Originally Posted by
CaptainMiles
Their pricing is a racket to exploit the EAS (Essential Air Service) subsidies. Every passenger flown into or out of an EAS airport earns the airline a subsidy of about $200 (varies by market).
OK I read the underlying rules a little more carefully and I'm not sure this characterization is exactly right.
Per
https://www.transportation.gov/polic...al-air-service , carriers are paid on a "per flight completed" basis -- in principle the DOT pays the same subsidy amount for OAK-MCE flight as long as the flight operated, no matter whether the flight went out booked 1/8 or 8/8.
*However*, there is a $200-per-passenger subsidy cap which applies to communities close to a large or medium hub airport -- so if VEL or MCE are within 210 miles of the nearest large or medium hub, then the DOT will not pay more than $200 in subsidies per pax.
So I don't see how EAS carriers are incentivized to carry extra pax *unless* the subsidies they are getting are so high that they're hitting the $200 per pax cap and need more pax to avoid maxing out the subsidy payment.