How Essential is Essential Air Service? A Welfare Analysis of Airport Access for Remote Communities

Austin Drukker, University of Arizona

Summary:

The Airline Deregulation Act of 1978 gave airlines almost total freedom to determine which domestic markets to serve and which fares to charge. To alleviate fears that newly deregulated airlines would shift their operations to serve large, profitable markets, leaving remote communities without access to the national passenger airline network and the markets and opportunities that come along with such access, Congress established Essential Air Service, a federal government program that provides subsidies for more than 100 communities in the continental US. I conduct a welfare analysis of EAS by estimating a discrete choice model of demand using unique data that couple passengers’ choice of flight with their residential ZIP code. These data allow me to estimate passengers’ willingness to trade off farther driving distance for lower prices, which in turn allows me to estimate the monetary value residents place on having access to a nearby airport. I find that subsidies to several EAS airports that are relatively close to a larger hub airport cannot be justified on public finance grounds, suggesting these EAS funds could be put to better use elsewhere.

Project Details

Project Type:
Dissertation
Project Status:
In Progress
End Date:
January 31,2023
UTC Grant Cycle:
NITC 16 Dissertation Fellowships
UTC Funding:
$15,000