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low cost carriers

Oct 5, 2017

Does society unwittingly subsidise the likes of Uber or Jetstar?

Please consider this Guardian analysis on the true cost of low fare transport, but keep in mind it might be flawed

 

Uncomfortable, for sure. But low cost travel also empowers more wealth and choice

The Guardian is running a well argued and provocative story on how low cost low labor conditions businesses like Uber or Ryanair dump serious cost burdens on society in general, but is the argument it advances totally correct?

The story, on its UK website, relates directly to the well publicised screw ups by the biggest regional UK and EU airline Ryanair that saw massive flight cancellations because, to cut to the chase, it is such a poor employer that it can’t keep enough pilots engaged to fly jets offering an immensely successful and attractive service to consumers.

(And a few other problems as well, all being addressed it seems somewhat late into the day by its management.)

But it’s a story decidedly relevant to Australia, and the US, in particular, and the principles the Guardian report looks at are highly applicable to other ‘disruptive’ or innovative enterprises such as Amazon, or ride sharing companies like Uber.

Saving $$$, and time, through the convenience of on line apps and data driven business models has made changes in retailing, banking, and mobility by almost any mode highly attractive to consumers.

The report says, As consumers, we have been hooked by bargains that come at a cost. Sometimes that cost is directly visible to the passenger: toddlers dragging suitcases through security to save a few quid, increasing the general stress level. Other individual desires – stoked by cheap offers and unrealistic prices of an online flight deal or an Uber – have major impacts on social and physical networks beyond our screens.

It goes on at length. It points us toward an outcome where the actual consumer experience is degraded by discomfort or unintended consequences that drag down the amenity of a society where ‘service’ was measured by something other than cheapest headline price.

But could it be that the arguments it advances lack an important additional consideration. For all of the dislike this writer has for crap service and tiny seats and assorted rip offs, (all shared by thousands of Plane Talking readers) the rise and rise of low cost carriers like Ryanair and Jetstar may have stimulated an invaluable net benefit for society.

This could be argued to have resulted from additional economic activity arising from more affordable mobility that truly increases the wealth and overall amenity of the community. Jetstar is a pain in the shoulders, the hip bones, the kneecaps, and so forth (something even becoming more apparent at times in ‘full service’ options), but it is also a facilitator for independent small or sole business entrepreneurs and those with leisure time to do trips that were previously rare or unaffordable.

The answer to the issues identified by the Guardian writer might not be in rolling back or banning the likes of Uber, or trying the impossible, like attempting to put Ryanair back in its box, but in redefining and driving compliance with commonsense standards for consumer protection, and the capture of appropriate levels of taxation.

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5 comments

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5 thoughts on “Does society unwittingly subsidise the likes of Uber or Jetstar?

  1. ggm

    Yes. the argument it proposes is generally, if not always correct. Public utility outcome demands regulation and enforcement of standards. These LCCs and equivalent Low Cost providers basically rip out the bits of the universal service obligation and standards they don’t like. So in Ubers case, there is no public liability insurance test, there is no cracked windscreen test, there is no blue card driver search test.. in the LCC, there is no obligation beyond Warsaw. its retreated to the bare minima. And we have some evidence that Flight rules are being treated as cost, more than benefit

    1. Dan Dair

      Ggm,
      I agree with your points,
      but I would also add that many businesses in nations which have some kind of low-waged state-welfare support or income-tax breaks/credits, purposefully offer wages low-enough to allow their employees to work to the maximum allowed, which will still allow them to retain their ‘state-benefits’ whatever they happen to be.

      Effectively, the business is underpaying their employees for their own & their shareholders benefit, whilst ensuring that the state will pick-up the costs of the additional financial burden of a living wage for those employees.
      Every employer which does this is effectively having their wage-bill subsidised by the rest of the nations tax-payers.?

  2. Jacob HSR

    Hidden city pricing should be illegal. ie, flying from MEL to DOH should cost no more than flying from MEL to LHR via DOH. Next week, one way tickets are $770 and $1282.

    That is, $770 to get to London and $1282 to get to Doha!

    Absolutely disgusting.

    The EU should ban this practice.

    1. Dan Dair

      Jacob HSR,
      I agree with you that pricing should be much more ‘open’ & clear,
      but that said,
      travel-agents know this kind of stuff.
      That was part of what you were paying for back in the ‘good old days’ before the internet.
      They would buy you the London trip, organise your tickets
      & then tell you to get off in Doha.!

      Meanwhile, they’d be busy trying to sell the empty seats between Doha & LHR for themselves.????

      Since you know this stuff too, you can also buy the LHR ticket & get off at Doha.!

      1. Jacob HSR

        Dan, even if I end my journey in Doha, my luggage will still be sent to London.

        I think in 1995, SQ gave us the option to grab our luggage in Singapore even though we were going to Asia via Singapore! Not sure what SQ would have done if I had a Singapore work visa instead of a transit visa!