Charlie Munger：Competition in the Airline Business
Charlie Munger《A Lesson on Elementary, Worldly Wisdom As It Relates To Investment Management & Business》· Microeconomics: commodity businesses and competition · Investing · Growth · Human nature
Competition was so intense that, once it was unleashed by deregulation, it ravaged shareholder wealth in the airline business.
Source：
https://web.archive.org/web/20140625062802/http://ycombinator.com/munger.html
Locator：Archived transcript, paragraph 108 (beginning “If it's a pure commodity like airline seats”) · Verified：2026-10-19 · Verification：Exact match
Reading
Intense competition in a commodity industry can destroy shareholder wealth.
Context
Munger used airlines to illustrate the trap of a commodity business: the service is valuable, but intense competition can transfer that value to customers while shareholders earn poor or negative returns. Deregulation merely unleashed price competition that had long been latent. Investors must distinguish a good service from a good business.
Today's question
Is your industry creating brand premium—or turning the product into a price-driven commodity?
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