How deregulation has finally led to lower cost air travel in Australia.

When I was in my native Australia a couple of months back, I was pleased to discover that it is at last possible to fly around the country on Australia’s airlines for something like the at times very low cost of flying around Europe. Traditionally, domestic air tickets in Australia have been mind blowingly expensive due to truly astonishingly stupid over-regulation of the industry. (Just as an example, for several decades only two airlines were licensed to fly domestically in Australia, one state owned and one privately owned. These two airlines were required to charge identical fares, operate identical aircraft, offer an identical number of seats on each route, honour each other’s tickets, and operate to identical timetables. This meant that if one airline wanted to fly an 9am flight to Sydney, the other airline had to agree to do so before it would be permitted). Getting rid of this asonishingly stupid over-regulation has been a slow and painful 20 year experience. Thankfully, though, it is largely gone. Although there is still far too little competition, the competition is now clearly on its way.

In any event, I was explaining this to Brian Micklethwait last month over a cup of tea, and he suggested I should write it up. I started doing so for this blog, but the story was sufficiently long and esoteric that by the time I had finished I discovered that I had written 6000 words, and it was a little too long and esoteric. Therefore, I have posted it to Transport Blog, where it probably more belongs.

And if you have ever wondered how Australia got from being the richest country in the world at the beginning of the twentieth century to being substantially behind the pack (although still a rich country) in 1980, and how it has managed to catch up substantially again since then, the answer is quite a lot of this sort of regulation and protectionism, followed by a substantial (and it times quite hesitant) about turn in the early 1980s, and this story captures most of the key details.