AIR TRANSPORTATION POLICY FOR SMALL COMMUNITIES: LESSONS FROM THE U.S. EXPERIENCE

Abstract

The last decades have witnessed a global trend toward airline deregulation, which has significant impacts on national policies regarding air accessibility to smaller communities. One important result of this liberalisation is that carriers are no longer constrained to serve routes, and may thus neglect service to less profitable destinations with lower traffic. Economic deregulation can therefore have detrimental effects on smaller communities. The United States has dealt with this issue through its Essential Air Service program. Its experience suggests lessons for other countries. U.S. policies have been reasonably successful in sustaining basic air service to smaller communities over the past thirty years of deregulation. Moreover, they have done so relatively effectively and efficiently. A large-scale analysis of the U.S. experience, and three case studies of the communities of Columbia and Jefferson City (Missouri), Rutland (Vermont), and Merced (California) demonstrate this phenomenon. The results show overall gains in efficiency, mostly attributable to the US policy of encouraging competition between air carriers seeking to provide service to small communities. The major flaw in the U.S. arrangements seems to be that the policies have not kept up with changing conditions since deregulation in 1978.