(ii) The initial decision by TY and JK to collude on the fuel surcharge appears to meet the interests of both companies to maximise profits. In this sense, it appears they were acting at level 1.2-there was fairness in the exchange in that both companies benefited from the increased prices being charged. The collusion meant that there was fairness in the exchange-both airlines benefited.
It is likely that the price fixing could be explained as level two of Kohlberg. While airline customers would expect TY and JK to make some profit(else they would go out of business) that profit would not be "excessive". It is possibly reasonable to expect an airline to charge a fuel surcharge, placing the decision at level 2.1. However, he fact that there was collusion means there was an attempt to raise prices artificially, which would not be expected by customers. Level 2.1 action is therefore not appropriate.
