The Case for Privatizing Airline Security

Ask libertarian conservatives what, in an ideal scenario, are the proper functions of the federal government and most everyone would at least mention national security. But after September 11, even some libertarians, like those over at the Foundation for Economic Education (FEE), are rethinking that. The Christmas Day bombing and the recent revelation that U.S. border officials knew the suspect had extremist ties now make the privatization position seem more reasonable. Here are the key excepts from the FEE article:

A private system would have important incentives enabling it to evolve better security practices. The reason for this is twofold. First is the liability exposure of airports, airlines, and insurance companies. While some measures may fail, such failure would prompt decision-makers to look for other options. Entrepreneurial activity would inevitably result in the development of better and more cost-efficient means of securing air travel.

Apparently there is a precedent for this in fire safety:

Past experience with private safety regulation through the insurance industry demonstrates its value. Poole shows how the National Board of Fire Underwriters (NBFU) established private inspection of U.S. fire departments beginning in the early nineteenth century.11 Insurance rates offered to fire departments were adjusted on the basis of compliance with the Board’s recommendations. Thus departments had ample incentive from the liability standpoint to adopt the best-known safety practices. The NBFU evolved into the Insurance Services Office (ISO), which continues to conduct detailed analyses of city fire departments to determine the practices that minimize liability. ISO develops ratings that are used by insurers to set premiums.

Beside the alleged benefits to security, there efficiencies would be realized in other areas as well:

Currently, the impact of politics is obvious in some regulations that make no sense. For example, there is a rule that forbids airlines from pushing away from gates until all passengers are seated. This rule seems laughable given that buses and trains routinely let passengers make their own decisions about taking their seats. Before the rule was adopted, Southwest Airlines (noted for its on-time performance) regularly pushed away as passengers were finding seats. They were only required to be seated before takeoff. No one was ever injured. After the new policy was imposed in 1986, at least 4.2 minutes was added to each turnaround, costing Southwest at least $150 million in 1994.

FEE is not alone in supporting this idea. Read the what the Ludwig Von Mises Institute has to say about it here. The Heritage Foundation seems open to it too. And apparently some Montana airports are seriously considering privatization. Read more here.

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