Jim Kenyon: Cape Air Serves Lebanon on a Wing and a Subsidy

For the second year in a row, Cape Air is offering end-of-the-year discounts on flights from Lebanon to Boston and New York. I guess when you’re raking in millions a year in corporate welfare, you can afford a little bit of largesse around the holidays.

Cape Air, which is based in Hyannis, Mass., and operates a fleet of more than 75 airplanes, is a major benefactor of the federal Essential Air Service program. The airline has received $26.3 million in federal subsidies during the last year for serving 15 small airports around the country, according to a U.S. Department of Transportation report issued in November. A good chunk of the money — $2.3 million — came for providing daily flights in and out of Lebanon Municipal Airport. On a list of where Cape Air draws its largest subsidies, Lebanon ranked No. 2. Only the Fort Leonard Wood, Mo., airport generated more, bringing in $2.9 million.

The Essential Air Service program was established as a “safety net for the smaller and more isolated communities across the country that had scheduled air service at the time the (Airline Deregulation Act) was passed in 1978,” explains the federal DOT website.

But with Congress in belt-tightening mode , or at least talking a good game, the program has come under fire. Last month, New Hampshire Sen. Kelly Ayotte didn’t hold back in a Union Leader story about Cape Air’s reduced Lebanon fares ($49 to Logan and $99 to New York, each way). “Taxpayers are effectively subsidizing this promotion, given that Lebanon Airport relies heavily on millions in taxpayer subsidies each year made possible through the so-called ‘Essential Air Service’ program,” said Ayotte, maybe recognizing that her political future doesn’t depend on Upper Valley supporters. “This may seem like a bargain for air travelers, but taxpayers are the ones left holding the bag at the curb. If the airline can afford to slash prices on plane tickets, it would certainly seem that the federal subsidy has outlived its original purpose.”

To be fair, Cape Air — the airport’s only commercial airline — is doing Lebanon a favor by reducing fares ($25 or more on some tickets) late in the year. To qualify again for $1 million in Federal Aviation Administration funding for infrastructure improvements, Lebanon must reach the 10,000 outbound passenger mark by Dec. 31, which it did for the first time last year. This year, the airport entered the final month needing 564 passengers — 57 fewer than last December — to reach the magic number.

“We’re delighted that we can be helpful to the airport and people in the Upper Valley,” said Andrew Bonney, Cape Air’s senior vice president of planning.

Cape Air’s subsidy in Lebanon turns out to be about $115 per passenger. The feds allow up to $1,000 per passenger. The Essential Air Service program represents a “significant and important part of our business,” said Bonney. He also pointed out that Cape Air operates in dozens of cities not in the program, and the airline was in business for nearly 20 years before it started receiving federal subsidies in 2007. Cape Air came to Lebanon in 2008.

During the last year, Cape Air and other airlines have been paid $220 million for serving 117 small airports nationwide. Lebanon, the only New Hampshire airport in the program, had the 26th largest subsidy.

In some remote parts of the country, the program probably is essential. But is the ability to hop aboard a nine-seat Cessna for a 50-minute flight to Boston or 75-minute trip to White Plains, N.Y., essential in the Upper Valley?


Not with larger airports in Manchester and Burlington a 90-minute drive away for most Upper Valley residents. There’s also Dartmouth Coach, which has seven buses a day that stop at Logan ($38 for a one-way ticket and $60 roundtrip) and at least one that makes a daily New York City run.

Lebanon’s airport is essential only for the Dartmouth billionaires club, otherwise known as the college trustees, and other high-fliers who zip in and out of the Upper Valley on their private jets.

But like it or not, the city of Lebanon can’t afford for Ayotte and others who consider the Essential Air Service program to be a waste of tax dollars to get their way. “If Essential Air Service went away, we’d lose more than just Cape Air,” Lebanon Airport Manager Rick Dyment told me.

About 60 percent, or $480,000, of the airport’s $800,000 in annual revenue is tied to Cape Air’s operation. The airport, a perennial money-loser for the city, would become even more of a financial drain without Cape Air’s landing fees and rent it collects from terminal tenants. The federal Transportation Security Administration and two car rental companies would have little reason to stay.

The airport’s bottom line has improved as the number of outbound passengers has climbed from 6,200 in 2009 to 10,011 in 2012. But it still “isn’t enough to allow an airline to break even,” said Dyment. Without the EAS subsidy, “we couldn’t fly the route,” Cape Air’s Bonney told me. “The economics of the service don’t work.”

In 2012, Cape Air made 4,042 flights in and out of Lebanon. On average, there were five passengers on each flight. Last Wednesday morning, just before boarding began for a flight to Boston, I watched as three TSA agents guided the plane’s five passengers through security.

The airport continues to be an albatross. But Lebanon better hope the federal government doesn’t stop feeding it.

Jim Kenyon can be reached at Jim.Kenyon@valley.net.