Airline Seat
Economics:
A Content-Rich
Case Study and
Discussion Activity
for Microeconomics
Ron Cronovich
Carthage College
Kenosha, WI
rcronovich@
carthage.edu
Background
• Excel file: seat dimensions
• Since 1990s,
– Seat width & pitch have declined
– Filled seats % of capacity has
increased from 70% to 85%
• http://www.youtube.com/watch?v=DeWxzd0d-3c
Flights diverted when fights b/w passengers
broke out
• 8/24/2014
United Airlines flight from Newark to Denver
diverted to Chicago
• 8/27/2014
American Airlines flight from Miami to Paris diverted
to Boston
• 9/1/2014
Delta flight from NYC to W. Palm Beach diverted to
Jacksonville
Brainstorm: What economic concepts can we
use this case study to teach our students?
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externalities
property rights
cost-benefit
scarce resources
Coase
adverse selection, market for lemons
information, value of disclosure
Brainstorm: What economic concepts can we
use this case study to teach our students?
Brainstorm: Discussion questions
for property rights
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Are property rights well-defined?
How could airlines better define them?
Who has the rights over that 4”?
Do the property rights change during flight?
***Why did fight happen???
QUESTIONS FOR CLASS DISCUSSION
• What costs were incurred as a result of diverting
these flights?
• Who incurred them?
• Why do you think the airlines put the rows so close
together?
A consumer is shopping the web for a flight from
O’Hare to San Diego.
• What factors does the consumer consider when
choosing her flight?
• What information does she have about the different
options?
• How might things be different if airlines were
required to disclose “seat pitch” to consumers when
consumers are shopping for flights?
Consider these two questions:
1. How much do you think consumers would be willing
to pay for 6” greater seat pitch?
2. How much more would airlines have to charge to
make them willing to increase seat pitch by 6”
Why are these questions important?
What information would you need to answer each
question?
<Excel file with back of envelope calculations>
Currently, seat pitch is 30” or so, which experts say is very
cramped. Contrast the following scenarios:
A. When customers buy their tickets, the airlines state
that knee defenders are allowed
B. When customers buy their tickets, the airlines state
that knee defenders are NOT allowed, and that
passengers have the right to recline their seats by X”.
C. When customers buy their tickets, they do not know
whether knee defenders are allowed, or whether
passengers have the right to recline when doing so will
harm the person in the seat behind them
A Coasian solution?
• What would Ronald Coase suggest?
• What would be required for Coase’s proposal to
work?
• Does this seem realistic?
• Can you think of anything else that might work?
Any questions?
• Email me for class materials:
rcronovich@carthage.edu