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Iowa State University--Becoming the Best

The Substitution of Ground Transportation for Service to Smaller Communities Now Receiving Essential Air Service Subsidies

Researcher(s)

Principal investigator:

Project status

Completed

Start date: 01/01/15
End date: 12/31/15

Publications

Report: Cost-Benefit Analysis: Substituting Ground Transportation for Subsidized Essential Air Services (1.58 mb pdf) December 2015

Sponsor(s)/partner(s)

Sponsor(s):

About the research

Abstract:

Since the Airline Deregulation Act of 1978, the U.S. Department of Transportation (DOT) has been subsidizing air service to small rural communities through the Essential Air Service (EAS) program. The original intent of the program was to maintain some level of air service to rural communities that would otherwise not have any. The Rural Survival Act of 1996 established the permanence of the EAS program fueled by the idea that reliable air services are vital to local rural economies. This idea is somewhat challenged in recent research studies that found little to no economic impacts of air traffic.

This project entertained the theory that intercity traffic volume, and not air traffic volume alone, is what affects economic outcomes of certain geographical areas. A cost-benefit analysis of substituting subsidized air service with a subsidized ground service is presented and concludes that an intercity ground service network can create substantial cost savings on both a per round trip and round trip-seat basis.