Externalities and long lines at airports


Photo: Flikr Creative Commons

Yesterday I published a piece in MinnPost, “Why you shouldn’t feel too grateful to Delta for hiring people to help with the TSA security-line crunch.”  The takeaway: airlines are creating a negative externality by charging high fees for checked baggage. A better solution to long lines at the airport would be to adjust the relative price of checking a bag versus carrying it on the plane so that more passengers check their luggage.

Airlines clearly prefer that passengers deal with their own luggage. By reducing the need to load and unload bags, airlines decrease their costs both in terms of labor (i.e. hiring fewer baggage handlers and such) and in time (aircraft can be turned around faster with shorter load/unload times.)

However, this is exactly what negative externalities are all about: One party does something that off-loads their costs onto someone else.  This encourages them to do more of the action (in this case, encouraging customers to carry their own bags) than is socially optimal.  Yes, it boosts airline profitability to go along with the current system, but it increases the costs borne by all levels of government along with passengers who must arrive at the airport earlier and spend more time in lines.

There are better ways to deal with this problem than simply throwing more resources into the TSA. Let’s think more creatively about a system that deals directly with the problem.