Ash & Cash

Watching the coverage of the chaos, caused by the Icelandic volcano, over the last few days, has caused me to consider a number of things. Firstly, what does this tell us about our reliance on air travel - a question environmentalists may have something to think about. Secondly, it made me see, yet again, the ability of the media to shape public discussion. All discussion has been around whether the State, has done a good or bad job, in dealing with getting people back home. There has been no discussion of whether, in fact, the State had that responsibility in the first place. Thirdly, and intimately related to the first two, is that it has demonstrated that air travel is way too cheap, and is so because the full costs of flying are not reflected in the price.

The first question is, of course, a huge area for discussion, and not one I could adequately deal with here. But, I want to deal with the other two together. If I get in my car, to drive somewhere, there are various costs that I have to bear. In actual fact, most transport economists have known for decades that, even here, the full costs are not borne by the motorist. The costs of environemntal pollution, the costs of policing the roads, the costs of healthcare for accidents etc. are not at all covered by the private motorist in the tax they pay etc. But, the motorist does cover some of that cost, as well as the other direct costs of motoring. The private motorist also has to take out Insurance to cover other unforeseen costs. Although, they do not have to take out breaakdown cover, many do, and, if they don't, and their car breaks down, they do not expect the state or someone else, to cover the cost of them getting to their destination.

If I book a train journey, then I expect the train company to get me to my destination, and if there are leaves on the line, I expect them to lay on buses instead, and so on. According to EU rules, airline companies have some similar obligations. If passengers are left stranded, the company should provide them with food and accommodation. It is clear that some companies, due to the length of time that passengers have needed to be accommodated, have not been fulfilling this requirement. All of them have complained that the cost of doing so is threatening them financially, and are demanding, that the rules be revised, to deal with such situations. None of them have had a legal requirement to ensure that passengers could be returned home by alternative arrangements, and none of them appear to have made any attempt to do so. Instead, that responsibility has been passed from the Profit & Loss of the companies - and thereby its shareholders, on to the backs of the State, and thereby to you and me the taxpayer.

But, as a socialist, there seems something very unfair, about the idea that some low paid worker, who cannot afford any foreign holiday, but who pays tax, whether Income Tax, N.I. or VAT, should, thereby, cover the costs incurred by people who have been able to afford a holiday on the other side of thee world! Still less to cover the costs of business travellers, whose air fares are often as much as a low paid worker earns in six months. Why should the state be responsible for picking up the bill that should rightfully fall upon the airline companies to esnure that they get their passengers to their destination? After all, the airline companies know who all those passengers are, they should have some idea where they are and where they are going. Logistically, it makes far more sense for them to deal with getting them home, than for the State, which cannot possibly know the who, where, and when of such a logistical nightmare, even with all of the growth of the Big Brother state. Why should it be respoonsible for doing that when it is not so responsible for any other form of transport?

Of course, if the airline companies did have to meet that reponsibility, the cost of air travel would rise substantially. Either, the companies would have to build up their own reserves, to cover such costs, as and when they occurred, or, more rationally, they would need to take out insurance to cover such an eventuality, and, given the massive, and almost open ended, degree of exposure that insurance companies ould be subject to, in the event of an event like the current one or worse, the insurance premiums would be significant. The result would have to be that the cost of air travel rose substantially. But, would that be a bas thing. Should we not actually have to judge the cost of air travel, against other alternatives, on a rational basis of the real costs? What, in fact, we have had is competition between airlines that has driven costs down by cutting corners. That is the real basis of the BA dispute. And, for passengers, not only does it open up the problems we see now, but it has serious implications for passenger safety.

Of course, the reality is that, given where we are, there is no alternative but for the State to have to try to get people back home, just as in the case of houses built in a flood plain getting flooded, no socialist would simply say "Its your fault for buying a house there", or "its the responsibility of the insurance company". The point is, we should try to not be in the kind of situation we are in. The cost advantages of flying, by not including all the costs, have to be addressed, just as the cost advantages for builders of building on flood plains have to be addressed - for example by demanding from them a bond to cover the cost of future flood damage, and so on.

If the capitalist State has a role to play it is in ensuring that private Capital has to properly reflect these costs in prices, it is not to simply bail out the private Capitalists when such costs manifest themselves, and we should not let the Capitalist Media shape the debate to suggest that it is.