Competition versus Predation in Aviation Markets

Chapter 5When does Airline Competition become Predation?

David Greig

Introduction

2001 saw the demise of two Australian domestic airlines: Impulse (an efficient airline with unsound fare policies) and Ansett (a larger, inefficient airline). The dominant airline, Qantas, then briefly accounted for around 90% of the domestic aviation market, and still has 60-70%. From time to time there have been accusations that Qantas has been overly aggressive in its competitive tactics. For example the main new entrant, Virgin Blue, has accused it of dumping capacity on new Virgin routes. Impulse earlier made the same accusation over its Melbourne–Newcastle route. Investors who had been looking at reviving Ansett were reported as asking for the government to ...