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Virginia promised Amazon has awarded more than half a billion dollars in direct grants to attract the company's new development, HQ2, to Crystal City in Arlington. Virginia's promise included an additional 25 pages of taxpayer-funded goodies and a new name for the neighborhood: National Landing. The Commonwealth even offered Amazon to build a new pedestrian bridge connecting HQ2 to the nearby Reagan National Airport. However, Virginia's proposal could not include for the store, which was all nonstop flights to Seattle.
The reality is that only Congress can do it.
In fact, Washington Airport is one of the few in the country to meet the capacity limits imposed by the federal government under the directive. High density ruler, a law passed in 1968 to manage the congestion of five overcrowded urban airports. The rules establish how many commercial flights and other flights can be scheduled to take off and land all hours of the day.
Getty
Each of the five airports is special, but the Washington National and New York LaGuardia are in their own way. There are not many big cities in the world where you can board a jet just 15 minutes from the city center. Logan from Boston, Aeroparque to Buenos Aires perhaps, but the few other examples show how amazing they are for travelers.
On many routes, travelers are willing to pay for the privilege of this type of convenience. On the top ten routes, for example, average domestic fares at Washington National are nearly 20% higher than those at other airports in the Washington area. American Airlines has been forced to sell a set of slots at National and LaGuardia in exchange for approval from the Justice Department for its merger with US Airways. transaction reportedly reported $ 425 million. It turns out that when the government restricts competition, consumers pay.
In today's free market environment, it is tempting to argue that such intervention by the government should be removed. When the DoJ forced Americans to give up their niche markets, for example, they opened the door for newcomers and low-cost carriers, giving consumers more choice. This is surely the right direction for a capitalist society.
It was not so long ago that the government conducted such an experiment. The draft transport law AIR-21, adopted in 2000, effectively survey the capacity limits at LaGuardia. In six months, carriers had added more than 300 new flights, increasing the average number of flights flight delay from 144% to 38 minutes. Coupled with the effects of training, delays at LaGuardia accounted for a quarter of the minutes late for the country as a whole. The free market was not really free.
If takeoff and landing slots at these airports are so valuable, why then do airlines offer so many small planes? The average number of flights from National does not exceed 99, compared to 123 for domestic flights at other airports in the Washington area, where there is no flight limit. One reason is that travelers on lucrative commercial routes that favor these airports value the option of high frequency service. After all, it is difficult to market a shuttle service that departs only once a day. Business travelers pay extra to know that they could take a flight earlier or later if the plans change.
Another reason is that historic airlines protect their sinecure by "sitting" on slots, using smaller planes. The average size of aircraft operated by American and its US Airways merger partner prior to divestiture was 85 seats. New entrants who took over these assets – Southwest, JetBlue and Virgin America – increased the average number of seats per departure to 132 seats, an increase of 55%. New entrants added competition some routes and introduces the first service into others.
But the real reason National Skew Small's planes are of legislative design. The high density rule does not simply specify the number of takeoff slots, but how they can be used. At National, about 17% of the resource is dedicated to commuter operations, which can only be used by aircraft with 76 seats or less, a structure put in place to encourage more services in smaller cities and more. relatives. time, small helix meant. (Another 19% is reserved for non-commercial aviation – think of business jets). It is fundamentally a choice of social and political priorities as congestion management. In fact, flights to major cities do not clutter much more airspace than those to smaller cities.
The other reason why it will be difficult for Amazon to get new flights to Seattle is also due to a legislative artifact. When capacity checks were put in place, they included a mechanism to force long-haul traffic to what was then the new Dulles airport, located far out in the countryside. It is hard to imagine today, now, that Washington Dulles is at the center of a large, exurban agglomeration that rivals the density of many cities. At the time, however, it was feared that the airlines would not use the new airport, with its futuristic design and mobile boarding lounges instead of jet bridges. The legislation therefore limited the flights to National to 650 miles. All that was left was to go to Dulles – a hard drive from downtown DC.
Over the years, many efforts have been made to eliminate National's "perimeter rule". It was extended to 1,000 miles in the 1980s and then to 1,250 km. Starting in 1999, politicians from cities a little further, led by the late Arizona Senator, John McCain (DCA-to-Phoenix) argued delete the rule. Instead, they won a limited number of "out of scope" extension locations. These niches are the source of bi-daily flights to Seattle. But even these were only allowed with the commitment not to result in a decrease service to small communities. On the other hand, lawmakers whose small communities benefit from nonstop air service, as well as legislators who support United Airlines, which operates a major center in Dulles, are pushing for National to not lift the line.
In addition, carriers that hold rights on the 32 slots beyond the perimeter can not easily change one of their slots to launch a new flight to Seattle. When the DOT granted the exemptions, each request was examined on a case-by-case basis for a given destination, sometimes even at a specific time. Airlines do not have the right to exchange one destination beyond the perimeter for another. The argument of each of them had to demonstrate that it would be advantageous for Washington and the national airspace system.
Like many regulatory structures, it is hard to imagine it being created again today. Here is such a valuable asset that it generates a 20% premium on each ticket. However, because of its historic federal heritage, the current structure is prone to a delicate compromise between several competing lawmakers, each seeking to gain support from a small constituency. Economists would not hesitate to argue that the scarce resource can be divided in the most effective way between those who are most willing to pay, unless for a strong opposing social purpose.
Does this sound like open competition for Amazon's investment?
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Virginia promised Amazon has awarded more than half a billion dollars in direct grants to attract the company's new development, HQ2, to Crystal City in Arlington. Virginia's promise included an additional 25 pages of taxpayer-funded goodies and a new name for the neighborhood: National Landing. The Commonwealth even offered Amazon to build a new pedestrian bridge connecting HQ2 to the nearby Reagan National Airport. However, Virginia's proposal could not include for the store, which was all nonstop flights to Seattle.
The reality is that only Congress can do it.
In fact, Washington Airport is one of the few in the country to meet the capacity limits imposed by the federal government under the directive. High density ruler, a law passed in 1968 to manage the congestion of five overcrowded urban airports. The rules establish how many commercial flights and other flights can be scheduled to take off and land all hours of the day.
Each of the five airports is special, but the Washington National and New York LaGuardia are in their own way. There are not many big cities in the world where you can board a jet just 15 minutes from the city center. Logan from Boston, Aeroparque to Buenos Aires perhaps, but the few other examples show how amazing they are for travelers.
On many routes, travelers are willing to pay for the privilege of this type of convenience. On the top ten routes, for example, average domestic fares at Washington National are nearly 20% higher than those at other airports in the Washington area. American Airlines has been forced to sell a set of slots at National and LaGuardia in exchange for approval from the Justice Department for its merger with US Airways. transaction reportedly reported $ 425 million. It turns out that when the government restricts competition, consumers pay.
In today's free market environment, it is tempting to argue that such intervention by the government should be removed. When the DoJ forced Americans to give up their niche markets, for example, they opened the door for newcomers and low-cost carriers, giving consumers more choice. This is surely the right direction for a capitalist society.
It was not so long ago that the government conducted such an experiment. The draft transport law AIR-21, adopted in 2000, effectively survey the capacity limits at LaGuardia. In six months, carriers had added more than 300 new flights, increasing the average number of flights flight delay from 144% to 38 minutes. Coupled with the effects of training, delays at LaGuardia accounted for a quarter of the minutes late for the country as a whole. The free market was not really free.
If takeoff and landing slots at these airports are so valuable, why then do airlines offer so many small planes? The average number of flights from National does not exceed 99, compared to 123 for domestic flights at other airports in the Washington area, where there is no flight limit. One reason is that travelers on lucrative commercial routes that favor these airports value the option of high frequency service. After all, it is difficult to market a shuttle service that departs only once a day. Business travelers pay extra to know that they could take a flight earlier or later if the plans change.
Another reason is that historic airlines protect their sinecure by "sitting" on slots, using smaller planes. The average size of aircraft operated by American and its US Airways merger partner prior to divestiture was 85 seats. New entrants who took over these assets – Southwest, JetBlue and Virgin America – increased the average number of seats per departure to 132 seats, an increase of 55%. New entrants added competition some routes and introduces the first service into others.
But the real reason National Skew Small's planes are of legislative design. The high density rule does not simply specify the number of takeoff slots, but how they can be used. At National, about 17% of the resource is dedicated to commuter operations, which can only be used by aircraft with 76 seats or less, a structure put in place to encourage more services in smaller cities and more. relatives. time, small helix meant. (Another 19% is reserved for non-commercial aviation – think of business jets). It is fundamentally a choice of social and political priorities as congestion management. In fact, flights to major cities do not clutter much more airspace than those to smaller cities.
The other reason why it will be difficult for Amazon to get new flights to Seattle is also due to a legislative artifact. When capacity checks were put in place, they included a mechanism to force long-haul traffic to what was then Dulles Airport, which had just opened, very far into the campaign. It is hard to imagine today, now, that Washington Dulles is at the center of a large, exurban agglomeration that rivals the density of many cities. At the time, however, it was feared that the airlines would not use the new airport, with its futuristic design and mobile boarding lounges instead of jet bridges. The legislation therefore limited the flights to National to 650 miles. All that was left was to go to Dulles – a hard drive from downtown DC.
Over the years, many efforts have been made to eliminate National's "perimeter rule". It was extended to 1,000 miles in the 1980s and then to 1,250 km. Starting in 1999, politicians from cities a little further, led by the late Arizona Senator, John McCain (DCA-to-Phoenix) argued delete the rule. Instead, they won a limited number of "out of scope" extension locations. These niches are the source of bi-daily flights to Seattle. But even these were only allowed with the commitment not to result in a decrease service to small communities. On the other hand, lawmakers whose small communities benefit from nonstop air service, as well as lawmakers who support United Airlines, which operates a major hub in Dulles, are pushing to prevent National's lifting of limits.
In addition, carriers that hold rights on the 32 slots beyond the perimeter can not easily change one of their slots to launch a new flight to Seattle. When the DOT granted the exemptions, each request was examined on a case-by-case basis for a given destination, sometimes even at a specific time. Airlines do not have the right to exchange one destination beyond the perimeter for another. The argument of each of them had to demonstrate that it would be advantageous for Washington and the national airspace system.
Like many regulatory structures, it is hard to imagine it being created again today. Here is such a valuable asset that it generates a 20% premium on each ticket. However, because of its historic federal heritage, the current structure is subject to a delicate compromise between many competing lawmakers, each seeking to gain support from a small constituency. Economists would not hesitate to argue that the scarce resource can be divided in the most effective way between those who are most willing to pay, unless for a strong opposing social purpose.
Does this sound like open competition for Amazon's investment?
