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December 04, 2004

Airline Routes.

I’ve said it before and will no doubt have to say it again. The current method of allocating airline routes is a nonsense:

British Airways is to face its first direct competition from other UK airlines on the lucrative routes to India after a ruling yesterday by the Civil Aviation Authority, the industry regulator.
The CAA said it was allocating 14 of the 21 new services made available by the Indian government to UK airlines to BA's competitors - Virgin Atlantic and Bmi. Even so, Virgin said it would appeal against the decision.

There’s two things wrong here. One is the absurd system of allocating flight rights themselves, with countries getting together to decide how many people may fly where and when. We are supposed to have left this socialist planning behind. But that’s IATA.
The second is how we then, internally to the UK, allocate the international rights. After lots of political lobbying, expensive consultants and all the rest, they are then given to the airlines. These licences are exactly that, a licence to print money. Don’t give them to people, charge them for them. Just as with the spectrum auctions, see how much the operator is willing to pay and stick the money in the Treasury. These licences are public assets (until we get rid of IATA and have a global free flying agreement) and should be charged for as such. These air routes fall into the class of land rents (however odd that might sound) and taxing or charging for such is the least distorting way of raising money for the Govt. there is.

Update: I am rebuked, and rightly so, for describing the system of allocation of routes as being part of IATA. Apologies, this is not so. My correspondent didn’t go on to inform me as to the correct name for the system of allocation of international routes via these Governmental decisions so I cannot pass it on to you.The rest, the thrust of the comments, still stand of course.

December 4, 2004 in Economics | Permalink


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That's IATA? What planet are you on? Get you facts straight first, otherwise you end up sounding like an ignorant bore. Which you do!

Posted by: thomas | Dec 4, 2004 1:34:34 PM

Allocation of international routes is usually effected through bilateral treaties eg Bermuda II beween the US and UK.

I believe the EU now wants to muscle in on the act: chaos looms!

Posted by: yellerKat | Dec 4, 2004 3:02:04 PM