Public funding of airport incentives in the United States: The efficacy of the Small Community Air Service Development Grant program

• The Small Community Air Service Development (SCASD) Grant program is evaluated.
• SCASD grants provide funding to small airports for air service incentives.
• Fewer than half of SCASDG recipients from 2006 to 2011 were successful.
• Successful grantees were generally in larger communities or had airline buy-in.
• Reform of the SCASD program may be warranted to improve its success rate.

As U.S. airlines began to restrict available domestic capacity at smaller airports in 2008 as a result of higher fuel prices and an economic downturn, these airports have increasingly started to rely on incentive packages composed of revenue guarantees, waived or reduced airport use fees, marketing support, or direct subsidies to attract new service. There are two main federal programs that provide funding for such incentives for small U.S. airports: the Essential Air Service (EAS) program and the Small Community Air Service Development Grant (SCASDG) program. While the EAS program has received considerable academic attention, there has been no comprehensive analysis of the success of SCASDG recipients in attracting and retaining their targeted air service.Using a metric of SCASD grant success, this paper evaluates the outcomes of 115 SCASD grantees from 2006 to 2011. In each year, fewer than half of the grant recipients were ultimately successful in meeting the goals of their proposal. Several case studies suggest that successful grantees often had significant community or airline support prior to submitting their grant and were located in slightly larger-than-average communities. Further careful consideration is necessary to determine whether reform of the SCASDG program is warranted to more effectively support the development of small community air service in the United States.