Monday, November 24, 2008

Party like it's 1978

My Lake George/Greater Adirondack Region Bureau Chief recently sent me this well written defense of airline re-regulation. Yup, a case for more government, and even though I recently wrote about how dysfunctional government can be, I could not agree more.

The airlines were deregulated in 1978, by the aptly called Airline Deregulation Act. This law gave the airlines pretty much free reign to set routes and establish their own prices. Good idea, right? Sadly, Jimmy got this one wrong.
Mr. Elliot outlines eight areas in the airline industry that government would be well advised to become involved in. They are: (1) ticket prices; (2) executive pay; (3) disclosure; (4) human rights; (5) the truth about delays/cancellations; (6) frequent flyer programs; (7) passenger compensation; and (8) common sense - i.e. making airline tickets transferable.

I know nothing about economics. Absolutely dumb as a rock on the subject. But, folks, capitalism in its purest form is a farce due to a little concept that I and others - like Nobel Prize winning economists - like to call market failure. And the fundamental failure of the airline industry is that it is, for all intensive purposes (that was for you), a cartel.

Allow me to explain why that is the case. The product being offered is homogenous, there are relatively few providers, and there has been a fairly transparent allocation of territories. Delta owns Atlanta, Northwest has Detroit, and American is king in Dallas. Sure, perhaps it's not perfect territorial allocation, but try flying into Atlanta on any airline other than Delta. How's that ticket price treating you?

And, by the way, if you think I'm on the fringe for thinking this, then "Hi, welcome to the fringe, BBC."

Therefore, under this assumption that the airline industry suffers from an incorrigible market failure, then Mr. Elliot's points are valid. Consequenlty, in an industry where the market has failed, government has a duty to become involved.

Of course, government probably won't get involved, which is odd because I think that most of the legislation that comes before my desk involves issues that legislators should be keeping their noses out of. But, the airline industry is powerful, and I am sure that just like Michigan lawmakers were beholden to the failing car industry for decades, the airline people are probably friendly with the right lawmakers.

Instead of enacting the bold regulations that we deserve, the public will instead be left, as is usually the case, with a talking points-style press release promising accountability, and "further study" and a reiteration of how Congressperson So-and-so cares about airline passengers, and blah blah blah.

And be sure to hold on to that press release, because it will make for a good meal when you are stranded for 14 hours at the tarmac and the airline is charging $27 for a bag of stale peanuts.

We'll get more of this.
And less of this.
Come on, Congress. Do it for the children.


adb said...

thanks for you know what. is that one of your camp kids?

Sparticus said...

it might be one of my camp kids. the graphic design department just googled "happy kid in airplane" and that came up. but, i guess there is a possibility that the kid is maio or lefko or morgy or ikitit or e-man or e-rock or ace dizzle or wacky tabacky or uker or pfeffer or bradley or j-rod or bramulus or tie domino or kessel or siegs or...