DEPARTMENT OF TRANSPORTATION TRUST FUNDS PAYMENTS TO AIR CARRIERS (LIQUIDATION OF CONTRACT AUTHORIZATION) (AIRPORT AND AIRWAY TRUST FUND) For liquidation of obligations incurred for payments to air carriers of so much of the compensation fixed and determined under section 419 of the Federal Aviation Act of 1958, as amended (49 U.S.C. 1389), as is payable by the Department of Transportation, [$33,423,077] $25,600,000, to remain available until expended and to be derived from the Airport and Airway Trust Fund: Provided, That none of the funds in this Act shall be available for the implementation or execution of programs in excess of [$33,423,077] $25,600,000 for the Payments to Air Carriers program in fiscal year [1994] 1995: Provided further, That none of the funds in this Act shall be used by the Secretary of Transportation to make payment of compensation under section 419 of the Federal Aviation Act of 1958, as amended, in excess of the appropriation in this Act for liquidation of obligations incurred under the "Payments to air carriers" program: Provided further, That none of the funds in this Act shall be used for the payment of claims for such compensation except in accordance with this provision: Provided further, That none of the funds in this Act shall be available for service to communities in the forty-eight continguous States that are located fewer than seventy highway miles from the nearest [large or medium] hub airport, or that require a rate of subsidy per passenger in excess of $200[, unless such point is greater than two hundred and ten miles from the nearest large or medium hub airport]: Provided further, That of funds provided for "Small Community Air Service" by Public Law 101-508, $13,000,000 in each of fiscal years 1995, 1996, 1997, and 1998 are rescinded. (Department of Transportation and Related Agencies Appropriations Act, 1994.) DEPARTMENT OF TRANSPORTATION PAYMENTS TO AIR CARRIERS PROGRAM AND PERFORMANCE The Secretary of Transportation, through powers of delegation and review, administers the section 419 subsidy program, which was added as part of the Airline Deregulation Act of 1978. Subsidies under this program are paid to airlines--primarily commuter carriers. Beginning in 1992, this program is funded out of the Airport and Airway Trust Fund. This appropriation provides funds to subsidize air service to small communities by payment to air carriers under § 419 of the Federal Aviation act of 1958, as amended by the Airline Deregulation Act of 1978, the Airport and Airway Safety and Capacity Expansion Act of 1987 and the Omnibus Budget Reconciliation Act of 1990. EAS was established as a transition program following airline deregulation. The Airport and Airway Safety and Capacity Expansion Act of 1987, P.L. 100-223, extended authorization for the program through September 30, 1998; this legislation also modified the quality of service standards for EAS. The Omnibus Budget Reconciliation Act of 1990 authorized $38.6 million in contract authority for the program for each year FY 1992-1998. The annual amounts remain available until expended. Eligible communities under the EAS program (about 700) include, generally, communities that were listed on air carrier certificates at the time of passage of the Airline Deregulation Act (ADA) in October 1978. As amended by the Budget Reconciliation Act of 1990, the ADA defined eligible points specifically as points that were eligible under § 419(a) of the Federal Aviation Act before October 1, 1988, that received scheduled air transportation at any time after January 1, 1990, and that did not have their eligibility withdrawn by DOT Orders 89-937 or 89-12-52 (these two orders made 26 communities ineligible).3 Also, the FY 1994 Department of Transportation and Related Agencies Appropriations Act required the Department to withdraw the subsidy eligibility of an additional 11 communities (Order 93-11-44). There are two distinct types of § 419 compensation. The first (referred to as "hold-in") occurs when an incumbent carrier files a notice of intent to terminate or reduce service below the required essential service level. In that event, the Department will prohibit the incumbent carrier from suspending service at the community until the selection of a replacement carrier is 1 Reflects the FY 1994 Congressional action to rescind $5.2 million in contract authority. 2 Reflects the FY 1995 proposal to rescind $13 million in contract authority. 3 Eligible points include those that receive subsidized service as well as those receiving non-subsidized service. possible. In the interim, the Department compensates the "hold-in" carrier for its continued services. The second basic type of § 419 rate is longer-term compensation. Air carriers agree to rates of compensation for future periods subject to availability of funds, normally two years in duration, at EAS points where these carriers have proposed service, but cannot do so without compensation. This type of § 419 compensation is paid as a monthly reimbursement to the carriers after the Department has solicited proposals to serve a point, has chosen a carrier, and the carrier has provided service. The $25.6 million obligation limitation requested for compensation to small communities in FY 1995 is $7.8 million less than the amount available in FY 1994, and is premised upon the implementation of program reductions by October 1, 1994. This amount reflects the monthly difference between the enacted level for FY 1994 of $33.423 million and the estimated FY 1995 level of $25.6 million. The budget estimate for FY 1995 assumes that approximately 105 communities in the 50 states and Puerto Rico would receive subsidized service. This number is about 15 less than the number of communities that received subsidized service in FY 1994. This reduction would result from the imposition of tighter standards for communities to qualify for subsidized air service. Consistent with these standards, communities are ineligible to receive subsidized service if located within 70 miles of a small, medium or large hub airport, or require $200 per passenger or more. (Proposed appropriation language specifies these criteria.) In addition, the change in the number of points receiving subsidized service reflects the anticipation that scheduled air transportation at some non-subsidized EAS communities will drop below the break-even level and require compensation while some currently subsidized communities may be approaching profitability and will no longer require financial support. |