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Introduction
With the growing market trend and increased popularity of low cost carrier airline, the market for no frill airline is growing at a rapid rate. From an airline industry perspective, Australia is a large country with many domestic destinations that allows Airline companies to take advantage of the demand for domestic travel either for business or for pleasure. As one of the largest and dominant players in the airline industry, Qantas which was founded in 1920 provides both international and domestic air services while Ansett which was founded in 1936, function mainly as a domestic carrier (Gregory J. Bamber et al, 2006pg 3).. The introduction of low cost carrier started in the year 2000, with the launch of Impulse and Virgin Blue airline has affected the airline industry drastically with their low fares as compared with the normal fare (Gregory J. Bamber et al, 2006 pg 3). In order to counter this new threat, Qantas and Ansett responded by reducing their fares to match up with the current market price for domestic travel (Gregory J. Bamber et al, 2006 pg 3). However with higher operating overhead, Qantas and Ansett faced many challenges resulting in the loss of profits and the collapsed of Ansett in the year 2001 (Gregory J. Bamber et al, 2006 pg 3). Qantas managed to sustain itself with competitors such as Virgin Blue and impulse during the price war and eventually led to Qantas taking over Impulse and relaunched as the newest low cost carrier Jetstar to counter Virgin Blue dominant of domestic market share (Gregory J. Bamber et al, 2006 pg 3). Currently Jetstar and Virgin Blue dominate the domestic market. This paper will discuss the economic impact that occurred with the introduction of low ...