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6jgu1ioxph's avatar

This reminds me of one of my favourite essays from the sadly now dormant Status 451 blog - Minimum Viable Citizen: https://status451.com/2016/12/06/minimum-viable-citizen/ . It too deals with airlines unbundling their services (though, being US-centric, it is Frontier rather than Ryanair who are used as the example), and asks to what degree we should expect businesses and institutions to have to accommodate people who are too incompetent to navigate the increasingly complex systems we need to deal with to lead a normal life.

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Tom Bailey's avatar

Index funds and budget airlines have some parallels

Before the advent of index funds, investors used active mutual funds for two reason: 1) diversified market access 2) potential of market beating returns

But the two were bundled together and investors had to pay 1-2% in fees. Essentially paying for the PM and other staff to try to provide those market beating returns

Then the index fund came along and allowed market access and potential outperformance to become unbundled.

Some investors didn’t actually care about a manager trying to outperform the market. They just wanted diversified market access. And the index fund provided it. Those who still wanted potential of outperformance could continue to use active mutual funds and pay the higher fees

Likewise what airlines were offering used to all be bundled together. As well as getting someone from A to B, the airline offered a level of service and experience onboard. And as a result, average price higher. Then budget airlines came in and said well if you only care about a to b travel, we can just unbundle all those features and you can pay bare minimum - no thrills etc

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