Thursday, December 08, 2011

U.S. Department of Transportation awards Essential Air Service subsidy to American Eagle


The U.S. Department of Transportation has picked American Airlines and its affiliate American Eagle to receive the Essential Air Service subsidy in Sioux City.

The group submitted a bid of about $1.5 million for it a few months ago. The money will allow American to take over air service for Delta at Sioux Gateway Airport.

With the subsidy, American Airlines affiliate American Eagle will provide non-stop service to Chicago O'Hare 13 times a week. From there, the airline can take passengers on to about 250 cities in more than 40 countries.

Competitors for the subsidy, Delta and affiliate SkyWest, proposed keeping the twice daily flights to Minneapolis International.

In the last few weeks, both American Eagle and SkyWest made pitches to the city and airport board. American Eagle won out with recommendations to the DOT from both. City officials we talked to say they're happy with the results.

"American Airlines looks like a good choice for us and we hope that things move forward," said Mayor Pro Tem Tom Padgett.

Last month American Airlines and their parent company AMR filed for bankruptcy. It raised some concerned eyebrows among the community.

Local officials maintained that the bankruptcy will help reorganize American and they'll come out stronger on the other side.

US Senator Tom Harkin, who supports the airline's move to Sioux City, says the EAS subsidy will make sure American breaks even locally.

"I think American Airlines is going to be just fine on this. And, as you know, with their servicing Sioux City, they are going to get some federal funds... just to make sure they're not going to lose any money on it," said Tom Harkin, (D) Iowa.

The subsidy for American lasts two years. After that, the airline says they hope to fly here without EAS assistance. They even suggested adding additional hubs to places like Dallas-Fort Worth.

Both American Eagle and SkyWest are awaiting official confirmation from the DOT before commenting further.

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