I flew back to DC from Indianapolis on a reputed low-cost carrier over the weekend. Though informed that it was a full flight, the seat next to me remained unoccupied and I sensed that it was going to be my lucky day. It was. Another passenger (we'll call him "Johnny Ringo") then boarded the plane and took the only other unoccupied seat a few rows ahead of me.
A few minutes later the guy seated next to Ringo got up and asked if I could let him into the seat beside me. I was initially disappointed at first because, having represented the PFF Racing Team in a half-marathon the day before, I could have used the extra leg room. But my new seatmate then explained that he moved because "[Ringo] smells like he hasn't showered in a month and I was getting sick to my stomach." To validate his theory, I then witnessed the young couple in the seats immediately ahead of Ringo leaning foward with their noses buried in their palms.
The flight attendant, having taken several complaints from the passengers and a moment to imbibe in Ringo's stench, then stopped by to explain the so-called 'company policy' to my new seatmate. "Unfortunately, we could have issued you a new ticket on a later flight, but we are unable to remove [Ringo] from the plane."
This seemed entirely backwards to me at the time. Indeed, I have checked this airline's Contract of Carriage online and it explicitly states that a customer can be removed from a flight if they are emitting an offensive odor (unless the person is disabled).
But let's assume that nobody on the plane knew this and the airline did not enforce the term of this contract, which is exactly what happened. Admittedly, there are all sorts of negative externalities being spewed about in a mass transit situation, it's just a matter of degree. In most instances, there is no Coasian solution, given the high transaction costs and strategic behavior problems that impacted customers would incur in trying to buy folks like Johnny Ringo off (in this case off of the plane). Attempts by air carriers to address these concerns (see, e.g., Southwest's policy on customers of size) are quite controversial, and as I have now seen, selectively enforced. So when presented with a similar situation, one is seemingly left with two choices - breathe through the mouth for two hours and/or defy social convention by being directly confrontational with the offending passenger. Not that it would've mattered to Johnny Ringo, who slept all of the way to Washington.