This is business and the law introductory subject in austral

QUESTION 3 Two large airline companies have for many years offered similar flight arrangements and services in a particular market. They also share airport terminal buildings, and at some airports share aircraft servicing facilities. A new company commences airline services in competition with the existing airlines. Neither of the existing airlines provides any assistance to or cooperation with the new airline. They also introduce large discounts on their prices (something they seldom did previously) and apply pressure on travel agents to promote their services and not to promote the services of the new airline. Discuss.

Solution

Solution:

As per the Australian Consumers Law Schedule 2, it imposes uniform legislation for protection of the consumer and the same is incorporated into each Australia’s states and territories. And also it encourages the competitive market which helps to protect the consumer interest. As per competitive act all the entity should be encouraged by the government to enter into the market and set up their business. This will prevent the monopoly and the interest of the consumers are taken care by the same.

In the instant case a new airlines services company wants to enter in the airlines services. Previously there are two companies which are providing the airlines and auxiliary services. Due to entrance of the new industry the competition will increase and the existing company will lose potential customers. This will impact negatively on their business activities and the profit of these companies will decrease. To avoid this scenario, they want to prevent the entrance of the new airline company and they start to reduce their air fare and also give pressure to the travel agent for promoting their services.

Due to these activities the entrance of the new entity in the existing airline market is became difficult. The new company will not able to compete with the existing companies. These types of activities no longer encouraged by the Australian Consumers Law and as per the law the strategies of the existing companies must be prevented and the should provide the opportunity to the new company to enter in the airline industry and make the industry more competitive so that consumers get better service at fair price.

References:

Amonini, C., Keogh, J., & Sweeney, J. C. (1998). The dual nature of country-of-origin effects-a study of Australian consumers’ evaluations. Australasian Marketing Journal (AMJ), 6(2), 13-27.

Meyer, S. B., Coveney, J., Henderson, J., Ward, P. R., & Taylor, A. W. (2012). Reconnecting Australian consumers and producers: Identifying problems of distrust. Food Policy, 37(6), 634-640.