Airlines

The TSA Can’t Help Being Annoying

by Ivan Osorio on November 15, 2010 · 2 comments

in Mobility, Politics as Usual, Regulation

With the holiday travel season approaching fast, public anger at the federal Transportation Security Administration’s (TSA) increasingly invasive airport passenger screening procedures — full body scans and pat downs — seems to be growing louder by the day. Homeland Security Secretary Janet Napolitano argues that these measures are necessary to maintain an adequate level of security for the nation’s air travel.

Indeed, some types of safety measures, including passenger screening, are needed for air travel safety. The problem with the current security regime is its structure. In a way the TSA can’t help annoying travelers with petty, intrusive rules. It is in its nature, as a top-down, government regulatory bureaucracy. By design, it’s good at promulgating and enforcing rules, not so much at turning on a dime to react quickly to potential threats, which have an annoying habit of turning up unexpectedly and be ever shifting.

Hopefully, the public anti-TSA backlash can lead to greater public debate over the nature of government institutions and the incentives they face, compared to those in the private sector. At Forbes, Rhodes College economics professor Art Carden launches a strong early volley in this debate, arguing for abolishing the TSA.

But won’t that compromise safety?  I doubt it.  The airlines have enormous sums of money riding on passenger safety, and the notion that a government bureaucracy has better incentives to provide safe travels than airlines with billions of dollars worth of capital and goodwill on the line strains credibility.  This might be beside the point: in 2003, William Anderson incisively argued that some of the steps that airlines (and passengers) would have needed to take to prevent the 9/11 disaster probably would have been illegal.

This makes me wonder, as I often have, of what exactly goes through the mind of Naderite self-styled safety advocates when they advocate some new “safety” requirement. Do they really believe that companies have no economic self-interest in helping protect the safety of their customers? An auto manufacturer whose vehicles can’t withstand accident impacts or a restaurant where people routinely get food poisoning won’t stay in business for long.

That kind of failure to account for incentives underlies a lot of economic fallacies. It also distorts the political debate, by making possible the notion that taking an activity out of the marketplace somehow obviates any self-interest surrounding it. In fact, government intervention simply shifts self-interest from the voluntary exchange of the market to the coercive functions of government. The TSA debate is no different, as Washington Examiner columnist and former CEI Warren Brookes Fellow Tim Carney notes:

If you’ve seen one of these scanners at an airport, there’s a good chance it was made by L-3 Communications, a major contractor with the Department of Homeland Security. L-3 employs three different lobbying firms including Park Strategies, where former Sen. Al D’Amato, R-N.Y., plumps on the company’s behalf. Back in 1989, President George H.W. Bush appointed D’Amato to the President’s Commission on Aviation Security and Terrorism following the bombing of Pan Am Flight 103. Also on Park’s L-3 account is former Appropriations staffer Kraig Siracuse.

The TSA isn’t probably going away any time soon. However, the backlash can bring about some needed changes, in addition to introducing more questions about the role of government into the public debate — all the while air travel becomes even more unpleasant.

Even Cranky Liberals Are Coming to Understand the Air Travel Sector!

by Fred Smith on April 22, 2010

in Economy, Politics as Usual, Regulation

 Brett Snyder, editor of the web site, crankyflier.com, wrote a revealing column this weekend, “Don’t let bag fees make you nostalgic. Airlines’ golden age wasn’t so golden..”  Commenting on the Block Airline’s Gratuitous Fees Act – the BAG Fees Act by Senator Schumer, he noted that the “good old days” were good only for the wealthy.  Elites flew, most people didn’t.  It was too expensive, too inconvenient; airline deregulation democratized air travel making it more affordable and more convenient (this phenomena is typical of the role the rich play in making innovation possible, see my blog post “The Rich are the Society’s White Mice”).  Snyder understands that ensuring sustainable profitable operations – a prerequisite if any of us are to fly at all – is complex.  Today, most people select based on fares and number of stops but they may elect in the future to pick based on the costs of the full bundle of services they expect to use (checked bags, ability to change schedules at lower price, fewer restrictions on travel, nature of on-board services).  Airlines and travel search firms are moving in this direction already.  It is that market responsiveness – not politicians who will ensure more friendly skies (for most of us) in the future.  After all, Snyder concludes:  “… in the old days … most of us couldn’t even have afforded a ticket.”

The Economics of Charging for Airline Amenities

by Ryan Young on February 9, 2010 · 2 comments

in Mobility, Odds & Ends, Zeitgeist

As of May 1, American Airlines will charge $8 to customers who want to use a blanket and pillow. JetBlue and US Airways already charge for them. This is only the latest example of a nickel-and-diming trend that has been going on for at least a decade. Passengers can also expect to be nicked for checked baggage, food, and drinks.

It’s also terrible PR. An unscientific CNN.com poll shows that 96 percent of passengers are unwilling to pay. More than that probably also harbor some resentment against the offending airlines.

Given how much customers resent extra charges, it is a mystery to me why airlines have so many of them. Why don’t they just include those expenses in their ticket prices? People don’t mind paying once. But if they have to take out their wallet a second or a third time, they often get angry. This anger is completely avoidable. Just put those extra nickels and dimes in the initial ticket price.

There has to be a reason why airlines so readily incur their customers’ wrath. My theory is that airlines think the nickel-and-dime approach can lower total costs. If people stick to carry-ons to avoid a checked baggage fee, that saves the airline some money. If they set the fees right, they’ll save more in labor costs than the forego in baggage fees.

Maybe they’re thinking the same theory applies to pillows and blankets. They’re on every seat in every flight. But most people don’t even use them. I rarely do. Seems like a waste of resources, doesn’t it? By only giving blankets to people who want them enough to pay for them, the airline has to buy fewer sets of pillows and blankets. It also has to clean fewer of them. If they’ve calculated correctly, this will result in a net savings. That means lower fares. And hopefully, more business.

I have no idea if this theory is correct. But it does make some sense.

But the fact remains that people are transaction-averse. Southwest Airlines has had great success with its concsious business strategy of keeping its nickel-and-diming to a minimum. While I personally prefer the Southwest approach, there seems to be room for both business models in the market. Time will tell if one eventually proves superior in giving people what they want. Even if it involves much grumbling, cursing, and reaching for wallets.

Thinking outside the box on security

by Fred Smith on January 7, 2010

in Mobility, Precaution & Risk, Regulation

The Washington Post editorial, “In the wake of Flight 253, the TSA must get more anti-terrorist tools” makes a short-sighted argument for increasing resources for the TSA.  Terrorists, as we’ve seen in Iraq and elsewhere, have diversified, wreaking havoc wherever individuals congregate.  Malls, mass transit systems, sports stadia, churches all represent targets.  To focus scarce taxpayer funds on the risks of air travel alone neglects the broader terrorist threat.

Why not encourage a more active anti-terrorist role for air travelers and airlines – and enact “Good Samaritan” laws to reduce their liability?  Unfortunately, current privacy laws and anti-discrimination lawsuits have restricted their ability to augment efforts of the TSA.  Consider how airlines might have responded to 9/11. A US Michael O’Leary might well have launched a “John Wayne” or a “Nervous Nelly” option.  The first would arm passengers (and crews) for self-defense (that approach might well have minimized the killing sprees at Virginia Tech and Fort Hood).  The latter might require passengers to strip and don strait jackets for the duration of the flight.  Competition would encourage a more careful balancing of security and privacy concerns with passengers playing a creative role.  Thank God the passenger on Northwest was not forced to remain in his seat!

Why should efforts to advance public safety exclude the public?  America’s history shows numerous ways in which the citizenry has played a critical security role.  Government should play a role in defending the citizenry but your focus on the role of bureaucracy alone risks losing the creativity of travelers and airlines.  Why not encourage their involvement too?

And, given the problems already observed with both the TSA and the HAS in their preemptive efforts to alone provide security, shouldn’t the possibility of enlisting business and the citizenry in this effort be considered?

TSA Praises Itself After Year of Security Lapses; Obama Administration Backs TSA Unionization at Public Expense

by Hans Bader on December 31, 2009 · 1 comment

in Employment, International, Labor, Mobility, Personal Liberty, Politics as Usual, Precaution & Risk

In a year-end message to Transportation Security Administration (TSA) staff, the agency praised itself for a “very good year” in airline security, despite repeated security failures.  But, as ABC News notes,

The message made no mention of TSA snafus during 2009, including several highly critical reports by the inspector general for the Department of Homeland Security and the inadvertent posting on the Internet of confidential documents revealing airport security procedures.

Recently, a Nigerian terrorist nearly managed to blow up an airliner, after being allowed on the plane despite being on a terror watch list.  He set fire to explosives, but was thwarted at the last minute when vigilant passengers put out the fire. Amazingly, Homeland Security Secretary Janet Napolitano claimed that the episode showed that “the system worked.”

The Obama administration is now trying to unionize the TSA., which will make it even more cumbersome, slow-moving, and bureaucratic.  The Washington Examiner explains why that is a very bad idea that would undermine travelers’ safety.  Union-mandated “collective bargaining would cripple the TSA,” stripping the TSA of “its flexibility to move people . . . and change protocols when it believes there is a terrorist threat,” requiring “TSA managers to share sensitive intelligence information with union negotiators . . . increasing the possibility of damaging leaks,” and restricting managers from rewarding ”high-performing screeners or fire those unable or unwilling to perform their duties in an efficient manner.”

The TSA is now reportedly planning to impose additional pointless restrictions on airline passengers, such as limiting access to blankets, and requiring passengers to stay in their seats during the last hour of flight, even though it was a passenger who got out of his seat during the last hour of flight who thwarted the recent attempted terrorist attack by putting out the fire the Nigerian terrorist had set to the explosives he carried on the plane.

For more on the TSA see here.

If at First You Don’t Succeed, Change the Rules.

by Ivan Osorio on November 2, 2009

in Deregulate to Stimulate, Economy, Employment, Labor, Regulation

From attempting to manipulate the definition of “supervisor” to changing the way in which workers are organized, the above seems to be a guiding principle in organized labor’s bold new approach to increasing union membership. Consistent with that, some union friendly government officials are trying to change the way in which votes for some workers are counted.

Today, as The Wall Street Journal reports, National Mediation Board chair Elizabeth Dougherty wrote to more than a dozen Republican senators, protesting her colleagues’ proposed rule change (sent to the Federal Register on October 29) that would change the way in which votes are counted in organizing elections under the Railway Labor Act (RLA).

Under a 75-year-old interpretation of the Railway Labor Act, any employees who don’t vote on whether to create a union are counted as “no” votes. That means a union can’t be approved without a full majority of all employees voting in favor of it.

Under the National Labor Relations Act governing other industries, a union can be created as long as a majority of all votes cast are in favor of collective bargaining. In such elections, nonvotes don’t count either way.

Earlier this year, the White House named Linda Puchala, a former leader of a flight-attendant union, to the NMB to succeed Read Van de Water, a former lobbyist for Northwest Airlines. Harry Hoglander, a board member since 2002, is a former union leader for pilots.

Ms. Dougherty joined the NMB’s board in 2006. A registered Republican, she served as a labor adviser to Mr. Bush earlier this decade.

In September, the AFL-CIO union formally asked the NMB to adopt the same voting rules as the National Labor Relations Act, arguing that the unionization-election process under the Railway Labor Act is undemocratic.

In its proposal published Monday, the NMB agreed, saying that “few if any” democratic elections treat nonvotes as “no votes.” Allowing a contrary policy, as under the current NMB union-voting rules, “could allow those lacking the interest or will to vote to supersede the wishes of those who do take the time and trouble to cast ballots,” the agency added.

Opponents of the overhaul say the higher bar for unionization was set up to protect interstate commerce from disruption. They also argue the law hasn’t hindered unionization: Roughly two-thirds of airline employees and more than three-quarters of railroad workers are organized, according to industry estimates, far higher than the 12% rate across the entire U.S. economy.

That’s a major change, but the unions are not about to stop there in their efforts in this area. The Teamsters, in cooperation with UPS, are trying to move employees of FedEx — UPS’ competitor and a Teamsters organizing target — out from being regulated under the RLA to jurisdiction under the National Labor Relations Act (NLRA).

Unlike the NLRA, the Railway Labor Act requires unionization to be carried out company-wide. This prevents the creation of balkanized work rules that could result from piecemeal unionization at individual facilities. UPS began as a ground transport company, so most of its employees are covered under the NLRA.

However, the Teamsters are UPS have pursued that change through the legislative process. Now some union allies are pursuing a similar change through the regulatory process. When it comes to changing the organizing rules, Big Labor seems more likely to keep persisting.

For more on the RLA, see here.

Regulation of the Day 40: Flying a Plane

by Ryan Young on August 26, 2009 · 1 comment

in Deregulate to Stimulate, Mobility, Regulation, Regulation of the Day

Want to fly a plane? The FAA just published 72 pages worth of changes to its already extensive certification rules. 173 changes in all.

Don’t forget to list your current residential address when applying for a knowledge test.

1+1=2<1

by Tatiana Kryzhanovskaya on July 21, 2009 · 1 comment

in International, Odds & Ends

By introducing new regulations the Congress together with major airlines are discouraging us to travel. While the Congress is deciding on how to regulate the size of carry-on luggage and while the airlines are charging us more in taxes than in actual fares, the passengers are still facing a ridiculous policy that a one-way airfare costs several times more than a roundtrip ticket. Weird arithmetic: a trip from one destination to another and back will cost you much less than a flight one way only. Is not that strange that 1+1=2 is less than 1? In fact if you are purchasing a roundtrip the cost of a ticket is up to 10 times cheaper than if you are booking a one-way trip. For example, a roundtrip from New York to Paris would normally cost you around $750. But if you need only 1 segment of this journey you would be asked to pay at least $2000. So booking a roundtrip and using only 1 segment of it saves you a lot of money. Seems very inefficient that the airlines are forcing us to “adjust” our travel plans in order to pay less instead of just making the price fair for a half of the trip as well.