Posted August 23, 2014 7:00 PM by

Airshare program hits Uber snag —Feds say no to innovation…

 

(CUSA) – Unionized transportation companies are not happy. Private pilots are licensed but cannot take paying passengers because the FAA says no.

 

Nanny state or safety concerns? Dennis Lohouse has the story. —Ed.

 

DENNIS E. LOHOUSE, CFA

 

The Federal Aviation Administration has decided that airplane owners cannot rideshare and share costs. In a ruling against AirPooler, the FAA has determined that sharing an unused seat in a private place, for the promise of expense sharing, is tantamount to selling tickets and therefore runs a foul of the Federal common carrier regulations.

 

AirPooler is a start up company that is promoting a software app that connects private pilots in small planes with potential passengers. It has long been the practice of those who fly their own planes to defray the costs of fuel and airport fees by finding passengers who are going the same way.

 

It is like carpooling and the UBER car service combined. Uber is also a ride sharing service connecting private car owners with people desiring rides who may not want to use public transportation or highly price regulated taxi/livery services.

 

Each of these services evolved out of excess capacity being used to provide low cost transportation alternatives. The only thing that has been missing is the intermediary. In comes Uber or Lyft offering ground transportation and Airpooler and others like Flytenow offering air sharing arrangements.

 

The powers of vested interest have risen up against these upstarts as highly regulated and unionized transportation companies see a real threat to government set prices and impenetrable barriers to entry.

 

There are two sides to every story. One can imagine the angst of a taxi driver who paid a six figure sum for a municipal livery license (NYC medallion cost $965,000 in the latest auction), facing competition from drivers who pay nothing, and have no regulation.

 

In a real sense this is battle over free markets versus government “managed” markets. Government steps in and regulates many businesses for one public good or another. The price of taxi fare to and from major airports gets fixed at a flat rate because newcomers or visitors may get defrauded by overcharging or traveling circuitous routes.

 

The FAA’s concern over passenger safety is well taken given the lack of reporting required of private pilots. However, it must be said that ultimately the buyer must beware in any transaction with an unknown entity – whether it be a pilot, a driver or even a major airline. We rely on well known brands or trusted companies because we have expectations borne out of common experience.

 

The real question is how much control should the various layers of government have over commerce, based on their assessment of our well being? Surely some set of safety standards could be imposed on private pilots who decide to take hitchhikers along? Or is this just another example of the nanny state closing off innovation in favor of entrenched and influential stakeholders?

 

In an era when waste elimination and conservation are real issues, why not let the markets allocate resources to businesses with excess capacity? Perhaps the airlines will figure out how to lower fares or add flexibility to their schedules. And, perhaps taxi fares will decline in areas that embrace Uber.

 

Isn’t this what innovation and market forces are supposed to do? I suppose the buggy whip manufacturers would still be in business if they had been able to get the Government to regulate Henry Ford out of the auto business!

 

 

 

Print Friendly
Two ways to know God: Opinion or faith —you are free to choose…
Hollywood’s dirty money —Eric Holder investigating?…