Bad Economics Kills 68 on Flight 4184

Published January 4, 1995

On October 31, 1994, in a muddy northern Indiana soybean field, American Eagle Flight 4184 from Indianapolis to Chicago went down, killing all 68 passengers. The flight’s landing had been delayed 32 minutes, and the pilot had agreed to an additional 10-minute delay.

In the aftermath, government officials scrambled, first to pick up the pieces of a macabre mosaic of passengers, crew, and plane strewn across the field, and second to discover the cause. The National Transportation Safety Board and the Federal Aviation Administration spent countless hours pondering the plane’s black box. The plane’s pieces were put under a microscope.

Psychologists delved into the pilots’ personal histories for hints of drug use, depression or other personality flaws. Weather conditions were considered and reconsidered. Air traffic controllers were questioned. And so on and so on.

In all this, there were important questions no one asked, perhaps because they raised the question of government culpability. One important question was: Why was Flight 4184, whose scheduled duration was about 65 minutes, caught in a holding pattern that would have delayed its landing 42 minutes? After all, if the flight had been up and down with no delays that may have permitted icing or other possible crash causes, maybe the disaster would have been averted.

The stated reason for the delay is that Chicago’s O’Hare Airport had a shortage of landing slots at the time of the flight’s scheduled landing. But this raises another question, namely, why was there a shortage? To economists the answer is obvious and as old as the hills.

Shortages occur when prices are below “market-clearing” levels. Whenever this happens, things like waiting lines emerge to ration products among consumers. Lengthy pre-landing holding patterns like that of Flight 4184 are evidence that landing slots are priced too low. Such pricing is not surprising. Our nation’s public airports are socialistic enterprises run by bureaucrats. Everyone knows that bureaucrats have job tenure and salaries largely independent of merit considerations. Airport administrators are no exception. They have little incentive to tackle the hard work involved with setting market- clearing prices for landing slots. Such prices vary with the time of day, day of the week, the time of the year, and many other factors.

America’s socialized airports put Americans at risk waiting in airplanes. The reason is no different than why citizens of the former USSR shivered in line waiting for bread outside the government baker. Flight 4184 was waiting in line because there were more buyers for highly desirable late afternoon weekday landing slots than available slots, because the slots had been priced too low.

What if a private corporation had owned O’Hare Airport? We know the corporation would have had no reason to under-price landing slots at its airport. O’Hare Inc. would have had every incentive to go to the hard work of pricing slots in accordance with varying demand conditions, just as Florida hotels have high winter and low summer rates.

Passengers on Flight 4184 might have paid higher ticket prices for a pricier landing slot. But Flight 4184 would have landed 32 minutes earlier. Maybe, just maybe, Halloween would have turned out differently for 68 people.

When the Transportation Safety Board lists “cause of accident,” they should consider entering “bad economics.”

Jim McClure and T. Norman Van Cott are professors of economics at Ball State University and senior fellows of the Indiana Policy Review Foundation.