Assignment:
The effects of aviation safety regulation on the economy.
Aviation safety regulations refers to the security measures put in place to regulate, protect, control, develop and enhance space transportation. These measures and roles include:
• Regulating commercial space transportation
• Regulating air navigation facilities' geometry and flight inspection standards
• Encouraging and developing civil aeronautics, including new aviation technology
• Issuing, suspending, or revoking pilot certificates
• Regulating civil aviation to promote safety, especially through local offices
• Developing and operating a system of air traffic control and navigation for both civil and military aircraft
• Researching and developing the National Airspace System and civil aeronautics
• Developing and carrying out programs to control aircraft noise and other environmental effects of civil aviation
Air transportation plays a vital role in a country's growth process by accelerating convergence of goods and persons. The contribution of air transport far exceeds that of road transportation sevenfold.
Due to these measures that are available in this particular field, there has been a significant economic growth in a number of ways.
Some of these include but are not limited to:
• Growth in air transportation has directly maps into economic growth due to spillover effects through creation of direct and indirect jobs in the industry and other auxiliary sectors such as tourism and other service sectors
• Through a viable air transport industry could be the catalyst that can boost intra-continents business. This encourages investors to start investing in potential countries of their choice hence contributing development of the business sector.
• A country is able to transact with other foreign countries like in trade where corporations and large companies get to market their products across the boarder raising the country's GDP.Expansion in air transportation creates market opportunities for local entrepreneurs by creating regional and global economic centers.
• The tourism sector gets to grow rapidly as more and more people come in for leisure bringing in foreign exchange thus contributing to economic development in the region. This is incorporates the cultural exchange as well.
• Through a viable air transport industry people gain confidence of flying with the specific airlines to different destinations thus raising income and promoting the related industries like those that produce oil and such stuff.
• Developing the aviation industry may also represent an opportunity to mitigate chronic transport problems faced by the 16 landlocked African countries. When tourists land, they still need to use road transport to drive to their intended places and therefore infrastructures needs to be developed thus cutting down the cost that the government would have used.
• Such regulations/restrictions usually protect the regions from unlawful entrance and acts like the most common threat, terrorism. This cuts down the costs used in deploying security personnels whenever such threats occur and also increases productivity of people living in the nearby regions as they do not have to live in fear of attacks. Although terrorism remains a security concern for Australia, it is no longer the primary national security concern.
• Promoting construction of a viable air transport system leads to construction of the related industries in the nearby regions resulting to urbanization which is also a factor in economic development.
There are also some negative impacts that come along enforcing tight aviation security.
• Reinforcing some of the measures requires a lot of funding which means that all taxpayers have to dig deep from their pockets especially in developing countries. This may result to neglection other sensitive economic areas that require serious attention.
• Some technological advances made usually find employees who cannot execute the measures and policies. This means that the relevant bodies/airlines have to organize professional and vocational training programs in order to transfer knowledge and expertise that sees commercial success, competency and promotion of industry standards on a global scale. This calls for an extra coin from the taxpayer.
• Before committing billions of dollars of taxpayer money to different activities aimed at enhancing air safety and security, several of the proposals do not pass an economist's benefit-cost test hence risking the whole affair.
• There are difficult trade-offs in improving aviation safety and security. Ignoring such trade-offs can lead to undesirable policy outcomes. Each measure to improve safety and security can have an impact on the direct costs to travelers, delay, convenience, civil liberties, fatalities, and taxpayer costs. For example, using computer background checks to identify suspected terrorists could enhance security at a reasonable cost, but would also curtail individual freedoms. Requiring airlines to match each bag to a passenger on a specific flight just before that flight's departure may reduce the threat of a "drop and run" terrorist tactic, but could result in lengthy delays and inconvenience. Using high-tech machines to detect explosive devices could increase delays significantly and do little to enhance safety. Requiring child safety seats will secure infants during air travel, but it could lead to an increase in automobile travel and highway fatalities. The sad truth is that aviation fatalities cannot be eliminated unless we ban air travel, and that is simply too high a price to pay. Some level of risk must therefore be deemed acceptable, and we need to confront the question of how safe is safe enough. This requires a careful assessment of the likely benefits and costs of the proposals.
• Sound policy requires a thorough assessment of benefits and costs. A thorough assessment of the benefits and costs of regulations is critical in establishing sound public policy. Some commissions do not acknowledge that risk reduction in aviation comes at a substantial cost. One of the most disturbing aspects of the report is the lack of a serious discussion of the benefits and costs of the recommendations. Although the administrations are quick to note that the new recommendations do not impose federal budgetary costs because they are regulatory in nature, they do impose real costs on the airline industry, air travelers and taxpayers.
• Policies, at the very least, should not cause more deaths than they save.Disregard for the benefits and costs of a policy can lead to some perverse outcomes because regulations can often lead to the opposite result than the one intended. One example of this is the proposal to require child safety seats for infants on flights which is likely to increase the cost to air travelers while causing a net increase in fatalities. This policy proposal needs to be carefully considered. I estimate that increased delays likely to result from full passenger bag matching and baggage screening by explosive detection machines would not only cost billions annually in hardware and delay, but would also result in annual increased highway fatalities.
• The primary beneficiaries of a service should pay for the usage of that service they enjoy. Thus, a commission like FAA, was correct in calling for user fees to fund the air traffic control program. Likewise, air travelers should pay for the improvements in safety and security.The Commission, however, calls for federal funding for security measures, arguing that aviation security is a national security issue. A security surcharge may be the most appropriate mechanism to finance security improvements. Then, the primary beneficiaries of the antiterrorist measures, air travelers, would be asked to pay the lion's share of the cost.
Only if these antiterrorist measures are really intended for other problems that benefit consumers at large should the public be asked to foot the bill. For example, enhanced screening technologies and profiling could reduce the flow of illegal drugs and contraband. If, however, the proposed increase in regulations is really targeted at other activities, it should not be ushered in under the veil of increasing security. Instead, the regulations should be evaluated on their own merits.
Conclusion
It is desirable to move beyond the rhetoric and examine the implications of a multibillion-dollar policy before foisting it on an unknowing and emotionally vulnerable public. Risk-free air travel is not a realistic option because the cost -- banning air travel -- is simply too high.
Since we cannot prevent all accidents or terrorist threats, we must decide on the costs we are willing to bear to get small reductions in these risks. Each step to reduce aviation fatalities has costs that can be measured in terms of direct expenditures, taxpayer costs, delay, inconvenience, civil liberties, and overall fatalities. We must recognize that while some additional measures may be worthwhile, one quickly runs out of attractive options. Policies that are likely to lead to a net increase in fatalities should be avoided.
In the case of airline terrorism, a much more sophisticated approach may not be desirable given the high cost. The Israelis have the most sophisticated security system in the world. But travelers often spend three hours in the airport getting their baggage and themselves inspected. The costs of such an extensive system would be astronomical if adopted in the U.S. because of the volume of air travel.
Air safety and security concerns are likely to increase in the future. These concerns are too important to be addressed in an ad hoc manner. Economic analysis can help frame the policy discussion in addressing both of these concerns. While it cannot replace judgment, it can be a critical aid to decision makers who are interested in separating rhetoric from effective policy.