"Have floor prices for flights too, not just ceiling fares"

KUALA LUMPUR: Tourism and Culture Minister Nazri Aziz says the proposed capping of seasonal increases of airfares will be good for tourism, but adds there should also be a limit on how low the fares should be. "If you put a cap on how high prices can go, then it's good for tourism. But the floor price should be capped too," he told a press conference today in commenting on a Malay Mail report that the Malaysian Aviation Commission was considering allowing airlines to increase domestic flight airfares by only 2.5 times the average fares during peak seasons.

Nazri said some airlines offered airfares that were too low, to the point they affected other airlines. "Sure, cheaper flights are good for competition and tourism, but the prices can't be ridiculously low. "In business, new players may try to get ahead of the competition by dropping their prices, and once their competition is out of business, they then raise their prices."

Previously, Deputy Transport Minister Ab Aziz Kaprawi said the Malaysian Aviation Commission (Mavcom) would be tasked with drafting proposals by June for airfares during festive seasons, but former Malaysia Airlines CEO, Abdul Aziz Rahman cautioned against this, saying the rates were best decided by the market.

a. Using a diagram, illustrate the effect of the issues.

b. Using a diagram, explain the effect if the price is decreases.

c. Give your oppinion about the issue. (Discuss about cause and benefit)