New York Times headline: “U.S. Limits Tarmac Waits for Passengers to 3 Hours.” Just imagine …
***
Representatives of industry associations reacted negatively to the government action, warning that over-regulation would stifle innovation and harm the competitiveness of U.S. firms. “Requiring each plane to stock up on 0.5-ounce bags of pretzels and peanuts will only hurt passengers,” said Sam Tapscott of the Airline Roundtable. “Airlines will have no choice but to pass the higher costs on to consumers, who will see the price of excessive government intervention in every ticket they buy.”
More worryingly, some industry analysts warned of dire consequences for the U.S. economy. “Forcing airplanes to return to the terminal after three hours will reduce the efficiency of the entire air travel system,” said David Dell’amore, professor of flight operations at Harvard University. “Modern flight management algorithms minimize aggregate wait times and ensure the perfect balance of customer comfort and economic value-added.”
The problem, experts say, is that the government rushed to create new regulations without considering how market forces could solve the problem. “Clearly, if consumers placed a value on a maximum runway wait time, they would have negotiated it with their airlines already,” said Petra Waterman of the American Enterprise Institute. “Since no airline offers such a contract term, we can assume that consumers place no value on it. Besides, if consumers were not happy with the service they receive from airlines, then a new airline would have already entered the market offering shorter wait times.”
Ella Ringding of the U.S. Airlines Association agreed that extended tarmac wait times are a problem, but said that the solution should be left to the industry. “The U.S. Airlines Association takes very seriously any issues that reduce the satisfaction of our customers,” she said. “We have drafted a model code of conduct for all of our members to address this problem. According to the model code, airlines should notify passengers whenever they happen to be on a flight that has been waiting on the tarmac for more than three hours, and should repeat that notification every hour. We believe that by providing sufficient disclosure to our customers, they will be able to make the air travel choices that best suit their individual needs.”
The airlines have succeeded in convincing major non-airline companies to take their side. Buddy Banker, a managing director in Citigroup’s investment banking division, opposed additional government regulation in recent testimony before Congress. “Efficient air travel is the foundation on which the health of the U.S. economy rests,” he said. “If American companies cannot rely on an air transport system that is free of meddling from the government, we will be at a competitive disadvantage relative to companies in Europe, where airlines are free to strand their passengers for over three hours. We can just wave millions of jobs good-bye, and soon we’ll all be speaking Chinese.”
Muffy McDonnell, Senate minority leader, promised a bitter fight in Congress. “This is just the latest step by the jackbooted thugs in the Obama Administration in their plan to bring socialism to the United States, and we’re going not going to take it lying down,” she said at a press conference. “The next thing you know, people won’t be able to bring guns onto planes.”
However, not everyone is upset with the new regulation. One Goldman Sachs derivatives trader, who asked to remain anonymous because he is not authorized to speak about company strategy, said that the firm is planning to create a market for derivatives that airlines can use to hedge against the risk of having to return planes to the terminal or having to pay fines to the FAA. Goldman is thinking of creating “collateralized delay obligations,” or CDOs, which will diversify wait-time risk by including flights from across the entire country.
Update: Q points out the opportunity for a carry trade: “wall street would charge large fees for flying people across the country and then buy them cheap tickets home on greyhound.”
Update 2: I didn’t think this was initially necessary, but since a few people may have been confused, I’d like to point out that this post is a joke. The New York Times link at the top is real; everything else I made up.
By James Kwak
The Baseline Scenario 
Reminiscent of “If Air Travel Worked Like Health Care”.
Why do we have a government? What do individuals accomplish with force that voluntary associations of peaceful individuals could not?
Oh, that’s rich: “Clearly, if consumers placed a value on a maximum runway wait time, they would have negotiated it with their airlines already… Since no airline offers such a contract term, we can assume that consumers place no value on it.”
Fortunately, I haven’t had the experience, but to hear those who’ve been subjected to it, “place no value on it” is a little off the mark. As Jack said, while turning blue in the icy North Atlantic waters, “when we get back, I’m going to send a strongly-worded letter to White Star Lines.”
I seriously had to click through to the original NYT piece to make sure you weren’t just quoting it…
Why stop at airlines? The Federal Government should impose “stiff penalties” on States if traffic extends commuting times.
If interstate highway traffics slows to 50% the speed limit, the Federal Government should fine itself.
This “regulation” is nonsensical. Airlines that annoy people by leaving them on the tarmac will go out of business (oh… unless the government bails them out like they did in 2001)
LOL, er, croak. And if economists were weather forecaster, summer would be just around the corner right now.
If Wall Street Ran the Airlines …
Goldman Sachs alone could use its bonus pool to buy all US airlines. Since they are not buying, they don’t think there is much money in running airlines.
If? This tarmac penalty story is a Veridian Dynamics style spin to divert attention from issues exactly like Wall Street. This announcement of something that will become effective in 120 days (!) was released before snowy and delay-full Christmas in a desperate attempt to find something – anything – that will portray the government as potent and compassionate, a government of HOPE and CHANGE. No affordable health, no peace, and the bank bonuses (unimportant in themselves but a focus for public rage) – but the government proves its virility in taking up prime issues that were more fitting for Consumer Reports.
You’re late. Some idiot given airtime on CBS News tonite already blasted LaHood’s failure to properly equip the FAA, saying that Free Enterprise would’ve done better, and that this doesn’t really help flyers.
(Tho his reasoning was that it’ll just slow down the flight to allow people to go to the bathroom and/or allow some extra snax/water/etc onboard, something that I, as a frequent flyer who’s been held for “any minute now” takeoff an hour + late, have a bit of sympathy for. Although if this reg actually gets activated more than once or twice, I’d guess most of the flyers would appreciate it.)
Now this is what I call “Holiday Cheer.” Thanks for the laughs…though I suppose some of your fiction isn’t far from the truth.
http://online.wsj.com/article/SB10001424052748703523504574603870922982770.html
Can you guys publish a special post to explian their issues in detail? I did not find a place for suggestion, so I had to post it here.
Yes, James, in the hands of the pure corporatist (read greedy capitalist) the bizarre is well attended. So, the bottom line is “damned the customer and their defenders, full speed ahead.” I still remember the mantra “hurry up and wait,” and as a military veteran, I can vouch for having to gain patience to bear up under that military fact. It was patience that has been tried time and again, not just on a tarmac, but in an endless “on hold queue” or trying to see someone or talk to someone in any commercial enterprise Complaint Department. It was tragic that the government had to step in here, but it does protect our rights. I am sure that the airlines could add a dollar to each ticket to compensate for poor planning and inconvenience and no one would complain, but they’d rather make the extra dollar by making us sit and wait for them to decide when is the time to fly. They certainly don’t care about the fact that now we must arrive two or three hours before flight time to assure timely boarding.
Wonderful piece. Bravo!
Recent quote: “It’s difficult taxing bonuses because banking is sort of like top-league football – your best players can transfer abroad very easily if they are offered more money”
Except the full analogy is one where your best players have scored a hatrick of own goals, been sent off by the ref, and caused the collapse of the state.
– UK’s Have I Got News For You
you missed a big one: the carry trade.
wall street would charge large fees for flying people across the country and then buy them cheap tickets home on greyhound.
So you’re saying that cramming people into a plane on a runway for longer than 3 hours is ok? Look, if the plane isn’t able to take off, due to weather, mechanical problems, the airline should ‘fess up and get these people off the plane. If the airline needs to get bitch-slapped by the Feds to understand the common sense notion that the consumer bought a ticket to fly, not sit on a runway for an indefinite and extended period, so be it. I suppose you think that the consumer has the right to just exit the plane on the runway? Good luck with that. My take: there have been plenty of long waits on the runway, plenty of complaints, letters, etc. To what response from airlines? They still happen. My recommendation: next time you find yourself sitting on a runway for hours on end, ask the stewardess for access to the intercom so you can read this post to the rest of the sardines ready to to choke the hell out of anyone lobbying for more time on the runway. Let me know how that works out for you….
Anthony, I assume you’d apply these same rules to traffic on government-controlled roads.
If you’re late to work, your employer should be able to fine the state — or Federal government if you used an Interstate highway.
If you’re stuck in gridlock on a highway, you can’t just get off right? I’ve written letters to the state government, the city of Boston, and the highway department. To what response? There’s still traffic and gridlock every time I use these State-controlled highways.
“If the airline needs to get bitch-slapped by the Feds to understand the common sense notion that the consumer bought a ticket to fly, not sit on a runway for an indefinite and extended period, so be it. I suppose you think that the consumer has the right to just exit the plane on the runway?”
My experience with the conservative/libertarian types is that they only support the “sanctity of contracts” when it works to the advantage of the rich and powerful elite.
Recall the disparity in reactions to the government attempting to break the contracts that required investment bank execs to be paid millions versus the reaction to the government breaking the contracts of blue collar union auto workers.
The next thing you know, we’ll be slinging profanity at flight attendants, then getting our pals to lie about it.
Oh, yeah, Charles Schumer and Kirsten Gillibrand beat us to it!
With all do respect, why don’t we try to stay focussed and productive, rather than modifying every issue to support our agenda.
No one wants a plane sitting on the runway for 3 hrs, not even the airlines, or all those “fat cat” Wall St. guys. I can’t speak for all the fat cat lawyers from D.C.
How does fining the airline $27,500 per passenger help the passenger?
1. The Federal Government runs air-traffic control, the FAA, and TSA/security/bag-screeners. None of these agencies could possibly be responsible for delays, right?
2. The “Passenger Bill of Rights” isn’t a reimbursement to the passengers sitting on the tarmac. They get nothing*, while the Federal government gets $27,500 (*technically, they get water and peanuts.)
3. If it’s truly a contract issue — i.e., a passenger paid money for a guarantee to reach their destination within a set amount of time — the the passenger should be able to sue the airline in a local court. At least this way the passenger is reimbursed.
Libertarians support the sanctity of contracts in all cases. If a ticket is a contract (I tend to think it is), then the issue can easily be resolved in court between the passenger and the airline.
Most amusing, thanks for that!
priceless. this line in particular is spectacular:
According to the model code, airlines should notify passengers whenever they happen to be on a flight that has been waiting on the tarmac for more than three hours, and should repeat that notification every hour.
well so far very little. in the real world force seems to all ways over ride the peaceful individuals. see China, Iran, Russia and few other countries. it may not be the way we want it, but it is the way it has been for millenniums.
well so far its hasn’t worked that way. maybe thats because being in the airline business takes lots of money to get started and keep going. so not many new airlines get created. besides there are only so many slots at the airports. care to guess who has bought them?
and we can see how well free enterprise has done with the financial systems and banks. had they not been rescued by the government they would have all failed. and they got them selves into that mess on their own
while the FAA and the airports run the airport. the airlines set their schedules. and the airlines know that most customers need to leave at a certain time so they schedule their flights accordingly. even if that is impossible to accomplish except with excellent weather. but they don’t adjust for that. and they all want to fly through just a few airports. and when the weather in those airports is bad it backs them every where. but why should passengers be stuck on an airplane for 12 hours in conditions that would have a building or house condemned if it happened in them.
while tickets are contracts, there are so many exceptions to that contract that about all that really is expected from the service is that at some point you may take off, and you may arrive at your destination. but no guarantees about time in either case, or that you will even be on airplane when you do arrive
It’s not free enterprise when the government bails you out.
Nor is it free enterprise when the government gives you capital at 0% (or 0.25%).
Wow,I can’t believe anyone in their right mind would think sitting on a crammed plane for over three hours is ok.
Corporations only care about one thing as we know.Why pretend otherwise?
Maybe this is a major reason why our country is in in the gutter right now?
Right, basically what you are arguing is there is no free enterprise anywhere on the planet because government all over intervenes in markets and on industry level.
Reminds me of a joke about how an economist (or maybe free market ideologue?0 would solve the problem of how to open a can on a deserted island…
But it doesn’t matter if free enterprise exists or not. I’m just pointing out that it’s wrongfully accused in DW’s comment specifically in financial systems and banks. It’s existence is not important here. (though, if you can prove that it has never existed, that only backs up my argument).
Instead of “see how well free enterprise has done with the financial systems and banks” a more appropriate statement would be:
“see how well government intervention, price-fixing interest rates, below-market FDIC insurance, and support of failing private companies has done with financial systems and banks”
I certainly don’t think it’s fun to sit on a runway for three hours, but I do appreciate that transporting an airplane, loaded with 250 people, safely and timely is an enormous task. That said, 3 hours on the runway is certainly not the, thanks to the hard work of many involved.
More importantly, corporations don’t care about people, they don’t have feelings. They do, however, have a purpose, which is to make money. In doing so, they employ a nation, funding the greatest economy in the world, enabling the 47% of employable US citizens who will not pay federal income taxes this year to enjoy their liberty.
If you think this country is in the gutter right now, I have to believe you are referring to my tax dollars being used to modify ill deserved mortgages, provide cash to those who can’t aford new cars to now buy them, and provide free health care to those unwilling to accept responsibility for themselves. All of which are presently being argued to be birthrights. Well, I agree.
If you are referring to the rare airport delay, and still think the country is in the gutter, then you are clearly part of the problem, and I welcome your search for happiness, and free stuff, elsewhere.
James, that is hilarious [some of the comments are great, too, but I am not sure some of the funnier ones are funny on purpose].
This is my favorite Baselinescenario blog post since your “A Partisan Post, You Have Been Warned”
Best wishes for the New Year.
I thought the only jokes were the names Kwak made up … not that the quotes weren’t funny …
“The problem, experts say, is that the government rushed to create new regulations without considering how market forces could solve the problem. “Clearly, if consumers placed a value on a maximum runway wait time, they would have negotiated it with their airlines already,” said Petra Waterman of the American Enterprise Institute. “Since no airline offers such a contract term, we can assume that consumers place no value on it. Besides, if consumers were not happy with the service they receive from airlines, then a new airline would have already entered the market offering shorter wait times.”
ROTFLOL! ;)
“How does fining the airline $27,500 per passenger help the passenger?”
Damn straight! Fine’em $30,000 and give $2500 to each passenger.
@dw: Why should I have to wait in line for 30 minutes at the Post Office? Why does my commute crawl to 5mph when the speed limit is 65 on an Interstate highway as I approach the city?
If the airline isn’t breaking a legal contract, then what’s the problem? You don’t want to risk the chance of sitting on the tarmac? Then drive or take the train. Why is it the government’s responsibility to solve this problem but not solve long lines at the DMV, Post Office, or grid lock on public highways — at least these are things that the government has total control over.
The WSJ cites 1500 extended delays last year. Assuming all planes were full and each delay was 5 hours. That’s about 2.2 million person-hours lost. Contrast that to Public Transportation: Boston’s MBTA posts about 100 10-15 minute delays each day (see http://twitter.com/mbta_alerts). With a daily ridership of 1.3million, if each delay only effects 1% of the ridership, in two weeks, you’ve lost more person-hours on the Boston T than a full year of tarmac delays nation-wide.
@Min – why should the government get any money? What if it’s the FAA is the cause — prohibiting a certain plane from taking off? They could technically cause the delay, fine the airline, and get tens of thousands of dollars? If you believe in fines, 100% of any imposed fine should go to the victims.
James, you are badly underestimating the regulatory capture type problems with the airlines. There has been a complete counter-revolution against liberal competition; governmentally managed competition based on back-room deals is DOT’s central policy, and unlike Wall Street, there isn’t even token resistance in the media/blogosphere. Last week’s Japan bilateral facilitated incumbent protections, huge taxpayer subsidies to prop up JAL, and rules limiting new services to governmentally-mandated post-midnight hours; in Orwellian fashion the DOT called this an “open skies” breakthrough that would lower fares.
The Bush DOT was totally in the pocket of the big Legacy carriers, and the Obama DOT hasn’t changed a thing, hoping they can get the lobbyist largess that used to go to the GOP. That’s why they’ve rubber stamped the merger of 26 previously independent North Atlantic carriers into a cartel of 3 collusive alliances, and it is why they are starting to do the same on the Pacific. That’s why they told the DOJ to f*ck off when they pointed out that there was absolutely no legitimate evidence supporting any of their merger/antitrust decisions.
The three hour rule is a cheap way for the DOT to get cheap “pro-consumer” publicity from MSM folks who can’t be bothered to go beyong the processing press releases. This is the equivalent of a few minor limitations on credit card teaser rates, distracting from the reality that Treasury is doing pretty much everything else that Chase and Citibank want. The 3 hour rule has dozens of loopholes, negating 75% of the potential value, while keeping the lawyers busy. If you wanted to stop the abusive practices, you simply establish a sliding scale of penalties you’d have to pay stranded pax, the airlines would factor these costs into delay/cancellation decisions (just like they’ve done with denied boarding for decades). Note that the fines here go to DOT, not to the pax who got stranded.
Well, it is getting lighter every day, is it not?
Clever, but as per usual, where a bureaucratically controlled regulation is thought to be required, existing laws (or slight variations thereof) would suffice.
When passengers purchase a ticket to take them between one place and another at a certain time, it can easily be thought of as a binding contract. After a certain amount of delays, the contract can be considered breached by the airline, at which point the passengers should have the right to renege on their payment and demand to be returned to the terminal.
It is entirely silly to criticize regulation of the airline industry in its current form. This is effectively the most regulated industry in the country along with nuclear power and these companies are effectively wards of the state since 2001.
In a perfect world you wouldn’t need government, or cops or militaries. Because in a perfect world everyone would be perfect: perfectly able and perefctly willing to do the perfectly right thing at the perfectly right time and place. Cooperation, when needed, would be immediate and executed perfectly. Unfortunately we’re not angels; the world is not perfect. Anarchy means rule of the jungle rather than rule of men.
When I read that the airlines would be fined $27,500, I thought “well thank goodness that the poor passenger will get some financial compensation for being trapped on an unmoving tin tube” and then I read the *rest* of the story.
It’s just another way for the government to extract more dollars from the public, because as most folks know, corporations do not pay taxes (or fines, for that matter). The expense is passed along to the consumer. Always.
http://www.uglywomansguide.com/index.php/2009/12/27500-a-head/
“”” If American companies cannot rely on an air transport system that is free of meddling from the government, we will be at a competitive disadvantage relative to companies in Europe, where airlines are free to strand their passengers for over three hours. “””
Untrue. In Europe pax with a 3+ hour delay are compensated 250 to 600 euros ($400-$900) since November:
http://www.travelmole.com/stories/1139570.php
Note: rule above also applies to US airlines operating from Europe :-)
I always love the “government regulation will stiffle innovation and make U.S. industry uncompetetive” argument that big business wags fall back on whenever some type of regulatory initiative pops up in Congress. It’s almost like we are to believe that the U.S. went through our own dark ages during the two great periods of governmental regulation during the last century. Did we really invent nothing during those years? Did our industrial sector really lose the ability to compete in the world markets during those years?
Blah,Blah,Blah,Blah……I’m against modifying mortgages and the stupid car rebate btw.
As far as healthcare,our system is ranked way at the bottom of rich countries.Is this really caused by irresponsible people unwilling to pay for healthcare? You have got to be kidding.Their is no way you really believe that.
“happiness, and free stuff, elsewhere”…..Seems like your the unhappy one.
Did I dream this or was this reported on syndicated radio today as the real deal?
I’m not the one stating the country is in the gutter.
Staying on point, I have been victim of airline nightmares, just like everyone. I don’t enjoy it. I just think it’s a reach to blame it on Wall St. I’ve been following this site during the financial crisis, and found it very informative, but I believe James is now using this captive audience to push his personal agenda (ie. “Do Smart, Hard Working People Deserve To Make More Money?), and it seems as though he now traces the root of every problem back to Wall St. We complained when big banks took aid, we complained when they paid it back……enough alreaday. While not perfect, there is a very strong argument for free markets topping the government on issues such as efficiency and value, and in the end, if you don’t like Continental Airlines, don’t fly them, and don’t buy their stock.
The other way to solve the problem would be to outlaw private jets. Leave a couple of airline CEOs on the tarmac for over 3 hours and the problem would get fixed.
A pilot buddy of mine had a flight that was stuck on the tarmac for hours (the story made the news but I’ll leave it at that to keep my friend anonymous) and from what he’s told me, the advantage of this rule is protecting captains who want to take the passengers back to the terminal.
The thing to remember is that the lives and safety of the passengers are in the hands (literally and legally) of the captain and first officer. It doesn’t matter what air traffic control or the airline orders him to do, if the captain declares an emergency, its his call to take what actions are necessary.
Easiest case, you’ve been on a tarmac for hours and you suddenly feel chest pains and your spouse tells the flight attendant you’re having a heart attack. That’s enough for a captain to declare an emergency and state to ground control he’s returning to return to the gate and needs a paramedic waiting there. Ground control has to give his plane precedence over all other traffic to make that that happen.
The airline isn’t supposed to ever discipline a captain or first officer for putting passenger well being above all else, but it ain’t pilots running airlines, its MBAs.
A harder case- the flight has been on the tarmac for hours and might be able to go in an hour, maybe. The captain has to weigh on the one hand the flight attendants coming in to inform him that the toilets are overflowing, the cabin smells like puke and passengers are getting hysterical; on the other hand, he knows the airline will be pissed if a delayed flight turns into a canceled flight. This new regulation will just make it easier for the captain to declare an emergency and go back.
After all the bean counters should appreciate he’s saving them money on fines.
Dear God. The fact that you have to say it’s a joke tells everyone all they need to know about the situation.
Hey Dave, Real Marxist Leninism would work even better than your “Free Enterprise”.
The problem is that it doesn’t exist either.
Let’s talk about real solutions for real world problems. Utopia is, quite literally, nowhere.
As someone who made the huge mistake of getting into the airline industry 30 years ago I enjoyed the satire. Hell the bonous pool for G.S. is probably larger than all the profits we made or did not make in the last two years! Ever wonder way you can fly around for the same money you did 20 years ago? Look at our paychecks and you will know why!
Wards of the state? Are you kiding where is our bailout money??
I tried to find an indication that the aims of the government were EFFICIENCY and VALUE instead I found:
“establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty”
I guess I prefer the latter.
Efficiency and value aren’t necessarily aims of any person or institution, just characteristics of those who are more effective and successful in achieving their goals. Anyone whose goals are anything other than that is an idiot.
Maybe if we wanted to establish justice we should start with the criminals in DC. Perhaps signing them up for the same health care and social security as the rest of us (A full pension is available to
Members 62 years of age with 5 years of service; 50 years or older with 20 years of service; or 25 years of service at any age).
If we wanted to insure domestic tranquility we could start by not treating votes like chips on a poker table (Ben Nelson), and conducting votes at 2 AM in the morning.
If we wanted to provide for the common defense we could turn our cell phones off on an airplane when asked, and not call those responsible for our well being B!TCHES (Charles Schumer).
If we wanted to promote the general welfare we might want to stop Presidents from signing things like The Commodity Futures Trading Act of 2000, which explicitly prevented the regulation of credit derivative swaps, and lined the pockets of DC dirtbags with funds from their lobbiest buddies.
And, If we wanted to secure the blessings of Liberty we might consider why our forefathers left Europe, and conclude that representation without taxation is just as dangerous as taxation without representation.
I prefer all these tings too, That doesn’t mean we have to be corrupt and stupid while doing it!
Except of course if it’s other people’s money.
Good post.
Typo in “we’re going not going to take it lying down…”
Dubious logic you make use of. Sitting in traffic is comparable to being stuck on a plane? Riiigghhhht.
The entire transportation industry should be nationalized. Period. Deregulation has brought nothing but fewer airlines, declining service, and increased fares.
Forcing people to stay on a plane for more than three hours is completely unacceptable. I know, because it’s happened to me inumerable times. Imagine being stuck in PHX SkyHarbor, with 110 degree temps outside. The plane was boiling hot inside.
Unfortunately our country is in the gutter on all fronts.I choose not to pretend and keep my eyes closed.
It really doesn’t matter wether we’re talking about waiting on a plane ,healthcare, or just about any issue in America does it ?……..the vast majority of citizens always seem to get the short end of the stick.
“if you don’t like Continental Airlines, don’t fly them”……so if I don’t want to wait over three hours on a plane I should vote with my wallet huh?
Too bad All airlines are equally unresponsive to this tactic.
If you dislike it this much, pick another airline, and buy a one way ticket!
And yes. Vote with your wallet. We do it every time we go to the polls, unless campaigns will no longer include the economy, budgets, or taxes.