Kris,
I think you are close to the money with points 1 and 2.
I can’t see point 3 happening. This is still a free market economy. The ACCC don’t just get to walk in to a business and break it up because they “want competition”, and especially not just because the competition went bankrupt.
The ACCC is quite happy with monopolies all over the country.
If there is a temporary airline monopoly I’m sure the Govt will take steps to temper the gouging, but a monopoly won’t last.
In fact, during the recovery, and I don’t think any of us can predict exactly how the recovery will take place, even with only one airline, I don’t predict too much gouging. Look at it this way, you have an airline in a slowly recovering economy with too many aircraft, and too many employees. What would you do? Raise prices? I don’t think so. I think you would offer bargain basement prices to get all the employees and aircraft working again, boost the economic outlook, and do everything you can to persuade the travelling public that flying is suddenly cool again. After all, you know you won’t get back in the black until all those planes are back in the air and full of punters.
It will be down the track, once the economy is back on track and the load factors are sustainable that the gouging becomes a potential problem. And don’t forget, the airline that survived this will have burned billions in cash getting through it. The economy is going to have to pay for this little social experiment one way or another. Expecting slightly higher taxes for the next decade or two? Or course! Higher airfares? Maybe! Is that unreasonable?
But as for competition? Something will emerge. Airline Entrepreneurs can’t help themselves, especially when a State Government is getting toey for a bit of investment. And they will be. But they won’t be interested until they have someone to undercut! And there won’t be any potential to undercut until the planes are full again. Don’t forget, the LCC model relies on full aircraft.