On Skies and Airports

by Don Boudreaux on August 22, 2007

in Regulation, Trade, Travel

USA Today today published this letter of mine advocating free trade in air-passenger service and privatization of air-traffic-control and, indeed, airports generally:

USA TODAY’s editorial "How airlines mistreat fliers and get Congress to go along"
correctly notes that America’s flying public can be better served, but
the editorial’s proposed solution of more government regulation is
unwise (Our view, Airline passenger rights debate, Monday).

What Congress should do:

* Open domestic routes to foreign carriers. The increased competition will lower prices and improve service.

* Follow the example of Canada and more than a dozen other countries
that have either fully or partially privatized their
air-traffic-control systems. As a result, these countries have seen
impressive technological advances.

State and local governments can do their part by privatizing
airports, which will unleash the profit motive and supply more and
better ground capacity for planes and passengers.

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  • Hmmm... The increased competition will lower prices and improve service,, yes definately!

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  • It's a mixed bag. More competition equals lower fares. Lower fares equals less capital for the airlines to maintain their aging fleets.

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  • John Dewey

    faultolerant: "Now take a look at Southwest (aka Southworst)...Herding people on a 737 like cattle may appeal to the poor (or folks with no self esteem) but it's not my idea of "service". ... Between government mismanagement of every aspect of security and air operations, coupled with the piss poor way airlines treat their hostages, er, customers....it's no wonder people absolutely hate to fly."


    And yet, somehow, Southwest has managed to fly more passengers in the U.S. than any other airline. And, for some reason, cities are still lined up petitioning Southwest to add service at their airports.


    faultolerant: "I'm sorry, but the rosy picture you paint of the state of air travel today doesn't exist"


    I don't think I painted a rosy picture. I acknowledged many of the problems you listed. But I also pointed out several ways that service has increased: more destinations; easier ticketing and check-ins; and faster, quieter flights to and from smaller cities now served by regional jets.


    About the crowded aircraft, I think customers have shown they will not pay for more space. American Airlines tried to attract more passengers by increasing legroom in Coach cabins. The experiment failed miserably.


  • faultolerant

    John Dewey:


    Sorry to be contrary here, but I would have to argue against your "rosy" perspective of air travel these days.


    (FWIW, I have 1,000,000 miles under my belt mostly on TWA, AA and Delta, so I'm not exactly an airline neophyte)


    Airlines may offer more services (e.g. more destinations) but they do so with crowded aircraft, poor maintenance, surly airline staff, dirty airports that are about a mile long, airline computer systems that are written by idiots and price structures that make brain surgery look like chid's play.


    And that's just the legacy carriers.....


    Now take a look at Southwest (aka Southworst)..... Yes, the Southwest effect performs a drastic lowering of fares in whatever city SW enters. It also causes a massive decrease in the quality levels of other carriers who dispense with all pretenses of service to compete with Southworst on price. Herding people on a 737 like cattle may appeal to the poor (or folks with no self esteem) but it's not my idea of "service". Top it off with that hokey brand of banter and you have Ma & Pa Kettle running an airline (just look at Kathleen Barrett and her idjit boss).


    Yes, air travel has now been brought to the masses, but it's like having a tooth filled. Between government mismanagement of every aspect of security and air operations, coupled with the piss poor way airlines treat their hostages, er, customers....it's no wonder people absolutely hate to fly.


    I'm sorry, but the rosy picture you paint of the state of air travel today doesn't exist on AA, SW, NW, Delta or any other airline...and it certainly doesn't exist at DFW, ORD, TPA, STL, LAX, JFK, et al.

  • Will C.

    The reason Chicago wants a new airport - planned to be built far out of the city - is so that Republicans can have a fiefdom to rival that the Democrats enjoy with OHare and Midway. The delay in getting the new airport has Republicans squirming because many are rumored to be landowners at the new airport site. In the meantime, a nice airport in Gary and another in Rockford go begging.

  • K

    Brotio. Maybe I should have said poor air circulation rather than dry air. I believe the problem in jets was mostly due to the higher altitude of flights.


    Ventilation is hardly my field and other factors are undoubtedly involved.


    As for FC treatment over the years. I can't quite say. The speed of jets, their range, the ability to avoid bad weather, and devices such as the microwave oven have changed everything.




    Certainly seats are more comfortable, entertainment is piped in, liquor is served, temperature is well controlled, and the quality of meals is more even.


    The attendents have more to do but are still very nice.


    Meals then could be very good in FC, or very bad, or none at all if the logistics went wrong. They were prepared off plane. Coffee was usually brewed on the ground in large thermos.


    Often the weather was rough and you got nada until the pilot deemed otherwise.


    The topic is too big for my typing.


    I disagree with the idea that more airline competition will improve matters. Some activities are best regulated. Travel is one. We never expected Ford and GM to build roads for only their cars.


    Railroads started w/o cooperating and it just didn't work well. Long distance bus lines can operate independently. But for a megopolis to have a dozen overlapping local bus lines is madness.

  • John Dewey

    "I think people are just more coarse than 30+ years ago. "


    Yeah. Kids learn from television and don't forget when they grow up. We had Wally and Beaver as role models. Today's 20-somethings had Beavis and Butthead.

  • brotio

    K, Thanks for the info. I never flew in the pre-regulation era, so I'm glad to get the input. I can't disagree with anything you say, except for the dry air making for cranky customers. I live in Colorado, so I LIKE dry air :p Seriously, though, I think you're absolutely right about manners, but I think people are just more coarse than 30+ years ago.


    I would like your opinion on one more thing, if you don't mind? Would you say the treatment FC passengers receive from the airline staff is better, worse, or no change from your earlier experiences?


    Thanks again for your reply

  • John Dewey

    K,


    Thanks for the observations. I think you are correct about employees dissatisfaction over pay and benefits. I think pilots and flight attendants still receive very good pay, though. They compare their current pay with what they received six years ago, and not with what the market is paying for similar skills. Why do I believe they are being adequately compensated? For one thing, turnover is no higher than historic levels. They know they still have a good deal.


    Certainly flight attendants are handling more passengers on the average flight. Airlines have dumped poor routes and used sophisticated computer-based pricing to ensure the rest are near-full.


    Airline productivity is up from 25 years ago for several other reasons. Three pilot cockpits have been eliminated. Larger aircraft enable economies of scale in every labor role except gate agents and flight attendant. Administrative overhead has been slashed since 9/11. Internet ticketing and self-serve check-in reduced manpower further. These should be good times for airline profits.


    I agree that a documentary on changes in travel would be fun to watch.

  • K

    John D: Did I notice a change in the behavior of airline employees?


    Yes. As I said there is more stress. They no longer have good pay, pension plans, and job security. Some do and some don't which probably makes it worse.


    They deal with a public attitude that has changed. And not for the better (old folks always say that). They have less authority and fewer options - I won't go into details.


    Productivity is up. But that leaves each employee handling more people.


    It all adds up to impersonal and cranky people. FC can be treated great because the profit margin is still there. In FC you sell travel, in economy you sell transportation. FC passengers have clout and choice - many of the truly rich no longer fly commercial.


    The changes in travel since WW2 would be a good subject for a Ken Burns documentary.


    ED? It is being abused but is needed for large parcels. Some activities need a lot of land, period. And some need certain land.


    Our governments are constrained in some activities and unfettered in others. ED involves money and (nearly) unlimited government power. Corruption follows as the night the day.

  • Nick

    I've noticed a big difference in the quality of my "air travel experience" depending where I'm flying. If I'm leaving Albany and flying to BWI its a lot nicer flight than leaving BWI and going to Albany. In Albany crowds are pretty much non-existent, you go straight to (and through) a well trained and staffed security checkpoint, and you load the plane from two doors instead of one. In BWI you generally have a hassle on the beltway, have to stand in line for a long time to even get to security, stand in line to board the plane through one door, etc. At the end of the day I plan to leave my house 3 hours early to fly out of BWI and only 1.5 hours early to fly out of Albany, and the car trip to Albany is longer than the trip to BWI.


    I noticed the Journal had an article today about people switching to Amtrak now for shorter trips (DC-NY).


    With Respect to Eminent Domain: I don't have a problem with it as long as the power is exercised to obtain property for public use, the price paid is fair market value, and the locals don't manipulate the zoning to drive the price down. Sam do you really think we ought to try to assemble the land for a project like expanding I-95 by bargaining with each individual landowner along the entire corridor?

  • John Dewey

    "IMO passengers were more courteous and considerate. Uncontrolled children were seldom encountered. Your opinion may differ. "


    I think that's true. Competition after deregulation has made air travel affordable to the masses. Many more younger adults and children are flying. Even lower middle class folks can now afford to visit destinations they once drove to see. Perhaps people in these groups have a different view of what constitutes courteous behavior.


    "And there were often many empty seats which is more pleasant. Today most flights are packed."


    The large airlines each employ dozens of analysts who ensure, through pricing structures, that as many seats as possible are filled. Sophisticated computer programs enable the carriers to adjust fares as needed to maximize revenue. When a flight departs less than 80% full, those analysts have failed in their mission.


    I'm curious about one thing, K. Did you notice a difference in the behavior of airline employees? I realize that our workers are more stressed as a result of increased loads and pressure to hold down costs. But the airlines have added thousands more employees to handle the work.

  • K

    brotio: I am retired from a major airline and traveled in first for many years beginning in the 1950s.


    Air travel is now more unpleasant due to stress. Much of it is not the airlines fault. The passengers arrive stressed and the mega-airport compounds it.


    Years ago all passengers were treated well. Today FC is sure to be, the rest is a crapshoot. The airlines cannot control the crowding in the airports, most delays, or the security that applies to everyone.


    IMO passengers were more courteous and considerate. Uncontrolled children were seldom encountered. Your opinion may differ.


    The biggest planes had one hundred seats. Now that is small. And there were often many empty seats which is more pleasant. Today most flights are packed.


    Jets fly high. The air is dry. Not at all a good way to improve tempers. The latest jets have less of a problem with air quality. I sure don't miss smokers.


    The planes were cleaner - ashtrays excepted - because they flew fewer legs each day.


    FC has always given you little or nothing on short flights. But for long hops the amenities are better than ever. Too bad I can't travel anymore. But Al likes my carbon footprint.

  • brotio

    John Dewey nailed it regarding customer service. Handing security over to a government-union member, job-protected, indifferent bureaucrat is an almost sure-fire way to sour the mood of airline customers. Airlines serve so many budget and economy travelers as compared to ten or twenty years ago. I'd love to see how long-term first class travelers rate airline service now versus the past.


    Eminent domain needs to be applied very cautiously. Some libertarians might balk at it being used for infrastructure, but there's very little we can do about it since the Constitution makes it legal. Even those who oppose eminent domain realize that the odds of getting the relevant passage in the Fifth Amendment repealed is slim-to-none, but that doesn't mean We The People should allow eminent domain to be easy. Government abuse has led us to the horrid Kelo decision where "public use" and "public benefit" are now synonymous it the eyes of the Supreme Court.

  • I am interested in your comments about airports which are intuitively correct. But do you have any evidence that airports like the couple in Mexico that are privately held (Veracruz and Aguascalientes to name two) are better in service than those which are publicly operated?

  • John Dewey

    "In fact (a) lower prices have made service worse, and (b) overcrowding of the skies without adequate infrastructure growth has made service worse."


    Saum, I agree with (b). The government-owned and antiquated air traffic control system has made service much worse. The lack of runway and gate capacity in Chicago, especially, and in a few other cities has sharply increased flight delays.


    I'm not sure I agree that lower prices have made service worse. Air travelers in most cities have many more destinations and frequencies than 20 or 30 years ago. Economies of scale have enabled advances in ticketing, check-in, and monitoring of flight status. Small regional jets have replaced prop planes on many routes, reducing flight times as well as increasing passenger comfort.


    As an industry insider, I can say with certainty that competition motivates airlines every day to tweak the mix of better service and reduced prices. Every airline is trying to give customers what they want. Legacy carriers learned that most customers are unwilling to pay for meals, which you may view as a reduction in service.


    At the same time, we should acknowledge that the post-September 11 security challenges of the airline industry have damaged the public's perception of service. Long lines at the government operated security checkpoints establish a customer mood that is hard to overcome.

  • Saum

    Mr. Boudreaux,


    You say: "Open domestic routes to foreign carriers. The increased competition will lower prices and improve service."


    I can see the lower prices argument. But, improved service? Don't we have plenty of competition, low prices AND lousy service today? In fact (a) lower prices have made service worse, and (b) overcrowding of the skies without adequate infrastructure growth has made service worse. How will adding more players in the mix, improve service?


  • John Dewey

    sam grove: "Now comes the "lone holdout for more money" argument.


    Obviously, such a property could not be sited in an urban location. "


    No, I'm not going to even bother. IMO, libertarians are never going to convince the voting public to prohibit eminent domain for highways, flood control lakes, and airports. Voters may decide that specific public works proposals are not needed. But they're not going to allow isolated property holders to stand in the way of infrastructure expansion they deem necessary.





  • Billy

    Am I the only one who thought the total contribution amounts given for the airlines (both individually and as a whole) was somewhat surprisingly low, despite the tone of the USA Today piece?

  • I just don't see how 30-40 square miles of land in a suitable location could be acquired without eminent domain.


    With money, of course.

    Now comes the "lone holdout for more money" argument.


    Obviously, such a property could not be sited in an urban location. What are some other options?


    There's a reason we don't have private traffic cops even though that might be more cost effective.


    Maybe it's because muninciple governments are responsible for the streets.

    Private traffic cops are sometimes found on private property.

  • We don't have private traffic cops? You mean those wand-wavers at the stadium and the long-gone disembodied voice in a tower at the long-gone Schuster's Department Store are all municipal employees?


    I suspect, however, that the multiple nature of aircraft operators makes it likely that there is a coalition that will block any privatization effort.

  • An international airport is desperately needed in Palmdale. Chicago is a clear candidate.


    I'm more concerned about privitization for competitive reasons. What happens when United pays a little extra and gets priority landing? Will capacity concerns turn into the anti-market disaster that is cabbie medalions in NYC? I'd be more comfortable with a 5th branch of the military modeled after the Coast Guard. There's a reason we don't have private traffic cops even though that might be more cost effective.

  • John Dewey

    "Where are NEW airports needed?"


    Many believe Chicago needs a new airport. O'Hare has definitely reached its capacity, and Midway is too short to handle modern aircraft. I don't know if a third Chicago airport is truly needed, but the state of Illinois believes so.


    "Why should they be subsidized via eminent domain?"


    I just don't see how 30-40 square miles of land in a suitable location could be acquired without eminent domain. It's certainly a legal option, though I'm sure libertarians must object to it.

  • The sheer size of airports would seem to require that eminent domain be exercised.


    Where are NEW airports needed?

    Why should they be subsidized via eminent domain?

  • John Dewey

    I think there is no question that government operation of air traffic control and of airports has been grossly inefficient. Is there any party that would not benefit from full or partial privatization?


    If airports were privatized, would communities still be able to restrict noise and hours of operation?


    Would some government entity still need to plan for the location and size of any new airports? The sheer size of airports would seem to require that eminent domain be exercised. Or is there a free market solution for that?


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