Predatory Pricing

Predatory Pricing
  • 6

That there are “ free markets” is an illusion and a myth perpetuated by the grandees and ideologues of capitalism. In reality, markets are not free. While innumerable instances can be cited in support of this assertion, but a real world issue that touches and impinges upon the lives of many is the issue of exorbitant rates of flight tickets from Delhi to Srinagar and perhaps even vice versa. As the peak tourist season has arrived in Kashmir, flight tickets have touched peaks between fifteen to nineteen thousand rupees for a trip! Clearly, for, say , a family of four this rate would amount to a figure of around a lakh rupees, which for the middle classes is clearly unaffordable. Exorbitant tickets would not only hamper the travel plans of natives but also negatively impinge upon tourist flows into Kashmir. The question is why is this happening? Why are airlines charging such exorbitant rates? The answer might lie in the quest for “supernormal” profits. The industry structure of airlines is in the nature of oligopoly, after the deregulation of the industry. It would appear that there is oligopolistic cartelization among the airlines which leads to predatory pricing, affecting the consumer of the services, that is, travelers, the most. Oligopolistic cartelization means that two or more airlines collude to fix and rig prices, especially when the demand is high, inverting thereby , the basic laws of economics , that of , supply, demand and price. To repeat, this not only hurts consumers’(travelers) pockets but also tourist flows to a place like Kashmir. How , the question now is, can this nagging issue and practice be remedied? The answer lies in regulation , a vigorous regulatory body and price ceilings and caps on the maximum that an airline can charge. There must also be strict penalties for cartelization and thereby predatory pricing and any airliner taking recourse to these practices and found guilty and in breach of law, must not only be penalized but also named and shamed, targeting its brand equity and reputation. Since the genie is out of the bottle in terms of privatization of the airline industry and cannot be rolled back, prudent and deft regulation becomes key and instrumental to protect the rights and interests of consumers. It is therefore high time that, in the Jammu and Kashmir circuit, this regulation see the light of the day.

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.