logo

The Impact of Civil Aviation Regimes on Leisure Travel - PDF

   

Added on  2021-05-30

6 Pages1468 Words50 Views
Running head: ECONOMICS ASSIGNMENTEconomics assignmentName of the student:Name of the University:Author note

ECONOMICS ASSIGNMENT1Australian airline industry is one of the rapidly growing industry that has been facingrampant boom through its recent endeavours. Qantas being the flag carrier of the Australianairline is the largest operational market player in the airline organisation in the state and it isconsidering the age of its operation and the fleet size, it is third largest in the world (Shaffneret al. 2017). Under several occasions Qantas has curtailed the market domination in order tohave large amount of benefit through its operation, however, with the rise of regional playersand the arch rival Virgin Australia it is facing large amount of competition in the market.Considering the market share of the Qantas its rival, it can be stated that the Australianeconomy post 2003, has become a duopoly market; however, if the regional players areconsidered, then the market structure become an oligopoly (Greig 2018). Presently Qantas ischarged by its rivals that it has been blocking the share buyback policy of the other restrictingthe government to intervene the market and hampering the sustainability of the other players.Though Qantas is accounted for 68% of the market share in the domestic arena and 36% inthe case of the international flights from Australia, it wants to dominate the market with itspower to restrict intervention (Wang et al. 2017). Through curtailing the governmentalintervention, the firm is aimed to gain monopoly power which will aid it to become the onlyexisting operator in the Australian market.Under the present duopoly market structure, Qantas is the market leader with most ofthe market share and it rivals except Virgin Australia is mere as tiny as atom. Under theduopoly market structure, two firms operates and the level of producer surplus is much higherthan the competitive situation (Ciliberto et al. 2016). On the other hand, taking advantage ofthe lack of alternative, duopoly player reduce the consumer surplus by a large amount leadingto exploitation of the same. Though products in the duopoly market are almost identical,through utilising the brand value and quality of service, consumers differentiate the producer.Utilising the same principal, Qantas operates in the market, which aimed to provide quality

ECONOMICS ASSIGNMENT2service to their consumers (Williams 2017). Information regarding the strategies of the othermarket players are not easily available in the duopoly market structure that makes thecompetition higher. However, it is often observed that, duopoly players rather than opting forthe collusive pricing, consider cumulative pricing strategy in order to gain maximum amountof profit. However, in the case of the Australian airline, Qantas was willing to gain all themarket share through restricting the government intervention in the market (Eaton 2017). Asthe amount of loss of the Virgin is huge and it is almost near the shutdown point, Qantaswanted to gain most out of the poor situation of its rival. Considering the situation of the Virgin Australia, if the government failed to intervenethe market, then it would have been a devastating situation for the Australian airline industry.The market has become fragile under the loss situation of the second largest airline in thestate and if it has stopped to operate, then there will be no one to restrict the Qantas fromexploiting the Australian consumers who wants airline service. In absence of the rivalindustries, airline industry of Australia would have turned into a monopoly market, where thesole service provide would be Qantasorensteing and rose 2014) Thus Qantas deliberatelywanted to restrict the government to intervene in the market with their protectionist law forthe virgin airline. Government according to its latest airline industry law has allowed themarket players to raise capital through the foreign shareholders in case of the loss making(Hyam 2013). According to the Qantas it has been proving undue advantage to enhance itsmarket share through the investment from the foreign shareholders. Under this situation, Virgin Australia will achieve much amount of advantage over itsrivals and may soon surpass the popularity of the Qantas both in the domestic as well as inthe foreign market. Under the situation of loss making Virgin and other domestic players hasasked the government to allow them to generate funds from the foreign market players so asto enable it to operate and government has did the same to bail them out from the loss

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
Assignment on Principles of Economics - doc
|11
|1521
|61

ECO 201 : introdution to microeconomics
|8
|1417
|301

HI5003 Economics for Business- Monopolies, Duopoly and Oligopoly in Australia
|9
|1413
|116

Economics Assignment: Economies of Scale
|12
|1714
|52

ECOM4000 Economics Assignment | Economic Literacy Skills
|9
|1691
|95

Economies of Scale | Economics Assignment
|8
|1705
|53