Aviation

In: English and Literature

Submitted By haszgns23
Words 282
Pages 2
Malaysia Airlines System launched its zero-fare campaign for local as well as for Southeast Asia destinations. It is analysis that AirAsia claimed that MAS is cross-subsidising the zero-fare campaign with profits from international routes. In addition, Malaysia Airlines System is accused of practicing predatory pricing. It is stated there is a simple test for cross subsidy and predatory pricing. We know that the simple test for cross subsidy is the cost approach. Then it can be analysis if the revenue from a subset of outputs is less than its incremental cost, the subset is the receiver of cross subsidy. In addition, the test for predatory pricing is that any price below variable cost is predatory if it can prove that the price constitutes a threat to an efficient firm. It is stated it must be shown that the predator tries to eliminate its competitors. It is stated and analysis that once the competitors exit the market, then it must also be shown that the predator firm raises the price to recoup the losses suffered in price wars. Meanwhile, in this price war, there is no evidence of cross subsidy. Similarly, the Malaysia Airlines System aggressive pricing is not predatory.
It is stated that, Malaysia Airlines System denied the accusation by Air Asia that it was using international subsidies to finance its as “Everyday Low Fares” campaign that stated in the New Straits Times on 16 May 2008 as it launched its zero-fare campaign for local as well as for Southeast Asia destinations that had been launched in May 2008. It can assume that there are accusations made against Malaysia Airlines System that it is practicing predatory…...

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