Service Challenges:In a stressed economy, airports face uphill battle to attract, retain air service

April 8, 2003

Plavin Seeks More EAS Money

David Plavin, president Airports Council International-North America, recently testified before the Senate Committee on Commerce, Science and Transportation’s Subcommittee on Aviation on behalf of the American Association of Airport Executives and ACI-NA. Among his recommendations for the 2003 FAA Reauthorization Bill: Expansion of the Small Community Air Service Development Program.

Recognizing the difficulty for small communities to attract and retain commercial air service, in conjunction with the current challenges of airlines, Plavin asked that Congress provide a major increase in funding for the program, and improve the Essential Air Service Program (EAS).

In fiscal year 2002, Congress appropriated $113 million for the Essential Air Service Program, with an additional $20 million for the Small Community Air Service Development Pilot Program.

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A few outttakes from Samuel Buttrick, UBS Warburg, on the state of the airline industry:

- "I can’t think of a product in any business that is marked up above average cost more than business travel. How many businesses can you think of that mark up their primary product to their preferred customer, not by 10 or 20 percent, not by 40 or 50 percent, but by 700, 800 percent?

- "So the single largest challenge facing the airlines, the traditional, legacy carriers focusing on the hub and spoke model, is making business travel relevant again.

- "... Capacity is not going to bail this industry out unless there’s a major liquidation. Bankruptcy can be a restorative spa where you go in and ... come out leaner and meaner with a competitive cost structure. Or alternatively, it can be a proverbial roach motel. They go in, but they don’t come out."