Tag: competition

Girard and reunions

Thanks to my subscription to Jim O’Shaughnessy’s Infinite Loops podcast, I have been exposed to some of the philosophy of Rene Girard. A few times, he has got philosopher Johnathan Bi on the show, to talk about Girard’s philosophy.

 

Bi has also done a series of YouTube lectures on Girard’s philosophy, though I haven’t watched any of them.

In any case, Girard’s basic thesis (based on my basic understanding so far) is that we are all driven by “mimetic desire”, or a desire to mime. This means we want to do things that others want to do.

So you see an instagram post by a friend who has gone to Sri Lanka, and you want to go to Sri Lanka as well. Your cousin has invested in Crypto, so you want to invest in crypto as well. Everyone in your class wants to do investment banking, and so you want to do that as well.

(actually now that I think of it, I was first exposed to mimetic desire by a podcast episode sent by my school friend Hareesh. In a way, Bi’s appearance on Infinite Loops only enhanced my liking for this philosophy).

 

This is yet another of those theories that “once you see you cannot unsee”. You see mimetic desire everywhere. Sometimes you copy the actions of people who you want to impress (well, that’s how I discovered Heavy Metal, and that has now turned out to be my most-listened-to genre of music, because it turned out I like it so much).

The theory of the “mirror neuron” is unclear (at least I’m yet to be convinced by it), but either by gene or by meme, we are conditioned to mime. We mime people’s actions. We mime their desires. We do things because others do them.

As the more perceptive of you might know from my previous post, we had our 16th year IIMB reunion this year. Not many turned up – about 30 from my class (2006) and 45 from the class of 2005 (thanks to covid both our 15th year reunions had been postponed, so we ended up having our 16th and 17th year reunions respectively).

It was an amazing experience. I don’t know what it was, but I liked it far more than the 10th year reunion.  One major thing was the schedule – the 10th year reunion lacked a focal point on the main day (I’ve written about it) because of which we were rather scattered around campus. The 10th year reunion also had a much more formal structure, with “sessions” which meant we had less time to chat.

This time round, the Saturday schedule was very good – an interaction with the current director RTK from 10 to 11, and then NOTHING. That interaction was enough of a focal point to get us in one place, so everyone was accessible.

Then, fewer people having turned up meant we ended up having deeper conversations. We spoke about life, philosophies, kids, spouses, divorces, other people’s divorces, random gossip and all such. Absolutely no small talk, and infinitesimal work talk, and that made it more satisfying.

This morning, Bi tweeted again about Girard and mimetic desire.

One of the corollaries of Girard’s theory is that people get into conflict not when they are different but when they are similar. And mimetic desire means that people will try to become more similar to each other, and that increases conflict.

If not anywhere else, that is true in a business school, especially one where the class is rather homogeneous. Mimetic desire means everyone wants the same jobs, the same grades. And so they compete. And get into conflict.

16 years post graduation, we have drifted apart, and not in a bad way. Over this period, a lot of us have figured out what we really want to do and what we really want, and understood that what we want is very different from what others around us want. Not really being around our former peers, we have no desire to mime them any more, and that has freed us up to do what we really want to do, rather than just signalling.

And so, when we meet at a reunion like this, we are all so independent that we just never talk about work. There is no sense of competition, and we just focus on having fun with people we went to school with. The time apart has helped us get out of our desires to mime, and so when we get together, we compete less.

Maybe I should read / understand more philosophy. Or is this desire just mimetic?

 

 

Comparing Airline Pricing across countries

The WSJ reports, based on a survey, that airline prices are cheapest in India (HT: Nitin Pai). They evaluate the cost of flying in terms of cost per 100 km. The usual ridiculous comparisons that go with any such article are present in full here – they compare the per kilometer cost of flying to train and bus fares, and conclude that flying is cheapest (this reminds me of an equally ridiculous report in the Times of India which showed that the cost of India’s Mars mission was less than that of taking a bus in Mumbai).

A few thoughts on this report by the WSJ:

  • Per km is a wrong way at looking at air fares. In most markets (from my experience pricing air tickets and cargo), fares are set based on competition and to fill capacity. Notice that marginal cost of a passenger is really really low, so once a flight is in place airlines will do what they can to maximize their revenues from that.
  • Taking this forward air fares depend on the competition in a particular sector (btw, the way airlines price it, Bangalore-Barcelona is one sector, and the price of that doesn’t depend on the Bangalore-Frankfurt and Frankfurt-Barcelona prices. These are three independent markets and triangle inequality doesn’t necessarily hold. Just FYI). So going by the report, India has a lot more competition compared to other countries in most sectors.
  • Now think of other large countries (you need big area for flights to make sense) and think of their income levels compared to India. Only developed countries and other BRICS come to mind. All of them have a higher willingness to pay than India.
  • Airline prices are thus a function of simple (elastic) demand and (inelastic – flight schedules are announced by “season”) supply. So once in a season we have a lot of flights scheduled, competitive forces push prices down
  • Given that it’s demand and supply that determines airline prices and not costs, in my opinion the airline industry goes through cycles. You have lots of competing airlines. Prices are low and they lose money. In the course of time one or two go out of business or scale down, and that leads to increased prices. Airlines make money for a while, and then looking at the supernormal profits you have new entrants and so on. India right now is going through the phase where you aer getting more investors (Air Asia, Air Costa, Tata-SIA, etc.). That depresses prices. In a year or so I would think someone like SpiceJet will go out of business and that might push fares up for a while.
  • There’s also the seasonality factor – based on regular travel to Bombay over the last two years I’ve found that fares in the monsoon months are half of the fares at any other point in the year. It’s a function of demand, again (Indian seasons don’t exactly tally with international seasons according to which schedules are made, so this results in flawed matching)! Given the timing of the piece it is possible that Indian fares in the monsoon months have been sampled.

 

Market Share Of Indian Air Operators

Not so long ago, we had a CAG report that discouraged giving sixth freedom rights to Gulf-based airlines, the argument being that it was reducing the market share of Indian airline companies, and was reducing the chances of Delhi airport ever becoming a hub. In that report, the CAG had also claimed that the granting of these sixth freedom rights was hurting the financial performance of Air India.

The Ministry of Civil Aviation, via the government data portal, has put out data on the market share (in terms of number of passengers and amount of cargo) of Indian and Foreign airlines for flights to and from India. While the data strangely refuses to mention the units for some of the variables, that doesn’t prevent us from calculating the market share of Indian carriers in the passenger and freight markets. The graph below summarizes this:

airlinemarketshare

 

What is interesting is that the market share of Indian carriers in terms of both passengers and freight grew significantly between 2006 and 2011, slowing down a bit towards 2012 (wonder if Kingfisher’s demise adequately explains that). While this was the time when many of those sixth freedom rights (that the CAG was so opposed to) were granted, this was also the time period when privately owned Indian airlines started expanding globally and adding international routes.

This suggests that the reason for Air India’s losses lie less in the grant of the sixth freedom rights – which only grew the market, and more to do with the quality of service provided by the airline vis-a-vis both foreign carriers and privately owned Indian carriers.

What can also be seen from the above graph is that there is perhaps significant scope for expansion of Indian carriers when it comes to Air Cargo where their market share is minuscule compared to their passenger market share.