Sequester could ground commercial air services statewide
by Ted Carter
Published: March 22,2013
As with a series of other disruptions occurring at airports large and small around the country, the culprit is the federal budget sequester, an onslaught of across-the-board cuts brought about by the failure of Congress and the White House to agree on a new spending plan. The cuts total $86 billion for this fiscal year and could reach hundreds of billions of dollars in the years that follow unless a deal is reached.
The U.S. Department of Transportation, through the 1978 establishment of the Essential Air Service program, pays Fort Lauderdale, Fla.-based Silver Airways more than $5 million a year for commercial flights services at the small airports. For Greenville service, Silver Airways is paid $3,522,398 annually, $2,965,667 for Hattiesburg/Laurel, $2,417,808 for Meridian and $3,533,398 for Tupelo, the DOT says.
Nationally, the DOT pays commercial carriers a total of $200 million a year to provide service to isolated airports that otherwise would have no service. The subsidies grew out of the 1978 airlines deregulation that freed the airlines to decide which markets they would serve and the prices they would charge.
While a spokesman for Silver Airways said the DOT has assured the airline it has no immediate plans to either lower or withhold funding, the agency says the Essential Air Service program is part of the sequester involving $600 million in DOT cuts. Just when those cuts will occur is not yet known, said Bill Mosley, DOT spokesman. “We are still studying what sequestration does to Essential air Service. That could come down the line in a few months.”
Meanwhile, Silver Airways will carry on as usual with scheduled flights of its Saab 340Bplus aircraft (maximum seating: 34 passengers) and Beechcraft 1900D aircraft (maximum seating: 19 passengers), spokesman Steve Bennett said.
He said he is unsure whether a loss of the federal payments would lead Silver to give up its Mississippi routes. “I don’t know if we can really speak to that,” he said.
He emphasized that if an opportunity existed to serve some or all of the airports absent a subsidy, “we would explore it.”
Silver Airways, created through the 2011 acquisition of Gulfsteam International, a carrier that primarily provided Florida-to-Bahamas service, operates 190 daily scheduled flights between 45 gateways in Mississippi, Florida, The Bahamas, Georgia, Montana, Ohio, New York, Pennsylvania, Alabama, Washington, DC and West Virginia. Chicago-based investment firm Victory Park Capital owns the airline.
The airline operates under a principal code share and alliance agreement with United Airlines and Copa Airlines and a close interline agreement with Delta Airlines.
Tom Heanue, director of Hattiesburg/Laurel Regional Airport and president of the Mississippi Airport Association, said he worries the sequester could eventually catch up with Silver Airways and leave his and the other airports without a commercial carrier. “They are trying to make a start as an airline and this could pull the rug out from under them,” he said in an interview last week.
Without commercial service, Hattiesburg/Laurel and the other mid-tier Mississippi towns could languish. “It’s what the railroad was 150 years ago. It brought commerce to your town. If the railroad by-passed your town, success by-passed your town.”
At Tupelo Regional Airport, director Josh Abramson indicated he is not counting on remaining in the Essential Air Service program much longer. The DOT is considering a regulation that would require an airport to be more than 100 miles from a hub airport to qualify. Tupelo Regional is about 95 miles from Memphis International, a hub airport.
As for the sequester’s more immediate effect, “I just don’t know,” Abramson said.
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