The Corner

Who Ruined Air Travel? The Airlines, their Unions, and their Politicians

Over on the homepage, Josh Gelernter makes a strong case that the left ruined air travel. He is right when it comes to New York and DC, but unfortunately there is plenty of blame to go around in the rest of the country. I asked my Competitive Enterprise Institute colleague Marc Scribner for his reaction. Here it is:

“Big airports” are not uniformly slot-controlled. In the U.S., only the New York airports and DCA are slot-controlled (Level 3 coordinated airports in IATA’s terminology). New York and DCA are special cases that don’t easily lend themselves to other airports, such as Minneapolis, which also suffer from a lack of competition. Competition is usually reduced at these other airports not by way of landing slots, but by terminal gate leases. This is due to airline opposition to airport user fees, which makes airports dependent on airlines to do facility expansions, resulting in the airlines securing long-term exclusive-use gate leases in exchange for funding needed airport improvements.

Currently, the federal government puts great restrictions on local airport user fees, known as passenger facility charges, capping them at $4.50 per enplanement for a maximum of two enplanements per trip. Further, airline competition has been limited since the 1920s, when cabotage rules were enacted prohibiting foreign-owned airlines from servicing domestic routes (for instance, only 25% of Virgin America is owned by Richard Branson, the legal foreign ownership maximum–the other 75% is owned by a New York hedge fund). The airline industry is a global industry, yet politicians acting on behalf of the airlines and their unions still prohibit the free flow of global airline capital.

There has long been bipartisan opposition to loosening federal restrictions on these two pro-competitive mechanisms, so it is incorrect to blame “the left” for the airline industry’s alleged lack of competition. The biggest culprits are the airlines, their unions, and the politicians they pay to do their bidding.

For the free market to operate, politicians who supposedly support the free market need to allow it to do so. Competition works, but it’s not just the left who gets in its way.

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