Today the airline industry sets prices in a highly irrational way Since

Today the airline industry sets prices in a highly

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Today, the airline industry sets prices in a highly irrational way… Since deregulation, the full unrestricted Y fare… has almost doubled… today, over 90 percent of passengers pay an average of only about 30 percent of the full fare. (Wensveen, 2011) Oligopolistic industries generally compete through advertising and/or customer service which are non- priced. And because of mutual dependency, the industry fears price wars. However, most airlines are having difficult time differentiating their services from others, thus leading many customers to mainly focus on how low the fares are. Unlike other oligopolistic industries, various government units have played major roles in financing the growth and development of the U.S. airport-airways system. (Wensveen, 2011) Government financial assistance is also a unique characteristic of airline economics. Until 1970, the Airport and Airways Development Act allowed airlines to use the
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3.2 Airline Economics 2 airports and airways at minimal cost. The Airport and Airway Improvement Act of 1982 continued to aid airway operations and airport development. There are more unique characteristics such as 60% of total assets in mobile and leading capital spending due to technological advances and phasing out aircrafts.
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  • Fall '16
  • Kelly Lawton
  • Oligopoly, Northwest Airlines, Delta Air Lines

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