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FAA Threats Don't Fly

Pricing solution to flight delays

Robert Poole
August 27, 2004

Flight delays are back to pre-September 11 levels. One of the biggest reasons that travelers across the country are missing connecting flights and waiting for late planes is congestion at Chicago's O'Hare International Airport. Your flight may not go near O'Hare, but that doesn't mean the airport isn't to blame for your wait. O'Hare, last in the country for on-time takeoffs and landings, serves as a hub for both United and American Airlines and is a major point for international flights meaning a delayed flight in Chicago ripples through the air traffic system all the way to both coasts and Europe.

To ease the bottleneck, the Federal Aviation Administration recently summoned all the major airlines to Washington, and after a series of negotiations and FAA threats, United and American Airlines agreed to temporarily move 37 flights out of peak afternoon and evening travel times. The FAA estimates the moves will cut the average delay by 20 percent at O'Hare and 5 percent nationally.

But the FAA shouldn't be strong-arming airlines into "voluntary" reductions. Travelers benefit from amazingly low fares and frequent air service today thanks to airline deregulation, which got the government out of the business of deciding which airlines would fly where and when. A competitive airline market is inherently dynamic it changes from day to day and month to month, as airlines try different things to attract air travelers. Some work and get expanded; some don't work and are dropped. For the feds to sit in Washington and decide who will use the available spaces at any airport during peak hours strikes at the heart of what makes airline competition work for consumers.

There's an obvious alternative to government's bullying: let the market decide.

And the quickest way to do that is for the FAA to authorize O'Hare, or other busy airports, to put a surcharge on landing fees during congested hours.

The beauty of a pricing solution is that it would let airlines - and passengers - decide which flights to keep and which ones to delete from peak periods. Assuming airlines passed the landing surcharges onto travelers in their ticket prices, there would be a strong incentive to use larger-capacity planes during rush hours. A $1,000 per landing surcharge equates to $20 more per ticket on a 50-passenger regional jet, but just $7.50 more on a 135-passenger 737. Smaller airlines would determine if they could still compete with the new, higher ticket prices or if they should shift some flights to non-peak hour or other airports.

Airlines traditionally have opposed such pricing ideas as a kind of monopoly exploitation by airports. But under FAA rules, all airport revenues must be spent on airport projects. Many major airports across the country are currently undergoing costly expansion projects. O'Hare has a $15 billion expansion plan in the works and can certainly use the cash. American and United, which strongly back the O'Hare expansion, should not object.

Smaller airlines should also see the merits of pricing runway access. The only alternative is some kind of governmental allocation, and as a newcomer up against huge incumbent airlines (and their congressional champions), that's a competition they are likely to lose.

O'Hare is the most congested airport, but it's hardly the only one: Atlanta's Hartsfield-Jackson was the nation's most delayed in June, and Reagan National, LaGuardia, and Dallas/ Ft. Worth all suffer serious rush-hour congestion. So does Boston's Logan Airport under certain weather conditions. And the FAA recently approved a precedent-setting landing surcharge for that airport.

Airline competition is saving consumers about $20 billion a year on airfares, according to the Brookings Institution. But if we let government back into the business of deciding which airlines can fly where, those gains are at risk. Far better that we deal with airport congestion as we deal with most other scarcities � by letting the market decide.

Robert W. Poole, Jr. is Director of Transportation Studies at Reason Foundation. A version of his air traffic control corporation concept was implemented in Canada in 1996. He has advised the Office of the Secretary of Transportation the White House Office of Policy Development, the National Performance Review, the National Economic Council, and the National Civil Aviation Review Commission on air traffic control.


Robert Poole is Searle Freedom Trust Transportation Fellow and Director of Transportation Policy


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