Small airlines battle to serve the most remote US cities, where even empty flights can be profitable thanks to millions in subsidies

© Provided by Business Insider An Advanced Airlines Beechcraft King Air 350 aircraft. Joey Gerardi/Gerardi Aviation Photography

  • The US government’s Essential Air Service program gives subsidies to airlines serving remote cities.
  • Around $315 million is being spent in 2021 for Lower 48 cities, given largely to the country’s smallest airlines.
  • EAS cities are highly sought after and communities can be very particular with who serves them.
  • See more stories on Insider’s business page.

Beckley, West Virginia; Burlington, Iowa; and Clovis, New Mexico are among the countless US cities that have been overlooked and underserved by America’s largest airlines. There’s simply not enough consistent demand to make them profitable.

But one airline’s money-losing route can be another’s profit-maker. In fact, a niche industry of regional airlines seeks out these cities and relies on the US government to help turn a profit when flying to them.

The Department of Transportation’s Essential Air Service program incentivizes airlines to serve more than 100 cities American cities. More than $315 million in yearly contracts is doled out in the Lower 48 alone, and nearly $27 million is given in Alaska.

Any airline can submit a bid to serve EAS cities but regional carriers have cornered the market. The top EAS airlines in the US include SkyWest Airlines, Cape Air, Boutique Air, Southern Air Express, and Denver Air Connection, according to the DOT’s most recent data.

When considering bids, the DOT factors in items including the service reliability of the airline, connectivity to larger airlines, opinions of the community being served, and the cost of the subsidy. The cheapest bid doesn’t always win the contract, nor does the one with the most community support.

© Joey Gerardi/Gerardi Aviation Photography A Southern Air Express Cessna Caravan aircraft. Joey Gerardi/Gerardi Aviation Photography

In the case of Rutland, Vermont, the DOT chose Cape Air to serve the city with an annual subsidy of $1,959,579 for the first year rising to $2,018,366 the next. Cape Air’s option won out over a cheaper Boutique Air option in part because of a lack of community support for the latter airline.

But what the community gives, the community can also take away. San Francisco-based Boutique Air was forced out of Ironwood, Michigan, for example, after its aircraft suffered two incidents on flights from the city.

The airport board voted to “seek a new air carrier,” according to a government filing, and three airlines – Air Choice One, Southern Air Express, and Denver Air Connection – all submitted multi-million-dollar bids to take Boutique Air’s place.

Major US airlines can also advocate in support of their regional airline partners as ease of connections in major airports can be crucial in securing a contract. Some major airlines, including American, do bid for EAS routes themselves but are a small percentage of the program as of the most recent DOT tally in July.

The unique airlines operating these flights often use unique aircraft, including older models that are cheaper to operate. Aircraft can be more than 40 years old, such is the case with some of Cape Air’s fleet of Cessna 402C aircraft.

© Joey Gerardi/Gerardi Aviation Photography A Denver Air Connection Fairchild Swearingen Metroliner aircraft. Joey Gerardi/Gerardi Aviation Photography

Other airlines, including Boutique Air, use private aircraft intended to transport the wealthy. “Some airlines do feel more like a private [flight,]” Joey Gerardi, an aviation writer who has taken more than 40 EAS flights and has seen the best and worst of the program, told Insider.

Most EAS flights that he’s taken have been bare-bones with no in-flight entertainment or even a flight attendant.

“A lot of Essential Air Service carriers don’t have much service at all and that’s just because of the size of the plane,” Gerardi said, adding that some offer special treats like a snack basket of full-size candy bars.

Alaska sees a lot of EAS flights given the remote nature of the state’s cities and Alaska Airlines is a prominent carrier, using its fleet of Boeing and Embraer aircraft. On those flights, the experience may be indistinguishable from a standard Alaska Airlines flight.

But the type of aircraft used can be a point of contention for communities. Michigan resident Dennis Lennox complained in a letter to the DOT about SkyWest’s Bombardier CRJ200 aircraft operating daily flights between Detroit and Pellston, Michigan under the Delta Connection brand.

© Nicolas Economou/NurPhoto/Getty A Delta Air Lines Bombardier CRJ200 aircraft. Nicolas Economou/NurPhoto/Getty

“This aircraft has outlived its viability, is regularly in bad condition, and provides an unacceptably uncomfortable in-flight experience for passengers even on a flight of only 45 minutes to 1 hour in duration,” Lennox wrote, estimating that 40% of the flight he’s booked on the aircraft have been delayed or canceled.

And with millions in government subsidies, these airlines don’t have to worry about filling every seat, and they often don’t.

“At least 80% of the EAS flights I’ve been on have five or fewer people,” Gerardi said.

Read the original article on Business Insider

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