Europeans Kicking North American Ass on Free Markets in Air Travel

A new report from the Frontier Centre for Public Policy compared ticket prices in E.U. and North America and found that protectionist policies on this side of the Atlantic lead to higher prices and fewer flights. The study compared the cost of five domestic American, Canadian, and European flights and found that a traveler could:

• Book all five U.S. flights, travel a total (return) distance of 3,334 miles and pay $934.72, all taxes and fees included (which constitute 14 per cent of the cost).
• Book all five European flights, travel a total (return) distance of 3,358 miles and pay $525.72, all taxes and fees included (which constitute 52 per cent of the cost).

Similar results were found for cross-border flights:

• Flights from five Canadian cities to five U.S. destinations with a total (return) distance of 6,004 miles cost $2,034.21 if the return trips originated in Canada and $1,971.99 if those same return flights originated in the United States.
• However, five European cross-border flights (Munich-Rome, Dublin-Berlin, Vienna-Athens, Prague-Barcelona and London-Paris) would generate a total (return) distance of 6,212 miles and are significantly cheaper at $941.93.

Moreover, the Europeans pay lower prices even though they have significantly higher taxes. The trend toward cheaper E.U. flights started with glimmers of liberalization in 1987. The reforms continued in the '90s with the opening of domestic markets to both European and American carriers. By 1997, any airline operating in the E.U. gained the right to pick up and drop off passengers within another member country. 

The EU department responsible for overseeing the open market in airline competition, the European Commission—Mobility and Transport notes that subsequent developments included a 120 per cent increase in intra-EU routes between 1992 (before full liberalization) and 2008; a 400 per cent increase in the number of routes with more than two competitors on it between 1992 and 2008; the emergence of low-cost carriers, which now constitute one-third of all intra-EU scheduled capacity; and, not surprisingly, because of the above, lower fares.…

The European market contrasts sharply with the airline market in North America. Presently, Air France can fly a passenger from Paris and drop her off in New York City or Los Angeles (or any other U.S. destination to which the airline flies), but Air France cannot pick up a New York passenger and fly him to Los Angeles. The same is true in Canada.

For lots more on the joys of airline privatization, check out the archive of Reason Foundation Director of Transportation Robert Poole.