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.

Comments

[robc]

I guess I could click the article, but I question all the fees being included.

Isnt it a european airline that is now charging for going to the bathroom on the plane? How many piss breaks per flight did they include? And dont they have a lot of the same idiotic baggage fees than the US has?

I always fly southwest and dont pay the $10 to move to the front of the line, so my bags fly free and fees are minimal.

[Dagny T.]

Southwest is by far my favorite airline. I love getting to pick my own seat and thereby avoid babies, fatties, and large groups of chattering teens (if only the over-perfumed, the armrest-hoggers, and the incessant talkers were as easy to ID).

Re. the stupid cross-border rules, I suspect that explains why it's usually almost double the price for my family in Vancouver to fly to NYC vs. what it would be if they flew from Seattle.

[sage]

I love getting to pick my own seat

I don't know if that's sarcasm, but I hear that thongs don't bunch up as much.

[Dagny T.]

But, Cosmo said the thong is, like, so 2000 and late. To verify this, someone should monitor the female asses of America for VPL. Consider it your patriotic duty this holiday weekend.

[Jim]

I plan to monitor the female asses of America. It will be my duty at the lake this weekend. God bless America and Canada to.

[Jesse Kline]

I paid $63 to take two bags on an AA flight. It can't get much worse than that and competition can only make things better.

[Frank]

Isnt it a european airline that is now charging for going to the bathroom on the plane?

That would be Ryanair, an Irish airline. It is great idea, what with the Irish and their drinking, they must make a fortune on piss fees.

[Ska]

I know in Amsterdam it was common enough to see bathrooms that charge .50 euro. You'd have to carry change to the bar just so you could take a leak. I would guess the Dutch aren't the only ones that do that, either.

[OMG]

I can testify of the same thing happening in France. I had to pay to piss many times in Museums and other places. The rule was usually "if you paid to get in, you don't have to pay to piss", but it wasn't set in stone. Sometimes you have to pay anyway. The cost was usually a couple of Francs (7 Francs equaling 1 USD at the time).

[Tim]

Belgium too.

[Sean Healy]

Ryanair does not charge to go to the bathroom. The CEO routinely makes ludicrous statements to get free publicity.

Many European airlines have followed the Ryanair model and disaggregate/itemise costs, so you don't have one all inclusive price. Baggage charges are separate. You also pay for seat reservation, priority boarding, online check in and a bunch of other stuff. Or not, if you prefer.

[Tman]

US Air: Come for the expensive tickets, stay for the maggots!

[DJF]

As anyone who has ever flown will tell you, some cities are significantly cheaper to fly between then others, and that happens in the US/Canada or Europe. So unless they do a survey which includes all airline trips and determines cost overall then just picking 5 trips in each area does not give you a good basis to say which is more expensive. You can simply pick the cheapest flights in Europe, the middle in the USA and the most expensive in Canada and come up with the results as per this article.

[grrizzly]

One of the European domestic routes selected in the paper -- the cheapest one -- is London-Edinburgh with a total round-trip fare (including taxes) of $24.48 on RyanAir. It's with fares like this that Europe beats the USA.

However, there is a problem. According to Ryanair.com Ryanair doesn't currently fly between London (any airport) and Edinburgh. It's terribly inconvenient when the key piece of data cannot be verified.

[DJF]

Since the London to Edinburgh route sounds like it would be a major route in Britain, the fact that Ryan Air does not actually provide the service would indicate that they can't make money at $24.48 a trip

[Dan Lavatan]

As I recall at least some European carriers are subsidized. I'm skeptical, for instance, that the proportion of the VAT used to fund Airbus was included in this study.

My understanding is that freedom of the skies is also reciprocal, so that if France were to allow US carriers the right to fly between Paris and Dunkirk, French carriers could operate within the US. The EU operates as a unit and has internal competition from former Solviet states.

[Max]

Carriers are not the same as plane production companies like Boing or Airbus. Also, Boeing gets the same kind of protectionist subsidized bull-sh*t that Airbus gets, so there is not much to compare there.

The study was more airline companies and those are NOT subsidized. To the contrary, they are bled dry because in our day and age flying is evil because of all the CO2...

[Zeb]

You don't sound like the usual Max we get here. You might want to change your handle.

[Jesse Kline]

My understanding is that freedom of the skies is also reciprocal, so that if France were to allow US carriers the right to fly between Paris and Dunkirk, French carriers could operate within the US.

Actually, American carriers can pick up passengers in one French city and drop them off in another. The EU unilaterally opened the market to US carriers, but America did not reciprocate.

[Dagny T.]

Where is the outrage, the shame that godless Europe is beating us on this? I'll take some USA! USA! chest-beating if it means cheaper flights.

Luke: If there is one thing that's for certain, it's that God will make sure that evil gets punished.

Jason: Oh yeah? Then explain Europe to me.

[BakedPenguin]

Dag, the US is already behind Hong Kong, Singapore, Oz, Kiwiland, Ireland & Canada when it comes to economic freedom.

Because we're all deregulated and shit thanks to Bush II: Revenge of the Bush.

[Dagny T.]

Oh Wise Yet Sadly Flightless Bird, I'm just gettin' my nationalism worked up in preparation for the 4th. God knows I got enough pro-Canadia sentiment via Facebook today.

[Dagny T.]

Upon further consideration, "Revenge of the Bush" would make a good title for a backwoods rapesploitation flick.

[BakedPenguin]

Funny, that occurred to me, too. It sounds like it would be of about "I Spit on Your Grave" quality.

Ironically, my strongest memory of the fourth was outside America. The insurance company I was working for at the time sent me to London for six weeks. They told us that we'd have to work on the fourth, and hoped we weren't too upset over it.

I got sent over for free, free room & board in one of the cultural capitols of the world, and they were worried I'd be upset because I didn't the fourth off. Between the pubs and sports bookies, the Starbucks (expensible lunches!), the museums, galleries, historical sites - not to mention the metric fuck-ton of incredible shows to see - (I once had to choose between going to see Roger Waters or The Dead Kennedys), I was ok with having to work on the fourth.

It was all downhill from there with that company, but that's another story.

[Warty]

Which did you choose?

[BakedPenguin]

My choice was made for me when Waters sold out, although I probably would have gone to see the Dead Kennedys anyway, since their tix were ?10 vs. ?48 for Roger Waters.

I came back the next day and mentioned that I'd gone out to see a show, and one of the women I was working with remonstrated with me for not mentioning it to her. I told her it was the Dead Kennedys (I knew she generally listened to country), and she said she didn't care, she wanted to go out and have fun. After that we saw Cake, Green Day, and The Damned. I regret missing Slayer and the Sex Pistols. Slayer was on a weeknight, and I'd already put myself in my boss's shit house. I would have had to pay $150 to extend my return flight to see the Sex Pistols.

[BakedPenguin]

Oh, and when I went back in 2003, I could have seen Mot?rhead, but I had to do something with my stupid brother and his (then fiance?) wife.

[BakedPenguin]

Oh, and on topic, they allowed us to set our return date, so we could take a vacation in Europe (on our own money, and only if we had vacation days, but it was still thoughtful). I financed a trip to Glasgow with my gambling winnings from the (2002) World Cup. I also found out that if you're going to Scotland, go to Edinburgh, not Glasgow. It was on a ?20 RyanAir or Orange flight.

[MikeP]

I'm all for the argument for free markets in air travel. Nonetheless, there seem to be some issues with this study.

In particular, he compares internal travel in Canada, the US, and various European countries against each other, and then compares international travel against each other.

If his hypothesis that the EU has an international free market in travel, then the intranational experiment in European travel is distracting and in fact largely inaccurate.

What he did instead by restricting all three regimes to internal travel in his first comparison was limit his choice of flights to those flights that are short enough to compete with ubiquitous trains in Europe and mostly don't compete with trains in the US. It's no surprise that European travel would win in that much broader competitive environment.

The better comparison is US internal flights versus EU internal flights at flight lengths that don't compete with trains.

Lo and behold, the price accumulations comparing those two options are $935 in the US and $942 in Europe -- pretty much what one would expect considering both are free and highly competitive. It is true that the average length of the European flight is almost twice the US flight, but at these flight lengths prices are not too sensitive to mileage.

So, yes, I'd like to see foreign airlines able to operate within the US, but I don't expect prices inside the US to drop because of it. The US already has quite enough airlines to be internally competitive.

[zeroentitlement]

You are on to something, except that IIRC the train from London to Paris is quite pricey (round trip, they start at ~$170), despite the relatively short distance.

Worth noting, though, is that airfares from London to other major destinations on the continent are cheap enough to inspire jealousy, and except for Paris, there's...duh...no train service with which to compete.

While in London in late 2001, I saw signs all over town for GBP 25 to fly to Rome ($50 at the time). Obviously, no train to Rome.

Does a lack of regulation account entirely for an international flight of 891 miles (London to Rome) costing $50, while a U.S. domestic flight of 871 miles (i.e. Seattle to Vegas) costs $250+? Certainly, I would love to see the proliferation of low-cost carriers that's available to consumers in Europe, but I believe the reason they have so many is that European air carriers are publicly subsidized.

[Brett L]

No alt-text? Low hanging fruit not worth the effort?

[R2]

Since US airlines have not been profitable for a while and certainly seem to have broken their unions to a large degree, what is keeping prices high in the US?

[James Anderson Merritt]

A free market in air travel is better than a poke in the eye with a sharp stick, but as long as the airports are government-owned territory, there will still be big problems that the free market can't easily (or ever!) fix. For instance, the new government in Britain recently nixed the long-planned third runway at Heathrow airport. This is one of the world's busiest airports -- and also one of the most infamous, for its delays and other hassles that befall the traveler. You'd think that, especially during a global economic recession, the government might want to encourage an area of industry, in which its citizens seem to be doing good business. But you would be wrong. Instead, as a means to keep commitments to curtail GHG emissions, the current British government is actually DISCOURAGING air travel, and key in their disincentives is a policy of letting infrastructure stagnate.

This reminds me of the similar policy that California had during the 1970s and '80s, concerning electric power plants for a similar environmental reason. Eventually, during the faux-deregulation fiasco of a decade ago, we all felt the pain of the State's refusal to allow increase in electrical generating capacity. And of course, airline passengers at Heathrow already suffer a lot; I imagine things will only get worse there.

Here in my own town of Santa Cruz, the progressive activists long ago quashed plans to build additional dams to increase our supply of municipal water. These days, such projects are prohibitively expensive. So we suffer with fairly draconian use restrictions during drought years, and high rates generally. Restricting the water supply didn't keep people from coming here. It just made them miserable when they did.

On the other hand "if you don't build it, they won't come" can work. I long ago vowed never to fly commercial airlines again, if I could help it, as long as people were treated like cattle by TSA and the airlines themselves. So I know that "aversion therapy" does work, and neglect of infrastructure provides that therapy in spades. But how sad that governments have this little trick in their respective "toolboxes."