Really Stupid Arguments for Regulating the Airlines

Things in the Sky calls it an interesting argument, but really that’s way too generous.

Congressman James Oberstar thinks checked bag fees justify the government re-regulating the airlines.

Deregulation has been credited with making airline travel affordable for the average American. But Oberstar pointed to the $2.7 billion the airlines earned in baggage fees in 2009 as evidence that consumers are no longer benefiting from the system. He said he believes there’s support in the House for re-regulation.

But consumer pricing is still consistently on the decline as a result of deregulation. (People forget that the whole point of the regulated era was to maintain high fares to boost airline profitability, that it wasn’t until 1976 that the Civil Aeronautics Board began ‘experimenting’ with allowing regulated airlines to offer discount pricing.)

And as Dan points out the bag fees amount to less than $4 per passenger. The TSA costs far more than that, yet somehow government bureaucracies are a good idea here.

Meanwhile, there’s a bill in Congress that’s passed the House to increase ticket taxes. How does Oberstar, chairman of the House Transportation and Infrastructure Committee, square his support for taxing consumers more for their tickets with his rants about roughly the same per-passenger cost for baggage?

Except of course that (1) more dedicated revenue increases the resources under the direction of the transportation bureaucracy, (2) baggage fees aren’t subject to tax, and (3) the latter doesn’t provide an opportunity for grandstanding.

Mike’s Deli across from my office imposes additional fees on top of the lunch special (sandwich + chips + small soda) if you don’t want Lay’s brand. And Ted’s Montana Grill will charge you an extra $2 to turn your side of fries into Chili Cheese fries. Small potatoes perhaps. But take P.F. Chang’s, according to Wikipedia the “P.F.” stands for founder Paul Fleming, who isn’t even Chinese (how about some transparency?) and they have over 200 restaurants. Their market cap is over a billion dollars. They charge extra for fried rice (though not for brown rice).

If it would get votes or TV time, or shake loose lobbying cash, no doubt it would be time to regulate Chinese menu pricing.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. Certainly much airlines do today is regulated. If they wanted to require that a checked bag or small meal on longer flights be included they could do that without returning to non-competitive pricing. Airlines would have to raise ticket prices a few dollars but they might not mind. Airlines have to cut these services because passengers notice low fairs and forget service issues when booking, then have a worse customer experience when they miss out on the services. Bad customer experiences are regrettable, but not as bad as no customers, so it is a tough choice for airlines. If airlines could guarantee their competitors could not remove the services and beat them by a few dollars on price, they might gladly reinstate the services to keep customers happier and encourage them to fly.

    I would not consider regulating Chinese food unless they start charging for the fortune cookie. At that point the only regulation I would propose is that you cannot charge for the fortune cookie.

  2. Have you noticed that Oberstar’s re-regulation comments seem so bizarre that NOBODY is paying attention to them? Heck, not even Obama wants to go there.

    This is a good thing.

    And I echo your comments about gov’t fees and travel. The only expenses that have appreciably risen over the years are the taxes. The TSA sure seems to collect a lot of money to do what they do. Customs and Immigration expenses are through the roof: heck, I am certain there are transatlantic trips not taken because the fees add too much to the ticket price. And now the gov’t is planning on raising passport fees again.

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