Re: Public School was a waste of my time (Re: When even a Republican can see it....)

In message <slrnfcvrof.qkn.randolph@xxxxxxxxxxxxxxxx>, Randolph Fritz
<randolph@xxxxxxxxx> writes
On 2007-08-25, David Friedman <ddfr@xxxxxxxxxxxxxxxxxxxxxxxxx> wrote:
In article <lh3vc3l2gl8u1lbnrh0da11prvf1n59djh@xxxxxxx>,
mike weber <fairportfan@xxxxxxxxx> wrote:

On Fri, 24 Aug 2007 08:58:19 -0500, David Friedman
<ddfr@xxxxxxxxxxxxxxxxxxxxxxxxx> wrote:

The deregulation of pricing and entry to the airline industry.

Which has worked so well.

Actually, I think it has. As best I recall, airline fares are well below
what an extrapolation of pre-deregulation prices, allowing for fuel
costs, gives you. By casual observation, load factors are a lot higher,
which makes travel a little less comfortable--the seat next to you is
less likely to be empty than in the old days--but considerably cheaper.


But the industry is going under; even the huge 9/12 subsidy doesn't
seem to have saved it. And the seat in front of you is likely to be
quite a bit closer and the airline crews serve extra snack-packs to
customers who didn't remember to buy an overpriced airport meal.
Maintenance is going downhill, though the system as a whole hasn't yet
achieved Chinese levels of corruption, and I really wonder if people
actually can evacuate aircraft with sardine-can seating.

While in Europe, where we have less regulation and a more free market
approach prices are substantially lower [1]. The new budget airlines are
making bigger profits than the established airlines. Part of their
business model is have a high load factors on a uniform fleet of new
planes, this simplifies maintenance as you as only have one type of
engine and fuselage to support and new planes tend to be more fuel
efficient, cheaper to maintain and quieter. The oldest, nosiest and
least efficient planes are used by a few of the old flag-carriers which
are in severe financial difficulties, the insolvent Alitalia is a
notable example.

During the negotiations on the recent EU-USA open skies agreement the
USA was consistently protectionist and anti-competitive [2] while the EU
was pressing for a much more open market. This may have been due to
several of the European budget airlines seeing a market dominated by a
sclerotic bunch of featherbedded established monopolies completely
unprepared for aggressive competition, just like the old European
flag-carriers were when the EU introduced a free market [3]. Within
Europe the flag-carriers were lobbying for protectionism but got little
sympathy from the commission.

You can blame your government for helping American airlines to continue
to fleece you, while you still come out ahead American consumers got far
less out of the agreement than they could have done if the US government
had been willing to ignore the bleating from the airlines. The current
status of the treaty is the EU has ratified the US hasn't yet and the
treaty is due to come into force in March.


[1] We also have higher statutory service requirements, compensation
for some types of delay or cancellation for example, the upshot
is we get lower prices *and* better service.

[2] For example the US wished to keep US domestic flights
monopolised by US owned carriers, while the EU wanted to fully
open both domestic markets to any airline who cared to bid for a
route, what ended up happening is the EU domestic market is open
the US domestic market is closed. The US also wanted to retain
harsh foreign ownership restrictions the EU wanted no
restrictions.

[3] The Single European Act is a marvellous thing, this was one of
the consequences. Mergers were somewhat restricted by
flight-slot provisions the various bilateral open skies
agreement with the US, this resulted in that whole class of
treaties being in breach of EU law hence the need for an EU-USA
agreement.
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