Kudos to Transport Ministry for decision on airfares

I AM responding to the recent announcement by the Transport Minister on the measures to control airfares during festive periods. It is indeed encouraging to learn that the Minister, together with Mavcom, has seriously considered the issue of exorbitant airfares during festive periods, which has long been suffered by Malaysians on both sides of the South China Sea.

The decision to reject the imposition of a ceiling price has been well thought out. The ability of the authorities to bring on board commitments by the domestic air carriers is also applauded. After all, the market remains the best place for determining prices.

Controlling the price of airfares is ineffective, as can be seen in the United States where price regulation had hampered the country’s airline industry for decades until it was revoked in the 1970s.

It may be argued that the aviation sector has since evolved significantly with the implosion of budget carriers, yet the fact is that the airline industry remains tightly regulated and uncompetitive.

With the relatively low number of competitors (particularly in the domestic market), there is a ten- dency for oligopolistic behaviour among the market players.

This usually leads to higher prices and consumers are often deprived due to less competition. As the regulator of the sector, Mavcom’s role is pivotal in breaking up any oligopolistic behaviour and creating a freer market in the airline industry.

Indeed, the Transport Ministry’s commitment to ensuring fair and free competition in the airline industry is commendable. It is hoped that this policy would also be extended to the management of airports in this country.