Small cities with limited airline service sometimes get government help - in the form of subsidies - to make themselves more attractive to airlines.
But what if the small city already had air service and merely wanted lower fares?
That appears to be the situation in Fresno, Calif., where United Airlines complains that a federal grant benefiting a competitor, Denver's Frontier Airlines, is unfair.
United on Tuesday wrote the U.S. Department of Transportation asking it to review its standards for making such grants.
A spokesman for the department, Brian Turmail, said, "We will review their letter and respond to United as appropriate."
What sparked the letter was the use of a Small Community Air Service grant to draw Frontier Airlines service to Fresno from Denver.
Under the program, the Transportation Department in 2003 granted $1 million to Fresno, which used that money to subsidize the introduction of service by Frontier, according to United's letter.
United Express, United's commuter operation, already operated between the two cities.
But Fresno "urged the need for service by a 'low fare' carrier and identified Frontier as such," according to the letter.
"Federal money shouldn't be used to subsidize low-fare competition," United spokesman Jeff Green said. "If another carrier's being subsidized and being paid to operate in those markets, then obviously they have lower costs and can offer lower fares."
But service from a single airline tends to result in higher prices, Frontier spokesman Joe Hodas said.
"It's been proven time and again when a single carrier is the only one that offers service from point A to point B, they have essentially ... a monopoly on that market, so pricing tends to not be competitive because there's no one to provide the competition to help drive down fares," he said.
Mike Boyd, whose Evergreen aviation consulting firm helped Fresno get the Small Community Air Service grant, said: "The program is designed to increase competition and lower fares, mostly for smaller communities. That's precisely what this grant is doing."
Fresno's deal with Frontier is a revenue guarantee rather than a straight subsidy: The city will pay money to Frontier only if the expected traffic doesn't materialize.
But what if the small city already had air service and merely wanted lower fares?
That appears to be the situation in Fresno, Calif., where United Airlines complains that a federal grant benefiting a competitor, Denver's Frontier Airlines, is unfair.
United on Tuesday wrote the U.S. Department of Transportation asking it to review its standards for making such grants.
A spokesman for the department, Brian Turmail, said, "We will review their letter and respond to United as appropriate."
What sparked the letter was the use of a Small Community Air Service grant to draw Frontier Airlines service to Fresno from Denver.
Under the program, the Transportation Department in 2003 granted $1 million to Fresno, which used that money to subsidize the introduction of service by Frontier, according to United's letter.
United Express, United's commuter operation, already operated between the two cities.
But Fresno "urged the need for service by a 'low fare' carrier and identified Frontier as such," according to the letter.
"Federal money shouldn't be used to subsidize low-fare competition," United spokesman Jeff Green said. "If another carrier's being subsidized and being paid to operate in those markets, then obviously they have lower costs and can offer lower fares."
But service from a single airline tends to result in higher prices, Frontier spokesman Joe Hodas said.
"It's been proven time and again when a single carrier is the only one that offers service from point A to point B, they have essentially ... a monopoly on that market, so pricing tends to not be competitive because there's no one to provide the competition to help drive down fares," he said.
Mike Boyd, whose Evergreen aviation consulting firm helped Fresno get the Small Community Air Service grant, said: "The program is designed to increase competition and lower fares, mostly for smaller communities. That's precisely what this grant is doing."
Fresno's deal with Frontier is a revenue guarantee rather than a straight subsidy: The city will pay money to Frontier only if the expected traffic doesn't materialize.
UniTED'S LCC NOT 
