DOT Seeking Proposals to Jump-Start New Air Service

Now in its sixth year, the program has changed with the agency applying stricter criteria in making the grant awards.


For the second consecutive year, the Small Community Air Service Development Program is alive despite efforts by the Bush administration to kill this grant program. And for the second consecutive year, the program will only award $10 million in grants instead of $20 million as it had in earlier years.

The Department of Transportation (DOT) is now soliciting community proposals for the grants that are designed to improve air service to those small air hubs or those airports without any commercial service. The application deadline is April 27. The grants are traditionally awarded in late summer. (See the list of last year’s award winners.)(pdf)

Now in its sixth year, the program has changed with the agency applying stricter criteria in making the grant awards.

First the basics: No more than 40 grants will be awarded; no more than four projects can be selected from the same state and no current grant winner can apply. (See the rules as well as other DOT information on the program.)

One of the founding goals of the program was to reduce high airfares. In at least two cases, grants were awarded to cities that underwrote new low-fare carriers in direct competition with legacy airlines. No more.

Both United and Delta have objected to these grants. “The DOT doesn’t want to fight with the airlines,” says Michael Boyd, of The Boyd Group. His consulting firm has assisted communities in applying for the grants and then implementing their air service development programs. In the last grant round, the firm's clients won about one-third of the grants.

In the past, Boyd helped Sarasota and Fresno win grants that attracted AirTran and Frontier. “United cried foul. That won’t happen again.”

The scope of the program has changed so that Boyd now predicts that less than 60 communities will apply.

Last year there were 75 grant applications filed from 37 states collectively seeking $32 million. Only four of the 75 applications were from communities that had never previously applied to the program. In the class of 2006, there were 18 applications that failed to meet the basic selection criteria -- 16 of these because they were currently participating in an earlier round of funding or have found another source of funds.

“We have warned our clients that what worked in the past won’t work in the future,” Boyd explains.

“So going forward you have to be very careful that you submit something that is definable, that is measurable, and in front of a court of law, well almost, you can defend it as improving air service. Whatever you do, don’t ask to do something different.”

While Congress has rescued the program in the last two budget rounds, Boyd says Congress would like to end the program. “Congress has given DOT a mandate: You will fund EAS. Today, DOT is under pressure to use the money basically for EAS.”

Congress has cut the program by $10 million in the last two budgets to provide more funds for the Essential Air Service program.

No fan of EAS, Boyd calls it “a mess,” with the government funding empty planes flying between EAS city-pairs.

The Small Community program has settled into a pattern. The grant money is used either for marketing or airline subsidies. A number of early grants were for surveys, but fewer in recent years. DOT has “come to the conclusion the studies are just a waste of money spent trying to illuminate the obvious,” Boyd notes.

Any community preparing a grant application needs to come to table with cash to match the federal dollars. Unlike some federal programs that mandate specific local contribution ratios, this one does not. The rules don’t provide any guidelines.

However, Boyd cautions that communities should not promise a local match via ticket banks or travel pledges. DOT has found that these promises to buy a specified number of tickets on a new carrier fail to fully materialize once an airline starts flying.

“Use of these words will send applications to the round file,” Boyd notes.

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