Stardate 20020126.1754

(On Screen): Quentin writes to point out a report that it's been discovered that a group in Italy has been taking parts out of scrapped Airbus A-300's, cleaning them, repackaging them, and selling them as if they were new. Customers include all the Italian airlines, other European airlines, and airlines in the US including American. There may have been some of these parts in the A-300 which crashed in NYC last November.

It's hard to express sufficient contempt for anyone who would do such a thing.

If it can be shown that such parts contributed to the November crash, the State of New York is definitely going to want to extradite the lot of them. I do not have access to the New York legal code, but the California legal code is online and I just did some reading. At least within California law, they could be charged with capital murder (but IANAL). The relevant section is here.

First, it appears that it would be murder. Section 187 says that murder is killing with malice aforethought. Section 188 says that malice is implied "when the circumstances attending the killing show an abandoned and malignant heart" and that's an understatement in this case. As far as I can tell, the mere fact that they had to know that the parts could conceivably cause catastrophic failure of airliners would be sufficient.

According to section 190.2(3), murder can be punished in California by execution if the defendant has been convicted of two or more deaths in that particular proceedings. There were 265 deaths in that crash.

I assume that the New York law is similar. But it would have to be proved by the NTSB that the crash was caused by failure of one of the parts they sold. There will be records, and if it turns out that the bolts holding the tail on came from them, their ass is grass. (And it may well be true: it was reported that the tail bolts on that particular air frame had been replaced once.)

If so, there will be no mercy for these bastards. But the air lines themselves have to bear at least moral responsibility it's clear that they were buying from these guys, and asking no questions, because the price was lower.

But on a more global level, I think I can now categorically state that airline deregulation has been an abject failure. I think that the industry should be reregulated.

The most important aspect of regulation was fare control. All airlines charged the same rate for the same trip because they were told what they were permitted to charge. As a result, the airlines competed on the basis of service and comfort, and travel by air was quite comfortable.

But free competition is based on assumptions, and one of them doesn't apply: supply and demand. If you have five manufacturers of widgets competing in a market, with no single one dominating, then if their products are all interchangeable they will compete on the basis of price. Customers will search for the lowest price widgets, and the one who charges the best price will do the most volume. But if the price goes too low, to the point where the manufacturers are losing money on each unit they sell, then they will have an incentive to reduce production to save money. This will reduce the supply of widgets, which will cause a shortage and which will drive the price back up. As a result, the price will hit a sweet spot. But that assumes that the primary expense is per-unit. More production costs more and makes more, less production costs less and makes less. The manufacturer can adjust expenses to market conditions.

That doesn't work for the airlines. By the nature of their business, their expenses are fixed. It costs them close to a constant amount of money for every jet-hour they fly. They have to pay pilots and crew, buy fuel for the jet, amortize the purchase cost of the equipment, and do the same amount of maintenance and repair on the airframe whether it flies full or empty. The only expense which is variable is food, and that's small.

And to be viable, they have to fly jets on a fixed and reasonably saturated schedule whether there is demand or not. Therefore they have a large unchanging expense base unrelated to the number of tickets they sell. That puts them in the situation where they have no conceptual floor on the amount they're willing to charge for tickets. If it costs them $100 in expenses to fly a given seat from LA to NYC, then they'd love to sell a ticket for that seat for more than $100. But even if they can't, they'd rather sell that ticket for $50 than to not sell it at all and fly with the seat empty. Losing $50 is better than losing $100.

In the widget business, the principle of supply and demand assumes a saddle point will appear based on the fact that below a certain price the widget manufacturers will decide it isn't worth it to produce them anymore. But the airline business is trapped and would rather sell at a loss than not sell at all.

There has therefore been cut-throat competition which is not cushioned by any economic reality of how much the commodity actually costs, and all the airlines are losing money bigtime. Naturally, they've been cutting as many corners as they can on expenses. An airline was ordered out of business last year here in the US when it had been shown that it was not actually doing all the scheduled maintenance on its jets that was required, which saved them money but al