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Surname 1 Student’s Name Instructor’s Name Course Code Date Executive Summary This article seeks to precisely establish the causes of market power in the airline industry. Usually, the perfect contestability ideal in this industry is not subject to airline pricing. Instead, route concentration triggers price increases (Borenstein 344). The article outlines the merits of airport and route dominance, which include insulation that protects dominant companies from competition (Borenstein 345). Typically, these organizations employ marketing strategies, such as frequent-flyer programs, to attract customers, thereby increasing their revenue generation. This research utilizes a pricing equation and a relative price equation to determine the correlation between route concentration and high charges in the aircraft industry (Borenstein 348; 355); it represents the outcome in two ways. Firstly, it shows that the high average prices that some airlines sustain in concentrated markets prevent all players in the market to charge similar rates.
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  • Spring '16
  • Dr. samuel

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