Politically Thinking: Air fare subsidies a worthwhile cut
Returning the federal budget to sustainability over the next decade will require a combination of cuts in discretionary spending programs, reforms in entitlement programs and increases in tax revenues. Many elected officials and interest group leaders believe that solidifying the nation’s finances can be accomplished with changes in only one or two of these areas. Democrats want to cut military spending and raise taxes on the wealthy, while Republicans want to cut domestic programs and reduce Social Security, Medicare and Medicaid benefits.
Some elected officials and interest groups talk about a sustainable budget in principle, but jump to the other side when a local program supported by federal funds is threatened. A good example of such a program is “Essential Air Service,” by which the federal government, through the Federal Aviation Administration, subsidizes airlines to provide service to small airports all around the country. Over 150 airports receive subsidies from this program, with the subsidies totaling about $180 million per year. An airline called Cape Air receives a federal subsidy of $797,000 annually to operate three round trips a day between Boston and Rutland.
The House of Representatives recently passed a reauthorization bill for the FAA that would end the Essential Air Service program on Sept. 30, 2013. Rep. Peter Welch, who talks about pay-as-you-go budgeting, and the Rutland Chamber of Commerce, which lobbies regularly in Montpelier to cut state spending, are both strong defenders of the subsidized flights between Boston and Rutland.
Cape Air flies nine-passenger Cessna airplanes on the route between Boston and Rutland. There are three trips a day in each direction, 365 days a year, for a total of 19,710 seats per year. In 2010, Cape Air carried 10,879 passengers, or an average of five people per trip. Some of the flights carried a full load of nine passengers, while others were nearly empty. The federal subsidy came to $73.27 for every passenger in 2010. The fare on most of the trips was $79, so federal taxpayers ended up subsidizing nearly half the cost of the service.
While detailed information on the users of these flights is not readily available, most of the passengers are probably managers with national corporations such as General Electric traveling to their branch plants in Rutland, or well-heeled individuals who want to get to Killington and other ski destinations faster than they can by driving. If the federal subsidy ended and these passengers had to pay $150, rather than $79, for their flights, many of them, or their corporate employers, could probably afford the higher fare. Alternatively, they could fly into Burlington or Albany, each about a two-hour drive from Rutland.
At a time when the federal budget is under such pressure, is it a good use of federal dollars to subsidize plane trips from Boston to Rutland at more than $70 per passenger? Both the Obama Administration and the House Republicans are proposing to cut the federal low-income heating assistance program for next year. The $797,000 subsidy for the Rutland air service could buy 250,000 gallons of home heating oil, enough to heat more than 300 Vermont homes for an entire winter. Isn’t heating assistance for the poor a higher priority than the airline subsidy? Or couldn’t an argument be made that the entire Essential Air Service program, at $180 million per year, is an example of a federal subsidy whose benefits go primarily to corporations and affluent individuals, and which should be a prime target for elimination in order to move the budget toward sustainability?
Eric L. Davis is professor emeritus of political science at Middlebury College.