Service non compris

The more that you travel, the more you recognise how monopolies aren’t in the interest of customers.  Anyone who flies between the UK, Germany, Scandinavia and France can probably tell you endless stories of delays, cancellations and poor customer service by the relevant national airlines, which have little or no competition and amazingly-high airfares.  The cost to change from one flight to another can be as much as a transatlantic airfare – and that’s after you’ve already paid to get from A to B!  The last thing that their cabin crews seem to think about is communicating with their customers – they will look you blankly in the face and insist that the flight will leave on time even though it’s already departure time and you’re still sat in the airport.

Back in the 1980s a book was published in France called “Service non compris”, which showed how the lack of customer orientation in French business was gradually killing it.  IBM put a copy on the desk of each of the employees at its European headquarters.

In a monopoly situation, there is some validity in the old line of “You get what you pay for” – the trouble is, in a monopoly situation you have to pay so much more than is either necessary or justifiable.  When a monopoly says “We don’t make a profit – we charge that much just to cover costs, and the reason that our costs are so high is because we are so inefficient” – well, that’s when you know that things have to change.

The issue for a monopoly is not how can you provide a competitive service at a competitive price, but about how can you keep out any possibility of competition.  A monopoly doesn’t need to lock the customer in through providing the best service in town – the customer can’t go anywhere else.

There are a number of initiatives running in Europe at the minute, each of which has an intrinsic tendency towards monopoly.  SEPA: why not have just one big clearing house for the EU?  Securities settlement: why not just have one big CSD for the EU?  How will customers access these services? - why not just have one big network for the EU?

Will this result in better and more price-competitive services for customers?  My travel experience tells me – no, not if it creates monopolies as a result.  The initiative will have a big price tag, but at the bottom will be written “Service non compris”.