The Wonders of the Free Market and the Operation of Competition
Fly US Airways in and out of Philadelphia from Pittsburgh on Jan. 4, and the nonrefundable round-trip fare would be $118, before taxes. Take those same nonstop flights a week later, and the US Airways fare jumps to $698.
Why the reason for the change? [sic]
Southwest Airlines, the only major competitor to US Airways on that route, will end its nonstop service between the two cities on Jan. 8.
Is it not amazing what free competition can do? The presence of a single competitor can bring the price of a flight down by almost 85%! While this is remarkable, the commentary from some regular passengers is not:
The loss of competition and jump in prices, however, didn’t sit well with Witold Walczak, who found out last week that the cost for his once- or twice-a-month flights across the state would increase more than five-fold in January.
“Unless you are or work for the one percent, these prices are prohibitive,” he said. “This is price gouging of the worst sort … the free market is really sticking it to the little guy.
The “one percent” comment gives him away immediately as an economic airhead. Regardless, it is important to note that it was not only the free market that allowed for the raised price, but it was the free market that allowed prices to be so low to begin with. This is not price gouging, this is price normalizing.
Read further into the article, and you’ll find out that “Southwest planes were barely half-filled. ‘Southwest was dying on that route,'” according to an industry analyst.
So the free market allowed for airlines to operate at a loss for quite a while, ultimately subsidizing people like Walczak to the tune of thousands of dollars, but once circumstances change slightly, the free market is “sticking it” to the little guy?
I suppose Walczak will be giving his subsidy back then, since he was clearly “sticking it” to the airline for so long?
Worst of all, Walczak is the legal director for the ACLU of Pennsylvania. If this is the type of person we have out there protecting our liberties, we are screwed. Walczak needs to stick to free speech. His economic illiteracy makes him unqualified for anything else.