Price of everything, value of nothing

I could be in the air right now. Southwest had a seat on the flight at 11:00, several in fact. I was there at 10:45, physically ready to make a miracle 20-minute connection despite a concourse change. Those seats were undoubtedly empty when the plane departed.

Instead, I'm sitting in BWI waiting for the 12:25 flight after a bad Starbucks mocha latté. Why am I still here?

The exchange at the counter went like this.

"Could I get on this flight?"

"Yes, I think so. Oh, you'd need an upgrade at some cost."

"How much?"

"Let's see. Seventy-six dollars."

"You know that makes no sense."

"Yes it does. You booked one-week advance purchase."

What I thought was that she had been working in the industry too long if she thought it made sense. The woman behind me, flying on a free ticket, was pleased to get a free upgrade, too. She was also amazed that I couldn't get on the physical plane.

Southwest shares a pricing model with most other airlines. Each seat is assigned a particular price, and when they're gone, they're gone. In essence, the Wanna Get Away seats are on priced as if they're on a different airplane. To get onto the ­Anytime airplane, I would have had to pony up another $76, and this particular 1:25 wasn't worth that much to me.

What's wrong with that? Southwest set the rules and their price for an exception, and I wasn't willing to buy one. The market worked!

As if. Those empty seats were wasting assets, and now they're wasted. There was value to be provided to me, and there was demand for it from me. Instead, Southwest derived zero marginal revenue.

Here's an idea. I'm offering it free, since I have no way to derive benefit from it.

Some canny, economically literate airline will enhance their bottom line with a cross promotion with eBay. They can set it up however they like - auctioning the seats as the clock winds down would best match eBay's business model. But shrinking the upgrade price automatically as time ticks down would be easier to implement. Say, 15 minutes before flight time, when absent tickets become stand-by tickets by rule, $20. Ten minutes, $15. Five minutes, $10.

For $20, I would have upgraded. I'd be better off. Southwest would be better off. The market missed this opportunity.

Sure, there are start-up costs. The eBay cross-promotion should cover those and provide a tidy profit, too. But business, which free market true believers generally account as rational, has to be smarter.

Journalism tip

I've liked the work of Matthew Wald in the New York Times on the FAA/Southwest airplane inspection scandal, but this should never have appeared in today's story (my emphasis):

One senior executive at another airline, who spoke on the condition of anonymity, said the agency’s new stance reflects the new tone in aviation safety.

“In the past, you wouldn’t have grounded the whole fleet,” the executive said. “There’s a question of what’s rational and what’s not.”

You want this quote in this story, you have to stand by it. I suspect that it violates the Times's policy on anonymous quotes, too.

That's not power, Ray, that's a piece of paper

The FAA says it's "data-driven", but when all you look at all day is airline-generated paper instead of looking at metal, wiring, rubber, electronics, and fuel, the first piece of real data you're likely to get is a blip vanishing off radar. Out of sight, out of mind is exactly what inspections are supposed to prevent.

When you think of how many thousands of daily flights there are, 99% compliance is pretty slipshod. It means thousands of inadequately inspected planes have been flying every year. Thousands. With hundreds of thousands of actual people on board.

Yes, I've been one of those at-risk passengers. Without even venturing onto a third world airline.

Can't regulate safety!

Always remember, Republicans don't believe in regulations, even the ones that could save your life. They believe in the market, the holy market, from whom all blessings flow - and it keeps the pipeline for funeral services good and full, too.

Look, lots of countries don't regulate their airlines. They are called third world countries, and their planes fall out of the sky far more often than ours. That's where the Republicans want us to be, too.

Why Americans stand for it is the real puzzle.

Update: Here's a big piece of the puzzle. It's the stupidity, stupid! Bill comments at CNN:

I fly Southwest often and this is pretty disturbing. On the other hand, it is pretty typical of what to expect from a government program. All government is good at is wasting tax dollars. It's been that way for at least 50 years. Time for less government and not more!!!

In this story, lowly government employees found a problem in the private sector and got attention for it despite the anti-regulation political leanings of the current Republican administration. And the problem is ... government!

If this guy died in a plane crash caused by illegal shoddy and deferred maintenance, he'd still be blaming the government and not Southwest.