The Essential Air Service: When Government Subsidies Become an Airline Business Model
Wendover gets one important fact right: the government pays airlines for completed flights, not individual passengers. But the video makes a much larger claim—that airlines can profit without selling tickets—without establishing the route-level costs, actual ticket revenues or profit calculations needed to prove it. The distinction matters: a subsidy calculated to cover an expected operating shortfall is not automatically a government-funded profit machine.
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The opening numbers fail their own source check
The episode states that United Airlines received $2,317,073 annually for its Denver–Pueblo service. The Department of Transportation's May 1, 2019 schedule lists Pueblo at $2,548,067, with SkyWest as the contracted carrier, while $2,317,073 belongs to Hagerstown, Maryland, served by Southern Airways Express.
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This is particularly revealing because the video later identifies Hagerstown as receiving approximately $2.3 million annually. The same amount has effectively been attributed to two different communities. The DOT document is not an obscure source discovered years later; it is the contemporaneous official schedule referenced in the episode's own description.
The error matters because the opening establishes the financial credibility of everything that follows. A documentary that cannot reliably associate a subsidy with the correct airport should not expect readers to accept its financial comparisons without checking the underlying records.
The $380 passenger subsidy is not what the video implies
The video describes a $54 Victoria ticket as receiving an additional $380 from the government. It presents the arrangement almost like a government-funded discount attached to each passenger's ticket.
That is not how the payment works.
The $380 figure represents an average subsidy relative to passenger numbers, not a $380 payment made for each ticket purchased. The government pays the airline for completed contracted flights. The ticket price remains a separate commercial transaction.
The Government Accountability Office explicitly warned that average subsidy per passenger does not represent a specific portion of an individual ticket price paid by EAS funds. Ticket prices depend on demand, available seats, competition and airline pricing decisions.
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The distinction matters. A route with few passengers can have an enormous average subsidy per passenger without the government actually paying that amount toward any particular person's journey.
The video uses a useful measure of public expenditure but presents it in a way that encourages readers to misunderstand the transaction.
Air Choice One's $15.7 million is revenue, not profit
The episode makes its strongest accusation when it says:
“Plenty of airlines running EAS routes would be profitable without selling a single ticket.”
It then introduces Air Choice One, which reportedly received $15.7 million annually through subsidized routes before ticket sales.
But revenue is not profit.
The actual subsidy calculation is more complicated. GAO documented that DOT evaluates projected operating expenses and expected passenger revenues, then calculates the subsidy to cover the difference while providing a statutory profit element of 5% of operating expenses. Airlines must submit supporting financial projections.
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Once a contract is established, payment is made for completed flights rather than individual passengers. This creates a genuine incentive problem, but it does not automatically mean the subsidy alone covers the entire cost of operating an empty aircraft.
To establish the video's claim, we would need to examine individual contracts alongside actual operating expenses, passenger revenues and completed flights.
The $15.7 million figure does not provide that information. It demonstrates substantial government-derived revenue, not a $15.7 million profit or proof that Air Choice One could operate its entire network without selling tickets.
The distinction between a guaranteed revenue stream and guaranteed profit is precisely the distinction the video fails to investigate.
The actual incentive problem is worse than the video explains
The Congressional Research Service identified several weaknesses in EAS contracting that deserve considerably more attention than the simple fact that airlines are paid per flight.
Its December 2018 assessment found:
- Some contracts attracted only one airline proposal, leaving little competitive pressure to minimize subsidy requests.
- Subsidy cost was not one of the four principal statutory factors DOT was required to consider when selecting carriers.
- Communities were not required to choose the cheapest proposal.
- DOT estimated that 20–25% of EAS communities were served by aircraft larger than their passenger numbers appeared to require.
- EAS flights had an average load factor of 49% in 2013, compared with 83% for domestic flights overall.
Perhaps most revealingly, airlines were free to set their fares after agreeing on a subsidy. CRS warned that an airline might find it more profitable to charge relatively high fares to fewer passengers than to reduce fares and fill more seats.
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This is the genuine structural concern.
A system can guarantee the airline compensation for providing a service without giving it a strong incentive to make that service attractive, affordable or efficiently utilized.
There is also a political dimension.
A 2015 study by Joshua Hall, Amanda Ross and Christopher Yencha, published in Public Choice, examined EAS subsidies between 1998 and 2014. It found strong and consistent evidence that subsidies were higher in congressional districts represented on the House Transportation and Ways and Means committees.
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That finding does not establish corruption, improper payments or individual political interference. It does establish that congressional representation is associated with the distribution of subsidies.
A program supposedly allocating money according to transportation need deserves scrutiny when political representation is also associated with who receives the money.
Congress subsequently changed the selection rules. The FAA Reauthorization Act of 2024 required DOT to consider the total compensation proposed by competing airlines, something that had not previously been a mandatory statutory selection factor.
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The video describes a bidding process without explaining these weaknesses. It misses the more important question: whether the government is actually purchasing the best available service for the money.
Hagerstown's removal was more complicated than the video admits
The video uses Hagerstown, Maryland, as its example of a wasteful subsidy.
Southern Airways Express received approximately $2.3 million annually for flights connecting Hagerstown with Baltimore and Pittsburgh. Baltimore/Washington International Airport was relatively close, while Washington's major airports offered additional alternatives.
The video says Hagerstown lost its subsidy in October 2019.
What it does not explain is why DOT ultimately refused to keep the community eligible.
The legal record provides the missing information.
Hagerstown had repeatedly failed the statutory minimum of 10 passengers boarding per service day. It fell below that requirement in four of the five years preceding fiscal year 2018. Its average in FY2018 was just 7.9 passengers per day.
DOT had previously granted the community waivers, but declined another one in August 2019. The department cited its history of noncompliance and proximity to three major airports: Dulles, Baltimore/Washington International and Reagan National.
Hagerstown challenged the decision. On April 7, 2020, the US Court of Appeals for the DC Circuit rejected the challenge and upheld DOT's decision not to grant another waiver.
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This matters because the video presents Hagerstown principally as a case of an unnecessary route that was eventually eliminated.
The actual story is more specific: a community repeatedly failed a statutory passenger requirement, received several exceptions, and eventually lost eligibility when DOT concluded that another exception was unjustified.
The video even explains the 10-passenger requirement elsewhere. It simply fails to connect that rule to its own example.
The economic evidence is much less conclusive than the video suggests
The video cites a 2014 study by Ismail Cagri Ozcan, which found that a 1% increase in passenger traffic at qualifying subsidized airports was associated with a 0.12% increase in local per-capita income.
That is a meaningful finding, but it is not a universal economic return on EAS spending.
The underlying study specifically examined EAS airports with at least 1,000 annual passengers and used data covering 1999–2011. Its estimate should not automatically be extended to the smallest and most remote routes, particularly those with almost no passengers.
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There is also important research that appeared after the video.
In 2023, Austin Drukker published How Essential Is Essential Air Service? The Value of Airport Access for Remote Communities.
Using millions of airline passenger records containing residential ZIP codes and airport choices, Drukker examined whether residents actually used their local subsidized airports or preferred to drive to larger airports.
His estimated result was striking: community members valued access to local EAS-subsidized commercial flights at approximately $16 million annually, compared with a program cost exceeding $290 million in the study's 2019 data.
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Consider Macon, Georgia. The research found that only 3% of air travelers from Macon used their local subsidized airport, while 94% drove to Atlanta to catch their flights.
That is not an isolated question about whether an aircraft should fly with six passengers. It is a question about whether the transportation service being purchased is actually the service people want.
However, the $16 million estimate must not be mistaken for a complete calculation of EAS's social value. GAO subsequently noted that the study considered leisure travel only. It did not fully measure business attraction, employment effects or the wider economic benefits that local communities and aviation stakeholders attribute to air service.
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There is also evidence supporting the program's underlying purpose.
A 2024 GAO assessment found that EAS communities generally lost less air service and gained more seats per departure between 2018 and 2023 than comparable small communities without EAS subsidies. The program is doing something measurable to preserve connectivity, even if that does not establish that every subsidized route is worth its price.
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The real question is therefore not whether aviation helps rural economies. It can.
The question is whether the particular route being subsidized is the most effective way of delivering that benefit.
The $290 million comparison is no longer an adequate account of the program
The video describes the annual EAS cost as approximately $290 million and argues that this is relatively modest in federal government terms.
It compares the figure with highway construction, maintenance of unused government buildings and the purchase price of a B-2 bomber.
Those comparisons establish scale, not value.
The program's financial position has also changed considerably since the video was published in November 2019.
GAO's analysis of DOT subsidy reports found that annual subsidies for communities in the contiguous United States increased from approximately $292 million in 2018 to $456 million in 2023 in nominal dollars. Adjusted to 2023 dollars, that represented a 31% increase.
DOT attributed the increase partly to higher fuel and labor costs, inflation and the growing use of larger regional jets. The number of communities served by aircraft with at least 30 seats increased from 56 in 2018 to 70 in 2023.
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These increases cannot simply be labelled waste. Operating costs have genuinely risen.
But they make the video's casual dismissal of $290 million increasingly inadequate.
There have also been substantial legislative changes. The FAA Reauthorization Act of 2024 repealed the previous 70-mile eligibility requirement and introduced new distance-based subsidy limits. As of October 1, 2026, the general maximum average subsidy is $850 per passenger, with a $650 limit for communities within 175 miles of a large or medium hub, subject to applicable exceptions and waivers.
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The rules described as current in the 2019 video are now historical.
And there is another important detail: EAS was originally established as a ten-year program in 1978. Congress removed that time limit in 1996, making it permanently authorized. What began as a transitional arrangement has become a continuing federal commitment.
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That deserves a more serious examination than comparing its budget with a fraction of a bomber.
The verdict: The problem is not simply empty planes
Wendover correctly identifies an unusual public payment system and raises a legitimate question about the economics of rural aviation.
But the episode makes three significant mistakes.
First, it misattributes a $2.317 million subsidy figure to Pueblo when the contemporaneous DOT schedule assigns that amount to Hagerstown.
Second, it presents average passenger subsidies as though they were direct additions to individual ticket prices.
Third, it makes a sweeping claim about airlines earning profits without ticket sales without showing the route-level financial evidence required to establish it.
More importantly, it stops short of investigating the actual institutional weaknesses: limited competition for contracts, historical weaknesses in cost-based selection, poor passenger utilization, political associations in subsidy allocation and the lack of a comprehensive measure of community benefits.
The opposing evidence matters. Alaska has communities for which air service is genuinely indispensable. GAO has documented the program's role in preserving connectivity. Rural communities can lose access to medical care, businesses and wider economic opportunities when transportation disappears.
But that does not justify treating every subsidized route as equally essential.
A government should not have to choose between abandoning remote communities and writing airlines increasingly expensive cheques without knowing what the public receives in return.
The appropriate standard is route-by-route accountability: actual subsidy payments, completed flights, passenger numbers, fares, operating costs, alternative airports, service reliability and measurable community benefits.
The video identifies the existence of the subsidy. It does not establish whether taxpayers are getting a good deal.
That is the investigation worth publishing.
References
1. The US Government Program That Pays For Your Flights — Wendover Productions, November 5, 2019. The original episode and its disclosed sponsorship and research references.
2. Subsidized Essential Air Service Communities (not in Alaska) — US Department of Transportation, May 1, 2019. The official contract schedule establishing the different subsidy amounts and carriers for Pueblo and Hagerstown.
3. Options to Enhance the Long-term Viability of the Essential Air Service Program — US Government Accountability Office, August 30, 2002. Explains the subsidy calculation, profit allowance, payment arrangements and why average subsidy per passenger is not a ticket-level payment.
4. Essential Air Service, R44176 — Congressional Research Service, updated December 19, 2018. Documents weaknesses in contract competition, aircraft utilization, passenger loads and airline pricing incentives.
5. The Political Economy of the Essential Air Service Program — Joshua Hall, Amanda Ross and Christopher Yencha, Public Choice, October 2015. Finds an association between congressional committee representation and higher EAS subsidies.
6. Board of County Commissioners of Washington County v. United States Department of Transportation — US Court of Appeals for the DC Circuit, April 7, 2020. Establishes the actual passenger shortfalls, waiver history and legal basis for Hagerstown's removal.
7. How Essential Is Essential Air Service? The Value of Airport Access for Remote Communities — Austin Drukker, National Institute for Transportation and Communities, May 2023. Estimates residents' valuation of local EAS service and compares it with program costs using passenger travel choices.
8. Policy Options for Connecting Remote Communities to Air Transportation Networks — Transportation Research and Education Center, July 12, 2023. Provides the Macon airport-use example and examines alternatives to subsidized flights.
9. Commercial Aviation: Effects of Changes to the Essential Air Service Program — US Government Accountability Office, December 10, 2019. Reviews economic studies, program expenditures, eligibility changes and stakeholder concerns.
10. Commercial Aviation: Trends in Air Service to Small Communities — US Government Accountability Office, September 25, 2024; revised January 9, 2026. Provides current cost trends, connectivity comparisons, the limitations of the 2023 valuation study and the legislative changes enacted in 2024.