Airlines question on economics---plz help?

Question

Qantas and Air New Zealand have petitioned the Australian Competition and Consumer Commission (ACCC) to allow them to collude on the trans-Tasman route from Sydney to Auckland. The companies claim that collusion on this route, which would replace the current oligopolistic structure, would allow them to lower costs and therefore prices. What might the ACCC be worried about? Are the airlines’ claims potentially legitimate?

Answer 1

They would be fools to allow Qantas and Air New Zealand to collude...  Prices are dictated by competition. Without competition, neither airline has incentive to work towards lowering prices. Whereas if the trans-Tasman route was open to competitors, everybody jockey'ing to get your business and selling you a seat cheaper than the other guy is how to get low prices..

So I say, the ACCC should say, "h**l No"...

Answer 2

they are correct short term it would result in a price drop and savings.. the problem is other airlines unable to have similiar savings would be unable to compete.. and would slowly drop off that route.. when that happens what would keep the co0llusion from then using price gouging strategies to recoup their minor dip in profits here???

the ACCC is worried because ALL business's are greedy enterprises and : if well run: will suffer a short or mid term loss for a LONG term profit.