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MT: Feds may soon yank subsidized air service to Lewistown

By   /   January 10, 2013  /   1 Comment

By Dustin Hurst | Watchdog.org

GOVERNMENT PAPER FOR SILVER: Silver Airways receives millions in government subsidies annually.

HELENA – Low ridership numbers on a federally subsidized air route means that one rural Montana town could soon lose commercial air service.

The federal government provides more than $1.3 million annually to Silver Airways to help the airline provide twice-daily flights between Lewistown, a small community in the center of the state, and Billings.

A mere 660 passengers traveled the route last year.

Federal regulations say the per-passenger subsidy per route must not exceed $1,000. Any routes violating that regulation risk losing the federal support, which usually means that last airline, propped up by federal bucks, leaves town.

The subsidies come through Essential Air Service, a federal program originally authorized after the 1978 airline deregulation. The program gives subsidies to air carriers providing service to 150 communities nationwide, including nine Montana towns. It costs about $190 million annually, and taxpayers fund it through excise taxes on plane tickets, cargo and jet fuel.

During deregulation, federal lawmakers worried that airlines would pull out of rural markets because some smaller communities could not sustain strong ridership numbers. To keep carriers flying to these small towns, lawmakers struck a deal: One airline per qualifying community provides service, subsidized by the federal government.

Passengers don’t receive free airfare under the program, but rather cheap rates to a nearby hub. A round-trip ticket between Lewistown and Billings costs passengers $150, including fees and taxes.

According to Kevin Adams, an industry economist with the U.S. Department of Transportation, the Lewistown-Billings route saw 660 passengers for the year ending Sept. 30. That’s about 1.8 people per day, or about half a person per flight, assuming a yearly completion rate of 97 percent, the mandated service level.

The federal government pays Silver Airways, the carrier servicing the Lewiston-Billings route, $1.325 million annually, or a whopping $2,008 per passenger.

Some Montana cities receiving federal aid easily surpass minimum service levels. Sidney for example, received $2.9 million last year and had more than 21,000 passengers.

Silver’s FAA contract for the Lewistown route expires in May, and local officials are reportedly eager to renew it.

But they may not have the chance. Just ask people in Ely, Nev.

Ely, a tiny eastern Nevada town with just more than 4,000 residents, will likely lose its EAS service, provided by Great Lakes Airlines, in the coming weeks. The DOT released a finding in December that Ely dipped below required services, thereby making itself a candidate for program expulsion.

According to a document forwarded by Adams to Watchdog.org, Ely performed better than Lewistown in fiscal 2012. The Ely-to-Las Vegas route saw 1,070 passengers in 2012. Great Lakes received $1,637 per person served last year.

On Dec. 14, the DOT opened a two-month comment period for interested parties to weigh in on elimination of the Ely-to-Las Vegas route. If nothing happens to save the contract, Ely would lose air service and would have to jump through several administrative hoops to re-enter the program.

DOT officials haven’t engaged in formal discussions about ending the Lewistown-to-Billings route, but that could soon come. Adams told Watchdog.org earlier this month the department would probably begin evaluating the route’s necessity in “about a month.”

Locals aren’t happy with the news that they might lose contract.

Jerry Moline, the Lewistown airport manager, said in an interview Thursday that losing the federal subsidy with irreparably harm his community.

“It’d be devastating,” Moline said.

He lays some of the blame for the low ridership numbers on the route itself. In a previous contract, Great Lakes Airlines served Lewistown but flew passengers to Denver, with one stop in Wyoming. That’s part of the reason Moline hauled the Great Lakes Vice President Chuck Howell in front of the airport board Wednesday. A prompt return to the old route, Moline said, might help to increase numbers.

The Lewistown airport hasn’t talked much with the Federal Aviation Administration about the sagging figures, but Moline says he had a hunch Lewistown struggled in the past year.

“I kind of sensed it,” he explained.

Although he recognizes the dire situation, Moline pledged a fight to keep the EAS money flowing.

“I’m willing to do as much as I can to keep the service in here,” he vowed, noting that losing regularly scheduled commercial flights would harm the local economy.

While Lewistown’s situation appears dire, having a friend in the right place might help. U.S. Sen. Max Baucus, a five-term Democrat, serves as chair of a key subcommittee that oversees aviation-related issues and regularly showers EAS with glowing praise.

“Essential Air Service is essential to Montana jobs,” Baucus said in a 2011 statement released after U.S. Sen. John McCain, R-Ariz., tried to kill funding for the program. “While it is important to rein in the deficit, axing programs like EAS will actually cut jobs, shrink the economy and diminish our ability in Montana to attract business to our state.

Baucus has not yet commented on the impending review of the Lewistown route.

Contact: Dustin@Watchdog.org or @DustinHurst via Twitter. 

— Edited by John Trump at jtrump@watchdog.org

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Dustin is the Social Media Coordinator for Watchdog.org and a staff writer for Northwest Watchdog. He specializes in finding government waste, reporting on elections and innovating new media strategies.

  • http://touchstonesjests.blogspot.com/ TouchStone

    Consider precisely WHAT the term “federal subsidy” really means:

    The FedGov TAKES money from one state and sends it to another.

    If the route isn’t commercially viable WITHOUT such “wealth redistribution”, then just exactly HOW is it supposed to be “commercial” at all?

    Things like this were NEVER authorized in the U.S. Constitution.