Monday, December 31, 2007
Most people want a second carrier to serve STC, with Chicago and Denver the most frequent options sought. Right now the only scheduled service is to MSP via Mesaba Airlines, which operates as Northwest Airlink. Mesaba is one of the airlines that gets money through a grant program called the Essential Air Services Grant. There is a second program called the Small Community Air Services Development program that also funds regional airports subsidizing air travel from small communities.
How much is it? USA Today reports that over $100 million is used to subsidize these programs. Mesaba's parent, MAIR Holdings -- who also owns Big Sky Airlines -- earns some revenue from EAS payments, though others have done better:
That second carrier people want in St. Cloud? You'll probably need to find a grant to pay for that. And when airlines are cutting routes repeatedly and the regional carrier industry has three times the capacity as current flyers, good luck with that.
One beneficiary of subsidies has been the airlines the DOT picks in competitive bidding to run the flights. Great Lakes, whose business is largely subsidized flights, went from post-9/11 red ink into the black in 2003, turning a small operating profit three years ahead of the rest of the airline industry.
The subsidies alone, excluding fares from subsidized flights, made up 30% of Great Lakes' operating revenue in 2002-06, company reports show.
(h/t: Peter Gordon)