Tuesday, 17 June 2014

The benefits of competition, from a guy who's been there (and everywhere else)

The veteran travel writer Jim Eagles has a piece in today's 'Travel' supplement to the Herald (I've searched the Herald's site, and elsewhere, but it doesn't seem to be online*). It's called 'Living in the golden age of flight': those of us with our knees squashed up under our chins in cattle class might jib a little at the 'golden age' description, but Jim's bang on with the gist of his piece.

After recounting consistently bad experiences with the high fares and bad service on monopoly airline routes, and the much lower prices and better service from low cost airlines in more competitive markets - "Even Ryanair, which has a rather mixed reputation, provided a vastly better experience than the last time I made the mistake of choosing BA for European flights" - he gets to his punchlines.

"It all goes to confirm for me, what a wonderful thing competition is...Now every carrier knows that if it doesn't perform the customers can and will go elsewhere. When Air New Zealand (and its parent NAC) had a monopoly on domestic routes the service was shoddy and expensive. Now, thanks to the arrival of competition, it is a superb airline...It's a miracle".

Ten competition economists or a hundred competition lawyers* couldn't have put it better.

* Update June 19 - it's now available here
** A non-random ratio

3 comments:

  1. So competition improves service. Who would have guessed!?

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  2. Thanks for the comment. You might well feel (as I do) that the connection should be obvious, but you'd be surprised how many people don't see it that way. Quite a few people across various professions, for example, feel that competition is incompatible with high standards of professional care, and some people see competition as a 'race to the bottom' or as a waste of resources as a result of 'duplication'. I generally feel it's worth giving an airing to people who show the benefits of competition, as it seems to be a war that isn't won yet

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  3. Yes I agree with your point. It intrigues me that many people can see that competition in product markets is a good thing but can't quite make the transition to accepting that it is not as good as a government monopoly in (for example) education. I also accept that many people can only see the imperfections of the 'market' and hence believe that government intervention is always needed and thus always must result in improvements.

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