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Holding Pattern: Problems and Progress in Rural Aviation

November 03, 2011 By Conrad deFiebre, Transportation Fellow

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Commercial air service in Greater Minnesota, launched in many cities shortly after World War II, is threatened by declining passenger counts, airline retrenchment and controversy over federal subsidies to carriers.

Recent economic conditions have hit small and medium U.S. airports harder than the nation’s largest airports, with up to 18 percent losses in scheduled flight service over the past five years, compared to the biggest airports which have dropped only 2.3 percent.

These trends are forcing regional airport managers to work with local business leaders in developing ways to either retain commercial service—daily scheduled fights for the public—or find general aviation alternatives—charters, business jets, private service.

A move toward more general aviation would require state policymakers to rework the way they tax air travel. Reducing aircraft registration fees while raising aviation fuel taxes, which better reflect actual use of public airways, is one such reform that would promote business-friendly flying in a time of shrinking commercial service in much of the state.

St. Cloud Regional Airport, which lost commercial service in January 2010, is working with area business leaders to restore that service, using a combination of federal grant money, local public funding and business community dollars to guarantee an airline $1 million in revenue to launch commercial operations. It’s counting on direct service to Chicago or Denver, making it more attractive for passengers who would otherwise drive to Minneapolis to avoid a layover.

Overall, Minnesota’s public airports contributed $12.2 billion to the state’s $239 billion economy in 2009, according to a January 2011 University of Minnesota study. They supported 164,900 jobs and paid $6.5 billion in labor income. Most of this activity was concentrated at three large international airports -- Duluth, Rochester and especially Minneapolis-St. Paul – but the 133 small and medium-sized facilities throughout the state kicked in $434 million worth of output, 3,758 jobs and $184 million in labor income.

Rebalancing Greater Minnesota’s share of air service is critical to rural economic development. To accomplish this, Minnesota 2020 makes the following recommendations:

  • Minnesota should reduce aircraft registration fees and raise aviation fuel taxes, which better reflect actual use of public airways. Such a reform of the state’s outdated user-financing system for aviation infrastructure, safety and education would promote business-friendly flying alternatives to shrinking commercial airline service in much of the state.
  • State policymakers should speed up repayment of raids on a dedicated airport development fund with more low-interest general obligation bonding.
  • Both local communities and airlines must take more responsibility for the vitality of subsidized passenger routes under the federal Essential Air Service program.

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