Friday, 11 May 2018

Monopolies, Oligopolies, Market, and Passenger Choice

‘Every public company seeks, at some level, to be a monopoly, an organization with enough market power to dictate pricing, profits and the future of the market. And monopoly is also a critical failure of capitalism. When monopoly occurs, when the customer no longer has a choice, prices go up, innovation goes down and mostly, consumers have no voice. A key role of government is to create an environment where monopolies don't happen-and when they do, to intervene and eliminate them. Choice is the key word in making markets work. No choice, no market’ says Seth Godin.

In the airline industry, cost of air travel goes up despite lower fares. On-time arrivals are becoming less certain and the amount of time passengers spend on the ground often exceeds travel time and incurs additional costs. In a deregulated industry regulators act as observers, the concentration of power happens through airline mergers and alliances so much so that the government seems to have lost the key role. Call it monopolies or oligopolies, the results are the same – passengers are losing their choice and voice.

If ‘choice is the key word in making markets work’, then ‘no choice, no market’.

Are there lessons to be learned?