Airlines

How Protectionism Shields United Airlines From Competition

Wanna stick it to the unfriendly skies? Let Richard Branson and other foreigners compete inside the U.S.

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Free Richard Branson! ||| Virgin Group
Virgin Group

As Brian Doherty observed here yesterday, the United Airlines outrage does not require new laws, though that is certainly news to microphone-hogging pols like New Jersey Gov. Chris Christie. In fact, let's round up some of the opportunistic political responses, shall we?

* Rep. Jan Schakowsky (D-Illinois):

her bill "will end the practice of involuntarily 'bumping' passengers from oversold aircrafts once and for all. If an airline chooses to oversell a flight, or has to accommodate their crew on a fully booked flight, it is their responsibility to keep raising their offer until a customer chooses to give up their seat."

Schakowsky said her legislation also will require that any dickering over how much a passenger will get for voluntarily relinquishing a seat is "carried out before they board the aircraft. These fixes would prevent the situation we saw on video from ever happening again."

* Sen. Chris Van Hollen (D-Maryland):

he is readying legislation to prohibit airlines from forcibly removing passengers due to overbooking or to free up seats for crew.

The Maryland Democrat released a letter to colleagues seeking sponsors for what he has called the "Customers Not Cargo Act."

There is another way, I argue in today's L.A. Times. If lawmakers really want United to feel the lash, they should remove the politically motivated protectionism that blocks foreign competitors from driving customer-unfriendly American airline behemoths out of business. Excerpt:

Foreign companies and individuals—think Richard Branson and Virgin Atlantic Airways—are forbidden by U.S. law from owning more than 25% of a domestic airline. That's why Virgin America could be sold last year to Alaska Airlines over the express wishes of Virgin's famous founder: He just didn't have enough votes.

The differently headquartered are banned outright from servicing routes between two American cities, a practice with the sinister-sounding name of cabotage. And carriers from Singapore to the Gulf States are not only barred from competition, but subject to sneering taunts by American legacies from behind the protectionist firewall, such as when United CEO Oscar Munoz this March said that companies including the well-regarded Emirates "aren't real airlines."

What on Earth justifies such pre-Trump xenophobic mercantilism in our increasingly globalized world? According to North America's Air Line Pilots Assn.: "These regulations ensure the national security of our country and the integrity of our airline industry." Or translated into honest-ese, "These regulations ensure the job security of unionized U.S. nationals and the continued existence of poorly run U.S. airlines."

Read the whole thing here.

NEXT: Here Are All The Things Idaho's Governor Got Wrong About Asset Forfeiture in His Veto Statement

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  1. Obviously a transparent attempt by lawmakers to get some of heat off of that collective outrage. None of them are going to allow the market to take credit for fixing a problem. (See also: Lobby money)

    But, really, isn’t the very best public policy forged from legislative resume padding?

    1. Yep, second only to dead babies

      1. sorry, I think the saying is bad kids make bad law, not babies.

        1. I’ve proposed a 90-day waiting period for any new legislation based on a national outrage. No one will run with it, though.

          1. I’d like to see a 90 day ‘cooling off’ period for all legislative purchases.

          2. Good idea. The Senate is supposed to temper the passions and panics that rush through the House. Senators don’t see it that way

            1. repeal the 17th

  2. Allowing foreign airlines into the US would be a disaster waiting to happen. Do you not know in most countries they fly on the left? What happens when some British pilot forgets where he’s at and flies a jumbo jet head-on into an American jet flying on the right?

    1. Not to mention the gas tank being on the opposite side of the plane.

      1. You guys are grossly exaggerating the danger. Very few countries still fly on the left, so the chances of a collision are really small. And, besides, with appropriately-positioned rear-view mirrors and frequent use of landing-lights most accidents can easily be avoided. Of course the landing lights only work when the gear is lowered, so it does slow things down a lot.

        1. I hear most planes even have back-up cameras. They’re very safe.

      2. Could be worse. Australians fly upside down.

      3. That has more to do with where the exhaust pipe is.

      4. Not to mention pilot distraction due to sexting or when the cute Ukrainian flight attendant steps into the cockpit.

    2. What happens when some British pilot forgets where he’s at and flies a jumbo jet head-on into an American jet flying on the right?

      Don’t want to be killed in a mid-air collision like a thug? Don’t build runways.

  3. Two thoughts:
    1) Munoz is a jerk, but he’s right about Emirates–it’s a government owned and totally subsidized Disneyland-type airline, just like Dubai itself. Nobody could compete against them because they have infinite pockets. Still, I’d take an Emirates flight from Detroit to Hawaii if I could.
    2) These stupid laws also explain why almost all cruise companies that have cruises starting in the US finish abroad (e.g. any Alaska cruise starts or ends in Vancouver, most Caribbean cruises start and/or end elsewhere in the Caribbean). Cabotage laws prohibit foreign-owned carriers (in this case, cruise companies like Carnival, Regent, Crystal etc.) from starting and ending within the US. Not as annoying as the airline effects, but still weird.

    1. If the Dubai government wishes to subsidize plane tickets for Americans, why should Americans object to that? That’s free money for us.

      1. Fine with me. I agree it’s a win for us passengers, which is all that really counts, but I’m also saying that Munoz wasn’t way off-base in going after Emirates.

        Although I just did some research and Emirates CEO claims they aren’t actually subsidized. Details are a little sketchy, however.

        1. Emirates CEO claims they aren’t actually subsidized. Details are a little sketchy, however.

          Probably kept that way on purpose.

      2. Because the US gov’t subsidizes it too? The ex-im bank, more precisely.

        And since this is the more pragmatic and utilitiarian Reason, we clearly must provide subsidies for all.

    2. Cabotage laws prohibit foreign-owned carriers (in this case, cruise companies like Carnival, Regent, Crystal etc.) from starting and ending within the US.>/i>

      It’s even worse than that. Cabotage laws prohibit cruise companies, foreign owned or otherwise, from using boats that were not built in the United States on cruises starting and ending within the United States. It’s naked rent seeking all the way down.

    3. There is to my knowledge only a single salt water based cruise ship that begins and ends at a US port.

      Norwegian America’s “Pride of America”
      It services the Hawaiian Islands

      The hull began at a US shipyard with the intention of operating exclusively between American ports. Before the ship was finished the money ran or someone went bankrupt or something so they ended up finishing the ship in another country. Because it had to be finished elsewhere, the boat needed and got a special dispensation from Congress in order to operate exclusively at American ports.

  4. What on Earth justifies such pre-Trump xenophobic mercantilism in our increasingly globalized world?

    World Government is Inexorable, more on that after cocktails and shrimps!

    Meanwhile, in the Rust Belt…

    1. Meanwhile, in the Rust Belt…

      “Waaaahhhhhh why should we have to compete with inferior people from inferior countries? Save us Daddy!”

      1. Oooooh! I love playing smug elitist!

        Let me try now: “Yeah! Fuck those gun wielding religious laborers! Fuck them in their stupid fascist idiot faces! Serves them right, the dipshits!”

        1. Eh, C-. Stick to what you know, like blaming everyone else for your problems.

          1. Personally, i blame Hugh for all of my problems.

            1. He was Akston for that.

            2. I blame Winston’s mom for all of mine, but to each his own.

              1. I hear it happens to all guys at some point

              2. You shoulda double bagged your shit. Don’t worry, though, science is working on a cure.

            3. You’d be surprised how popular that idea is.

          2. The New Cool: One man’s journey through the pitfalls of acting intelligent, by Hugh Akston.

      2. “Waaaahhhhhh why should we have to compete with inferior people from inferior countries? Save us Daddy!”

        More elitism from self-loathing white Reason commenters. Hey Hugh, if you and your smug pals, Sparky and Kevin Williamson, hate the people who built this country – you know, white, God-fearing union laborers and factory workers who were married*, had at least four children, lived in a small town, drank drip coffee out of a thermos** went fishing every Saturday*** and to church every Sunday – then you should just get out!

        *To a WOMAN, as the Lord intended.
        **As the Lord intended for it to be drank, not guzzled out of some overpriced European, sissy-hippie cardboard cup; we saved their ass from Hitler, damnit!
        *** Some Saturday’s they would go into the lodge to play Hearts, where they always had their old-fashioned just waiting there…

        1. Hey Hugh, if you and your smug pals, Sparky and Kevin Williamson

          I notice you omitted Citizen X. CURIOUS

          1. Not really. Unlike those elitists, i’m humble as shit.

  5. Yes, please. US airlines are shitty, largely because of this policy. I’ve flown a lot more internationally than domestically, but when I have flown domestically I’ve been struck by how crappy and run down the planes are and how poor the service. A little competition is clearly in order.

    1. I’ve been unimpressed with KLM, ANA, JAL, and Korean Air. Everyone goes nuts over Sing Air but I’m fairly sure that’s mostly the frat boy mentality coupled with the bikini test requirement for the attendants.

      1. “I’ve been unimpressed with KLM, ANA, JAL, and Korean Air.”

        You left out Alitalia; WHEW!

      2. I thought ANA was great (based mostly on the number of free cocktails served and the politeness of the crew). Haven’t been on the others you list except KLM like 20 years ago.

    2. Airports too.

  6. I just want that airline with Jennifer Aniston on it.

    1. On want Jennifer Aniston on everything, especially me.


  7. hogging pols like New Jersey Gov. Chris Christie

    I larfed at this, thanks Matt!

  8. “they should remove the politically motivated protectionism that blocks foreign competitors from driving customer-unfriendly American airline behemoths out of business.”

    No thanks. I’ve flown several of the airlines active in South America and I’d prefer to not have LAN Peru or Aerolinas Argentina or Austral or Cubana flying their deathtraps over my head.

    1. No thanks. I’ve flown several of the airlines active in South America and I’d prefer to not have LAN Peru or Aerolinas Argentina or Austral or Cubana flying their deathtraps over my head.

      When these crash are they just not reported in the news? It always seems like PanAm and Malaysian Airlines should be at the top of the list. Maybe an asterisk next to Germanwings too.

    2. Are they really any better than US regional and freight airlines?

  9. Also, bring back pretty stewardesses please. When America was great and customer service still meant something, the flight cabin was always staffed by attractive and pleasant ladies. Nowadays, you’re lucky if you don’t get some gay guy with an attitude.

    1. Because what pretty woman doesn’t want to be stuck in a pressurized tube to be gawked at and groped by greasy cornballs who are being “flirty”?

    2. And probably not just regular ol’ gays either. You know United employs cuckaschmuck gays* (which as we all know are the second-worst kind of gays).

      *The worst, of course, are deeply repressed men, who see the gay menace everywhere.

    3. Whenever you start to think Mikey is just some retard, he drops a hint that he’s actually an incredibly old retard. Like, nearly-as-decrepit-as-Hihn old.

      Mikey, what’s your position on wooden nickels? Don’t take any, right?

    4. Another thing that foreign airlines do better.

  10. Wanna stick it to the unfriendly skies?

    Maybe after it buys me dinner.

  11. protectionism here vs govt subsidies there. Hmmmmm; do I prefer the broken arm or the torn ACL.

  12. This is why we need the government, people: how else could airlines kick you off their planes?

  13. Didn’t United do this because there are explicit laws allowing them to conduct oversell and involuntary “re-accommodation” practices?

    If so, isn’t this legislator outrage very misplaced?

    1. Why should there be a law that allows or prevents this practice? If an airline wants to use overbooking, that’s between them and their customers.

      1. Thank god, the sanity is returning.

  14. Laws micro-managing how airlines do business is part of the problem, not part of the solution.

    Yeah it sucks, but if United wants to open itself to civil suits from customers who pay for a seat and get kicked off, and other customers choose another airline based off of seeing that, that’s United’s bad business choice to make. as stated, there are laws to address this already.

    I don’t think most people understand how much government is involved deeper and deeper in more and more industries, and how many of the things they don’t like are directly or indirectly caused by said regulations. ‘unintended consequences’ is the name of the game.

    1. My current favorite are the newish regulation that forbid the airline from having a plane sit loaded on the tarmac for more than x number of minutes without giving people an opportunity to get off the plane (where x seems to correspond to the period for intermittent summer storms in New Yourk). Twice I’ve been stuck on a plane in the lineup waiting for a storm to clear, and just as it is and planes start taking off, back to the gate we go to wait juuuuust long enough that we miss the window and have to wait out on the tarmac again for the next storm to clear.

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