State monopolies are kept alive by power of unions to control policy

YESTERDAY’S announcement by the Government of its rejection of the Ryanair offer to buy and take control of Aer Lingus has been based largely on the belief that the creation of a monopoly would be anti- competitive and bad for consumers.

Few would disagree. It seems pretty obvious, doesn’t it, that fares at both airlines would rise if both were owned and managed by the ruthless profit-oriented Ryanair, under the management of Michael O’Leary? Surely all that keeps most prices down at reasonable levels at both airlines at present is the competition between the two parties? In addition, as an island nation it would be seemingly crazy to let one airline have almost total control over what routes are served, with just a few of the best routes served by other airlines.

However, in another transport sector, Dublin Bus isn’t allowed to face competition on existing routes because apparently it would result in reduced services and higher prices to customers. Last year, passenger numbers at the company fell and, despite hefty government subsidies, losses are being incurred. The response has been to increase prices, bucking the trend of the private economy. The idea is that this will help cover rising costs and otherwise falling revenues. Costs are to be cut too, with 120 buses withdrawn and about 250 redundancies sought. The company says routes will not be lost, but will be provided with different services. Presumably this means that Dublin Bus will stay on some of the new routes created by private competitors — which was all they were given licences for — and which Dublin Bus then flooded with buses to knock out the competition.