10 Ways Government Stifles Competition
In a November, 2014 article, The Kyiv Post in Ukraine reported on new aviation rules that harm competition and incidentally damage the government’s international reputation. Budget airline Wizzair had announced it was considering pulling out of the Ukraine market over these new rules, which primarily concern criteria to be met by the airlines that work in Ukraine. For example, one crucial point states that regular international flights can be operated only by airlines mostly owned or controlled by the state of Ukraine or Ukrainian citizens. The protectionist new rules stifle competition in several ways: They create unwarranted obstacles to market entry, and to expansion on that market for existing operators. They deform the internal aviation market by introducing changes that make additional profit unlikely. Perhaps worst of all, they remove stimuli for Ukrainian airlines to improve, and erode their competitiveness over the long term in international markets. In closing, the Author noted that the government has more important tasks, including provision of security guarantees.
