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Interesting story arising out of the recent JetBlue debacle:

"The stranding of hundreds of passengers aboard JetBlue Airways Corp. planes for up to 10 hours on Wednesday has revived calls to enact an airline customer rights law."

a passenger bill of rights to

- cap the time any delayed flight can languish on the tarmac without letting passengers get off

- specify compensation when airlines fail to deliver services as promised

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The only bill of rights an airline passenger needs is the right to life, liberty and property (or the pursuit of happiness). When such rights are secured, airlines are free to compete to provide the best possible service to passengers. Not just airlines, but also privately owned airports and air traffic control systems are also free to compete to provide the best possible service. In America, the latter two components of air travel are government-owned and operated, with the same efficiency as the post office or the public schools. And the airlines, while nominally privately owned and operated, operate under a welter of rules that preclude sufficient capital being invested in the industry, with the result that service, well... sucks.

A private air traffic control system would efficiently schedule flights and proactively take into account weather problems so that the odds that planes are piled up like in the JetBlue situation are significantly reduced. Additionally, privately-owned airports would be incentivized to have sufficient facilities available to accommodate the air traffic they get. Privately owned airports would also auction off or sell landing rights, thereby assuring that too many airplanes won't land at the same time.

Finally, in a laissez-faire society, airlines would be free to merge and collude, both of which would ensure that airfares were high enough so that they could afford to invest in enough equipment to ensure that passengers had a good experience on the airlines in all sorts of weather conditions. Today there are too many airlines and the prices they charge are too low so that cut-rate carriers such as JetBlue can only survive by offering service that is too stripped down. Passengers want the best balance between price and quality/safety. Because of restrictions against mergers and collusion, what they are offered is tilted too far in the direction of low prices and not enough in the direction of quality of service.

On a broader level, the JetBlue situation is an example of how "controls breed controls." The government hamstrings the ability of airlines to provide the best quality service by owning the airports and air traffic controls sytem and doing a lousy job of running them. They also hamstring the airlines by forcing them to compete only on price and less so on quality of service because they do not allow the airlines to merge and/or collude on prices. So, government intervention causes the problem. What is the solution proposed? More government intervention in the form of an arbitrary edict called the "passenger bill of rights."

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To play devil's advocate for a moment, might the conditions to which passengers are subjected ever give rise to a violation of their rights in extreme circumstances? I'm thinking here of passengers being denied food, water, fresh air, toilet facilities, and so forth for hours upon hours, without being allowed to leave.

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To play devil's advocate for a moment, might the conditions to which passengers are subjected ever give rise to a violation of their rights in extreme circumstances?
They are already, in part, when the airline uses force to act as an agent of the US government: as you know, the FAA imposes mandatory restrictions on airlines and passengers. If we remove those legal restrictions, the problem will virtually disappear. If such issues were to arise in the future, your voluntary contract with the airline would state what your rights are. As with any contract, the airline is not allowed to unilaterally enforce the contract, and if you breach the contract by leaving the plane, then either there is a settle-up clause, or they sue you for damages. They cannot physically restrain you from leaving.
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I've never been able to figure why these planes are left on the tarmac for hours on end. i.e. who is making what decision. From what I understand, none of these have resulted in a major law suit yet; instead, the airline gives some compensation -- like refund plus a first-class ticket -- and settles. For instance, the idea that no gate is available sounds crazy when one is considering 10 hours as the context. Surely one can empty the existing planes that are at the gates, move them back and let the plan with people on it come to the gate. I'd really like to understand more detail about what is going on in such cases.

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I've never been able to figure why these planes are left on the tarmac for hours on end. i.e. who is making what decision. From what I understand, none of these have resulted in a major law suit yet; instead, the airline gives some compensation -- like refund plus a first-class ticket -- and settles. For instance, the idea that no gate is available sounds crazy when one is considering 10 hours as the context. Surely one can empty the existing planes that are at the gates, move them back and let the plan with people on it come to the gate. I'd really like to understand more detail about what is going on in such cases.

Well, consider who owns the gates and who sets the rules for movement on the tarmac, when planes can open doors, etc. I agree with David Odden's comments. If the entire system were privately operated for profit, and free of the morass of FAA and other rules, these types of incidents would be rare. The profit-seeking behavior of all parties would ensure that. And when such incidents did occur, passengers could sue for redress if their contract with the airline was violated or if they were harmed in a manner that the courts would validate.

As for waiting on tarmacs, I had one multi-hour experience on the tarmac myself (Northwest Airlines). It was hellish and extremely frustrating because we were only about 30 feet from the gate. If it had lasted much longer, I think there would have been a revolt and passengers would have tried to open the doors and activate the emergency slides to get the hell out of the plane!!

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They are already, in part, when the airline uses force to act as an agent of the US government: as you know, the FAA imposes mandatory restrictions on airlines and passengers. If we remove those legal restrictions, the problem will virtually disappear. If such issues were to arise in the future, your voluntary contract with the airline would state what your rights are. As with any contract, the airline is not allowed to unilaterally enforce the contract, and if you breach the contract by leaving the plane, then either there is a settle-up clause, or they sue you for damages. They cannot physically restrain you from leaving.

Unless you agree that the other party can call all the shots while you're in the cockpit. Frankly, the least safe thing woudl be for passengers to demand to disembark on tarmac, and walk to the gate. This endangers both the passengers themselves, as well as other flights progress. I would be chaos. I'm not sure why a party can't contractually cede its right to break the contract at certain times. Not that this is currently done, but I'm just not sure why it can't be.

I certainly agree that regulations are a huge part of the problem as this is not a contract right now, and airlines certainly rely on that fact (as in "Federal Regulations prohibit tampering or disabling lavatory smoke detectors...")

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The only bill of rights an airline passenger needs is the right to life, liberty and property (or the pursuit of happiness). When such rights are secured, airlines are free to compete to provide the best possible service to passengers. Not just airlines, but also privately owned airports and air traffic control systems are also free to compete to provide the best possible service. In America, the latter two components of air travel are government-owned and operated, with the same efficiency as the post office or the public schools. And the airlines, while nominally privately owned and operated, operate under a welter of rules that preclude sufficient capital being invested in the industry, with the result that service, well... sucks.

Exactly.

A private air traffic control system would efficiently schedule flights and proactively take into account weather problems so that the odds that planes are piled up like in the JetBlue situation are significantly reduced. Additionally, privately-owned airports would be incentivized to have sufficient facilities available to accommodate the air traffic they get. Privately owned airports would also auction off or sell landing rights, thereby assuring that too many airplanes won't land at the same time..

I would agree with the latter point, but not as much wiht the former. Airline and air traffic control meteorology and scheduling is pretty advanced, but the more important point is that a private system woudl be structured with entirely different incentives for profit that would allow operations to run under a totally different system.

Airlines can't merge so they are uber competitive and as a result have not pricing power. That means that price / head has razor thin margins. If instead airlines had more pricing power, and could differentiate pricing, they would allocate scarce resources during weather incidents to the most valuable flights and cancel all the rest. RIght now inability to price, and lack of ability to differentiate pricing (all due to regulations) means they are incentivized to get every plane off the ground, and that is asking for trouble. In conditions like this they should be able to preferrentially launch their most profitable flights and cancel the rest and still make money. Right now, that is impossible so you get the log jam instead.

Finally, in a laissez-faire society, airlines would be free to merge and collude, both of which would ensure that airfares were high enough so that they could afford to invest in enough equipment to ensure that passengers had a good experience on the airlines in all sorts of weather conditions. Today there are too many airlines and the prices they charge are too low so that cut-rate carriers such as JetBlue can only survive by offering service that is too stripped down. Passengers want the best balance between price and quality/safety. Because of restrictions against mergers and collusion, what they are offered is tilted too far in the direction of low prices and not enough in the direction of quality of service...

This is exactly the issue. I blogged on this very item. This is literally what is holding the airline industry underwater, barely able to come up for air.

On a broader level, the JetBlue situation is an example of how "controls breed controls." The government hamstrings the ability of airlines to provide the best quality service by owning the airports and air traffic controls sytem and doing a lousy job of running them. They also hamstring the airlines by forcing them to compete only on price and less so on quality of service because they do not allow the airlines to merge and/or collude on prices. So, government intervention causes the problem. What is the solution proposed? More government intervention in the form of an arbitrary edict called the "passenger bill of rights."

Exactly, one ought to look at incidents like this and realize this is the equivalent of standing in a Soviet era bread line. This is not the airlines fault. This is a product of the welfare state. It is equivalent to the ire directed at any "big business" such as "big oil" or "the big three (autos)".

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I've never been able to figure why these planes are left on the tarmac for hours on end. i.e. who is making what decision. From what I understand, none of these have resulted in a major law suit yet; instead, the airline gives some compensation -- like refund plus a first-class ticket -- and settles. For instance, the idea that no gate is available sounds crazy when one is considering 10 hours as the context. Surely one can empty the existing planes that are at the gates, move them back and let the plan with people on it come to the gate. I'd really like to understand more detail about what is going on in such cases.

Weeell, I have a cursory understanding of airport operations (the reason I haven't been posting htis week is because I've been busy trying to get deicing fluids to airports!). If you look at the airport as a big "job shop" and analyze the throughput conditions, it becomes clear that there are many factors that determine departure delays, such as deicing time, runway capacity, ground operations times, inbound flights, and whether or not an airplane is running a hub operation or not. It is not even close to being an easy problem, and if you know anything abount it's mathmatical solutions (re: the "traveling salesman" problem) then you konw that finding the optimum solution is next to impossible.

When you look at the impact of weather on all of these you realize that in certain conditions (signficant ongoing precipitation, and significant precipitation on planes, and significant snow removal operations hampering runway capacity) these throughput times increase by an order of magnitude (i.e. instead of pushing back and taking off in 20 minutes) I am pushing back and planning on taking off in 3 hrs. What that does to the traveling saleman problem is make it extremely difficult. Essentially, I'm making a decision now that will need to factor in all of the things that could happen in the next three hours in a very complex system to start with.

This doesn't mean that airlines push back knowing that they will end up there for 10 hrs, but rather that the risk of doing so increases. Eventually, somewhere it happens.

Again, it's not that the scheduling is not doable, it is that we are working with welfare state structures affecting behaviors rather than market based behaviors. The first solution to the problem is to cancel more flights, but that is not what the welfare state demands. The welfare state has the effect of trying to distribute the good (airplane travel) to everyone at all times, (i.e. the Soviet bread line) rather than lettting profit drive allocation when resources become scarcer.

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Unless you agree that the other party can call all the shots while you're in the cockpit.
Of course when I say "can't", I mean properly, not metaphysically. The government physically can tax us to death.
I'm not sure why a party can't contractually cede its right to break the contract at certain times.
The basic principle is that you can agree to a specific draconian consequence for breaking the contract, or leave it up to general damage litigation to determine the consequences, but the actual use of force has to be ordered by the courts. This is part of the "monopoly on the use of force" business. This is related to the principle that you cannot make a contract that requires you to break the law -- the law cannot tolerate the situation where it must force a person to violate the law. Only the law may rightly restrain or beat the tar out of a person, against his will, so a contract that allowed the stewardesses to beat you into submission would be a contradiction of the force-monopoly principle.
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I'm pretty sure that government rules is the major underlying cause. Nevertheless, I'd like to understand the specific concretes in this case: were there no gates? who's call is it to do what? and so on.

As for disembarking, as Kendall said, that's often not safe either. On CNBC, one commentator said that under the "Patriot Act", if one does something like that in opposition to a command from the captain and crew, one could open oneself up to a maximum penalty of 20 years in prison. That's not to say you'd actually be prosecuted or get any prison under the specific circumstance, but that might be the law.

I think it's not exactly correct to say that "Passengers want the best balance between price and quality/safety", in the sense that there is no single best such combination. Different passengers want different balances between price and quality/safety. Government rules often mean that someone other than the passenger decides what's best.

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Kendall,

Nice blog, and blog article. Your point that companies in certain industries have a natural economy of scale that is often global in size is a good one. Antitrust seeks to atomize companies into inefficiently small entities. Extreme antitrust has already been tried in Communist China where they tried to put micro steel mills in every village. The only good outcome from that was that it helped Deng Xiaoping realize that Communism had failed and encouraged him to say, "To get rich is glorious." [Probably not an exact quote; I am quoting from memory.] Needless to say, it destroyed Communist China's steel production.

Antitrust regulation fails to understand that the natural economy of scale of an industry may call for only several competitors, each of whom is global in scale. Antitrust regulators fail to understand this because they are overly-fixated on one dimension of the economy: prices. They worry that prices are too high or too low, and the tool they use for such worrying is a flawed, rationalistic theory: the theory of perfect competition. Much has been written on this flawed theory by Objectivists and others, most recently in The Abolition of Antitrust, edited by Gary Hull.

What antitrust regulators are neglecting or evading or ignoring is the importance of an adequate return on capital. An adequate return on capital occurs when there are few competitors, especially in the type of capital-intensive, commoditized industries such as airlines or chemicals or utilities or steel-making, etc. Wall Street practitioners inherently understand this idea, although they fail to generalize and come out publicly against the antitrust laws. They understand these ideas because they champion investing in industries with "barriers to entry" or "pricing power" or in small, "under the radar" segments, i.e., segments that are not on the radar screens of the antitrust boys.

One may wonder if having only a few competitors is somehow bad or destructive of value. What about competition? Well, competition isn't only on the basis of price. Competition also exists on the dimension of innovation, and in the form of competing for capital. Capital flows to its highest uses in a capitalist society. If returns in a particular industry are really high, innovators will enter that industry and figure out a new way to provide the service or product that is better and/or cheaper. A historical example is how early electric utilities booted out the gas-light providers of city light. One "monopoly" booted out another "monopoly" by providing a better product at a lower price. Capital will always seek out these opportunities to boot out monopolies. The capitalists, entrepreneurs and scientists do so by offering better products at lower prices, from which we all benefit.

Tying this discussion back to airlines, airlines today are suffering from chronic returns on capital that are too low. As a result, there is insufficient investment in airlines. Given that, should we be surprised that passengers from time to time get stuck on planes? But, you say, the price they pay for tickets is cheap. Indeed, it is... Well, even that really isn't true. I would argue that if airlines could merge, and if all other components of the industry were in private hands, service would be better and prices would be cheaper. Ironically, by fixating themselves on price and claiming to be acting on behalf of "consumers", the antitrust cops not only make service worse and innovation less frequent, but they usually cause prices to be higher.

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I'm pretty sure that government rules is the major underlying cause. Nevertheless, I'd like to understand the specific concretes in this case: were there no gates? who's call is it to do what? and so on.

I am going to make a pure speculation here, since I know deicing better than gate movements, but I think the limiting factor for gate movements are crews, or ground control. There is no such thing as a valet in aircraft movements. To move plane you need pilots who still have flight hourse on the clock (one would think you had extra since fligths are cancelled though). Also, once a plane pushes back from the gate, it is in the traffic pattern which means someone has to coordinate it's position, and factor it into the traffic patterns of planes that are transiting to the runway. A large plane is essentially a great big "barricade" out on the tarmac. Remember too that in most large airports the number of gates vs the total number of planes at that gate per day is like 5-10, (much less obviously in curtailed operations, but you still just can't park all those planes offsite for a while easily). Factor in that the copmlete deplaning operation really takes something like 1-2 hrs (from time of push back of the occupying plane, pull-in, deplane and push backof the target plane).

Imagine a city block, two lanes, with parallel parking spaces filled along each side. Now imagine an equivalent number of cars in the road of this block, all of whom need to park to off load passengers. Only the owner can pull out their car, and there's barely much room to complete the operations, much less some cars have to navitaget the road to exit at either end, while others are coming into the the road, then have each parking / deparking operation take 1-2 hrs, and imagine how long it might take for you to find a parking space.

These events occur about 1 or 2 times each season and it is usually only 1 or 2 airports that end up with this sort of thing. It always makes a big splash and then goes away.

I was in a freezing rain event at DTW (Detroit) about 10 years ago. The deicing line alone was over 50 planes long. We waited 4 hrs to get to the front of the line, and just when we got there They closed the airport. Most of the gates had planes at them, and trying to accomodate 50 new planes at gates was impossible. We had to wait another 5 hrs to get a gate, because being the furthest out, we were the last plane back to the gate.

As for disembarking, as Kendall said, that's often not safe either. On CNBC, one commentator said that under the "Patriot Act", if one does something like that in opposition to a command from the captain and crew, one could open oneself up to a maximum penalty of 20 years in prison. That's not to say you'd actually be prosecuted or get any prison under the specific circumstance, but that might be the law.

I think it's not exactly correct to say that "Passengers want the best balance between price and quality/safety", in the sense that there is no single best such combination. Different passengers want different balances between price and quality/safety. Government rules often mean that someone other than the passenger decides what's best.

I don't at all have a problem with a voluntary contract that allows one to turn over complete rights to another during certain operations. Isn't this equivalent to obeying a traffic light? I have a right to drive or not, but I can't exercise my right to drive and disobey traffic control measures. My problem is that we want to let government demand this as per the Patriot Act statement above, when if people knew full well they were ceding their rights, then they'd be less apt to complain.

As with healthcare, SN is right. If people were allowed to take more responsibiltiy for their own well being, they'd be less apt to complain. Rather than whining to the "nanny state" when you don't like something.

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A good explanation Kendall, but there is one small nit to pick:

Factor in that the copmlete deplaning operation really takes something like 1-2 hrs (from time of push back of the occupying plane, pull-in, deplane and push backof the target plane).

Companies like JetBlue usually have average turn around times (thats the time between touching in at a gate and pushing back for the next flight) between 20 minutes and half an hour. The times you mentioned are typical for international operations.

The quicker turn arounds of course only make the problem worse, since the planes per gate ratio for a given time period is several times larger.

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One may wonder if having only a few competitors is somehow bad or destructive of value. What about competition? Well, competition isn't only on the basis of price. Competition also exists on the dimension of innovation, and in the form of competing for capital. Capital flows to its highest uses in a capitalist society.

Note also it is the fundamental structure of the industy that determines how many competitors makes for "good competition". In a large economy-of-scale industry like steel, chemicals, oil or airlines, the number is easy: TWO is enough to have a fiercely competitive marketplace. You don't know the number of markets I see where it is literally 2 or 3 total competitors, and the competition is stil fierce. There are six major airlines in the US alone (not counting global majors) and no one is making very much of a profit.

Edited by KendallJ
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A good explanation Kendall, but there is one small nit to pick:

Companies like JetBlue usually have average turn around times (thats the time between touching in at a gate and pushing back for the next flight) between 20 minutes and half an hour. The times you mentioned are typical for international operations.

The quicker turn arounds of course only make the problem worse, since the planes per gate ratio for a given time period is several times larger.

Thanks mrocktor. I would bet that that even the quicker turn around operaitons are slowed in weather conditions. It's not as much the passenger deplaning, but the ground crew operations outside. That's why I listed the range as 1-2. I would be total time for even JB would extend to close to the 1.

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As I see it, at the heart of this case is a fact asserted by the airline in explaining how the situation arose, namely that the pilots were repeatedly told that takeoff conditions were imminent, only to have it turn out that this was repeatedly not the case. I confront this fact because, in the absence of explicit contract terms to the contrary, I think that the passengers should indeed have a right to disembark and not be held by force (even if that force is implemented simply by means of moving the aircraft away from the jetbridge or stairs). But, as long as the airplane is actually engaged in the process of taking off (having left the gate), it would be impractical and irrational to extend the right to that context as it directly pertains to the purpose for which the passengers boarded the aircraft. What I'm searching for then is a line that signifies unreasonable delay, particularly since a considerable unreasonable delay could result in significant hardship to the passengers (lack of food, fresh air, water, toilet facilities, or even just time wasted).

To be clear, I don't think this should extend to emergency situations such as natural disasters. Yet repeatedly waiting for imminent takeoff conditions is a contradiction in terms, and regardless of the unjust FAA regulations, this was the airline's decision, i.e. it was with their ambit of free choice to act as they did. As the airline could have taken steps to allow the passengers to disembark earlier and chose not to, they were the proximate cause of the passenger's hardship even though the storm caused the delay. At some point the chain of causes and effects involves the airline's choice in extending the delay beyond what could be reasonably expected, at which point they should be obliged to permit passengers to leave. A law to secure the passengers right to depart a plane that is being held on the ground by the airline and is not actually in the process of taking off (having gone beyond a reasonable time to do so), would be a just law in my view.

One way to judge the amount of time that is reasonable might be to examine the standard by which the pilots are basing their decision to see if it makes any sense. The rationale used (that takeoff conditions were considered immiment over a ten hour span) doesn't seem to cut it. A nexus between the actual amount of time passed beyond a certain minimum baseline and a cascading standard of evidence (possible takeoff at time t, probable takeoff at time t+1, certain takeoff at time t+2, or abort) may be worth considering. With the passage of each unit of time the airline should confront a higher burden of proof in establishing their expectation of immiment takeoff to keep the passengers on board against their will.

I appreciate the difficulties that confront an airline in allowing passengers to disembark as Kendall explained, so I wouldn't extend the right beyond what the airline is actually capable of providing under the circumstances, and a wide berth favoring the airlines might be prudent. Only to the extent that they actually are able to allow passengers to safely leave the aircraft should the right exist. But to that extent, and in relation to a rational prediction about takeoff conditions vis-a-vis the amount of time passed, I would support such a right.

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