U.S. Rural Air Service Subsidy Set to Lapse Amid Shutdown, But Airlines Continue Flights to Underserved Destinations

WASHINGTON, Oct. 7, 2025 – The aviation sector has been taken aback after the President Trump administration announced that funds from a U.S. government program that subsidizes commercial air service to rural airports will expire Sunday because of an ongoing partial government shutdown, reported Reuters.

The administrative directive comes at a time when airline companies are busy announcing the third-quarter earnings.

Established in 1978, the Essential Air Service, or EAS program, is set to expire on Sunday, said the Department of Transportation, or USDOT.

This practically means that the program that has subsidized commercial aviation rural routes and had become a connectivity lifeline for Alaska is a target for a more than 50 per cent reduction in funding under President Donald Trump’s budget proposal.

However, several of the airlines which operate these flights are planning to continue for the immediate future, but if the shutdown drags on, they could stop, reported CNN.

“We are working with each community and evaluating our capabilities in the event of a longer-term government shutdown,” Skywest Airlines, which is one of the largest EAS operators, said in a statement. “It is our intent to honor our service commitments, including those under the Federal EAS program.”

Alaska Airlines operates flights to six cities under the program.

“Support from the Essential Air Service program is necessary to maintain this vital community service,” the airline said in a statement. “Despite this potential uncertainty, Alaska Airlines currently plans to continue operating reliable flights as scheduled while the federal government works to resolve the shutdown.”

Why EAS is Crucial for Smaller Destinations

Cost Cutting Measure: EAS program committed that certified air carriers serve 177 smaller markets.

The Essential Air Service program was envisaged to create a round-the-year connectivity for smaller, rural communities to be served by air carriers. The transportation department has “exhausted every resource” to prolong the shortfall, it said in a statement, which includes transferring unrelated funding from the FAA as an advance.

“Maximum movements in this air space are done by Alaska,” Transportation Secretary Sean Duffy told reporters. “You don’t have roads in Alaska. They travel by air, and a lot of these are small communities. Alaska will be impacted, but every state across the country will be impacted by the inability to provide the subsidies to airlines to service these communities.”

Connecting Underserved Cities: The eligibility for EAS program requires a subsidy per passenger of less than $650, unless the community is 175 miles or more from the nearest major airport.

Doing away with the Essential Air Service program was proposed by the White House during the first Trump administration, while Congress opted to boost funding.

Travel subsidy under the programme is meant for two round trips a day with 30-to-50-seat aircraft, or additional frequencies with smaller aircraft. The department says under the program about 65 communities in Alaska receive service and 112 communities in the other 49 states and Puerto Rico that otherwise may not receive any airline service.

“We don't have the money for that program moving forward,” Sean Duffy said.

Are Airlines Performing Well on Underserved Routes?

In May this year, Smyrna-based Contour Airlines (LF) announced that it has signed a pact with Spirit Airlines (NK) that will boost connectivity to the national air transportation system and bring affordable travel options to underserved communities across the US.

Contour is the second largest carrier in the US Department of Transportation's Essential Air Service (EAS) program. It currently serves 22 EAS cities throughout the continental United States.

“EAS communities no longer need to choose between national connectivity and low fares. The combination of service from our two airlines is the best formula to grow passenger traffic in these underserved airports,” Contour President Ben Munson said.

David Neeleman, Chief Executive of Breeze Airways, is optimistic regarding “sufficient market potential” in the United States for the company to have a fleet of up to 400 aircraft.

Neeleman recently told Bloomberg the company currently operates a fleet of about 50 aircraft, with a firm order for an additional 90 Airbus A220s, besides an option to reach 120.

The airline has a suitable fleet of aircraft to keep a firm grip in underserved markets and refrain from pitting with the likes of American Airlines, Delta Air Lines, and United Airlines.

Contour Airlines has partnered with Spirit Airlines to enhance connectivity within the national air transportation system and provide affordable travel options to underserved communities across the U.S.

Contour Airlines has partnered with Spirit Airlines to enhance connectivity within the national air transportation system and provide affordable travel options to underserved communities across the U.S.

Inputs from Saqib Malik

Editing by David Ryder