September 4, 2018 at 5:00 am ET
Ah, to yearn for the good old days of commercial air travel. Through the Civil Aeronautics Board of the mid-20th century, the federal government heavily regulated routes and fares. Only about one in four adults in America ever set foot in an airplane every year, versus about half today. Commercial travel was primarily the province of business passengers, the wealthy, and those flying on other people’s money (like Members of Congress), because the average inflation-adjusted fare was almost twice as expensive in the late 1970s1 as it is today.
Perhaps those “good old days” weren’t so good after all.
The Airline Deregulation Act of 1978 saw the federal government pull back on the throttles, allowing the market to soar and offer affordable air travel that hundreds of millions of passengers take advantage of every year. However, if federal lawmakers get their way and pass the “Forbid Airlines from Imposing Ridiculous (FAIR) Fees” Act, consumers and taxpayers will suffer.
The FAIR Fees Act, sponsored by Sens. Ed Markey (D-Mass.) and Richard Blumenthal (D-Conn.), would begin reversing four decades of progress toward real consumer choice by giving Department of Transportation bureaucrats the power to determine what are “reasonable” fees for ticket changes, cancellations, and such items as baggage and seat selection. Some 20 agencies of the federal government already exercise tight control over airlines, ranging from safety to tax collections to animal inspections to environmental compliance.
Economic history 101, from revolutionary France to the Nixon era to today, shows that government clampdowns on what can be charged for goods or services leads to scarcity or higher prices in other ways. Air travel is no different. Either everyone’s fares will go up to cover those who change reservations at the last minute, or fewer fares will be refundable. Choices for consumers are getting better without government intervention.
Under the FAIR Fees Act, taxpayers could be on the hook for more subsidies. Two of the ways airlines are able to serve smaller communities is through ticket pricing that allows budget travelers to forego services they don’t want, and through locking in as many passengers for flights as possible. Slapping arbitrary limits on change fees or making a la carte pricing untenable for carriers means these routes become more expensive. That only puts pressure to funnel more federal government dollars into the $250 million-per-year Essential Air Service program1, which Washington subsidizes for underserved destinations.
The reality is, a typical airline ticket carries a government tax and fee load of more than 21 percent1—about twice the effective rate that a middle-class family would face on a 1040 federal income tax return. Elected officials should be focusing their attention on lightening this costly (and mandatory) burden, instead of restricting options that are opening up air travel to millions. Both President Trump and Republicans in Congress have promised to make government less meddlesome and cut out unnecessary regulation; the FAIR Fees Act would not only contradict that intent, it would also chip away at a decades-old policy foundation that freed markets in air travel, railroads, and trucking within a few years of each other.
While it may be politically expedient to go after companies charging these supposedly “ridiculous” fees on consumers, lawmakers should remember that the total inflation-adjusted ticket price, which includes fees, cost more than $540 for a round-trip ticket in 1990 but only cost $360 in 2017. This is the result of less, not more, government intervention.
The Senate’s version of the FAA Reauthorization Act has unwisely included the FAIR Fees Act, but the House avoided doing so. Congress should not allow this deceptive proposal to ride along on the final conference bill both chambers could vote on in a matter of weeks. If Congress wants to get serious about maintaining Americans’ access to air travel and protecting taxpayers, it should work on a “FAIR” Act of a different kind: Forbidding Asinine, Intrusive Regulations from government that make flying costlier.
Pete Sepp is the president of the National Taxpayers Union, a nonprofit dedicated to lower and fairer tax policy at all levels of government.
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