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Tue 13 May, 2014 03:57 am
Qantas is interested in the relationship between two routes, the Sydney‐to‐Brisbane segment and the Sydney‐to‐Coolangatta route. Assume that business travellers want to go to Brisbane, but can fly into Coolangatta if they have to. On the other hand, holiday travellers only want to fly into Coolangatta (they value a flight to Brisbane at $0) and have a lower value of a flight than business travellers. What pricing strategy options are available to Qantas? In addition, what relationship between the two markets limits Qantas’s
ability to raise price. Can you suggest any strategies that can help overcome this relationship? Make sure you provide economic arguments to justify your answer.
@mel28,
I don't understand the presumption that Brisbane has zero value.
When any route is not profitable, they just stop flying those routes.
@cicerone imposter,
yes i don't understand that either, thats something I'm having trouble with. maybe they just value the other route and not the brisbane route but business travellers do
@mel28,
Or it could be that Brisbane is a hub for other destinations.
@cicerone imposter,
yes i think thats it, would you know how to go about answering this?
@mel28,
You would need to know what the consumer traffic is going into and out of Brisbane on that airline, and how it's been trending the past several years.
@cicerone imposter,
we just need to answer it with the information provided, second or third degree price discrimination? and what is the relationship that is stopping qantas from raising prices?
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