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Airline Executives Have Problems with Arithmetic!

Summary:
It turns out that it is not just Donald Trump and economics reporters, but airline executives also have trouble with basic arithmetic. We learn this from a Washington Post piece discussing the extent to which airlines are changing their practices to allow passengers to maintain some distance on flights. The piece discusses various airlines policies and then concludes with some wisdom from the CEO of Jet Blue: “‘You’re going to definitely have to sit next to a stranger again, I’m afraid, on a plane,’ JetBlue chief executive Robin Hayes said during a Washington Post Live discussion in late May. ‘Because [of] the economics of our industry, most airlines have a break-even load factor of 75 to 80 percent, so clearly capping flights at 55 to 60 percent, which is what we’re doing right now … is

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It turns out that it is not just Donald Trump and economics reporters, but airline executives also have trouble with basic arithmetic. We learn this from a Washington Post piece discussing the extent to which airlines are changing their practices to allow passengers to maintain some distance on flights.

The piece discusses various airlines policies and then concludes with some wisdom from the CEO of Jet Blue:

“‘You’re going to definitely have to sit next to a stranger again, I’m afraid, on a plane,’ JetBlue chief executive Robin Hayes said during a Washington Post Live discussion in late May. ‘Because [of] the economics of our industry, most airlines have a break-even load factor of 75 to 80 percent, so clearly capping flights at 55 to 60 percent, which is what we’re doing right now … is not sustainable.'”

The problem with Mr. Hayes assertion, as fans of arithmetic everywhere know, is that the “break-even load factor”depends on the price passengers are willing to pay. In the event that passengers are willing to pay a premium to not get a case of coronavirus with their flight, then an airline can break even with a lower percentage of its seats filled.

It may be the case that Hayes has evidence that people will not pay more to ensure their safety, but that is the central issue here. The piece is written as though people would not pay extra money for their safety, if this is really the case, then there should have been some discussion of the evidence.

The post Airline Executives Have Problems with Arithmetic! appeared first on Center for Economic and Policy Research.

Dean Baker
I am a senior economist at the Center for Economic and Policy Research (@ceprdc). I also run the blog Beat the Press (@beat_the_press)

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