Essential Air Service at Jackson, Tennessee

Order 2006-2-11
OST-2000-7857

Issued February 16, 2006 | Served February 22, 2006

Order Tentatively Terminating Subsidy Eligibility and Allowing Suspension of Service

By Order 2005-6-14, June 20, 2005, the Department reselected RegionsAir to provide essential air service at Jackson for the two-year period beginning June 1, 2005. Specifically, the Department authorized an annual subsidy of $1,179,026 for RegionsAir to provide 12 nonstop round trips each week between Jackson and the St. Louis hub with 19-seat Jetstream 32 turboprop aircraft.

Not only has Jackson’s traffic continued to erode, the community’s efforts to reduce the subsidy per passenger below the $200 statutory cap have not been successful. In addition, based on passenger data for the year ended October 31, 2005, the community generated just 4,728 passengers resulting in a subsidy per passenger of $249.37 - an amount even greater than the $234.35 subsidy per passenger based on year ended March 31, 2005, data. In other words, no progress has been made in reducing Jackson’s per passenger subsidy, and, in fact, the subsidy per passenger has steadily increased. We also note that Jackson is only 86 highway miles via Interstate 40 from Memphis International Airport, a medium hub, which, according to the Official Airline Guide for December 2005, offered nonstop service to some 90 domestic and international destinations. It appears that either RegionsAir’s service may no longer be able to compete with the highway to Memphis, or some other factor or factors have caused the reduction in demand at Jackson. In any event, Jackson’s subsidy remains well above the $200 cap, and the community has made no compelling demonstration that the subsidy per passenger will fall below the statutory limit.

Because the Department is prohibited from subsidizing service at communities where the subsidy amounts to more than $200 per passenger, unless they are more than 210 miles from the nearest large or medium hub, the Department has tentatively decided to terminate Jackson’s subsidy eligibility as of April 1, 2006, and to allow RegionsAir to discontinue service there after that date.

We will give interested persons 20 days after the service date of this order to submit objections. Objections should be fully documented and contain complete information on the data used by the person objecting. If we later finalize our tentative findings and RegionsAir decides to suspend service, we will expect it to contact all passengers who hold reservations for flights that will be suspended, to inform them of the suspension, and to assist them in arranging alternate transportation.

By: Michael Reynolds