Ann Crotty's Attack on Ryanair's Capitalist Operations

Business Report & Independent Online: Ryanair lays bare anarchy of individualist capitalism

The notion that Nationwide Airlines would charge a wheelchair-bound passenger for assistance in accessing the plane represents individualist capitalism taken to its brutal and logical extreme.

At this extreme, the cost of everything is deconstructed and allocated to individual consumers and you either pay or don't get access to the service or product.

I see absolutely nothing wrong with Nationwide Airlines charging what it wants to whom it wants in order for that person to use the services the airline provides. It is not brutal at all to ask a person to pay an extra fee in order to cover the likely higher costs of accommodating him or her. The passenger isn't being compelled to take that airline and can decide to frequent a different carrier if desired.

I'll give Ms. Crotty a nod of appreciation for recognizing that this is a logical extension of capitalist rhetoric.

The most famous proponent of this extremism is Michael O' Leary in his management of Ryanair, one of the most successful budget airlines in the world.

In a bid to offer the cheapest flights on any route, Ryanair has identified a cost structure in which a price is attributed to every aspect of a plane trip.

One of the airline's near-term goals is to discourage passengers from using luggage that needs to be put in the hold as Ryanair knows precisely how much this costs.

Encouragement will be done in the free market manner, which is to charge passengers for any luggage they want stored in the hold.

The traditional frills that have been done away with include free refreshments, free newspapers, allocated seats and free transport of golf bags.

This is remarkably efficient and ensures that passengers who don't play golf are not subsidising golf-playing passengers.

Again, Ryanair has every right to do this and it makes a good deal of business sense to do so. Identifying and eliminating unnecessary costs is crucial to long-term success; ditto for identifying and encouraging optional revenue streams.

This cost deconstruction does, however, have its limitations as it only includes costs identified by management.

To be absolutely pure, the airline should also be charged for the externalities it generates, such as damage to the environment. This additional cost could then be allocated to each traveler.

No, this isn't true and this highlights how Ms. Crotty misunderstands the principles behind capitalism.

Why are passengers charged to "consume" a seat on a plane? Because they want the privilege of using that airline's property for a defined period of time and they don't own the seat or the plane. Since the airline must pay for the costs it incurs for running the company, the best way to recoup those costs is through airfares its customers must pay. At the heart of this economic exchange are two things: the voluntary choices each side makes and the private property each side possesses that the other wants to have.

So what about the externality of pollution? Well, look back to the above. Who owns the "environment"? Assuming we are talking about your typical nation, we might expect to hear that "the people" own the environment. But that isn't true. In reality, the government claims and exercises actual ownership of the environment. Unfortunately, the notion of "public property" is thoroughly contradictory, as I mentioned in that post. Ownership of the environment only makes sense when individuals are the owners.

So, in that case, the damage done by the airline's operations is determined by each property owner that is physically impacted by those operations. Therefore, only the land owners who have a legitimate claim should ask for remuneration for damages. Though it is entirely possible the landowners would band together to increase their bargaining power with the airline, it is similarly possible several landowners would negotiate by themselves. Throughout this process, something crucial is achieved: the very subjective value of the cost of the damage done to the surrounding property is defined by the stakeholders of that property. Expecting a government agency or some commission to magically set a price of pollution per square foot per fifty yards of distance from the airline's path of operations may sound reasonable, but it neglects the fact that each landowner values different parts of his or her property differently. Thus, the just value of the damage is much closer to what the owner wants.

Furthermore, it isn't the traveler who creates these external costs. The airline is responsible for them, so the traveler shouldn't be forced to pay them. Of course, since the airline must earn the money to pay for any legitimate costs, the traveler will end up paying for at least part of them anyway. For a more technical analysis of externalities, see Why Externalities Are Not a Case of Market Failure (PDF).

Anyway, Ryanair believed that wheelchairs also represented a frill. Until a year ago, the airline charged passengers for wheelchairs.

And rightly so.

At the end of last year, a London court ruled that Ryanair had acted unlawfully by not providing a wheelchair free of charge after the British Disability Rights Commission brought an action on behalf of Bob Ross, who suffered from cerebral palsy and arthritis.

While travelling from Stansted airport to France in 2002, Ross was charged £18 (R205) for the use of a wheelchair to take him from the check-in desk to the plane and the same fee on his return trip.

This represented a substantial addition to Ryanair's one-way fare of £10.

You aren't entitled to other people's property unless they have violated your rights by initiating force against you or your property. Ryanair is not obligated to provide anything to Mr. Ross assuming no one in the company aggressed against him. Being handicapped doesn't grant you more rights than other people.

Ryanair said the airport's owners, British Airports Authority (BAA), should pay for wheelchairs. "We fly to 86 airports and at 80 of them wheelchairs are provided free of charge," said a Ryanair spokesperson at the time.

BAA replied that it did provide them free up to the check-in, but the cost of the airside movement had to be met by the relevant airline. It said all other carriers complied with this policy.

No, the customers are responsible to make the necessary arrangements they want for their travel. That includes paying for or contracting for disabled assistance.

Lawyers acting for Ross told the court that Ryanair had tried to categorise the use of a wheelchair as a frill. In the year to March 2002, Ryanair carried 6.6 million passengers, of whom 7,296 had requested wheelchairs. If the costs of the wheelchairs had been shared by all passengers, it would have added 2p to each fare.

In response to the ruling, Ryanair said it would charge a e0.73 (R5.80) levy on all passengers to meet the costs of providing wheelchairs at Dublin, Shannon, Stansted and Gatwick airports.

And so now everyone who flies Ryanair is explicitly stuck with the costs imposed at the demand of the government to help others. Coercion is wrong and this is coercion.

Although the principle appears to be the same, the situation at Nationwide is a little different. Passengers who need a wheelchair to access the plane have to pay R650 for each one-way flight to cover the cost of the passenger aid unit that Nationwide has to borrow from another airline.

Apparently, the other airlines do not charge for this facility as they own aid units and presumably don't charge for depreciation and replacement costs.

Sounds completely reasonable to me. If I want a beer on a flight, I should pay for it. If a seat is available that has extra leg room and I want it, I should pay for it. If I have a medical condition that requires extra monitoring from the stewardesses, I should pay for it. If the airline decides to absorb those costs as a way to please its customers, that's fine. But the airline is under no moral obligation to do so nor would I expect them to.

Ryanair's wheelchair policy and its response to the ruling have been enthusiastically endorsed by free market extremists who reckon it throws open an important issue.

"Interest groups often press for special treatment at the expense of others. People often agree to give it because they think the group is deserving and because they have not thought through how the service is to be paid for," writes one fundamentalist.

"By making the charging transparent, as Ryanair has done, people will be forced to think about whether the interest group really is deserving, and if they decide that it is, face up to supporting that view with their own money."

And we all know how nasty and scary those extremists are! Lord - they want to advocate principles and then follow through with them! Such a radical plan of action cannot be but disastrous to all mankind! But this is an op-ed, so I shouldn't be surprised Ann Crotty uses loaded language.

Searching around, it appears Geoffrey E. Wood wrote that in the abstract to his article "Who Pays for Wheelchairs?" in the June 2004 issue of Economic Affairs. I say Mr. Wood has it right. People all to blithely demand others should sacrifice for the needy without seriously considering just what is being sacrificed and who is doing the sacrificing. For example, imagine the gut-churning horror politicians would experience if everyone had to pay their taxes on election day...all at once and in full. The electorate would face the stark reality of what their government demands of them in response to their demands of government. I see nothing wrong with this. It is certainly the most open and honest way of conducting things. Hiding costs through withholdings and paycheck deductions obscures the real transactions going on.

Essentially, this view suggests we should query deserving claims and in satisfying ourselves that each claim is or isn't deserving, ignore any human sensitivities.

How completely sad is that idea? As though most of us don't enjoy a better life through an accident of birth rather than any appropriate recompense for personally honed attributes.

How about this? Other people are not your property to dispose of at your will and neither is their property. No one has the right to enslave me provided I have done nothing wrong. Demanding the airline cover these costs (and likely demanding the government force them to do so) is exactly that: slavery. It may not be as repulsive as the slavery in America during its first generations, but in principle it is no different.

Again, being crippled or ill or disabled does not entitle you to some special realm of rights that others cannot have. The concept of rights doesn't bend that way.

It is great that Ryanair's cheap flights have enabled a lot of people to travel, but by encouraging consumers to take an individualised view of life, the airline has highlighted the destructive anarchy of individualist capitalism.

©2004 Business Report & Independent Online (Pty) Ltd. All rights reserved.

Consider the converse. Taking a collectivized view of life means the society or group or class is more important than the individual. The needs and desires of five people rest on a higher moral plain than the needs and desires of one person. If the residents within a city consume more electricity than is being generated, the city should be able to simply take the land and resources of some inhabitants and convert them into electrical generating capacity. If, by popular vote, the majority of a nation picks a politician who says invading and subjugating neighboring peoples is the only way to restore economic health to the nation, then there are no moral objections to the tanks rolling in. If a gang wants to improve its standing among other gangs, it is fine for it to aggress against strangers walking through the gang's "territory."

This is the elevation of the collective over the individual and that desire is responsible for more death, destruction, chaos, and theft on this planet than anything else.

Ann Crotty was unable to show how the policies of these airlines are destructive. What I suppose she wants (the state managing how much the airlines should pay for the disabled) is. She wants an arbitrary amount of resources forced into the service of a customer need that will not remain static and predictable. Those resources will then be wasted as will the manpower to implement and manage them.

Finally, she obviously has a disdain for systems without formalized and enforced rules, otherwise popularly known as the turbulent demon Anarchy. But she refutes herself earlier up in the article:

At this extreme, the cost of everything is deconstructed and allocated to individual consumers and you either pay or don't get access to the service or product.

[...]

In a bid to offer the cheapest flights on any route, Ryanair has identified a cost structure in which a price is attributed to every aspect of a plane trip.

One of the airline's near-term goals is to discourage passengers from using luggage that needs to be put in the hold as Ryanair knows precisely how much this costs.

Encouragement will be done in the free market manner, which is to charge passengers for any luggage they want stored in the hold.

[...]

This is remarkably efficient...

This is quite explicitly a system of control and order. The actors within the system know before finalizing their transactions the pros and cons of doing business. They have the ability to decide whether to engage in exchange or not. It is a system of control and order, but it is also a voluntary system. The values we hold and their hierarchy in our minds provides an efficient and effective system of control and order internally and externally. Our values provide order to our thoughts and respecting the rights of others provide order to our behavior. The consequences of nonpayment or aggression should be obvious and they provide the enforcement and order she apparently desires.

Posted by Drizzten at November 04, 2004 12:01 PM