Legislators scrutinize skyrocketing costs of air service

Shaun Germolus
Shaun Germolus, Range Regional Airport manager, talks about the importance of his airport to the Iron Range Friday afternoon in Hibbing, Minn.
Photo for MPR by Derek Montgomery

As lawmakers in Washington struggle to slash federal spending, a transportation program called Essential Air Service has received close scrutiny.

The program provides large subsidies to airlines that preserve flights to small, rural communities, including three in northern Minnesota. Few question the economic importance of air service. But critics ask if it's worth the skyrocketing cost.

A popular scapegoat for those who want to end the subsidy is the tiny airport in Ely, Nev. For Republicans, the airport is an attractive target because it is in the home state of Democratic Senate Majority leader Harry Reid.

The program poses a difficult problem for members of Congress like U.S. Rep. Chip Cravaack, who represents Minnesota's Eighth District. Cravaack has placed a priority on balancing the federal budget, but he will soon have three airports served by the program in his district.

At a constituent meeting in Deer River in August, the GOP freshman and former airline pilot left little doubt about his position. He doesn't side with those who want to protect the subsidies from cuts, among them some Democrats in Congress.

"The main reason they were upset about it is because Senator Reid's favorite airport in Ely, Nevada, with — get this — a $3,700 subsidy per ticket," Cravaack told his audience.

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Nationwide the program's price tag has grown to about $200 million per year. Taxpayers pay nearly $5.5 million to prop up flights into three Minnesota cities: Thief River Falls, and in the Eighth district, International Falls, and Hibbing. That subsidy is poised to grow to about $8 million.

Bemidji and Brainerd are now eligible for Essential Air Service as a result of Delta Air Lines' decision this summer to stop serving those cities.

Translation: Passengers like the service.

Among them are Bob Anderson and his wife, who frequently use Hibbing's tiny Range Regional Airport for their flights home to Seattle.

"It's great. No charge for the parking. It's secure. It's easy to get in and out," Anderson said. "Very reliable service."

Anderson said he makes several round trips here every year to visit his cabin in Ely, where he grew up. But he said he wouldn't come nearly as often — and would spend less in Minnesota — if the service stopped, forcing him to drive from the Twin Cities or Duluth.

Airport director Shaun Germolus said losing scheduled air service would damage small cities like Hibbing.

"It puts us at a competitive disadvantage to larger cities if we would lose our public transportation," he said. "It's a large economic development tool for rural America."

Germolus said air service provides a vital link for mining company engineers and executives traveling to the Iron Range, where unemployment generally runs a percentage point or more above the statewide average.

But Delta Air Lines' three daily flights connecting Hibbing and Minneapolis on planes that carry 34 passengers are usually only about a third full. Delta officials say that's not enough to break even. So the federal government pays the airline nearly $3 million every year — about $200 per passenger — to keep those flights going.

"What is the justification of spending all that money, for really a handful of people in Hibbing to use that service?" asked Dan Kasper, a longtime airline industry consultant with LECG Aviation. Kasper points out that flights from Duluth receive no subsidies, and the Duluth airport is only a 90-minute drive for people in Hibbing.

"They could do what people in the rest of the country do, which is get in their car and drive an hour to an airport that has a lot more service that doesn't need a subsidy," he said.

Congress enacted Essential Air Service when it deregulated the airline industry in 1978. Any community that had scheduled air service then was guaranteed a minimum level of it going forward.

But the price tag has skyrocketed as the cost of fuel has taken off.

As a result, airlines are pulling out of smaller markets. On top of Brainerd and Bemidji, Delta also announced plans to reduce or eliminate service to Hibbing, International Falls and Thief River Falls.

In April, Cravaack co-sponsored a bill that would have eliminated the program. The Republican-controlled House approved it. But the bill never came up for a vote in the Senate, Democrats hold a slim majority.

Cravaack led a working group that has tried to bridgethe two chambers' differences. He also has backed away from his earlier stance, saying rural Minnesota businesses need air service. He cites International Falls as an example.

"Boise Paper needs that airport, so I would have been fighting to keep that airport open," Cravaack said.

Congress preserved Essential Air Service funding in September, but that money runs out again in January. Soon once again, Congress will be debating just how essential rural air service is.