Administrative protection has indulged monopoly industries, says a signed article in China Economic Times. An excerpt follows:

China's airlines lost a total of 430 million yuan (US$54 million) in the second quarter as soaring oil prices pushed up costs, said the country's aviation regulator. The industry suffered an aggregate loss of 2.57 billion yuan (US$321 million) in the first half of this year, more than quadruple that in the same period last year. Companies have to cope with soaring oil prices and fierce competition. As a result, airlines have once again called for an increase in the fuel surcharge as a way to get out of the red.

The more aid they get, the more money they lose. This seems to have been a common problem in all monopoly industries in recent years.

The National Development and Reform Commission raised power prices in order to subsidize the loss-making power industry. Meanwhile, a number of banks started to collect various kinds of fees in order to turn losses into profits. While oil companies enjoy trillions of yuan in profits, they also receive State subsidies worth tens of billion of yuan.

"Having a loss" has become the most frequently used phrase for monopoly industries. It has also become the best way for them to ask for subsidies from the government.

We all know that monopoly brings about fat profits. But the country's monopoly industries have been talking about serious losses. Different from other industries that are marketized, monopoly industries have extremely high behind-the-scenes personnel, administration and hospitality costs, which are much higher than their marketing, quality control and after-sales service costs. Once their profit figure changes, they think little about reducing these backstage costs or improving efficiency and attracting more clients. Instead, they take their begging bowl to the government.

And related authorities repeatedly indulge these monopoly industries. To keep the airlines happy, the General Administration of Civil Aviation of China let the fuel surcharge make a comeback. This approaches the customers' bottom line but still cannot satisfy airlines' greedy appetite.

With administrative protection, airlines remain content with standing still. Their imperiousness can be seen from their arrogant attitudes in dealing with disputes caused by delayed flights. If the airlines continue destroying their own image, they will lose more customers and the ability to cope with fuel price fluctuation in the international market and finally make a real loss.

Monopolies not only harm the sectors they operate in, they also lead to market unfairness. Monopoly enterprises not only oppress customers but also excessively depend on government to maintain their profits. Government protection fosters their greed and harms the country's overall economic development.

(China Daily August 1, 2006)