Friday, December 23, 2011

If You're Flying These Holidays

You should feel very, very safe, if your flight is on a U.S. flagged carrier. There were no fatalities in 2011, and only two in 2010, according to a WSJ article. Today, the chance that an airline flight will have an accident with a fatality is sitting at about one in 11 million. Flying is up to 100 times as safe as car travel by some estimates.

Meanwhile there was much ballyhooed release of new regulations to ensure that pilots and air crews get enough rest. Measure these remarks against the actual safety record shown at right:
Calling the long-awaited regulation a "landmark safety achievement" that resolves pilot-fatigue issues that have been festering since the 1970s, Transportation Secretary Ray LaHood on Wednesday said the changes were based on the latest scientific sleep research.
Perhaps the reference to sleep research is true, but to say that there is a long festering safety issue is demonstrably false. Fortunately, the new regulations aren't quite as onerous as originally thought.

Total projected compliance costs for industry dropped to about $300 million over 10 years, compared with $1.2 billion as originally proposed. FAA officials said they believe the industry won't have to hire new pilots to comply. Even so, the FAA still faced a seemingly big challenge justifying costs versus benefits.

According to the 300-plus page regulation, the value of anticipated benefits ranges from $247 million to more than $700 million over 10 years. Those benefits could include avoiding accidents, reducing aircraft damage and lowering insurance costs

I agree that reduced accidents have great economic value, the first article quoted savings of $600 million per year due to the low accident rate. But the accident rate is already close to zero, so I think we are just going to increase the cost of plane tickets with added regulation. We know from standard economic analysis that for each increase in airline ticket prices some people will choose to drive. That choice will result in more deaths. Why isn't this taken into account in regulatory analysis? It always sounds great when the government announces new regulation to increase safety, but there is a cost to regulation that has unintended consequences. This is why I view the regulatory regime with suspicion.


  1. Without commenting on the underlying regulation, could also apply a standard game-theoretic model whereby the regulation is a signalling mechanism to weary non-fliers that pilots are sufficiently rested and will increase demand, especially considering the disproportionate impact of widely publicized plane crashes.

    Economics is a pain in the ass, eh?

  2. The TSA is signaling us like a drunken sailor...

  3. Your figure only shows Fatalities, what about nonfatal accidents? Potentially that was the problem they were trying to address.

  4. Your figure only shows Fatalities, what about nonfatal accidents? Potentially that was the problem they were trying to address.

  5. Cali, interesting point, but couldn't the airlines adopt standards themselves, and so signal? By the way, I am not against all regulation, I just think we should examine its true value. Also, these rules seem a little complicated.

    Kelly, your humble blogger only has so much time to investigate each blog post, so I don't know. However, the Secretary of Transportation didn't say what exact problem was festering, but he made it sound bad. My point was that all the ballyhoo is usually over done. This is a perennial problem in government. We are re-organizing Human Resources for the fourth or fifth time for my agency's region here in San Diego. If you added up the savings announced for each re-organization, it exceeds the total that was originally spent on the function, and now HR is actually shipping money to the U.S. Treasury. My long association with government, especially considering that I have been in the best run parts of government, has made me very cynical that the federal government should be in charge of anything not absolutely required of it by the constitution.