Friday, 9 August 2013

Is this the world's stupidest economic policy?

I read in this morning's online Sydney Morning Herald, under the headline "Cathay wants more flights Down Under", that "Cathay Pacific wants to increase services to Australia but first needs the government to lift the cap on the number of flights it can operate here. The airline has hit its limit of 70 flights a week between Australia and Hong Kong, as allowed under bilateral air rights".

There are no good reasons for this "you'll only fly if we say so" policy, and many bad ones. It's protectionist, anti-consumer, anti-competition, anti-enterprise, anti-innovation, antediluvian - have I left anything out?

It's hard to believe that this sort of thing still persists. It's 35 years now since the US deregulated commercial aviation: when Alfred Kahn, the architect of the US move, looked  back on the outcome of the deregulation, he said (and I'm quoting from his Wikipedia entry here) that "The industry in the last 30 years gave the public something it had not received before: high quality, space, and low cost. It catered to a variety of demands and abilities today so that we had an enormous spread of fares. It offered the people upgrades such as business class and frequent flyer miles".

Rather endearingly, Kahn also said (again cited in the Wikipedia piece), "I can't tell one plane from the other. To me, they're all just marginal costs with wings."

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