Changing Regulation by the FAA

For years, airplane passengers have been told to turn off all their electronic devices while the plane is taking off or landing, as required by the Federal Aviation Administration (FAA). However, an announcement this week by the FAA, as outlined in this WSJ article, indicates that passengers will be able to use their electronic devices at ANY altitude, as long as the cell signal is turned off. The only requirement to offer this service is passing a five-step safety process proving that electronic signals will not affect the aircraft.

Building off of what we learned in class and from the Stigler paper, this apparent reduction in legislation could actually be viewed as additional legislation, acquired and most likely designed by the airline industry itself. The article seems to confirm this, as it mentions the FAA made its decision after "embracing recent recommendations by a high-level advisory group," no doubt made up of many airline executives.

The ability to offer better service to passengers, and the "costs" of going through the safety process, will most likely allow the airlines to justify higher prices to their customers. The additional safety guidelines relating to electronic devices, including the costs of setting up effective Wi-fi in the air, will also deter new airlines from entering the industry due to the higher costs. Thus, this new regulation will allow airlines to raise their prices and deter new entrants at the same time.