Politics & Government

Federal subsidy that helps fund Valley airports criticized

WASHINGTON — A federal subsidy that's funded air travel through Fresno, Modesto and other Central Valley cities has often failed to meet its goals, auditors warn in a new report.

The Valley cities have received hundreds of thousands of dollars in recent years from the Small Community Air Service Development Program. The money is supposed to help small airports gain financial altitude, but auditors question the grants' long-term worth.

"We found that half of the grants we reviewed failed to achieve (any of) their objectives, or were unable to sustain the resulting benefits beyond their grant horizon," the Transportation Department Office of Inspector General noted.

Seventy percent of the air service grant recipients failed to meet all of their stated objectives, auditors added. Typically, the grants provide either revenue guarantees to the airlines or support advertising and marketing aimed at boosting local air travel.

The critical audit could provide political ammunition for the Bush administration, which opposes the air service subsidy. Until now, Congress has kept the money flowing, with grants totaling about $100 million since 2002.

"Sometimes, the programs do work out; there have been grant success stories," Jerome Thiele, manager of the Modesto Airport, said Monday, "and there have also been times when (the grant) is not enough money."

Neither the Fresno nor Modesto grants appeared to work out. In both cases, the federal subsidy helped spur local air traffic -- but not for long.

The grants are different than the long-running Essential Air Service subsidy, which provides annual funding for the Merced and Visalia airports. Congress initially launched the Essential Air Service as a temporary program 30 years ago, but it has long since become permanent.

The separate Small Community Air Service Development Program is set to expire Sept. 30. Despite criticism, lawmakers savor the program as a way to help local airports.

"These programs are incredibly important to rural communities, and to the people who live in these rural communities," Rep. Mike Thompson, D-St. Helena, told the House Transportation and Infrastructure Committee.

Modesto, for instance, received a $550,000 air service grant in 2005. Fresno received a $1 million air service grant in 2003. Stockton received $400,000 last year, while Visalia received $200,000 in 2002.

Fresno's $1 million grant helped offset some of Frontier Airlines' costs for boosting service to Denver. The Modesto grant was to help SkyWest Airlines provide service to Los Angeles.

The new 40-page audit examines the overall program and does not specifically criticize any of the San Joaquin Valley grants. But for Valley cities, air service has proven volatile in the years since the grants were received.

SkyWest's traffic through Modesto, for instance, jumped from 35,000 passengers in 2005 to 96,000 last year, Transportation Department records show. But in March, SkyWest cited high fuel prices and insufficient revenue in announcing it would discontinue its four round-trip flights to Los Angeles in June.

"They cannot charge enough to make it profitable," Thiele said. "When they do charge more, we lose passengers to Sacramento (or other airports)," Thiele said.

Fresno Yosemite International Airport passenger traffic jumped from 990,000 in 2003 to 1.2 million last year, Transportation Department records show. The subsidized Frontier Airlines flights to Denver, though, collapsed relatively quickly. Helped by the federal grant, the Frontier flights began in September 2005. In June 2007, the flights ended.

Fresno airport officials could not be reached to comment Monday.

If the air service grants continue, auditors recommend that communities conduct in-depth marketing studies and provide "substantial financial and non-financial support." Transportation Department officials agreed, in their response to the audit.