Friday, September 25, 2015

Nouriel Roubini Flips Out as Airline Tosses Nobel Prize Winner Off Plane

Of course, it is not monopoly but government regulations that allow airlines to overbook, but that's how Keynesians think, Everything is "market failure" to them even when it isn't even close.



  1. How do government regulations allow airlines to over book? I've never heard that explained before.

    1. While I'm not aware of any specific reg that "allows" overbooking, the administration of compensation for such overbookings is codified in Title 14. I do not remember the specific regulation number but I think it is 250.8. My guess is that Google may prove helpful here.

    2. Regulations restrict how many carriers can operate. After 9/11, airlines demanded of congress the most onerous restrictions on traveler/consumer privilege.

  2. Airlines need to overbook to keep load factors. When I worked for an airline we would overbook by about 8% because that was our historic no-show rate. Statistically, it was in our best interest to hedge bets by overbooking. Sure, a few flights a day would have people getting bumped, but that's a small price to pay vs flying an empty seat.
    An airline seat is a perishable commodity. If that plane left with empty seats, we lost that revenue forever. Rubini should understand that.
    Having said that, domestic carriers are horrendous. Asian carriers have vastly superior service.

  3. Ditto on the Asian Airlines. Their fees are generally far lower than airlines in USA and Europe. I am flying from Little Rock, AR to Florida panhandle next week. Ticket $255 RT. Check two bags $120 for the trip. Make sense? I don't think so. Miss flying Southwest A L.

  4. Government regulations, indeed all government action, has indirect as well as direct effects. Regarding overbooking, I surmise that it has become more prevalent since post-911 rules that require passengers to be checked in at least 20 minutes before the flight time. This 20 minute cut-off was implemented for security purposes to allow for a final check of passenger manifests for "terrists". My guess is that rule results in more people missing their flights, thus more empty seats unless the airlines aggressively overbook. Indeed, the entire cartelized and regulated air industry is now one big cluster fuck.