JONATHAN COHN NOVEMBER 28, 2011
[with contributions from Matt O'Brien and Darius Tahir]
The prevailing story about passenger air travel is that it used to be a lot more fun or, at least, a lot more comfortable. I wonder how true that claim is. Weren’t the old planes a lot noisier? Didn’t they take longer to reach their destinations? Weren't they less safe?
But a few things clearly have changed – among them, the introduction of separate fees for baggage. Virtually every major airline now charges passengers to check bags. At least one, Spirit, also charges for some carry-on luggage.
Senator Mary Landrieu, Democrat from Louisiana, wants to change that. Last week, with much fanfare, she introduced the “Airline Passenger BASICS Act.” BASICS stands for “Basic Airline Standards to Improve Customer Satisfaction” and the bill, if enacted, would force airlines to allow every passenger one checked and one carry-on bag, free of charge. “When an airline advertises a flight, that is how much it should cost, plain and simple,” Landrieu said. “Passengers have been nickled and dimed for far too long and something has to be done about it.” The airlines, naturally, hate the idea. “Obviously,” says Steve Lott of the Air Transport Association, “we don’t think it’s appropriate for the government to regulate what services a private industry should offer to customers and at what price.”
When I hear trade group spokesmen say things like that, I rarely agree. And Landrieu’s argument actually makes a lot of sense to me: When airlines sell tickets to customers, they should be clear about what, exactly, they are selling. If Landrieu’s bill merely standardized the pricing of tickets, or forced airlines to be more transparent about what ticket prices include, I’d be all for it.
But that’s not what Landrieu is actually proposing to do. Her bill would force the airlines to include the cost of baggage in their passenger fares. That seems unnecessary. We don’t have a right to air travel, let alone to air travel that includes the cost of transporting baggage as well as people. The effect of this regulation will be to establish a cross-subsidy, so that people who fly without luggage effectively pay more so that people who fly with luggage pay less. But why should that happen?
It seems to me that this is one good the market is capable of sorting out on its own. Southwest Airlines already offers free checked bags – as you would surely know if you watch television, because it’s been the focus of their ubiquitous advertisements ever since their competitors started charging for luggage. If people really value free bags, they’ll reward it by flying Southwest over other airlines, at least on those routes where competition exists.
I confess that my thoughts on the airline industry are informed, somewhat, by an airline expert of close acquaintance. And, just to be very clear about my own views, I’m not against more regulation of the airlines, particularly when it comes to antitrust and labor issues.
What's more, I'm very much in favor of similar regulations over other areas of the economy, most notably health care. The health care market is a lot more prone to failure than the airline market is. And when it comes to medical care, cross-subsidy between different groups – namely, the sick and the healthy – is both socially desirable and practically necessary, in order to maintain stable insurance pools.
But those aren't the kinds of issues that Landrieu has made her focus. Maybe she should.
China Syndrome: James Pomfret of Reuters writes that China’s workers are becoming restive as the global economy slows, with dissatisfaction over many aspects of the Chinese economy rising.
A Frank assessment: Given his retirement announcement today, it’s certainly worth reading Jeffrey Toobin’s delightful New Yorker profile of Barney Frank.
Sanity on the right? Noah Smith sees some in Peter Thiel's acknowledgement that the state has a role to play in innovation.
Ad Hominem: Would Mitt Romney's deceitful ad about President Obama have been kosher in the corporate world? Matt Steinglass says no.
Video Dedication of the Day: Ohio State won Urban Meyer. But Michigan won the game.