The US Department of Transportation will spend $18 million this year to bolster flight options for smaller airports and communities. Nearly all of that money will funnel to United Airlines and American Airlines.
The Small Community Air Service Development Program (“SCASDP”) aims to help reduce airfares in markets that are above average, augment private funding contributions to support the program, and “bring the material benefits of scheduled air transportation to a broad section of the traveling public, including businesses, educational institutions, and other enterprises whose access to the national air transportation system is limited.” This year’s awards also focus on restoring or supporting service at risk of loss from the COVID-19 pandemic.
Some 78 airports and communities applied, seeking more than $58 million. Just 22 winners were selected from the applicant pool.
In nearly every case the grantees secured a commitment letter from an airline partner. While none of the letters guarantee the launch of service, the funding dramatically reduces the barriers to entry.
United Airlines and its regional partners stand to gain the most from the awards. Eleven of the winners identify United or SkyWest as their partner airline, covering just over $9 million in grants.
American Airlines’ awards top $7million, covering nine airports. Spirit Airlines is the only other winner, with its planned new service to Manchester, NH securing a grant of $425,000.
New Haven was hoping to win big, with a application seeking $800,000. That would combine with local contributions to hit $1.2 million in total funding, conveniently the amount Avelo committed to invest in the coming years as it builds a hub on the Connecticut coast. Alas, the subsidy funds will not be coming this year.
For its part, Breeze Chief Operating Officer Tom Anderson believes the SCASDP grants are a nice boost, but they cannot solve underlying flaws in the markets:
We talked all the municipalities and the airport authorities. And, [the Grants are] part of the business. But the underlying revenue story and underlying market story have to make sense. It is not driven by freebies first and a good market second. They have to work together because if it’s not a good market, all the freebies in the world are not going to make it commercially viable in the long term.
Still, with both carriers trimming operations in the short term as they reevaluate aircraft deployment and profitability, they must be disappointed none of the funding will flow their way. Especially with so much of it funding the small-town operations they hope to disrupt.
The near absence of Delta Air Lines from the applications is also interesting, though presumably the grant for many of the smaller Georgia markets will benefit its connections via Atlanta.
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