STEVE INSKEEP, host:
An airline that tried to serve small cities is calling it quits. Since airline deregulation in the 1970s, America's small towns have struggled to find companies and passengers willing to use their airports. The federal government subsidizes rural air service for about $100 million per year, but many planes fly with most seats empty.
Brian Mann of North Country Public Radio reports on the demise of Big Sky.
BRIAN MANN: A few months ago, Fred deLeeuw's Montana-based Big Sky Airlines was expanding fast, opening routes into the Midwest and Northeast.
Mr. FRED DELEEUW (President, Big Sky Airline): We love serving the North Country. We love serving the state of New York and...
MANN: Big Sky was one of the country's major airlines serving federally subsidized essential air service routes, handling about 10 percent of those flights nationwide. But by last week, that company was imploding with Big Sky officials blaming high fuel costs and the lack of regular passengers.
Mr. ARNIE D. DECKER(ph) (Airline Employee): Let's tear it down. That's what I'm doing, thinking of all the equipment apart.
MANN: Arnie D. Decker who worked in the tiny rural airport in Lake Clear, New York was busy dismantling Big Sky's check-in counter.
So what happens to you now?
Mr. DECKER: Well, I'm out of work. I have to apply for unemployment. That's where I'm headed.
MANN: A 140 pilots and ground crew were laid off, and Big Sky's collapse will eventually leave more than a dozen airports across the country without any commercial flight.
Gary Edwards(ph), account supervisor in Messina, New York, says the loss of daily service threatens to isolate his community at a time when the economy is already struggling.
Mr. GARY EDWARDS (Account Supervisor): We've invested so much money over the years into the airport and we just have to start over.
MANN: Nationwide, about 3,000 people use EAS flights every day, but the cost to taxpayer is steep, about $100 per passenger per flight. In the last decade, federal subsidies have jumped fourfold, topping $109 million last year. On average, about two-thirds of the seats on those flights are empty.
The GAO report issued last April found that 17 percent of the subsidized airports see fewer than five passengers per day. Critics and supporters alike say Big Sky's meltdown revives questions about EAS' future. Congressman John McHugh represents northern New York and has fought hard to keep the money flowing.
Representative JOHN McHUGH (Republican, New York): I'm sure it will be used by those who oppose EAS at all as an example of why we ought to get rid of it because it doesn't work anyway.
MANN: McHugh says subsidies should actually be increased. But Michael Boyd, an aviation consultant based in Colorado, says the problem is that too much taxpayer money is going to airports that aren't truly isolated.
Mr. MICHAEL BOYD (Aviation Consultant): In many cases, EAS is just sort of pork barrel that doesn't bring anything home, and it needs to be totally rebuilt. And the problem is Congress is not willing to that.
MANN: The GAO report found that nearly $25 million is being spent every year to prop up airports that are less than a two-hour drive from major hub airports. Brian Turmail, spokesman for the U.S. Department of Transportation, says his and agency developed programs to wean those airports off the system, but lawmakers backed.
Mr. BRIAN TURMAIL (Spokesman, U.S. Department of Transportation): The Congress refused to fund even such a small demonstration program.
MANN: Pressure for reform may come from the airline industry itself. Subsidies are spread so thin, Turmail says, that carriers like Big Sky can't survive.
Mr. TURMAIL: It's not a very successful business model, so it's very hard for these carriers to remain in business and remain viable.
MANN: The Department of Transportation is now searching for new carriers to take over Big Sky's routes from Montana to Tennessee to New York. So far, only a handful of companies have expressed interest.
For NPR News, I'm Brian Mann in northern New York.