Today I was reading The Age online, and I discovered an article on Air Australia going into administration. It turns out that the reason was because a fuel company was owed too much money and so refused to refuel one of their aircraft. I found this astonishing, that an airline could get to the point where it was unable to afford to refuel their planes. Surely somebody must have known that this was occurring much earlier, than when it got to the point that they couldn't afford fuel for their planes. I also got to thinking about the airline industry in general and how many airline collapses there has been over the years.
My thoughts then compared the airline industry with the taxi industry, here are two industries, both transport passengers between destinations, however one industry is highly regulated and another is hardly regulated at all. When you catch a taxi, you pay based on how far the taxi travels, regardless of the number of passengers, if you can't afford the full distance, you get kicked out earlier. This philosophy might be difficult to transfer to the airline industry because it costs a lot more to travel to a destination than in a taxi, so if only one individual is on the flight, then it would be a costly flight, and dropping you off early would require the use of a parachute. However, there must be some way in which the government can regulate, to a certain degree, airline ticket prices. Even if it is just to introduce a minimum ticket price, which companies cannot drop below, so that airlines can't undersell each other as much as they are currently, because this price war, in my opinion, is the main cause of these budget carriers going bust.
To read the article, check out The Age online.
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