Premiumization and Education

Six Flags and Cedar Fairs (the parent company of my beloved Cedar Point Amusement Park) have merged, with the more successful Cedar Fair owning 51% of the resulting amusement park behemoth. Like many park fans, I have followed this news with some trepidation-- Cedar Point is a tight, well-run operation with a park carefully laid out to deal with their geographic limitations (unless they dump a mountain of fill into Lake Erie, they aren't expanding any time soon), and Six Flags parks are like someone dumped some attractions in a sack, shook it up, and dumped it out.

Six Flags is the gazillionth business to suffer from a lack of focus on the main thing. One regular has noticed their strategic misstep:

Six Flags, he noticed, focused on adding thrill rides and overlooked smaller rides for kids and families and other park activities, such as evening entertainment and shows. Staffing at the park and customer service also became inconsistent.

“Six Flags can feel a bit disjointed,” he said. “Finances were more important than the guest experience.”

The coverage notes a technique that Six Flags used to boost its sagging fortunes.

Six Flags hiked ticket prices in 2022, raising the average price of admission to $35.99 from $28.73. The move caused a 26% drop in annual attendance

It was part of Six Flags’ “premiumization” plan to bring in fewer people to parks but get them to spend more. CEO Selim Bassoul complained in 2022 that Six Flags had turned into “cheap day care centers” for teenagers and said the company wanted to “migrate…a little bit from what I call the Kmart, Walmart to maybe the Target customer.”

In other words, here is Example #28,911,237 of how the Free Market is not geared toward making sure every customer is served. The Free Market picks winners and losers, not just among businesses, but among customers. Some customers are just too poor and annoying, say some businesses, and we choose not to serve them.

Premiumization is already a feature of the private school world, where pricing structures help signal that some schools are for the elite. A study now confirms that in one state, vouchers led to private school tuition hikes as schools took the opportunity to "migrate" to a higher tier in the education biz. 

Voucher fans picture a country in which privates schools throw their doors open wide, ready to accept poor young refugees of failing school systems. But the history of free(-ish) markets shows no such behavior. What the free market does is set tiers of service and quality, including the bottommost tier which may get nothing at all, with many businesses working to climb the profitable ladder of premiumization. 

It's no way to run an education system for an entire country.