Docket Number OST-2002-11590

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By Order 2002-2-11 (Docket OST-2002-11590), the Department instituted a new small community air service development pilot program and solicited an initial round of proposals from interested communities and consortiums of communities. This program provides grant-in-aid financial assistance to small communities to improve their air service. Grant proposals seeking priority consideration should be submitted by April 22, 2002.

Background
On April 5, 2000, the President signed the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (AIR-21), Public Law 106-181, which, among other things, established a new pilot program designed to help smaller communities (both in and out of the Essential Air Service program) to enhance their air service.

Specifically, the law authorizes the Secretary to provide financial assistance (direct financial assistance to an air carrier is limited to three years) to as many as 40 communities nationwide at any given time, though no more than four of those may be from the same state (a consortium of communities will be considered a single entity).

The core objective of the pilot program is to secure enhancements that will be responsive to a community's air transportation needs and whose benefits can be expected to continue after the initial expenditures.

1. Size-for calendar year 1997, the airport serving the community or consortium was not larger than a small hub airport (as that term is defined in section 41731 (a)(5), and
   1. had insufficient air carrier service; or
   2. had unreasonably high air fares
2. Characteristics-the airport presents characteristics, such as geographic diversity or unique circumstances that will demonstrate the need for, and feasibility of, the program.

Overall Available Funding/Use of Funds:
The statute authorized a funding level of $20 million for fiscal year 2001 and $27.5 million for each of fiscal years 2002 and 2003. No funds were appropriated for the first year, but in the Department's FY2002 appropriation bill, P.L. 107-42, Congress appropriated $20 million for the program. The statute directs the Secretary to assist communities in developing projects that will enhance their access to the National air transportation system through public-private partnerships, and to help communities overcome factors that might be inhibiting improvements in their current passenger air service (all-cargo services are outside the scope of this Pilot Program).

The law is very general about how program funding can be used. However, program funding is intended to improve air service to those communities that are not receiving sufficient air service or are experiencing unreasonably high air fares, and not to shift existing costs from the local or state level to the federal level.

1. provide assistance to an air carrier to subsidize service to and from an underserved airport for a period not to exceed 3 years;
2. provide assistance to an underserved airport to obtain service to and from the underserved airport; and
3. to provide assistance to an underserved airport to implement such other measures as the Secretary, in consultation with such airport, considers appropriate to improve air service both in terms of the cost of such service to consumers and the availability of such service, including improving air service through marketing and promotion of air service and enhanced utilization of airport facilities. For example, program funds may be used for any type of new media advertising; new studies designed to measure air service deficiencies, or to measure traffic loss or bleed to other communities; new expenses associated with conducting promotional activities, including air travel, air fares, vehicle rentals, accommodations and meals for visits to airlines; and the employment of new dedicated air service development staff on a long-term basis, advertising or public relations agencies, universities, and consulting firms.

Selection Criteria:
The Department's selection of those airports and communities to be included in the Pilot program will be based on the following objective criteria:

1. Relative size of each applicant community;
2. Geographic location of each applicant;
3. Grant amount requested compared with total funds available for all communities;
4. Proposed federal grant amount compared with local share offered;
5. Uniqueness of community's stated problem(s); and
6. Relative ability of community to resolve or address stated problem(s).

1. Is the community truly experiencing insufficient air service or higher than average air fares when compared to similar communities?
2. Does the proposal represent the best and most efficient method of meeting that need, given the community's circumstances?
3. Are the community's objectives attainable during the funding period requested? Is there a realistic prospect that the enhanced service -- in terms of quantity, quality, or price -- could be sustained beyond the end of the funding period?
4. Is there low-fare service within a reasonable distance of the community that may affect the potential for the community's project to be successful?
5. Has a public-private partnership been identified to be responsible for the program at the local level? Has a public agency or organization been identified as the local sponsor to serve as a clearinghouse to submit reimbursement requests and receive program funding from the Department? Have protections been established to ensure that money intended for this project cannot be diverted to other uses?
6. Is the requested funding level appropriate for the project being proposed? Has the community proposed an acceptable method to modify or suspend the requested funding prior to the end of the planned funding period if the project is not attaining the desired results?