Who really owns the skies? A thought on mutual funds and airline competition

© Khunaspix Dreamstime.

Ever so slightly off the freight topic, but this is a fascinating short piece in The Economist on airline competition. It notes that rival airlines with shareholders in common, for example a mutual fund, might be discouraged from normal market measures like a price war to lure customers from one airline to another. The shared ownership is, in essence, anti-competitive. And the study that highlighted this issue, discovered that routes run by airlines with shared ownership had higher prices – 3-5% higher, in fact. As the article rightly points out, this creates something of a headache for the authorities. Should you restrict share ownership? Or ensure a competitive market for consumers?