Subsidies Bolstered List of Busiest Airports in Arkansas

The four Arkansas airports that saw the biggest rise in passenger boardings in 2011 had one thing in common: government-subsidized air service offered through SeaPort Airlines Inc.

Boone County Regional Airport in Harrison, Memorial Field in Hot Springs, South Arkansas Regional Airport/Goodwin Field in El Dorado and Jonesboro Municipal Airport saw a median increase of 73 percent in boardings when compared with 2010. The figures for 2011 used to rank this year’s list of the state’s busiest airports are the latest available from the Federal Aviation Administration.

SeaPort is a scheduled commuter airline service headquartered in Portland, Ore. SeaPort was founded in Juneau, Alaska, in 1982 as Wings of Alaska, a name the company still does business under. Tim Siber, executive vice president of SeaPort, said the company currently maintains a fleet of 16 passenger planes.

In 2011 SeaPort offered subsidized air service to the four Arkansas airports through the federal Essential Air Service program. EAS was created to ensure that smaller communities had access to scheduled air service after the 1978 Airline Deregulation Act “gave airlines almost total freedom to determine which markets to serve domestically and what fares to charge for that service,” the U.S. Department of Transportation says. The DOT says that $15.4 million in EAS funds have been provided for Arkansas air service in the past two years.

SeaPort began offering flights in Arkansas in October 2009, and today it operates in Harrison, El Dorado and Hot Springs. SeaPort discontinued service to Jonesboro Municipal Airport near the end of 2011, and the airport now receives government-subsidized air service from Air Choice One Airlines of St. Louis.

Siber said SeaPort was forced to discontinue service to Jonesboro because it was too close to Memphis. He said that because the airline could offer only three flights a day under the EAS program, potential passengers often chose to drive 79 miles to the Memphis International Airport instead of waiting for a SeaPort flight. While Jonesboro saw an 89 percent increase in passenger boardings — from 522 in 2010 to 989 in 2011 — the numbers were dangerously low as far as EAS funding is concerned.

The Federal Aviation Administration & Modernization Act of 2012 required that, beginning with the 2013 fiscal year in October 2012, communities less than 175 driving miles from a medium- or large-hub airport must maintain an average of 10 passenger boardings per service day to remain in the EAS program. Because of the Jonesboro Municipal Airport’s proximity to Memphis, its EAS funding would have been in jeopardy if the same requirement had been in place in 2011.

Air Choice One announced in August that ridership at Jonesboro Municipal Airport increased 300 percent in early 2012 compared with SeaPort’s numbers for the same period in 2011. This increase, if sustained, suggests that the airport will be significantly closer to meeting the 10-passenger average when the stipulation goes into effect.

SeaPort Changes

Siber said SeaPort is making changes to reduce costs at the three Arkansas airports it still serves. He said the company has adopted “aggressive pricing” in the form of discounted fares in an effort to increase ridership, including a $39 flight from Hot Springs to Dallas. The company is also shifting from the nine-passenger Pilatus PC-12 plane to the similarly sized Cessna Caravan. The Caravan consumes less fuel and is easier to maintain because parts are more readily available, Siber said. A majority of the company’s fleet will be Caravans by the end of the year, he added.

George Downie, the Memorial Field airport director in Hot Springs, said he regrets seeing the Pilatus go. The Pilatus is “just a great aircraft for our type of service,” Downie said. He said that while SeaPort’s Caravans will be newer than the Pilatus planes, they will not be as fast or as quiet.

SeaPort’s efforts to reduce operating costs at Memorial Field are crucial because an EAS rule dating back to 1994 requires that the subsidy per passenger at an EAS-funded community cannot exceed $200 unless the community is more than 210 highway miles from a medium- or large-hub airport. Downie said Memorial Field, which is 197 miles from the Memphis airport, is being “singled out” to reduce its subsidy per passenger, which was $310 in 2011.

Downie said the airport is working to promote SeaPort’s flights in an attempt to reduce the subsidy per passenger. He said Memorial Field saw an increase of 1,420 total passengers in 2012 compared with 2011, an increase he said was the result of “the city of Hot Springs operating as a partner with SeaPort and trying to get the citizens to use our local commuter service.”

The EAS program has a number of opponents who think the government should not subsidize air services. One opponent is Taxpayers for Common Sense, a nonprofit organization that describes itself as a “nonpartisan budget watchdog that serves as an independent voice for American taxpayers.” In an April post on the TCS website, the organization cited 2011 passenger boarding statistics and pointed out that if the Jonesboro Municipal Airport failed to increase its boarding average to 10 per service day, it would not receive future subsidies. The post called Essential Air Service a “wasteful and unnecessary program” that has “long outlived its intended purpose and needs to be eliminated.”

Asked how he would respond to the EAS critics, Siber said, “They’re folks who probably don’t use it.”

Some passengers, he said, rely on the service to travel for medical treatment and business.

“For a lot of these small towns, it’s their link to the outside world,” Siber said. “It’s critical.”

Source:   http://www.arkansasbusiness.com