Department of Economics Working Paper Series The Political Economy of the Essential Air Service Program Joshua Hall, Amanda Ross and Christopher Yencha Working Paper No. 15-18 This paper can be found at the College of Business and Economics Working Paper Series homepage: http://be.wvu.edu/phd_economics/working-papers.htm The Political Economy of the Essential Air Service Program Joshua Hall* Associate Professor of Economics West Virginia University PO Box 6025 Morgantown, WV 26506
[email protected] Amanda Ross West Virginia University PO Box 6025 Morgantown, WV 26506
[email protected] Christopher Yencha West Virginia University PO Box 6025 Morgantown, WV 26506
[email protected] Abstract We find that congressional influences affect the amount of airport subsidies that a congressional district receives from the Essential Air Service (EAS) program. The EAS program was passed with the goal of helping to continue commercial air service to rural communities following the deregulation of the airline industry. Using subsidy data from 1998-2014, we find strong evidence that subsidies are higher in districts having congressional representation on the House Transportation Committee. Representation on the House Appropriations Committee is also associated with higher subsidies. Our empirical results, combined with news reports, are consistent with the EAS serving private as well as public interests. Keywords: congressional dominance, deregulation, airports JEL Codes: D73, L93 * Corresponding author. The authors would like to acknowledge the helpful comments of E. Frank Stephenson, John Dove, Jamie Bologna, and session participants at the 2015 Public Choice Society meetings in San Antonio, TX. The political economy of the Essential Air Service program 1 Introduction The structure of the airline industry in the United States changed dramatically in 1978 with the passage of the Airline Deregulation Act (ADA).