The Return of the Economic Naturalist by Robert H Frank

Author:Robert H Frank
Language: eng
Format: epub
ISBN: 9780753521656
Publisher: Ebury Publishing

32. Why Should Travelers Get a Valuable Resource for Free?

In April 2000, Congress passed a law intended to stimulate competition at La Guardia Airport [in New York] and increase service to small communities. In response, the Federal Aviation Administration substantially increased the number of flights allowed to operate at La Guardia, already one of the nation’s busiest airports.

But La Guardia couldn’t handle the new traffic, and a week ago the FAA rolled back the number of daily flights to pre-April levels. Then it held a lottery for operating slots that gave preference to nine small airlines.

Reducing operating slots in this way clearly ameliorates crowding. But it does so in a wasteful way that guarantees continued unfairness and frustration for area travelers.

Slots at crowded airports are a valuable economic resource, much like scarce seats on an oversold flight. History has taught us a valuable lesson about how best to allocate seats on oversold flights, one with a message for the problem of crowded airports.

Carriers once handled oversold flights on a first-come, first-served basis. If 120 passengers presented tickets for a flight with 100 seats, only the first 100 got to go. For passengers coming from connecting flights, this was like a lottery. If your connecting flight was late, you got bumped.

This solution never considered that individuals have different needs. People with urgent schedules were often forced to wait, while those less pressed made their flights.

Parallel issues arise with overcrowded airports. Just as a plane can accommodate only so many passengers, an airport can handle only so many operations. So every time a nineteen-seat Beechcraft 1900 [turboprop] uses La Guardia, the FAA must deny permission to some larger plane, say, a Boeing 757 with several hundred passengers. Today, even among carriers currently authorized to use La Guardia, delays and flight cancellations are legion. More important, a host of carriers would like to provide large aircraft service to La Guardia but are not authorized to use the airport at all. That means some travelers have to use less convenient airports, just as someone has to wait when flights are oversold. In both cases we have a strong interest in minimizing total inconvenience.

On this score, the La Guardia lottery is even worse than first-come, first-served. Not only does it make no attempt to minimize the number of diverted passengers, but it actively increases their number by setting aside special slot allocations for carriers that serve small communities with small aircraft.

There are better ways to solve both problems. In 1979 the Civil Aeronautics Board called for carriers to offer cash payments, free tickets or other rewards to induce volunteers to relinquish their seats on oversold flights. Passengers could decide for themselves how important it was to avoid waiting. Those with pressing business simply wouldn’t volunteer. The board’s proposal was adopted and became widely recognized as both more fair and more efficient than the earlier system.

Scarce operating slots at La Guardia can be allocated in essentially the same way. Rather than give them away by lottery, the FAA could sell them to the highest-bidding airlines.

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