INSTRUCTIONS:
Suppose you have been contracted by Qantas’s CEO, Alan Joyce, to prepare a report on its
competitive position and the
impact of various economic variables and phenomena on the
company.
Read the article by Peter Ryan and address the questions on the next
page.
Ryan, P. 2014, ‘Qantas: what’s the future for the flying kangaroo?’, ABC News, 16
March, v iewed 20 April 2014,
Your assignment
will need to identify theoretical concepts that are relevant, and draw on
additional research where necessary. Address each question
separately. Your grade will largely
depend on the quality of the economic analysis in your answers.
Read the attached article and conduct
additional research to support your answers for each
question.
QUESTION 1 (20%)
With reference to
relevant economic concepts and models, describe the nature of
competition Qantas faces in its regional, domestic and international
operations.
Consider elements such as market structure, pricing, interactions between firms, as well
as the possible role of external
forces, such as potential market entry, government
supports and new technology. What impact might these characteristics have on
an as s
ability to set its prices in these markets?
QUESTION 2 (this question hastwo parts, each worth 10%) (20%)
2a [10%]
Both the economy
as a whole and airlines in particular are sensitiv e to fluctuations in
the oil price. Making use of the AS-AD model, discuss the effect of
an increase in the
price of oil on real GDP and the price level for the economy in general. What effect
would this hav e on the price and
quantity of flights in the international airline market?
2b [10%]
Assuming Qantas has a monopoly on regional flights, use a microeconomic
model of the
firm to explain the effects [of an increase in oil price] for Qantas’s ticket prices and flight
capacity in its regional
operations.
3QU1lEOS;TION 3 (this question hastwo parts, each worth 10%) (20%)
a /0
Suppose] the RBA decides to increase the interest
rate. Using the relevant economic
model, describe the mechanism by which the RBA controls the interest rate, and by
extension, exerts
pressure on the exchange rate.
3b [10%]
How might exchange rate mov ements affect Qantas’s revenue and costs? Explain and
Ive
gxamples.
QUESTION 4 (20%
Using the relevant economic model, assess the impact of increased competition in the
regional and domestic
airline markets on Qantas’s long run profits. What barriers exist
to increased competition in these markets? Whatwill be the likely long
term outcome?
The following criteria relate to the entire assignment
10% Use and synthesis of relevant quality research
10% Clarity of
expression (including grammar, spelling, referencing), presentation,
communication and structure.
Hits:
1. Please read weekly class PPT
gaterials carefully before you start your writing (week 5 – 10). All the questions above are highly related to those PPT materials.
Please read the background article: “Qantas: What’s the future for the flying kangaroo?
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