Statement: The government-owned airline is incurring huge losses while private airlines continue to prosper and make substantial profits.\nCourses of Action:\nI. Ban all private airlines from operating in the country.\nII. Instruct the government airline to increase passenger fares significantly to improve profitability.

Introduction / Context:
Losses at a state airline amidst private competitors’ profits suggest structural and operational issues. Remedies should improve efficiency and value, not eliminate competition or price out customers.

Given Data / Assumptions:

• Private airlines succeed under the same market conditions.
• State airline’s challenges may include cost structure, utilisation, network design, service quality, or governance.
• Consumers are price-sensitive; competition benefits them.

Concept / Approach:
I (ban private airlines) removes competition, harms consumer welfare, and violates open-market principles. II (significant fare hikes) risks demand collapse and worsened load factors, further increasing unit costs. The sound approach would be turnaround measures: cost optimisation, fleet/network rationalisation, punctuality, ancillary revenues, partnerships, governance reform.

Step-by-Step Solution:
1) Benchmark costs vs peers; renegotiate high-cost contracts (fuel, MRO, leases).2) Optimise network: profitable routes focus; improve on-time performance and customer experience.3) Develop ancillaries (bags, seats, loyalty) and digital sales; explore code-shares/alliances.

Verification / Alternative check:
Fare hikes without value improvement typically lose share to leaner rivals; bans breed inefficiency and public backlash.

Why Other Options Are Wrong:
Only I/Only II/Either/Both: each is either anti-consumer or commercially naive.

Common Pitfalls:
Politically easy but economically harmful protectionism; ignoring operational metrics (CASM, load factor).

Final Answer:
Neither I nor II follows.