By Meredith Gardner
meredith.gardner@theindependent.com

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Independent/Barrett Stinson Rep. Adrian Smith (right) visits with Grand Island City Council President Mitch Nickerson on Wednesday evening before a roundtable discussion with area business leaders organized by the Grand Island Chamber of Commerce. According to Nickerson, Smith shared that he began his political career on a city council. Independent/Barrett Stinson As area business leaders listen, Rep. Adrian Smith speaks during a roundtable discussion Wednesday. Click Thumbnails to View

Smith met with about a dozen local business leaders at Nathan Detroit's for an informal discussion about local and national economic issues.

First up for discussion during the question and answer portion was the bids Grand Island has received for its Essential Air Service contract.

On Tuesday, the U.S. Department of Transportation notified the Central Nebraska Regional Airport it had received bids from Hawaii Island Air and Great Lakes Aviation to provide air service from Grand Island to Kansas City.

The bids came after Grand Island's current carrier, Mesa Airlines, filed to terminate its Essential Air Service contract. Mesa will be required to continue air service until a new carrier begins service or the end of October, when its contract was originally scheduled to end.

Essential Air Service is a nationwide program that provides federal subsidies to air carriers that serve rural areas.

The problem with the program is that it doesn't encourage air carriers to become self-sustaining, meaning airports must continue to rely on Essential Air Service subsidies to provide commercial flights, said Mike Olson, executive director of the Central Nebraska Regional Airport.

"There is no incentive for the airline to do well ... and we've got to change that," Olson said.

Another problem is that while communities can recommend which air carrier they prefer during the service contract bidding process, the DOT makes the decisions.

When Grand Island went through its last airline bidding process about a year and a half ago, the DOT didn't honor its request to award the contract to Big Sky Airlines, which would have provided flights to both Kansas City and Denver. Instead, the contract went to Mesa Airlines, which provides flights to Kansas City and Omaha.

Now, Grand Island is going through the two-year contract bidding process again. And it remains to be seen whether the DOT will honor the community's top pick for air service.

Complicating the process this time around are the 11 different bids offered by Hawaii Island Air. The options are packaged with service to other cities in Missouri, Nebraska and Arkansas, and each option is contingent upon Hawaii Island Air receiving Essential Air Service contracts for the other corresponding package cities.

"It's a big chess game," Olson said, adding the DOT has a difficult task in sorting out the contracts.

Air service is especially important to the economic development of rural communities like Grand Island, said Olson and Cindy Johnson, president of the Grand Island Area Chamber of Commerce. That makes it even more important for the Essential Air Service program to see reform.

"Air service is so critical to economic development," Johnson said. "There has to be a different way of addressing this."

Smith agreed that Essential Air Service should be changed.

"I think there's a political will to change it," he said. "The devil's in the details."

Smith spoke and listened to concerns about a wide range of other topics during the meeting, including tax policy, the Farm Bill, energy, ethanol and national security, among others.

A reduction in the capital gains tax and a halt to increases in the estate tax would help boost revenues and keep businesses especially small businesses afloat, Smith said.

Also, as the nation deals with high gasoline prices and works toward greater energy independence, it will be important for all energy source options to be out on the table, Smith said.

He supports research into using algae to produce biofuel. The method would not replace ethanol, he emphasized, but would provide another fuel option. He also talked about developing hydropower, clean coal plants and nuclear power.

"I think it's exciting to see what can be done," Smith said.

PoreB 3/26/08