Predatory Pricing

Predatory Pricing

Come winter or the hint of inclement weather when the Srinagar Jammu highway, all airlines take recourse to what is called predatory pricing. The quest is for supernormal profits at the expense of people or the miseries of people. The fundamental reason for this is privatization and deregulation. Not that either is bad intrinsically or inherently, but the process and its denouement is exploited by unscrupulous players in their quest for, to repeat, supernormal profits. In theory and in terms of market forces , especially of supply and demand and market clearing thereof, this should not have happened. The fundamental axiom of economics would apply here. The reference here is to supply and demand. Higher demand should lower prices. But, nay the inverse happens here. This accrues from cartelization and rent seeking from warped oligopolistic condition that is created by major airlines. The ultimate sufferers are the people of the region at critical and crucial times. As a result, many people cannot afford to travel by air and they are either compelled to prolong their stays or wait for the Jammu Srinagar highway to clear. The issue is more poignant for those who have health issues, and deadlines to meet. The condition and issue of predatory pricing must then be addressed the soonest. This can be done in two ways: one is to check quasi monopolistic or oligopolistic behaviors and end cartelization. The other , which falls in the domain of the immediate is to put price caps on air fares , especially under extraordinary conditions , like inclement weather. Generally speaking, privatization and deregulation is not bad. But both should be hedged and adequate safeguards developed and instituted which ultimately redound to the benefit of the consumers. If this does not happen and only firms benefit , then something is wrong perhaps not conceptually but in terms of process and procedure. The fact that airline firms choose to take recourse to predatory pricing suggests that the process of privatization is slanted and favors firms. If the intent of this was to benefit consumers( travelers in this instance), by opening up the sector and inducing competition to lower fares, this has worked only upto a point. During times of duress like climactic stability, it is the travelers who suffer. This condition needs to be addressed and changed on an exigent basis so that travelers are not left stranded when they need air travel the most.