The Christmas underwear bomber made have faded from the headlines, but his near success remains in the minds of airlines and Washington. In response, Bloomberg reports that the Obama administration may call for an increase in the airline security fee. It hasn’t changed since it was initially created in 2001, in response to 9/11. Should they do it? And if so, who should pay?
First, is the additional money here being put to good use? If it’s used for security theater, then I would say, probably not. More TSA representatives to frisk every passenger won’t prevent body cavity bombs on airplanes. I’m not an expert on security technology, but unless a full body scanner can do that, then I wouldn’t advocate wasting money on more of those either. If, however, the money will beef up homeland security in a meaningful way to monitor and catch terrorists before they get to the airport, then the additional fee might be a good idea. Unfortunately, according to the article, full body scanners are the likely target for the spending.
So who should bear the cost — airlines or taxpayers? As you can probably guess, airlines think taxpayers should. Here’s why, via the Bloomberg article:
Security costs should be borne by the government, said David Castelveter, spokesman for the Air Transport Association, whose members include Delta Air Lines Inc. and AMR Corp.’s American Airlines. “The airlines are not under attack; the country is under attack,” Castelveter said.
That sort of could be true, but probably isn’t in this situation.
If the money is used in the way I wish it would be — to detect terrorists before they get to the airport — then I completely agree with the airline lobby. In that case, taxpayers should bear the cost, because it’s non-airline specific homeland security. Terrorists would thereby be prevented from blowing up planes, buildings, bridges, etc. All Americans would benefit, so all Americans should pay.
But if the money is spent to specifically beef up airline security with full body scanners, more TSA officers, etc., then it’s pretty clear that the airlines are specifically benefitting from the fee. In this case, they should pay. And after all, that cost would be passed on to consumers anyway. And that’s okay.
Think about this from an economic perspective. There’s a security risk in commercial flying. In order to mitigate that risk, some security measures may help. But that prevention doesn’t come for free. As a result, the cost of flying should reflect that risk premium. Flyers should pay.
Again, airlines object:
U.S. airlines, with collective losses of about $60 billion since 2001, say they lack pricing power to pass fees on to fliers.
And all I can say is: that’s too bad. If pricing hadn’t properly reflected the terrorism risk premium in the past, then that should be corrected. If that causes demand to decline, and fewer people to fly, then that’s a reasonable economic outcome. And if that causes fewer routes, or more airlines to go out of business, then again, that’s what the market dictates.
Finally, pricey security measures would provide flying with a competitive advantage over other modes of transportation, like trains that lack as advanced security. That may drive travelers from trains to planes, if they feel safer traveling one way over another. If airlines are specifically benefitting from additional security measures, then taxpayers shouldn’t be paying for that benefit. Airlines, and consequently flyers, should pay for the additional safety the spending provides.
