absence of other senators to the Independence Day holiday, which drew many
of them to their home states.

Later this week, Stevens is co-hosting the 12th annual Kenai River Classic
in Soldotna. He said Mineta and two other Bush cabinet members -- Commerce
Secretary Carlos Gutierrez and Labor Secretary Elaine Chao -- are in Alaska
this week and likely to join him in some fishing before they leave.


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