The importance of markets, politics, and community support: An analysis of the Small Community Air Service Development Program

Abstract

Across the U.S., smaller communities face a challenging environment for attracting and retaining commercial air service as a result of airline industry changes. Increasingly, airports and communities in smaller markets are developing air service development programs (ASIPs) to provide incentives to reduce the financial risk to airlines while also marketing the new service to the community. A key source of funds for many of community-based incentive programs is the Small Community Air Service Development Program (SCASDP), which is a discretionary grant program operated by the Department of Transportation that provides funding to communities to supplement their own ASIPs. Despite the growing importance of this tool used by many communities, we know little about the factors that drive the allocation of SCASDP grants by the DOT. Using an analysis of 164 applications to the SCASDP program between 2011 and 2013, we assess the effect of market, political, and economic factors on the DOT's allocation of grants. Our findings suggest the DOT largely relies on the criteria in its published guidelines to allocate SCASDP grants. Specifically, the agency is more likely to approve applications for SCASDP grants when the community has the support of members of Congress who represent the community and the support of businesses and citizens through local match contributions. We also find the DOT allocates grants to communities with letters of support from air carriers and prior experience, either through multiple applications in the past or through an experience air service development consultant, with the application process.