Why the australia airline has form ?why it is a example of an oligopoly?
When there are few suppliers in a market, there is an oligopoly, or a domination of suppliers, who will carefully watch what their competitors are doing and follow suit. So they have a fair amount of control over prices as there are few competitors. This also means there is a risk of collusion (working with other suppliers in the market to keep profits high – a common argument about fuel companies and the high price of fuel actually) If you compare Australian airlines and the prices for flights, with airlines overseas and their prices, the difference is incredible. For example, travelling around the UK you can expect to pay about 5 pound for a flight (about $12 or so AUD) and in some cases (as my dad scored going from London to Scotland), free flights and only paying for taxes. However, in these countries, there are so many suppliers that competition is fierce, which of course drives the prices down.
