Tuesday, August 15, 2006

New terror regulations may sink budget airlines

The newest panic about terrorism may sink some airlines especially low cost airlines. One way low cost airlines reduce cost is have more and more luggage carried by the passengers instead of being put through baggage control. The newest panic regulations pushed by Blair and picked up, to some degree, elsewhere makes this difficult.

John Mattimore, an analyst with Merrion Stockbrokers says this undermines the low cost airlines competitive edge. He says that the new regulations “will take away the advantage the low-cost airlines are trying to seek.” He notes that such airlines “have been very active in recent months in encouraging passengers to check in less luggage and carry more luggage onboard.” He also warns there are efforts to permanent reduce carry on luggage to half the size currently allowed.

Apparently that hundreds of millions of carry on bags were purchased to comply with the old regulations is of no interest to the bureaucrats. It costs them nothing to impose hundreds of millions in costs to everyone else. All regulations currently proposed hurt the small airlines the most. But, duh, that is the nature of regulations. They always hurt the small competitor and work to the advantage of the big guys --- something opponents of “big business” haven’t figure out with their constant campaign for new regulations.