Showing posts with label Airfares. Show all posts
Showing posts with label Airfares. Show all posts

7.13.2009

Essential Air Service: Example of government waste

Rural air travel subsidies gain big budget boost

Excerpt:

A much-criticized subsidy for rural air travel would get a budget increase of more than 40 percent under a spending bill unveiled in the House on Monday.

The legislation approved by a House Appropriations subcommittee would give $173 million in the upcoming budget year to the Essential Air Service, which provides subsidies to small airlines to fly unprofitable routes. That's a $53 million increase.

In many cases the flights are nearly empty. In other instances, such as flights between Buffalo Niagara International Airport and Jamestown, N.Y., just 76 miles away, it's quicker to drive than fly.

The Bush administration sought unsuccessfully to cut the subsidies, which keeps flights going to 107 communities spread across 31 states in the continental U.S. and 45 tiny towns in Alaska. But the Essential Air Services program enjoys strong support among lawmakers; in April, 22 senators wrote White House budget director Peter Orszag to demand more money for it.

"Simply put, the Essential Air Service program was a promise made to rural America, and a promise that must be kept," the senators wrote.

Among the reasons for big increase is the upheaval in the airline industry, including higher fuel prices, and the larger subsidies required to attract new carriers into the program after other airlines drop out.

Indeed, the subsidies also have a new benefactor in President Barack Obama, who requested the big increase in his February budget submission despite acknowledging that the program is inefficient.


Comment: Kathee sometimes travels to Des Moines. She figures that driving to Des Moines is a better deal (even with the travel time) than flying. My last business trip to Des Moines, 3 of us rented a car and drove!

12.02.2007

Northwest - the "800-pound gorilla" at MSP

Low-fare air battles bypass Twin Cities

Excerpt:

Travelers beginning their trips at Minneapolis-St. Paul International Airport on average pay 21 percent more than travelers starting at other hub airports because of the relative lack of low-fare carriers here, according to the former Transportation Department officials' report.

With increased service from low-fare carriers, the so-called "hub premium" isn't as steep as it used to be in the Twin Cities. Twelve years ago, the premium was 38 percent.

Minneapolis-St. Paul "now ranks fourth-highest," said Patrick Murphy, co-author of the competitive analysis and a former deputy assistant secretary for aviation at the Transportation Department. "It's not in the ranks of the worst, but there is still a premium."

Murphy said the strength of Northwest Airlines in this market contributes to the fare premium by keeping smaller carriers out of the market. In 2006, Northwest flights accounted for 76.5 percent of takeoffs and landings at the airport.

Comment: Southwest would give Northwest a real competitive run for the money!