… Complaining About Airlines

How many times have you heard from a friend or seen on a Facebook wall “I am never flying XYZ Airline again!?” I’m sick of hearing that. People just say it so that people know that they travel and so that people hear about their problems. It is the epitome of #FirstWorldProblems. The truth is that flying is not nearly as bad as we make it seem. I’m currently on a two and a half hour flight that I bought for $68 one way, plus $55 for checked bags. That is almost certainly less than the actual cost of getting me from point A to point B, especially since the plane was not full. Sure, paying extra for the bags kind of stinks and there was not enough space in the overhead bins, but compared to the alternative, driving up the East Coast for at least a full day, spending money on gasoline and food, not to mention finding a car to drive in, flying is a far superior option for me. I would have actually been willing to do it even if it took longer and at a higher price. If I had to endure delays or even cancellations or other inconveniences it would still have been better than driving or potentially finding a train or bus service. We should not be complaining about air travel. Economically speaking it does not make sense.

I know I’ve actually written an article defending Spirit Airlines, but some of these rants are pretty funny!

Air travel in the United States used to be regulated by the Civil Aviation Board. The federal government set ticket prices and the routes that airlines could fly. The system was extremely beneficial to airlines, because ticket prices were set in their favor. However, in the late 70’s air travel was deregulated and ticket prices began to fall. In addition, more routes were added by airlines and the federal government established EAS to the benefit of communities that were losing air service.

The oligopolistic nature of the airline industry makes perfect supply and demand equilibrium pricing elusive, but compared to the era of regulated air travel, prices are much cheaper (50% by some accounts, adjusting for inflation). However, I contend that prices are actually far below the actual cost of flying. If you get a super cheap MegaBus ticket or you #BoltForAbuck can you complain about a somewhat uncomfortable seat? Not really. The same goes for air travel.

Exhibit A: air travel is extremely costly for the environment. Air travel accounts for between 5% and 9% of total climate altering emissions. The range in estimates is most likely due to if you take into account ancillary activities (transportation to and from airports, airport construction, airplane construction, and airport vehicles emitting greenhouses gasses) or just greenhouse gasses resulting from the burning of jet fuel and fuel in non-jet propeller planes. Since 1990, aviation CO2 emissions have increased 83%, and they are likely to grow in the future. In 2015 PwC forecasted that global air travel will double by 2035, mostly due to explosive growth in Asian economies. Even as jet fuels and aircraft designs are becoming more efficient, emissions will still skyrocket along with the number of people traveling.

boeing.rpks

In addition, airplane emissions are more troublesome because their high atmosphere point-of-emission alters atmospheric chemistry and is two to four times more damaging than terrestrial emissions. All of this is particularly startling because emissions from other sources are not growing nearly as fast as air travel emissions (for instance, due to the transition away from coal based electric generation).

Contrail_fourengined_airplaneThe deleterious effects of air travel go on. Burning jet fuel also releases hydrocarbons, water vapor, methane, nitrous oxide, and sulfur oxide, plus particulates like soot and sulfates. Many of these gases (such as methane) have warming effects in excess of carbon dioxide. Nitrous and sulfur oxides can cause acid rain, and CO2 contributes to ocean acidification as well.
Even the contrails from jet engines, which are just condensed water vapor (clouds) cause global dimming: the reduction of sunlight reaching the Earth. Clouds block the sun, as we all know. This has the effect of literally dimming the sky, but also altering climate patterns globally. Ironically, global dimming counters global warming, and the atmosphere would have warmed even more were it not for global dimming (drought if we do, damned if we don’t).

For the most part these environmental costs are completely ignored in the cost of a ticket.  

Carbon emissions and climate change are not the only negative externalities associated with air travel. Noise pollution is a major problem near airports and in takeoff and landing corridors. Not only do nearby residents suffer hearing loss, studies have also shown increased risks for stroke, heart disease, and other cardiovascular ailments. In addition, exhaust fumes from rides to the airport, airplanes, and other airport vehicles, takes a serious toll on the health of people exposed to these emissions, particularly airport workers and local residents. Kids are more likely to get asthma, and other residents have higher risk of cardiovascular disease. For the most part the people exposed to these pollutants pay the price in medical bills, loss of potential earnings, and loss of quality years of life. Air travelers, the very people causing these problems, do not pay the bill. Air travel is far more expensive than we realize. It is just that we are passing the check on to other less fortunate people.

KayakThe internet and its innovations have also made air travel cheaper for the general public. Imagine having to search for a cheap plane ticket 20 years ago before there were flight search engines online. You would have to go to the website of every airline individually or call the airlines. Fuhgeddaboudit if you had to string together trips to multiple cities, or wanted to try to catch a budget airline after arriving overseas. The permutations must have been endless. There was asymmetric information. Pricing power was in the hands of the airlines. They probably would have had to spend a lot of advertising bucks convincing consumers that they offered the best value flights. Those advertising costs went right into the price of a ticket. In the end, consumers were much less likely to actually find the most ideal flights for their budget. Now, with flight search engines it is much easier to find the cheapest flights for your itinerary.

 

Despite the fact that the richest among us are flying exponentially more than the rest, air travel is heavily subsidized by the United States government. Various aspects of air travel are public goods. Air traffic control is a federal system with federal employees. Highways and public transportation that go to airports are public goods. Airport security is also federally financed. Even airports are often owned by public agencies that issues bonds, putting taxpayers on the line in the case of default. Large portions of the FAA operating budget is funded through the Airport and Airway Trust Fund (AATF) which collects taxes from the air travel industry and passengers. However, the AATF does not have enough funds to cover all FAA operations.

  • In FFY 2012 it covered just 71.12% of the FAA’s budget
  • 71.53% in FFY 2013
  • 80.10% in FFY 2014
  • 92.77% in FFY 2015

Those funds are only used on FAA operations. Many arms of the national air travel security apparatus, such as the Transportation Safety Administration, Customs & Border Protection, and Federal Air Marshals are administered through the Department of Homeland Security, which has no dedicated trust fund like the FAA. The TSA alone cost $7.55 billion to operate in 2015 (although they have non-air travel operations as well). This is all not to mention the public infrastructure that gets us to the airport.  Since these public services are funded out of general funds people who do not fly often are literally subsidizing frequent flyers through their taxes. Those air traffic controllers and TSA screeners are being paid for by all 320 million Americans, but 55% of us don’t even fly once in a year.

If you doubt that air travel is the realm of the rich, take as evidence April 2013 when the federal government budget sequester went into effect. Thousands of flights were cancelled and delayed and there were long lines at airport security due to TSA furloughs. Flyers were not the only citizens suffering due to budget sequestration, but within days Congress belayed the sequestration for air travel and air travel only. If there were similar problems at long distance bus terminals it may not have even made the local news. Politicians actually deliberately congested the George Washington Bridge as political revenge in New Jersey. The Washington DC Metropolitan Area “Metro” subway system is currently having a nearly existential infrastructure and safety crisis. The crisis was years in the making, with numerous warnings, but lawmakers in Virginia, Maryland, and the federal government continuously avoided the problem, leading to the present day dire situation. Not surprisingly, DC’s population is 49.5% Black, and 59% of Metro riders are African-American. Do members of Congress (primarily White and rich) ride the Metro? Rarely. Do they fly nearly weekly to travel between DC and their constituencies? Absolutely. The government responds to the needs of the rich and the White before all others, the others be damned. In the instance of sequestration’s toll on air travel they responded in absolutely record time (less than one week), spitting in the face of the collective sacrifices that they were saying we all needed to make.

Not to be unfair to terrestrial travel, interstate road travel is intended to be financed primarily through the Federal Highway Fund. The Federal Gasoline Tax finances this trust fund, and tax shortfalls have left extreme shortcoming in the trust fund over the last few years, causing the Treasury to transfer money into the fund. However, far more people travel on roads multiple times a year than fly. Although it is an extremely flawed system, at least our highway system it is funded more equitably by the people and businesses that use the roads.

Lastly, many of our complaints about airlines are unavoidable or out of the control of the airlines themselves. If you are complaining that your flight was cancelled because of inclement weather and the next available flight the airline has available is a day or two away you are being unreasonable. That is not the airline’s fault. Inclement weather happens and affects air travel. In fact, the airlines have a vested interest in avoiding these situations, because it causes them to lose money, approximately $200 million in 2014 (masFlight). Sure, the airline could see if there is a seat for you on the flight of another airline, but they would have to buy that ticket for you, which is more expensive than putting you on one of their own airplanes. If you expect that service, expect higher prices. I certainly would not expect that service included in the price of a $68 ticket, and we should not complain for complaining’s sake when this happens to us.

Many other delays are caused by airline staffing issues. Pilots and flight attendants have federally mandated limits on how much they can work. Sleepy pilots make for mistake-prone pilots. The United-Continental Airlines merger of 2010 has left the combined airline with two different flight crew unions that have to operate separate from each other. Up to 6% of United Airlines flights since the merger have been due to the difficulties resulting from this union barrier. In the short-term airlines cannot do anything about this. Surely in the long-term they can work with labor and do a better job with staffing, but most complaints I hear are not directed at these nuanced policy issues.

The national air traffic system causes still more delays. Our air is congested with airplanes, and the air traffic control system is saturated by airplanes. The air traffic control system is outdated – it runs on World War II radar systems. There is a better GPS-based system available dubbed NextGen, but Congressional dithering and mismanagement at the FAA has interminably delayed the wide scale rollout of this system. Currently, airplanes have to follow certain vectors prescribed by the FAA. NextGen will allow more direct airport-to-airport routes, as well as a host of other benefits. Most importantly, with more direct routes airlines will burn less fuel, ticket prices will go down, travelers will save time, and greenhouse gas emissions will decrease against the status quo. Not to downplay the task of implementation, NextGen has been estimated as a $40 billion investment, shared between the government and the airlines, but the FAA estimates that it could provide over $100 billion in benefits and savings.

The federal government could arguably do a better job regulating the oligopolistic market structure of the airline industry. In the current market, with just a few extremely large airlines, airlines have more pricing power than consumers. In addition, there is a lot of evidence that airlines tacitly collude or possibly explicitly fix prices. The Obama Administration has done a moderate job at best addressing these issues, and the economy suffers as a result. Imagine an engineering services firm that would like to meet new clients at an industry conference in another city. They want to send three of their engineers, but they can only send one or two because prices are fixed at a higher price than the firm is willing to pay. As a result they lose out on potential future clients and the national economy grows more slowly as an unfortunate result. These pricing issues pale in comparison to the costs of negative externalities that are not internalized into the price of air travel, but they are still an issue that we ought to demand the federal government address. Complain about that, not missing your connection.

Local politics is also responsible for part of the problem. For example, La Guardia Airport has been begging for a rejuvenation and runway modernization for decades, but the City Hall-Albany-Port Authority traveling circus has been unable to make any headway. 15% of national delays are due to congestion in New York airspace alone, and with so many flights originating in or going to New York, delays in New York reverberate all across the nation. London is setting itself up for similar problems with its inability to resolve its airports of the future problem. I find National Airport right outside DC absolutely delightful, but a miasma of outdated national laws and local politics have limited its growth and the flights that can depart from National. Next time you are frustrated with a delay or having to get out to Dulles you may want to complain about the government, not the airline.

There are certainly ways in which the airlines could improve. Sometimes their customer service agents are poorly trained or unhelpful. The service that airlines offer customers that lose bags is subpar, and there is so much theft of items from checked baggage that some of this illicit behavior must be sanctioned by managers and airline security personnel. Furthermore, I have personally become extremely suspect of how airlines are making us deliberately uncomfortable so that we pony up and give them more money. Nevertheless, given the under-cost prices of air travel, we truly have much less to complain about than we sometimes make it seem.

I did not write this article to get people to stop complaining, although I would not mind. The purpose of this article is twofold. First, to get people to realize that air travel has a negative impact on the environment, and that to correct this mismatch the price of air travel will likely become more expensive and those of us less well-off will have to do less of it. Secondly, despite the subsidies and externalities, if we worked together with politicians, we could actually reduce the cost of flying, helping to offset some of the increases we see from externalities being internalized in the price of a ticket. Nevertheless, in the meantime, count yourself lucky that flights are as cheap as they are.

airplane

Sources:

http://www.theatlantic.com/business/archive/2013/02/how-airline-ticket-prices-fell-50-in-30-years-and-why-nobody-noticed/273506/

http://www.economist.com/blogs/gulliver/2013/08/airlines-america

http://www.thefiscaltimes.com/2014/11/19/NextGen-Congress-Enraged-FAA-s-40B-White-Elephant

ttp://www.nytimes.com/2016/06/17/business/years-after-united-merger-flight-attendants-work-for-two-airlines.html?module=WatchingPortal&region=c-column-middle-span-region&pgType=Homepage&action=click&mediaId=thumb_square&state=standard&contentPlacement=9&version=internal&contentCollection=www.nytimes.com&contentId=http%3A%2F%2Fwww.nytimes.com%2F2016%2F06%2F17%2Fbusiness%2Fyears-after-united-merger-flight-attendants-work-for-two-airlines.html&eventName=Watching-article-click&_r=0

http://www.pwc.com/us/en/industrial-products/publications/pwc-tailwinds-rising-passenger-demand.html

https://en.wikipedia.org/wiki/Environmental_impact_of_aviation

http://ecowatch.com/2013/10/09/noise-pollution-airports-impact-health/

https://www.washingtonpost.com/local/trafficandcommuting/metro-sank-into-crisis-despite-decades-of-warnings/2016/04/24/1c4db91c-0736-11e6-a12f-ea5aed7958dc_story.html

https://www.wmata.com/pdfs/planning/WMATA%20Making%20the%20Case%20for%20Transit%20Final%20Report%20Jan-2012.pdf

 

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Posted on June 25, 2016, in Air Travel, Climate and tagged , , , , , , , , , , , , , , , , , . Bookmark the permalink. Leave a comment.

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