Friday, April 09, 2010

Simple Economics

In the March 2010 issue of Internal Auditing magazine, there’s an article about South Africa’s competition watchdog investigating domestic airline operators for alleged price fixing to exploit travellers during the football World Cup.


I couldn’t help the involuntary snort. Here in the UK, it is generally accepted that airlines, trains and tour companies push prices up to EXPLOIT travellers during peak periods.

It’s simple economics. If demand is high and resources limited– prices will go up!

In early February when booking a trip to visit my sister in Scotland for the Easter weekend, I found that all the train fares were astronomical!! This was a whole TWO MONTHS before I was due to travel. And all the train companies were charging the same exorbitant prices –price fixing?

Why shouldn’t domestic airlines in South Africa make a buck out of a situation that is to their advantage? It is what we expect. Which is why as soon as England qualified to play in the World Cup there was a stampede by fans to buy tickets before the fares went up.

But just because something is generally accepted, it doesn’t mean that it is a good thing. I am all for Fair trade and protecting consumers. If a company can convince me that the prices that they set are fair, then I have no problem paying for them. After all it’s a business and they need to survive. I do respect businesses that see opportunities and make the most of them, but cannot reconcile this with deliberate exploitation just for greed.
Perhaps our UK Competition Commission should take a leaf out of South Africa’s book and start looking into the train companies