Of Kunal Kamra, Indigo and the need for competition

Outside the Eco-Chamber

A couple of weeks ago, the stand-up comedian Kunal Kamra happened to be on the same flight as former journalist and current entertainer and propaganda master Arnab Goswami.

Kamra tried to get a comment out of Goswami on why he does what he does. Goswami ignored Kamra and continued to pretend to be busy on his laptop.

This is something that the airline did not like (or was perhaps egged on by the civil aviation minister) and banned him from flying on the airline for a period of six months. This created a furor, with several celebrities coming out in support of Kamra, who said they would boycott Indigo and fly on other airlines. In other words, they took their business elsewhere.

The common folk also came out in support of Kamra. Many of them displayed protest banners while travelling Indigo, clicked pictures and put them up on social media.

A lot has been written on whether Kamra should have been banned or not, so I will not go there. Nonetheless, there is a different point that I want to make. The entire Kamra-Indigo episode shows the importance and benefits of competition in any economy and polity.

Here’s a thought experiment. Imagine if all this had played out in the 1980s or early 1990s, when the country was largely serviced domestically by one airline, Indian Airlines (of course, there was Vayudoot for the smaller destinations, but it was government-owned as well). If Kamra had been banned from travelling Indian Airlines, how would he get from one part of the country to another during the course of one day? There was no option.

All the celebrities who have decided not to travel by Indigo wouldn’t have been able to do so (by not travelling Indian Airlines) and as a result, it wouldn’t really have been possible for them to come out in support of Kamra unless they were ready to travel by Indian Railways.

The people who have been protesting with posters inside Indigo flights would have thought twice before doing anything like that. Further, the fact that Indigo has allowed them to protest inside its aircraft is also another impact of competition. The airline knows that people have an option of travelling by other airlines.

Hence, competition is good for the overall well-being of people. This reminds me of something that I experienced many years ago. Sometime in October 1988, my mother, my younger sister and I were supposed to take an Indian Airlines flight from Ranchi to Delhi and to Srinagar thereon, to attend my uncle’s wedding. The day we were supposed to fly, Indian Airlines cancelled the Ranchi-Delhi flight. Now, the next flight was 24 hours later (remember these were the days of only one airline). The airline couldn’t guarantee us a seat on the next day’s flight because it was already full. This meant that we were supposed to come to the airport the next day and if seats were available, we would be able to take the flight, else we would have to take the train to Delhi.

Finally, we got the tickets, but those 24 hours were very stressful, with the great fear of not being able to attend my uncle’s wedding.

On last count, Ranchi had a dozen flights to Delhi every day. A clear impact of competition. Another impact of competition has been that ticket prices have fallen dramatically over the years, making flying more affordable.

As Thomas Philippon writes in The Great Reversal—How America Gave Up on Free Markets: “Air France and British Airways enjoyed a duopoly on the highly profitable London-Paris route and charged the highest fares on record at the time.” Along similar lines, Indian Airlines had a near monopoly on flights within India and ticket prices were atrociously high. Only the rich and people like my father (for whom the company paid) could afford to travel by air. This is something that has changed dramatically in the last decade and a half, due to greater competition in the airline sector.

As per the Global Competitiveness Report of the World Economic Forum, there are three broad sources of growth in a country: a) basic requirements, such as institutions and resources; b) competition; and c) innovation.

Competition keeps companies on their toes, ensuring that the consumers get a good deal on what they pay for and, at the same time, helps efficient firms drive inefficient firms out of the market.

The story of Air India (formed with the merger of erstwhile Air India, which flew internationally, and Indian Airlines) reflects this very well. As competition grew, the airline couldn’t compete, and this led to passengers moving towards newer, private airlines, which offered on-time arrival at a lower price, a clearly better proposition.

What all this tells us is that competition is good for people and it also allows them to protest and, hence, is good for democracy.

Having said that, the airline sector in India is now again in a position where some more competition will do it some good. In 2019, Indigo had 47.1% of the market share. This needs to come down.