What Happens When Less Seats are Available?

I fondly remember struggling through my first economics class in 1987 or 88. At the time, economics was a pretty difficult concept for me to grasp even though my dad was an economics major in college. The subject was not in the genes. But over time, I have been able to figure out some of the basics that most Americans – and government officials – can’t seem to handle.

Two of the more simple concepts are the law of supply and the law of demand. When you artifically mess with the laws, you need to expect an artificial change that will be bad for consumers.

Today, the transportation secretary announced that after months of discussions with airlines that service the New York City area, the airlines agreed (were forced) to reduce the number of flights flying in and out of the three major airports surrounding the city.

With less seats available during the peak travel times, what do you think is going to happen to the price of an airline seat out of New York? It’s going up. Let’s see what happens in the future, will my prediction come true?

By limiting the number of airline seats available, the government – as usual – is not dealing with the problem. All they are doing is interrupting the supply and demand curves artificially.