Walter Williams
http://www.jewishworldreview.com --
PONDER THIS. You're traveling to Los Angeles. You've gone through security
check. Your luggage has been X-rayed. One wonders what else, in the name of
security, is accomplished when you're asked at check-in to show a photo ID
and questions like: Did you pack your luggage? Was it in your possession at
all times? Did anybody give you anything to carry?
Airline companies always like to say, "According to federal regulations,"
we have to wear our seatbelts, obey crew instructions, and do this and do
that. But as for a photo ID, the Federal Aviation Administration's (FAA) web
site says, "The FAA does not prohibit the airline from transporting a
passenger who does not present a photo ID" So why do airlines inconvenience
passengers and ask the stupid questions? At least part of the answer lies in
economics.
Often people aren't charged the same price for what appears to be the same
good or service. There are many examples of this: seniors get discounts,
children are charged half-fare on trains, buses and airplanes, doctors often
charge poor people lower fees, and theaters charge lower prices for matinee
shows.
In grown-up economic terms, sellers practice third-degree price
discrimination -- where different people are charged different prices when
that difference cannot be explained by differences in cost. For example, the
fact that children are charged half fare for a flight from New York to Los
Angeles doesn't mean they are half as costly to transport.
Price discrimination is a marketing strategy that produces higher revenue
than simply charging everybody the same price. But to engage in price
discrimination, you must be able to separate markets. Arbitrage must be
prevented -- a fancy term for people buying low and selling higher. It would
defeat the airline's revenue goals if a child purchased a ticket at half
price and an adult used it.
Separating the adult market from the child market is easy. But other
markets are more challenging, such as the businessmen market and tourist
market. For the same trip, airlines charge tourists (spending seven days or
a weekend day) lower prices than businessmen who go and come back the same
day or the next day. The airline's marketing strategy is weakened if
businessmen use tickets priced for tourists. Demands for photo IDs help
airlines separate markets by enabling them to determine who bought what
ticket. "Security" questions about who packed your bags, whether anybody
gave you anything to carry, etc., are thrown in for laughs to make the ruse
plausible.
Don't call the Department of Justice crying about price discrimination.
Price discrimination is everywhere; we all practice it and nothing's wrong
with it.
For example, take a gorgeous young lady. Who is she more likely to get to
buy her furs and wine and dine her at costly five-star restaurants: a
handsome young guy or a fat, old, ugly cigar-smoking man? If you said fat,
old, ugly, cigar-smoking man, go to the head of the class. The lady is
practicing price discrimination -- charging fat, old ugly, cigar-smoking men
higher prices. By the way, it works the other way around, as per the
admonishment of the Latin song with the lyrics, "If you want to be happy for
the rest of your life, take an ugly woman for a wife."
As for the airlines, I'd like for them to be forthright and not use the FAA
as an excuse. Just post a sign, "We engage in price discrimination and would
like to see a photo ID to make sure you're traveling on the highest price
ticket we can sell
