The Pan Am Effect

Thursday, October 13, 2011

At Agoraphilia, Glen Whitman discerns, in the attractive stewardesses of Pan American World Airways fame, a side-effect of yesteryear's government regulation of air travel.

Prior to airline deregulation, which was passed in 1978 and completed over the next few years, airfares had been set by the Civil Aeronautics Board (CAB). For many routes, those airfares were simply too high. As predicted by a simple supply-and-demand model, airlines were willing to offer more flights at these high prices than customers were willing to buy. Under normal market conditions, that would lead to falling prices. But since the airlines legally could not compete on price, they competed on quality instead. They offered better service, better food, and... wait for it... more attractive stewardesses.
With deregulation, it quickly became apparent that, "most people just wanted to get where they were going, fast and cheap," and so were not interested in paying extra for attractive flight attendants. Prices dropped and the appearance of flight attendants stopped being a selling point for airlines. The result was that the number of people flying at least once a year grew faster than the population, and numerous opportunities for work as flight attendants (beautiful or not) opened up.

Even when some improper government regulation appears to improve our lives in some small way, considering the larger picture (and conceptualizing the unseen side-effects) will inevitably show that the price for that apparent improvement is too high.

-- CAV

Update: Megan McArdle makes some pretty good arguments to the effect that other regulations, and not deregulation, may be to blame for this phenomenon.

P.S. I am told that there has been a problem with Twitterfeed, the service by which I auto-tweet my posts for the past couple of weeks. Specifically,Twitter has been taking users to my XML feed (and sometimes to the comments feed, rather than to the posts). I am now aware of the problem and hope to fix it, although my time to do so is very limited. Today, I am trying an alternate feed. If that doesn't work, I'll try something else on the next day's post, and so on until I find a working solution.

Thank you in advance for your patience. [Update: The new feed seems to have done the trick. Also, my thanks to "RussK" for informing me of the problem: I rarely am actually logged on to Twitter!]


Today: Updated the PS. 
10-18-11: Added an update.

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