The Public Policy/Secrets of the Airline Crisis
Applebaum, Anne
THE PUBLIC POLICY SECRETS OF THE AIRLINE CRISIS A irports had reached the saturation point. Air control technology was on its way to obsolescence. An unexpected air controller shortage created...
...Those who remain are still plagued by the same bad conditions as those who left—although their salaries could be raised and their training paid for by the aviation trust fund...
...T he saga of the unused aviation 1 fund could be chalked up as another minor government gaffe were it not for the dangerous state of airports and air traffic control systems...
...The projects, which include new weather radar, air traffic control computers, and improved landing systems, are exactly the air crisis remedies so many are now calling for, and are precisely the type of program the aviation trust fund was set up to support...
...National air traffic projects can be—and these were—similar in scale to large Defense Department programs...
...292 pages...
...Price Amount ^ Enclosed is my check or money order made Subtotal Name Indiana residents add 5% sales tax Address 'Total City/State/Zip Mail to: Liberty Fund, Inc...
...Hardcover $8.00 0-913966-64-9 Paperback $3.50 0-913966-65-7 Liberty Fund edition, 1979 Please send me: What Should Economists Do...
...Of course not all improvements would have to be made by the federal government...
...Finally, future administrations should not hesitate to impose anti-trust rules where they ought to be imposed...
...As the sense of emergency heightened, the President addressed the Congress, proclaiming that "years of neglect have permitted the problems of air transportation in America to stack up like aircraft circling a congested airport...
...Airplanes, traditionally the province of a well-heeled elite, have only now become the preferred form of popular transportation...
...When it rains in Chicago, planes are delayed first in Atlanta, New York, and Dallas...
...The air industry is booming...
...Preface, index...
...Many states and localities have refused to expand old airports or build new ones (even where local tax money is available) because of the space they require and the noise they create...
...The details are by now well known, but the relation of the air scare in the newspapers to past incompetence on the part of the FAA and Capitol Hill has somehow escaped notice...
...States should stop balking at the prospect of new or expanded airports, which can create jobs and improve local commerce, simultaneously paying for themselves and improving air traffic flow nationwide...
...With responsible management of air passenger tax money, these problibertyPiess/LibertyClassics bbertyPress WHAT SHOULD ECONOMISTS DO...
...Among his other books are The Limits of Liberty and, with Gordon Tullock, The Calculus of Consent...
...An unexpected air controller shortage created fear and uncertainty...
...At least six bills, in addition to English's, calling for all or partial airline re-regulationrestrictions on scheduling, curbs on numbers of flights—have been proposed in the House, accompanied by more in the Senate...
...They usually never catch up...
...So the FAA requested less money, and Congress appropriated less than originally planned...
...Please allow 4 to 6 weeks for delivery...
...There was lots of discussion every year on the technical maturity of projects and whether or not to proceed with them...
...Individual airlines are now capable of controlling flights in and out of entire cities, a handful are in control of the computerized reservation system, and prices are rising again...
...O ne indication of the air industry's desperate need for money is the number of requests for it...
...House of Representatives, without question that [vote for airline deregulation] is the worst vote I have cast...
...Its eleven large-scale programs—known as the major systems acquisitions of the National Air Space Plan (NASPLAN)were anywhere from one to eight years behind, and were already projected torun $6 billion over budget...
...Delays led to further delays, creating what Jack Lowenstein, who oversees NASPLAN for the FAA, calls a "chicken-and-the-egg phenomenon...
...The most notable of these was the Airport and Airway Trust Fund, earmarked for capital improvements adequate to projected air industry growth...
...The connection between the mismanaged trust fund money and the number of delays and near-misses must also be underlined in light of the many recent calls for re-regulation of the air industry...
...Indianapolis, IN 46250 THE AMERICAN SPECTATOR NOVEMBER 1987 27 lems could be mitigated: deregulation should not imply an end to all government involvement...
...If the story of the aviation trust fund has any greater importance, it is to prove that larger organizations—like the federal government—are poorly equipped for responsible, consumer-oriented management...
...The summer of 1987...
...We pay book postage rate...
...The spring of 1969...
...This clause has been in effect for three of the last five years, and House aviation subcommittee chairman Norman Mineta (D-Calif...
...Congress took action, establishing a new trust fund to take care of the problems...
...Now, when appropriations from the fund fall below a certain level, the amount of money which goes to these everyday expenses must be cut proportionately...
...Screaming headlines to the contrary, the air scare has happened before, and the legislative mechanisms originally meant to solve congestion problems are already in place...
...So the fund grew larger and larger with every airline ticket purchased...
...Theoretically, improvements or additions to O'Hare airport could halt the entire process...
...The trust fund now has a balance of over $9 billion, of which $5.6 billion is surplus...
...This Liberty Fund volume brings together sixteen important essays, many of them previously unpublished, on the nature and methods of economists...
...Such a volume, note H. Geoffrey Brennan and Robert D. Tollison in their preface, "provides relatively easy access to a group of significant papers on methodology in economics, written by a man whose work has spawned a methodological revolution in the way economists and other scholars think about government and governmental activity...
...Other politicians have joined him, especially those from rural areas who claim their districts are now being neglected by the airlines...
...This should surprise no one...
...Dr...
...Buchanan is General Director of the Center for the Study of Public Choice and Harris University Professor at George Mason University...
...All were rejected because of lack of funding: the aviation trust fund doesn't cover airports, only air traffic systems...
...Even the Department of Transportation has begunmumbling about "voluntary" and "required" restrictions on scheduling...
...Ticket taxes were even increased from 8 percent to 8.5 percent in 1982...
...7440 N. Shadeland Avenue, Dept NP-120 All orders must be prepaid in U. dollars...
...Again, the penalty clause Congress placed in the aviation appropriation bills prevented the money being spent for this purpose...
...Then they are late in Greensboro, Green Bay, and Sacramento...
...FAA spokesman Robert Donahue claims stiffly, "We efficiently and properly spend all the money appropriated to us...
...The country breathed a sigh of relief...
...Although the technology they require is not unusual or unique, they had run into enough technical difficulties to persuade Congress that further funding would not help them along...
...Glenn English (D-Oregon), a former deregulation advocate now sponsoring a bill to re-regulate the airlines, says that "In my 12 years in the U.S...
...In fact, it was never allocated...
...The Federal Aviation Administration says that the surplus arose because Congress simply refused to allocate it...
...By James M. Buchanan Preface by H. Geoffrey Brennan and Robert D. Tollison A founder of the burgeoning sub-discipline of public choice, James M. Buchanan was awarded the 1986 Nobel Prize in Economics...
...Were it not for new legislation now being rushed through Congress, it would continue to grow...
...While the FAA could have exercised more oversight, one congressional staffer pointed out that "the FAA is not the Pentagon...
...A penalty provision was added to the 1982 version of the aviation act explicitly to prevent this from happening, and insure that the bulk of the fund goes toward new projects...
...Since 1981, thirty-eight mergers have left eight carriers in control of 94 percent of the American air business...
...Why wasn't the money spent, in the meantime, on hiring more safety inspectors or improving controller salaries...
...Since 1982, there have been more than $10 billion worth of legitimate airport grant applications submitted to the FAA...
...The FANs Lowenstein asserts that "twelve new airports would need to be built to overcome the [airplane] delay problem," adding that one new airport would cost between $11 and $12 billion...
...Members of Congress point fingers the other way, noting that the FAA always asked for less money than could have been provided, and was suspiciously content simply to siphon its operating costs off of the fund without devising productive ways to use it...
...has accused the Administration of purposely invoking it, in order to make the federal deficit appear smaller...
...It's a tiny agency...
...Airport and air traffic repair may be one of the few areas of the economy where an influx of properly spent money—collected directly from consumers—could radically improve the efficiency of an entire industry...
...But neither was the fault the FAA's alone...
...But whether it was the technical problems or the lower appropriations which perpetuated the delays—that's unclear even to me...
...Gene Kimmelman of the Consumer Federation of America told the Congressional Quarterly in a typical comment: "Maybe we've gone too far with the theory without looking at the practical consequences...
...Because these were considered FAA operating expenses, and were therefore under the jurisdiction of the congressional penalby Anne Applebaum ty clause...
...It's not necessarily true that they could have moved the projects faster...
...Deregulation allowed this to happen, even if it also puts strains on an infrastructure built for a smaller number of consumers and a less prosperous industry...
...Wrong...
...The calls for an end to deregulation may even be spreading into other industries, since the problems of breaking up government-regulated trucking, railroad, and even telephone monopolies have also caused a backlash among economists and "consumer advocates" alike...
...Quan...
...The air traffic control system tracks planes, gives them their flight instructions, and (sup26 THE AMERICAN SPECTATOR NOVEMBER 1987 posedly) ensures that their paths do not cross...
...No one is so far willing to take full responsibility for the past history of the unspent money...
...Yet while Congress did appropriate less money than provided in three of the last five years, the money was withheld because the FAA could not prove that the bigger projects it was sponsoring were up to standard...
...Delays, for example, can be linked directly to the new "hub-and-spoke" airline connection system (pioneered by People's Express and Newark airport) which puts enormous strains on outdated, overworked hub airports and air traffic control systems, in turn disrupting the entire national system...
...But somehow, all of this extra money was never used...
...While the number of air passengers has escalated by 52 percent, the number of controllers has declined by more than 4,000 since the majority were fired in 1981...
...For the greatest threat to the air industry is probably not mid-air collisions, but the mergers and anti-competitive practices which are slowly ending the brief spate of low fares and multiple routes...
...But no matter how enticing the prospect of government-determined schedules and rates, too much demand—not too little regulation—is the primary cause of the present turbulence in the air industry...
...Almost anyone knowledgeable on the subject, from industry spokesmen to Hill staffers, agrees that the current spate of delays and near-misses is mostly attributable to the lack of spending on air industry infrastructure...
...In a similar vein, one congressional staffer asks, "How could near misses not be the fault of the control system and the controllers...
...Anne Applebaum is a reporter-researcher at the New Republic...
...Since its establishment in 1970, revenue from passenger ticket and aviation fuel taxes has been placed directly into the fund, and targeted for projects like airport expansion and new traffic control equipment...
...Congress can rewrite legislation to insure that money collected is usefully spent on safety inspections and minor improvements if major projects are not ready...
...Of course it is difficult to know whether to blame the outdated equipment, which NASPLAN is meant to replace, or the paucity and perhaps insufficient training of the controllers themselves...
Vol. 20 • November 1987 • No. 11
