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Regional airports could lose out as Trump’s budget proposal eliminates FAA subsidy

The terminal at Range Regional Airport in Hibbing is seen in a file photo from December 2015, not long after it opened. The airport is one of five in Minnesota to receive funding from the EAS program — initiated after airlines were deregulated in 1978 — to ensure that airlines continue to serve smaller, rural communities. (News Tribune file photo)

The debate over the Essential Air Service program is typically resurrected when legislation is before Congress to fund the Federal Aviation Administration, and Northland airport leaders say they expect this year to be no different.

The regional airports in Hibbing and International Falls are among five Minnesota airports that receive funding from the EAS program — initiated after airlines were deregulated in 1978 — to ensure that airlines continue to serve smaller, rural communities.

The program is a component of legislation for the FAA's authority and funding, which Congress will need to pass before the current FAA reauthorization expires in September. Additionally, President Donald Trump recommended eliminating the Essential Air Service program in his proposed 2018 budget, released Thursday.

The budget proposal states that "several EAS-eligible communities are relatively close to major airports, and communities that have EAS could be served by other existing modes of transportation."

Rep. Rick Nolan, DFL-Crosby, noted that residents in the 8th Congressional District rely on the regional airports because some live four hours or more away from a major airport.

"This slap in the face to rural residents demonstrates a severe lack of knowledge about our nation's rural communities," Nolan said in a statement Thursday.

The Falls International Airport wouldn't be able to function without the subsidy provided by the Essential Air Service, said Bob Anderson, chairman of the International Falls-Koochiching County Airport Commission.

"I don't think that there's any of the airports, including ourselves, that want to be on a subsidy. I think we would prefer to have sufficient travelers. But in order to have service to some of these communities on the Iron Range, in the forests of Minnesota where paper's made, it takes a subsidy today. If you want folks to live on the Range and mine the ore and harvest the timber and make paper for the folks in Washington, D.C. to be able to print, some of us need to live out here," said Anderson, who is also mayor of International Falls.

Shaun Germolus, executive director of the Chisholm-Hibbing Airport Authority, explained that the airport industry is always concerned that the Essential Air Service will be eliminated. In addition to the airports in Hibbing and International Falls, the program provides funding to the Bemidji, Brainerd and Thief River Falls regional airports.

The Essential Air Service is a smaller FAA program at $250 million, and is often considered "low-hanging fruit" for elected officials to decrease or eliminate as a cost-saving measure — but the program doesn't use money from residents' income taxes, Germolus said. The funding comes from taxes on items such as passenger tickets and airplane fuel, and taxes on international airlines that use the United States' air space, he said.

"One argument is that by eliminating the EAS program and the $250 million, you're saving money for the taxpayers. But in reality, it does not come from the general fund and the only people that are contributing to this fund are those that are actually buying airline tickets. It's more of a user-based fee and more of a user-based program," Germolus said.

A sign in the baggage claim area thanks passengers for using Range Regional Airport. (News Tribune file photo)

Anderson noted that some congressional members believe the program is a waste and that funding doesn't need to be spent on regional airports. An amendment to the FAA reauthorization bill was introduced in 2015 and 2016 to terminate the Essential Air Service. In introducing the 2016 amendment, Sen. James Lankford, R-Okla., claimed the program's spending has increased by 600 percent in the last 20 years while half of all seats are empty on planes servicing airports that receive funding.

"It is simply unfair to expect families in 99 percent of cities to subsidize convenient travel options for passengers flying in and out of the Essential Air Service airports. Congress should recognize that this 37-year temporary program is no longer essential and should eliminate it," Lankford said in a 2016 statement.

Germolus said he doesn't expect the program to be eliminated because Minnesota's delegation in Congress strongly supports it and understands the importance of Minnesota's smaller communities having access to an airport.

Anderson testified in the 1970s in support of the Essential Air Service's creation and Nolan and the late Rep. Jim Oberstar were part of the coalition to create the program. International Falls had air service before airline deregulation, because airlines were required to serve rural communities, Anderson explained. But the concern over deregulation was that airlines would stop serving the smaller communities and the Essential Air Service was a solution to that concern.

"It's been operating very well for those airports that are far enough away from any of the major hubs," Anderson said.

Nolan pointed out that the regional airports in Minnesota's 8th Congressional District account for more than 200,000 passengers every year. The Essential Air Service ensures that 160 regional airports in the United States will survive and benefit rural areas by "growing local economies, facilitating business, creating good jobs and ensuring citizens of air service at reasonable cost for their communities," he told the News Tribune in a statement.

"Altogether, EAS provides more than $5 million annually to north central Minnesota airports. Without EAS, small airports are in danger of going out of business — resulting in major job losses, diminished local economies and a lack of access to air travel for citizens in rural communities, he said in a statement.

In recent years, Congress has passed short-term extensions of the 2012 FAA reauthorization bill, which provided funding through 2015, instead of passing a renewed two- or four-year bill, which Germolus and Anderson say creates challenges in long-term project planning. The latest extension was passed in July 2016 and expires in September this year.

"What we'd like to see is a bill that's at least two years, if not four years, because what that does is it allows airports then to use funding in multi-year projects and helps us to manage the financing of those projects better," Germolus said.

The Falls airport commission tries to look ahead in planning, but the continuing extensions create challenges, Anderson said. He credits the staff in the FAA offices in Minneapolis and Des Plaines, Ill., with helping Minnesota airports during the reauthorization extensions.

"They're there to work with the airports, keep our airports safe, keep them operating. They're constantly at that same end — they don't know if monies are going to be approved to continue programs or not, and so that's very, very difficult for them. Those professionals who work at the FAA, we certainly feel for them also," Anderson said.

The Range Regional Airport in Hibbing, which has seen a 3 to 6 percent increase in passenger traffic per year for the last four years, receives $1 million per year from the Essential Air Service for capital improvement projects and can apply for additional discretionary funding from the program. Germolus said the Range airport will likely rely on $2 million from the program for its airfield lighting project in the next 18 months.

"If the FAA reauthorization bill does any of those things — eliminates EAS or diminishes funding here — it really has a crippling effect on not only our air service, but our funding capability for capital improvement projects going forward," Germolus said.

Although the Essential Air Service isn't funding the construction of the new Falls International Airport terminal, expected to open this summer, the airport relies on funding from the program to sustain the airport's operations, Anderson said. Passenger numbers have "dropped off significantly" since the economic downturn in 2009 and 2010, Anderson said. The airport wouldn't be able to have modern equipment used by the airlines and maintain its level of service without the program, he said.

"We're very concerned because we're in the process of building a new terminal here and the community and this whole region very much counts on that daily jet service to Minneapolis," Anderson said.

Anderson explained that the airport commission doesn't know what would happen if the Essential Air Service was eliminated, but there would be a good chance that SkyWest would reduce or eliminate its daily service from the Falls International Airport to the Twin Cities. Continuing the program would keep the nation's air service system strong, Anderson said.

"I think we have one of the best air systems in the world. It's been operating very, very well. I think costs are very reasonable for those flying and I think we need to continue the programs we have to keep that system as strong as it is," he said.

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