Don’t Feel Sorry for the Airlines

Beginning with passengers, change fees should be capped at $50 and baggage fees tied to some ratio of costs. The change fees don’t just irritate; they are also a drag on the broader economy, making the transport system less flexible and discouraging what would otherwise be efficient changes to travel plans. We should also put an end to the airlines’ pursuit of smaller and smaller seats, which are not only uncomfortable and even physically harmful, but also foster in-flight rage and make the job of flight attendants nigh unbearable. Finally, we have allowed too much common ownership, permitting large shareholders to take a stake in each of the major airlines, creating incentives to collude instead of compete.

The airlines will argue that their ownership structure, cramped seats, high fees and other forms of customer suffering are necessary to keep prices lower. But after the last decade’s mergers, no one should take that argument seriously. As any economist will tell you, in a market with reduced competition, and common ownership, there is limited pressure to reduce prices. Instead, as we’ve seen, the major airlines charge what they can get away with and spend the profit on stock buybacks and other self-serving enterprises.

The question of what the public should demand from an airline bailout raises questions that transcend the business of flying. The next several weeks will leave behind many economic victims, including nearly every provider of in-person services. Many small retailers, restaurants and other businesses, like caterers or fitness instructors, face grim prospects. Yet it is the economy’s big players, like banks and airlines, that are the best at asking for (and getting) government assistance.

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During the last economic crisis, we largely let individuals suffer while helping out the big guys, leaving behind deep resentments that still fester. This time around we should start from the bottom instead of the top.

Tim Wu (@superwuster) is a law professor at Columbia, a contributing opinion writer and the author, most recently, of “The Curse of Bigness: Antitrust in the New Gilded Age.”

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