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BOHANON & CUROTT: Let the sharing economy take flight

April 20, 2018

Economic Analysis by Cecil Bohanon & Nick CurottImagine an Uber-like app for private airplanes. Envision using your phone to book a $60 flight to Chicago on a six-passenger plane. The Aviation Empowerment Act, a bill introduced by Sen. Mike Lee, R-Utah, would clear the way for such flight-sharing operations in the United States.

Flight-sharing applications FlyteNow and AirPooler were about to bring the sharing economy to airplanes back in 2013. But the Federal Aviation Administration ruled that pilots using online flight-sharing apps would be considered “common carriers” subject to the same regulations as commercial airlines. The FAA’s decision effectively shut flight-sharing apps down. The Aviation Empowerment Act creates a new class of pilots called “personal operators” who can use flight-sharing apps without being subject to common-carrier regulations.

Sharing-economy platforms like Uber create enormous benefits for both consumers and producers. Economically, such platforms generate wealth by matching buyers and sellers that otherwise wouldn’t trade. The platform vets market participants and disseminates information to potential trading partners. In return, the platform makes a profit by charging a fee for the service. Amazon, Ebay, Airbnb and even dating sites like Match.com have revolutionized markets by making it easier to find a partner.

Platforms also benefit the economy by allowing for more efficient use of productive resources. To illustrate, consider Airbnb. Houses that otherwise lie idle benefit vacationers and generate revenue for owners. Flight sharing would likewise help put the more than 60,000 inactive airplanes in the United States to use.

Flight-sharing applications are already common in Europe and have been found to be safe and effective. The app Wingly, for example, directs passengers to licensed pilots, has a rating system so passengers can identify trustworthy pilots, and even provides passengers free flight insurance.

The Aviation Empowerment Act only goes partway toward creating an “Uber for the skies.” It only allows pilots to defray some costs of owning their plane by charging fees. It does not permit pilots to explicitly operate as for-profit enterprises. Pilots and their accountants will have fun parsing that one.

Nevertheless, the Aircraft Owners and Pilots Association estimates the annual cost of owning and operating a four-passenger airplane is $22,530. By letting pilots share these costs with passengers, more individuals will get pilot’s licenses, more aircraft will be produced, and pilots will fly more frequently. Simultaneously, thousands of Americans will benefit from inexpensive air travel.•

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Bohanon and Curott are professors of economics at Ball State University. Send comments to ibjedit@ibj.com.

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