DOT Less Daring With Small Airport Grant Awards

The U.S. Department of Transportation (DOT) has awarded $18.9 million in federal grants to 37 regional airport projects in 29 states.

The U.S. Department of Transportation (DOT) has awarded $18.9 million in federal grants to 37 regional airport projects in 29 states and encompassing 68 communities as part of the 2005 Small Community Air Service Development Program.

However, at least one consultant believes that DOT lost its "focus" in selecting the 37 2005 winning applications. DOT did not place as much emphasis on materially improving air service, this consultant says.

DOT received 84 applications in April for $19.8 million in available grant money. This is the fourth year of this grant program. Collectively, the 84 applicants asked for more than double that amount - nearly $51 million - in federal funds to jump-start or expand air service in small communities. In many cases, these communities have not had scheduled air service since the terrorist attacks of Sept. 11, 2001, when many carriers reduced their networks. In some cases, communities have not had service since the 1978 deregulation of the airline industry.

Of the 84 applicants, only 15 were from first-time applicants. The rest were past winners as well as repeat losers applying for the funds.

Although Congress had authorized up to $20 million to be split among up to 40 projects, the number of applicants were down from 120 last year to 84 this year, even though the program has proved to be "wildly successful," said Michael Boyd, of the Denver-based Boyd Consulting Group. "When you cull out the fruitcake ones, they were down to 65 good ones [of the 84 applications]," he said.

Of the winning applications, Boyd's firm advised 20 percent of them. Over the past three years, 25 percent of all the funds allocated have been awarded to Boyd clients.

"Overall, I think they got a little off focus," Boyd told Regional Aviation News. "In the last three years, they have been laser-focused on awards that lead to material improvements in air service." But this year DOT skewed some of the awards to the politically connected, Boyd said. At the same time, DOT seems to have avoided awards that would underwrite a new low-fare airline in a market only served by a legacy carriers, he added.

The political payoffs, in Boyd's calculations, are grants of $1 million to Northwest Chicagoland International Airport in Rockford, Ill., and $242,000 for an intrastate air service feasibility study for 15 California airports. The Rockford grant was the largest one awarded by DOT. Boyd also calls into question the wisdom the $950,000 grant to Somerset, Ky.; $936,400 to Poplar Bluff, Mo.; and a $587,000 grant to Sault Ste. Marie, Mich.:

* Rockford had originally sought $3 million to provide airlines with revenue guarantees to fly to seven different locations with scheduled service. Only charter carriers now serve the airport. Its local match will be $1 million.

* Somerset has secured a preliminary pact with RegionsAir to provide three daily flights to Cincinnati in exchange for a revenue guarantee. The community had originally sought a $1.08 million grant. The local community has promised a $100,000 cash match.

* In a joint application, Poplar Bluff and Farmington, sought $936,000 to underwrite new air service to be provided by Air Choice One to St. Louis. The carrier would use a nine-passenger Cessna Caravan. The grant would provide a gradually reducing subsidy to the carrier for three years.

* Chippewa County International Airport in Sault St. Marie sought a $987,000 grant to increase its base service provided by Mesaba from two daily flights to three to Detroit. The money would also be used to underwrite an equipment upgrade from a Saab 340 to a regional jet. DOT awarded a $587,000 grant and the local community has promised an $113,000 local match.

The DOT awards appeared to avoid underwriting new low-fare service from communities served only by legacy carriers, he said. "I do believe the complaints by Delta [DAL] and United [UALAQ] did skew the awards. I think the strong-arming has some effect."

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