The Boyd Group, Inc.
Advisors to the Aviation Industry
Since 1984

78 Beaver Brook Canyon Road
Evergreen, Colorado, 80439
303-674-2000
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The Boyd Group Advantage

News & Events

The Boyd Group Assists Client Airports In Winning
Over 20% of Total Small Community Air Service Grants

Evergreen, Colorado. October 18, 2007. The DOT today announced Small Community Air Service Grant Awards. We're proud to note that over 20% of total program funds went to clients of The Boyd Group. Again as in prior years, that's more than any other consultant.

Particularly, we're happy to announce that two of the awards - to Golden Triangle and to Rhinelander - represent repeat SCASD successes for our clients.

Ominous Cloud: Awards That Are Intended Not To Be Spent. While the awards are exciting, it must be noted that the current SCASD program has morphed fundamentally from its original intent and implementation back in 2002. It is increasingly clear that the focus at the DOT has shifted to looking for ways not to spend the dollars, instead of using it innovatively to actually fund programs that have a chance of real air service success.

The point is clear that Congress wants DOT to shift the money to EAS, a program that Congress refuses to bring into the 21st century. The original $35 million intended for the SCASD program was never funded, and half of the $20 million that was appropriated in the first years was taken away two years ago to fund EAS.

This year, not only did the the DOT award less than authorized, a number of the awards could be considered as nothing less than sure-thing "never-grants" - money for applications that under any earthly set of circumstances the DOT knows will never get used.

For example, a grant to attract a second carrier to a market now experiencing barely a 30% load factor simply isn't going to happen within current or future airline economics, particularly when carriers are today dropping RJ routes with demonstrated load factors of nearly 80%.

DOT staff are well aware of current airline industry economics, and they certainly know that no carrier in its right mind, and without a political gun to its head, would even consider such a market. Today, with oil prices in the $90 range, ATC congestion delays, and huge gate constraints at big connecting hubs like Atlanta, it would take a pretty big gun to convince any airline to take such a risk. Furthermore, unlike the early days of the SCASD program, the DOT isn't likely to allow changes to the service target noted in the application.

So it's easy money back into the DOT kitty, but the political points of making an award have been achieved.

Ditto for anything involving air service with intra-state on-demand air taxi service. The DOT knows full well that such schemes are DOA. The $1.5 million wasted in the first year of the program for a doomed-to-fail fruitcake air taxi deal in the Dakotas is not something the DOT has forgotten. That money was completely and embarrassingly wasted.

So the two awards given this year for on-demand air taxi service raise real questions regarding how serious DOT is in regard to spending the money. In terms of market viability, these schemes are just slightly behind a snowball in the Sahara.

It's unfortunate that DOT staff are put in this position by misguided congressional policies aimed at under-funding programs such as SCASD, as well as pressuring the DOT to shift dollars to an outdated EAS program that's in desperate need of total revision.

Ominous Cloud II - Rule-Playing At The DOT. In the first years of the SCASD program, the DOT would bend over backwards to adjust terms of an award, and the intent was to have the grant result in more air service.

Today, it's playing by a different rulebook, or in some cases, a rulebook they make up on the fly. It's clear that, instead of trying to use the program to produce maximum new service, the objective is to simply try to not spend the money. Unlike in the first years of the program, grants have been reneged upon based on subjective technicalities. Grant extensions - once no real problem - are being rejected on the shakiest of logic. Applications aimed at communities gaining low-fare service are now tossed in the round file if another carrier has a monopoly on service to the hubsite city. Again, there's no doubt that the focus is now on how not to spend the money, instead of being a vehicle to build new air service.

But The Program Has Been A Success. Nevertheless, we are proud that again this year clients of The Boyd Group received more of the program award money than those of any other consultant.  

And over the past five years, we can point to huge successes at our client airports as a result of assisting them in turning the grants into real air service improvements.

The most most successful of any grant in the history of the program is that of SRQ. Enplanements annually have grown by over 55% - that's 600,000 additional 0&D - due to the results of a SCASD grant attracting and incubating AirTran. That carrier's initial success in adding ATL has led it to add several other markets from SRQ, most recently St. Louis. The success of AirTran was crucial to convincing other carriers, including jetBlue, and most recently, American Eagle, to enter the SRQ market.

As for next year, it's possible that there may not be a program, but time will tell. In the meantime, we're proud to once again be able to have assisted our client communities in gaining their share of SCASD money.

We'll be working with several of them in the coming months, as we did with SRQ, to turn the dollars into enplanements.

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