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June 08, 2006
Denied Boarding Directive
Do you remember a year or so ago when the EU brought in the Denied Boarding Directive? This was to force airlines to compensate passengers for delays, overbooking of flights and so on? With TEBAF Margot’s wonderful phrase, that increased competition meant the need for increased regulation (to which the answer is, no you stupid woman, it is monopolies and oligopolies that require regulation to protect consumers, not open markets).
There is nothing that Government can do to markets that won’t create perverse incentives. As here:
The Federal Aviation Administration criticised BA strongly for allowing the flight, in February last year, to continue. It said that the aircraft should have returned to Los Angeles and is proposing to impose its maximum fine of $25,000 (£13,000) on BA for flying an aircraft in an “unairworthy condition”.
But why did BA fly that 747 across the Atlantic on three engines?
The report says that BA allowed flights by 747s to continue after an
engine failure on 15 occasions since April 2001. Each time, BA saved up
to £100,000 that it would otherwise have spent in compensating
passengers and providing a replacement aircraft.
A perverse incentive, no? And this now applies to all flights that originate or terminate in the EU as well. Aren’t we lucky little boys and girls to be looked after so well by our wise and munificent rulers?
June 8, 2006 in European Union | Permalink
Comments
If you're worried that a batty "consumer protection" laws of the EU are promoting risky behaviour by BA by flying 747's with an engine out, then you can be comforted by the knowledge this won't last long.
4 engines 4 long haul?
No.
2 good 2 need 4 engines.
By the end of the year, the FAA looks to introduce ETOPS 330 effectively giving unrestricted access worldwide to twins. At the same time, LROPS will be introduced placing restrictions not seen before on quads and so the era of the quad is fading properly and the twin will dominate the market. ETOPS twins are far more reliable and safer than quads despite the theoretical FUD about redundancy, which isn't actually born out in practise due to the poor standards under which quads are maintained. And the rules explicity state that a twin with an engine out must divert so there is no negotiating over this.
So long live the big twin. Long live the 777.
Posted by: Josh | Jun 9, 2006 12:08:34 AM
I think you'll find that the legal system is a form of regulation. Unless you're saying that that is also a distortion on the market, then I think that your assertion that regulation is unneccessary is simply wrong.
This kind of regulation is rather similar to the rule that voids gambling contracts: it restricts the freedom to make certain contracts for good reasons. The contracts that airlines were peddling as tickets pretty much amounted to "If you give us your money we might fly you somewhere if we feel like it". Consumers did not realise this, and airlines were abusing this. This directive simply ensures that airlines cannot make empty promises.
The cause of such unsafe flying is that airlines choose to overcommit on their bookings. If you believe that holding commercial parties to their promises is a perverse incentive, then you should advocate the elimination of legally binding contracts.
Tim Adds: Not sure that there is a rule that "voids" gambling contracts. They are not justiciable. true, but I’m not sure that’s the same as void.
Posted by: Marcin Tustin | Jun 10, 2006 6:15:09 PM
They are void, the most high-profile case of recent times that turns in part on this is Lipkin Gorman v Karpnale.
Posted by: Marcin Tustin | Jun 10, 2006 6:34:22 PM
