Rural flight subsidies
Commercial air transport gives carriers freedom to serve any cities and routes they wished, so air carriers will only, other things being equal, provide routes where they are profitable, which gets back to the fact that the subsidies are necessary to convince the airlines to provide services and offset the impacts of the commercial air transport. Under this background, government provides rural flight subsidies to help flights and communities with relatively lower traffic levels maintain a minimum level of air transport service and connect them through carrier hubs to the national network, so they would not lose service entirely.  In U.S, it is the Federal Aviation Administration (FAA) that allocated a $199 million dollar combination of mandatory and discretionary funding for small and geographically isolated locales throughout the United States during fiscal years 2012–2015.  In China, the Civil Aviation Administration of China provided 152 small airports with around 1.9 billion dollar in 2016 to eliminate the numerous gaps in both accessibility and quality of Western airplane transportation. In the context of Europe Union transport law, Public Service Obligation (PSO) is arranged in which a governing body or other authority offers subsidies to low-density routes for a specified period of time. This is done in cases where there is not enough revenue for routes to be profitable in a free market, but where there is a socially desirable advantage in this transport being available .
- Goal: Increase the rates of airplane transportation user comfort, convenience and satisfaction
- Goal: Increase the number of airports and airport gates
- Goal: Increase the funds available to develop, operate and maintain airplane transportation
- Goal: Increase passenger air ridership
- Goal: Increase the amount of cargo being transported by airplane
Small rural and remote communities with low traffic volume would be abandoned by carriers due to commercial air transportation which allowed the airlines to serve any routes they desired. While that kind of air transportation stimulated competition between carriers on popular routes connecting large cities, it would likely lead to a reduced or complete elimination of services for smaller communities. In this case, rural flight subsidy was structured to provide air transport service to communities that do not have local markets (i.e. Passenger demand) that can independently support at least one commercial air carrier. Rural flight subsidy guaranteed that any community that had received commercial passenger service before commercial air transportation would continue to maintain service.In U.S., each day, about 3,000 passengers enjoy mostly empty, heavily subsidized flights, financed by rural flight subsidy that requires the government to guarantee commercial air service to scores of small communities that can't support it themselves.
In 2015, Boutique Air has been awarded the Essential Air Service (EAS) contract for Muscle Shoals, Alabama following SeaPort Airlines' termination of flights in late October. Boutique Air provided 24 round trip flights a week. Two flights a day will go from Muscle Shoals to Hartsfield-Jackson Atlanta International Airport (ATL) and two flights a day will go to Nashville International Airport (BNA). By having the Atlanta connection passengers can connect to over 1200 flights per day to anywhere in the world. Businessman said that this was great news for the business traveler who can leave MSL in the morning and return later that evening. For the leisure traveler Nashville was a destination market that serves over 50 markets with 390 flights a day with both Southwest and Jet Blue Airlines as low cost carriers.  Boutique Air was already located in the Nashville International Airport and was servicing Greenville, Mississippi with two flights a day before 2015.In 2016, the Shoals’ new commercial airline, its third in 31/2 years, boarded 440 passengers in its first full month of operation. San Francisco-based Boutique Air began commuter air service Feb. 23 to Nashville International Airport and Hartsfield-Jackson Atlanta International Airport. The airline boarded 45 assengers from Feb. 23-29, which worked pretty good. 
Tradeoffs of implementing this policy may include:
- May result in a waste of fuel and cause a less than welcoming environment when the aircraft only carrying a few passengers
- Will lead to inefficiency of airplane uasge because there will only be several flights every week
- Distort the incentives of rural flight carrier to attract passengers by themselves.
- May illogically increase the number of air passengers when other modes (e.g.land or marine travel) may be more cost-effective and environmentally friendly
- May divert air passengers from profitable airports, increasing overall passenger costs
- Expensive to maintain because the total amount of the subsidy is increasing year by year
If answered yes, the following questions indicate superior conditions under which the policy is more likely to be appropriate:
- If subsidies were eliminated, would it drastically reduce opportunities for smaller, more rural communities in the United States to access the national air transport system?
- There is no redundancy in airport market coverage with larger, geographically proximal airports?
- Would it be possible to prioritize subsidies by evaluating community eligibility and then assessing the potential impacts of inclusion/exclusion on community access to the air transport system?
- Are there enough properly-sized, economically viable aircraft to serve smaller communities?
- If given the subsidy, do these airlines have profitability-focused management strategies to run?
- Are supporting infrastructures appropriate to operate air transportation?
- Are there a significant number of areas in the jurisdiction that are geographically underserved by air travel?
- If new airline routes were introduced, would a significant number of passengers in underserved areas utilize it?
- Is sufficient funding available to provide the necessary amount of subsidy in order to attract air carriers to provide service to the rural areas?
The following questions and considerations are offered for determining how to implement this policy:
- What carriers (e.g., demostic carriers only), if not all, will be eligible to receive rural flight subsidies?
- Because the purpose of this policy is to connect rural counties to national air network, the subsidy should be allocated to demostic carriers only.
- What criteria will a route be required to meet in order to qualify a carrier for subsidies?
- It should be unconvinient for other travel modes(e.g. auto or marine) to come.
- Withnin certain distance there should be no larger, geographically proximal airports with any redundancy in airport market coverage
- How will the amount of subsidy be calculated for carriers based on different route?
- If calculated by travel distance, carriers will lose initiative to attract passengers by themselves.So maybe calculating by passenger is appropriate.
- The ratio of cost over revenue should be taken into account.
- How often will subsidized carriers operate these route weekly?
- How to prevent subsidizing flights which is easier to access by auto?
- The distance from subsidized counties to airport of destinations should be stipulated.
- How to make sure the subsidy divided correctly and impartially?
- How to waive the subsidy timely when certain flight no longer meet the requirement to get subsidy?
- The qualification to receive subsidy should be checked every few years.
- Has adoption of: Limited.
- For governance level(s): National.
- For area type(s): Rural.
- Notable entities who have implemented or adopted this policy include:
- Country of United States of America Approximately 60 communities in Alaska and 115 communities in the lower 48 contiguous states in U.S.
- Country of China Western cities in China, such as Xizang, Xinjiang.
- International Organization of European Union PSOs currently in operation in Europe are routes from Dublin to Kerry and Donegal, routes between the Greek Mainland and the Greek Islands, routes from Italian mainland to Sardinia and Elba, routes between the French mainland and Corsica, certain domestic routes within Sweden and Finland, and routes to the Scottish Highlands and Islands.
- Associations - Passenger Airlines Assumption: Nowadays, the competitions between airlines are more and more intense. Rural flight subsidy attract airlines' attention to a new field of air transportation, which help them expend their business scope.
- Constituent Groups - Rural Residents. Assumption: Rural flight subsidy enables local people travel to national air network
- Associations - Aircraft Manufacturers Assumption: More flights will increase the usage of airplane and airplane demand.
- Constituent Groups - Local Businesses Assumption: Rural flight subsidy could prevent economic isolationism, scarce resources, and the loss of farms and younger families not willing to stay.
- Labor Unions - Aircraft Pilots Assumption: Good air service is essential to attract business, maintain a tourist industry and promote jobs.
- Electeds - Local Legislators. Assumption: Small local airports are expensive to run but vital to the communities they serve and incumbents try to keep their constituents happy.
- Government Agencies - Environmental Protection. Assumption: Low ride rate and redundancy results in resources waste. Flights typically go out less than half full, and many airlines that get the subsidies find they still can’t break even.
- Constituent Groups - Automobile Clubs and Owners. Assumption: Some of the time saved by flying rather than driving to a reasonably close airport will get eaten up by waiting for a connection.
- Electeds - National Executives. Assumption: National Executives want to eliminate rural flight subsidy right away because they want to show they’re at all serious about cutting government waste.
- Labor Unions - Airport Workers. Assumption: Because the service is so unreliable, the spinoff business benefits of having an airport with commercial service probably don’t actually accrue to towns that get the subsidies, which makes airport workers struggle for living.
- A strategic approach for improving rural air transport in the United States Grubesic T H, Murray A T, Matisziw T C. [J]. Transport Policy, 2013, 30: 117-124. Highlight costs of the EAS program and identify systemic inefficiencies in the allocation of EAS resources.
- Economic contribution of essential air service flights on small and remote communities. Özcan, İsmail Çağrı. Journal of Air Transport Management 34 (2014): 24-29.This article argued that even thought rural flight subsidy have lots of disadvantages, the program was crucial to accessing small and remote communities, which helps them develop economically and socially.
- U.S. Small Community Air Service Subsidies: Essential or Superfluous?.Cunningham, Lawrence F., and E. Woodrow Eckard. Journal of Transport Economics and Policy (1987): 255-277.This paper was a statistical analysis of the impacts of formal operationg subsidies on air service to small communities after deregulation has been acted for 9 years.
- A spatial analysis of air transport access and the essential air service program in the United States.Grubesic, Tony H., and Timothy C.Matisziw. Journal of Transport Geography 19.1 (2011): 93-105. In this paper, a comprehensive database of US airports is combined with network analysis techniques and a geographic information system to evaluate population access to subsidized airports for 2006.
- A Quality Framework for Services of General Interest in Europe, Brussels 20.12.2011 COM(2011)900 FinalEuropean Commission(2011). This White paper stated that a higher share of travel by collective transport, combined with minimum service obligations, will allow increasing the density and frequency of service, thereby generating a virtuous circle for public transport modes.
- A Study Of An Essential Service And Tourism Development Route Scheme(2013).This study examines a number of key elements in constructing a Essential Service and Tourism Development Route scheme, i.e. route selection, service level specification, carrier selection, contractual arrangements, subsidy payments, sources of financing, and supplementary measures.
- EAS Program: a Complete Taxpayer Waste,the Heartland Institute(2016). This article argued that the program, which cost a tick over $180 million last year, is the single most wasteful program in the government.
- Current List of Eligible EAS Communities U.S. DOT.(2015) This document provided a list of Essential Air Service (EAS) program eligible communities as of September 2015
- Is the Essential Air Service program still vital after 30 years?,Kathy Cobb(2008). This article analyzed whether it is still necessary to provide rural flight subsidy. In this article, the Government Accountability Office (GAO) recommended rural flight subsidy serves only the most isolated communities and cited data that show passengers are willing to drive to a nearby major hub with a low-fare carrier.