article: SECTION 1. SHORT TITLE. This Act may be cited as the ``Rural Aviation Improvement Act''. SEC. 2. REPEAL OF ESSENTIAL AIR SERVICE LOCAL PARTICIPATION PROGRAM. (a) In General.--Subchapter II of chapter 417 of title 49, United States Code, is amended by striking section 41747, and such title 49 shall be applied as if such section 41747 had not been enacted. (b) Clerical Amendment.--The analysis for chapter 417 of title 49, United States Code, is amended by striking the item relating to section 41747. SEC. 3. PER PASSENGER SUBSIDY FOR ESSENTIAL AIR SERVICE. (a) In General.--Section 41742 of title 49, United States Code, is amended by adding at the end the following: ``(c) Per Passenger Subsidy Cap.-- ``(1) In general.--The Secretary of Transportation may not provide compensation to an air carrier to provide air transportation under this subchapter to an otherwise eligible place in the 48 contiguous States if the eligible place-- ``(A) is located fewer than 70 highway miles from the nearest large or medium hub airport; or ``(B) is fewer than 210 miles from the nearest large or medium hub airport and requires a per passenger subsidy in excess of the dollar amount described in paragraph (2). ``(2) Dollar amount of per passenger subsidy.-- ``(A) In general.--The dollar amount described in this paragraph is-- ``(i) for calendar year 2008, $200; and ``(ii) for each calendar year after calendar year 2008, $200 increased by an amount equal to-- ``(I) $200, multiplied by ``(II) the percentage (if any) by which the CPI for the preceding calendar year exceeds the CPI for calendar year 2007. ``(B) Rounding.--Any increase under subparagraph (A)(ii) shall be rounded to the nearest dollar. ``(3) Definitions.--In this subsection: ``(A) CPI for the preceding calendar year.--The term `CPI for the preceding calendar year' means the average of the Consumer Price Index as of the close of the 12-month period ending on August 31 of such calendar year. ``(B) Consumer price index.--The term `Consumer Price Index' means the last Consumer Price Index for all-urban consumers published by the Department of Labor.''. (b) Per Passenger Subsidy Defined.--Section 41731(a) of title 49, United States Code, is amended by adding at the end the following: ``(3) `per passenger subsidy' means-- ``(A) the total compensation provided by the Secretary of Transportation to an air carrier under this subchapter that is necessary for the air carrier to provide air transportation to an eligible place, divided by ``(B) the total number of passengers using such air transportation.''. (c) Conforming Repeal.--Section 332 of the Department of Transportation and Related Agencies Appropriations Act, 2000 (Public Law 106-69; 49 U.S.C. 41731 note) is repealed. SEC. 4. COMMUNITIES ABOVE PER PASSENGER SUBSIDY CAP. (a) In General.--Subchapter II of chapter 417 of title 49, United States Code, is amended by adding at the end the following: ``Sec. 41749. Essential air service for eligible places above per passenger subsidy cap ``(a) Proposals.--A State or local government may submit a proposal to the Secretary of Transportation for compensation for an air carrier to provide air transportation to a place described in subsection (b). ``(b) Place Described.--A place described in this subsection is a place-- ``(1) that is otherwise an eligible place; and ``(2) for which the per passenger subsidy exceeds the dollar amount allowable under section 41742(c). ``(c) Decisions.--Not later than 90 days after receiving a proposal under subsection (a) for compensation for an air carrier to provide air transportation to a place described in subsection (b), the Secretary shall-- ``(1) decide whether to provide compensation for the air carrier to provide air transportation to the place; and ``(2) approve the proposal if the State or local government or a person is willing and able to pay the difference between-- ``(A) the per passenger subsidy; and ``(B) the dollar amount allowable for such subsidy under section 41742(c). ``(d) Compensation Payments.-- ``(1) In general.--The Secretary shall pay compensation under this section at such time and in such manner as the Secretary determines is appropriate. ``(2) Duration of payments.--The Secretary shall continue to pay compensation under this section only as long as-- ``(A) the State or local government or person agreeing to pay compensation under subsection (c)(2) continues to pay such compensation; and ``(B) the Secretary decides the compensation is necessary to maintain air transportation to the place. ``(e) Review.-- ``(1) In general.--The Secretary shall periodically review the type and level of air service provided under this section. ``(2) Consultation.--The Secretary may make appropriate adjustments in the type and level of air service to a place under this section based on the review under paragraph (1) and consultation with the affected community and the State or local government or person agreeing to pay compensation under subsection (c)(2). ``(f) Ending, Suspending, and Reducing Air Transportation.--An air carrier providing air transportation to a place under this section may end, suspend, or reduce such air transportation if, not later than 30 days before ending, suspending, or reducing such air transportation, the air carrier provides notice of the intent of the air carrier to end, suspend, or reduce such air transportation to-- ``(1) the Secretary; ``(2) the affected community; and ``(3) the State or local government or person agreeing to pay compensation under subsection (c)(2).''. (b) Clerical Amendment.--The analysis for chapter 417 of title 49, United States Code, is amended by adding after the item relating to section 41748 the following new item: ``41749. Essential air service for eligible places above per passenger subsidy cap.''. SEC. 5. PREFERRED ESSENTIAL AIR SERVICE. (a) In General.--Subchapter II of chapter 417 of title 49, United States Code, as amended by section 4, is further amended by adding after section 41749 the following: ``Sec. 41750. Preferred essential air service ``(a) Proposals.--A State or local government may submit a proposal to the Secretary of Transportation for compensation for a preferred air carrier described in subsection (b) to provide air transportation to an eligible place. ``(b) Preferred Air Carrier Described.--A preferred air carrier described in this subsection is an air carrier that-- ``(1) submits an application under section 41733(c) to provide air transportation to an eligible place; ``(2) is not the air carrier that submits the lowest cost bid to provide air transportation to the eligible place; and ``(3) is an air carrier that the affected community prefers to provide air transportation to the eligible place instead of the air carrier that submits the lowest cost bid. ``(c) Decisions.--Not later than 90 days after receiving a proposal under subsection (a) for compensation for a preferred air carrier described in subsection (b) to provide air transportation to an eligible place, the Secretary shall-- ``(1) decide whether to provide compensation for the preferred air carrier to provide air transportation to the eligible place; and ``(2) approve the proposal if the State or local government or a person is willing and able to pay the difference between-- ``(A) the rate of compensation the Secretary would provide to the air carrier that submits the lowest cost bid to provide air transportation to the eligible place; and ``(B) the rate of compensation the preferred air carrier estimates to be necessary to provide air transportation to the eligible place. ``(d) Compensation Payments.-- ``(1) In general.--The Secretary shall pay compensation under this section at such time and in such manner as the Secretary determines is appropriate. ``(2) Duration of payments.--The Secretary shall continue to pay compensation under this section only as long as-- ``(A) the State or local government or person agreeing to pay compensation under subsection (c)(2) continues to pay such compensation; and ``(B) the Secretary decides the compensation is necessary to maintain air transportation to the eligible place. ``(e) Review.-- ``(1) In general.--The Secretary shall periodically review the type and level of air service provided under this section. ``(2) Consultation.--The Secretary may make appropriate adjustments in the type and level of air service to an eligible place under this section based on the review under paragraph (1) and consultation with the affected community and the State or local government or person agreeing to pay compensation under subsection (c)(2). ``(f) Ending, Suspending, and Reducing Air Transportation.--A preferred air carrier providing air transportation to an eligible place under this section may end, suspend, or reduce such air transportation if, not later than 30 days before ending, suspending, or reducing such air transportation, the preferred air carrier provides notice of the intent of the preferred air carrier to end, suspend, or reduce such air transportation to-- ``(1) the Secretary; ``(2) the affected community; and ``(3) the State or local government or person agreeing to pay compensation under subsection (c)(2).''. (b) Clerical Amendment.--The analysis for chapter 417 of title 49, United States Code, as amended by section 4, is further amended by adding after the item relating to section 41749 the following new item: ``41750. Preferred essential air service.''. SEC. 6. RESTORATION OF ELIGIBILITY TO A PLACE DETERMINED BY THE SECRETARY TO BE INELIGIBLE FOR SUBSIDIZED ESSENTIAL AIR SERVICE. Section 41733 of title 49, United States Code, is amended by adding at the end the following new subsection: ``(f) Restoration of Eligibility for Subsidized Essential Air Service.-- ``(1) In general.--If the Secretary of Transportation terminates the eligibility of an otherwise eligible place to receive basic essential air service by an air carrier for compensation under subsection (c), a State or local government may submit to the Secretary a proposal for restoring such eligibility. ``(2) Determination by secretary.--If the per passenger subsidy required by the proposal submitted by a State or local government under paragraph (1) does not exceed the per passenger subsidy cap provided under section 41742(c), the Secretary shall issue an order restoring the eligibility of the otherwise eligible place to receive basic essential air service by an air carrier for compensation under subsection (c).''. SEC. 7. CALCULATION OF HIGHWAY MILEAGE TO MEDIUM AND LARGE HUB AIRPORTS. (a) In General.--Section 41731 of title 49, United States Code, is amended by adding at the end the following: ``(c) Calculation of Highway Mileage to Medium and Large Hub Airports.-- ``(1) In general.--In any determination under this subchapter of compensation or eligibility for compensation for essential air service based on the highway mileage of an eligible place from the nearest medium hub airport or large hub airport, the highway mileage shall be that of the most commonly used route, as identified under paragraph (2). ``(2) Most commonly used route.--The Secretary of Transportation shall identify the most commonly used route between an eligible place and the nearest medium hub airport or large hub airport by-- ``(A) consulting with the Governor or a designee of the Governor in the State in which the eligible place is located; and ``(B) considering the certification of the Governor or a designee of the Governor as to the most commonly used route. ``(3) Applicability.--This subsection shall apply only to eligible places in the 48 contiguous States and the District of Columbia.''. (b) Conforming Amendment.--Section 409 of Vision 100--Century of Aviation Reauthorization Act (Public Law 108-176; 49 U.S.C. 41731 note) is repealed. SEC. 8. OFFICE OF RURAL AVIATION. (a) Establishment.--There is established within the Office of the Secretary of Transportation the Office of Rural Aviation (referred to in this section as the ``Office''). (b) Functions.--The functions of the Office are-- (1) to develop a uniform 4-year contract for air carriers providing essential air service to communities under subchapter II of chapter 417 of title 49, United States Code; (2) to develop a mechanism for comparing applications submitted by air carriers under section 41733(c) to provide essential air service to communities, including comparing-- (A) estimates from air carriers on-- (i) the cost of providing essential air service; and (ii) the revenues air carriers expect to receive when providing essential air service; and (B) estimated schedules for air transportation; and (3) to select an air carrier from among air carriers applying to provide essential air service, based on the criteria described in paragraph (2). SEC. 9. EXTENSION OF AUTHORITY TO MAKE AGREEMENTS UNDER THE ESSENTIAL AIR SERVICE PROGRAM. Section 41743(e)(2) of title 49, United States Code, is amended by striking ``2008'' and inserting ``2011''. SEC. 10. ADJUSTMENTS TO COMPENSATION FOR SIGNIFICANTLY INCREASED COSTS. Section 41737 of title 49, United States Code, is amended-- (1) in subsection (a)(1)-- (A) in subparagraph (B), by striking ``; and'' and inserting a semicolon; (B) in subparagraph (C), by striking the period and inserting ``; and''; and (C) by adding at the end the following: ``(D) provide for an adjustment in compensation to account for significant increases in fuel costs, in accordance with subsection (e).''; and (2) in subsection (e)-- (A) in paragraph (1), by striking ``may'' and inserting ``shall''; and (B) in paragraph (2), by striking ``may'' and inserting ``shall''. SEC. 11. CHARTER AIR CARRIER PASSENGER BOARDINGS. Notwithstanding any other provision of law, the Secretary of Transportation shall treat passenger boardings on aircraft operated by charter air carriers at airports receiving essential air service under subchapter II of chapter 417 of title 49, United States Code, as passenger boardings for purposes of section 47114(c)(1)(E) of such title. SEC. 12. AUTHORIZATION OF APPROPRIATIONS FOR ESSENTIAL AIR SERVICE. (a) Adjustment to Authorization of Appropriations.--Section 41742 of title 49, United States Code, is amended-- (1) in subsection (a)(2), by striking ``$77,000,000'' and inserting ``$33,000,000''; and (2) in subsection (b), by striking ``Notwithstanding section 47114'' and all that follows. (b) Funds From Airport and Airway Trust Fund.--Section 41737(d)(2) of title 49, United States Code, is amended to read as follows: ``(2) In addition to amounts authorized to be appropriated under section 41742(a), not more than $50,000,000 shall be available to the Secretary out of the Fund for each of the fiscal years 2008 through 2011 to incur obligations under this section. Amounts made available under this section remain available until expended.''.
summary: Rural Aviation Improvement Act - Repeals the Essential Air Service Local Participation Program. Prohibits the Secretary of Transportation from compensating an air carrier for providing essential air service to an eligible community in the 48 contiguous states if such community: (1) is located fewer than 70 miles from the nearest large or medium hub airport; or (2) is fewer than 210 miles from the nearest large or medium hub airport and requires a per passenger subsidy for such service in excess of $200 for calendar year 2008, including any increase for each ensuing calendar year. Authorizes a state or local government to submit a proposal to the Secretary to: (1) compensate an air carrier for essential air service to an eligible community above the $200 per passenger subsidy cap; (2) compensate a preferred air carrier for providing such service (i.e., an air carrier preferred by the affected community although it is not the lowest bidder); and (3) restore the eligibility of a community to receive subsidized essential air service. Requires the Secretary, in determining compensation (or eligibility for it) for essential air service based on highway mileage, to use the highway mileage of the most commonly used route between the eligible community and the nearest medium hub airport or large hub airport. Establishes within the Office of the Secretary the Office of Rural Aviation. Extends through FY2011 the Secretary's authority under the essential air service program to make agreements to provide assistance to underserved airports. Requires adjustment of compensation to air carriers for providing essential air service in order to take into account significant increases in fuel costs. Directs the Secretary to treat passenger boardings on aircraft operated by charter air carriers at airports receiving essential air service as passenger boardings for purposes of making apportionments of airport improvement grant funds.