Australian Airline Industry - Essay

Topics: Airline, Economics, Monopoly Pages: 4 (1142 words) Published: September 20, 2011
Table of Contents

Identify a market for tourism or hospitality services in the Asia Pacific region that is essentially oligopolistic in nature. Analyse the pricing and supply strategies of the key firms operating in this market.  

This report explains the theory of oligopoly and discusses how Australia's airline industry provides a solid example of an oligopoly market. It uses case studies of Qantas, Jetstar, Virgin and Tiger airlines to demonstrate how they all need to employ profit-maximising strategies that take into account the likely response to the strategies of other firms. Airline Industry Overview

Australia's airline industry can be classified into three broad categories: domestic trunk route airlines
regional airlines
International airlines. It is a well-known fact that every firm wants to be successful in its business. Sometimes it is difficult to decide what kind of actions to take in order to achieve it. Especially, it is hard on oligopoly market because this is one of the most complicated market structures. Oligopoly includes many models and theories such as duopoly where there are just two producers, and which pricing decisions remind monopoly, kinked demand curve, which decreases economic profit, and cartel, which brings economic profit just for the short-run. However, to be a successful oligopolistic firm in the long run, managers should include in the planning process such economic theories and models as producer interdependence, the prisoner’s dilemma, price leadership, non price adjustments, and correct using of barriers to entry. number of producers on oligopoly market, the price and output solutions are interdependent. As a result, firms can cooperate or come to an agreement profitable for everyone. Therefore, they can increase, as it is possible, their joint profits (Pleeter & Way, 1990, p.129). Further, oligopoly is divided on pure, which is...

References: Barbot, C., 2004. Price Competition amongst LCCs, CETE – Centro de Estudos de Economia Industrial, do Trabalho e da Empresa (Research Center on Industrial, Labour and managerial Economics).
Doganis, R., 2001, The Airlines Business in the Twenty-first Century, Routledge, London.
Farris, M. T. & Happel, S. K. (1987). Modern managerial economics. London: Scott, Foresman and Company.
Gallaway, J. H. (2000, August 28). Market structure: Oligopoly. [WWW document]. URL** [2000, November 28]
Pleeter, S. & Way, P. K. (1990, April). Economics in the news. Addison-Wesley Publishing Company, Inc.
Porter, M. E. 1996. What is strategy? Harvard Business Review, November–
December, 61-78
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