April 8, 2020 1:24PM

The Risk of Too Much Air Safety Regulation—Further Thoughts

By Peter Van Doren and Dennis L. Weisman

Introduction

In a recent article (“The Risk of Too Much Air Safety Regulation,” Regulation, Spring 2020), we argued that reflexive overregulation of air safety following the two tragic crashes of Boeing’s 737 Max aircraft could easily cost many more lives that it saves. This observation follows from the fact that increased air safety regulation would force Boeing to reflect these higher regulatory compliance costs in price increases for new aircraft. This price‐​cost dynamic would drive up airfares and thereby divert some proportion of travelers from the low‐​risk skies to the high‐​risk highways. Because it is over 100 times more hazardous to drive than to fly on a per‐​mile basis, the lives saved in the air would be swamped by the far greater number of lives lost on the roadways. This analysis was the basis for our public policy counsel that investment in air‐​safety regulation is properly focused on minimizing the net number of lives lost across all viable modes of travel rather than air travel alone.

The purpose of this commentary is to extend our previous analysis to include the increased number of serious injuries that are likely to result from an increase in air‐​safety regulation in the aftermath of the two crashes of the Boeing 737 Max airliners. From a public policy perspective, the results of this supplemental analysis are no less concerning than the original analysis given the dramatic increase in the net number of injuries induced by an increase in air safety regulation. The risk of injury in driving is almost 24,000 times greater than that of flying on a per‐​mile basis. The roads are dangerous and deadly—the skies are markedly less so.

The Grim Statistics

According to the National Transport Statistics, in 2017 there were 0.233 injuries reported per 100 million aircraft miles compared with an alarming 85 injuries reported per 100 million motor vehicle miles (Tables 2–9 and 2–17). This represents a 365‐​fold difference (85 ÷ 0.233) in injuries across the two modes of travel.

Airplanes, of course, carry many more passengers per mile of travel than motor vehicles. In 2017 airplanes traveled 6,338 million miles (Table 1–35) resulting in 693,818 million passenger miles (Table 1–40) for an average occupancy of 109.47 (693,818 ÷ 6,338) while motor vehicles traveled 3,212,347 million miles (Table 1–35) resulting in 5,502,417 million passenger miles (Table 1–40) for an average occupancy of 1.71 (5,502,417 ÷ 3,212,347).

If one uses these data to convert the injury rates from a vehicle‐​mile to passenger‐​mile basis, the result is 0.0021 injuries reported per one‐​hundred million aircraft passenger‐​miles (.233 ÷ 109.47) compared to 49.7 injuries reported per one‐​hundred million motor vehicle passenger‐​miles (85 ÷ 1.71). This implies that, on average, the risk of injury is approximately 23,667 (49.7 ÷ 0.0021) times greater when traveling by motor vehicle than traveling by airplane on a per passenger‐​mile basis.

Estimating the Injuries From New Air‐​Safety Regulation

Because Boeing was recertifying an existing aircraft (the 737 was initially certified in 1967) as opposed to certifying a new aircraft, it received a FAA (Federal Aviation Administration) waiver for a pilot‐​alert system on the 737 Max that is required of new aircraft and that would have cost $10 billion to implement. The pilot‐​warning system is a central focus of the FAA’s accident investigation into the 737 Max crashes.

We estimated in our previous article that the $10 billion expenditure on the pilot‐​alert system would have raised airfares by approximately 10.52% and resulted in a 0.63% increase in highway passenger‐​miles. This equates to an additional 347 hundred‐​million passenger‐​miles driven. (This is based on a cross‐​price elasticity between air and automobile travel of 0.06 and a base of 55,024.2 one‐​hundred million passenger‐​miles.) The product of 347 and 49.7 (injuries per one‐​hundred million motor vehicle passenger miles) implies that an estimated additional 17,246 injuries on the roadways would occur because of the regulation‐​induced increase in airfares. Assuming a one‐​to‐​one correspondence between the increase in miles driven and the decrease in miles flown, an estimated 0.7287 (347 × .0021) injuries would have been avoided in the air as a result of this increase in airfares. Hence, the net number of injuries induced by the increase in air safety regulation is approximately 17,245 (17,246 – 0.7287).

Investigation into the Boeing 737 Max crashes revealed that the actual task of air‐​worthiness certification was not carried out by government inspectors but (incredibly) by Boeing employees. If those certification functions currently conducted by Boeing were taken over by the FAA, the estimated cost is $1.8 billion and 10,000 employees. If this additional cost were paid by those who fly (and conservatively assuming there is no demand response in terms of reduced passenger air miles), this would result in an increase in airfares of approximately 1.9% resulting in an additional 62.7 one‐​hundred million motor vehicle passenger‐​miles driven (0.019 × 0.06 × 55024.2). The increase in the number of highway injuries induced by this change in regulation is approximately 3,116 (62.7 × 49.7). Because significantly less than one injury is avoided in the air because of the decreased air travel as a result of this increase in airfares and the very low injury rate in air travel, the net number of injuries induced by this change in regulation is essentially simply the increase in highway injuries.

Conclusion

The FAA’s investigation into the 737 Max crashes is ongoing and some troubling facts have already surfaced; more are certain to follow. These observations notwithstanding, the fact that the technology exists that could have saved lives and avoided injuries in the air does not imply that it would have been prudent to implement those safety measures. Policymakers must not be myopic in their zeal “to do something.” They must, of necessity, exercise due diligence so as not to implement costly air safety measures that drive up airfares and cause consumers to substitute high‐​risk highway travel for low‐​risk air travel. As we stated in our original article and reiterate here, from a public policy perspective the greatest risk confronting the traveling public is not airplanes falling out of the sky, but rather reflexive over‐​regulation of air safety that on balance costs far more lives than it saves and causes far more injuries than it avoids.