As expected, price controls harm Wichita travelers

Writing from Tallahassee, Florida

As reported in the Wichita Business Journal on May 12, 2005: “The average number of daily departures dropped to 45 in March 2006 from 54 in March 2005.”

The effect of the AirTran subsidy is to reduce the price of airfare to and from Wichita. That is its stated goal. If the subsidy did not work to reduce prices, we would be wasting our money. The fact is that the subsidy does work to reduce airfares to and from Wichita. It also does what any economist could predict: it reduces the supply of air transport to and from Wichita. I think that’s why economics is called the “dismal science.” There really is no free lunch.

The same article also reports this:

Sam Williams, chairman of the Wichita Fair Fares campaign, believes that the airlines will see there is enough passenger growth to justify reinstating the lost destinations.

“The numbers always showed that we had the ability in our catchment area to, over time, make this airport very successful,” Williams says. “Nothing has dampened my enthusiasm that that’s still going to happen.”

I have a picture in my mind of a group of planners for, say, American or United or Northwest, planning whether to increase capacity to and from Wichita, or even if to stay in the Wichita market at all. If AirTran — a “new” airline with low labor costs — can’t earn a profit on its Wichita route at the fares it charges, how can the “legacy” airlines be expected to do so? And if they can’t earn a profit, how can we expect them to continue providing service in Wichita?

The answer is this: we can’t expect the legacy airlines to continue their present levels of service in Wichita as long as we continue to apply price controls.

For all the gushing over AirTran, try using it to get to some of the destinations I regularly fly to: Lexington, Jackson, Cincinnati, and Tallahassee. But I can get to these cities on most of the legacy airlines — the very airlines that we are punishing. If we lose the service of the legacy airlines, we will be in deep trouble.

If we want to allow Mr. Williams’s dream of a successful Wichita airport to come true, we need to let market forces set fares. Any other solution will cause — and has already caused — our city harm.