Read the case study and answer the three questions in paragraphs. CLOSING CASE T

Question

Read the case study and answer the three questions in paragraphs. CLOSING CASE The Rapid Consolidation of the US, Airing,, In July 2008, American Airlines (AA) was the largest airlines, including American and JetBlue Southwest air carrier in the other established U.S. airlines as well as newer airlines sued a cost-leadership strategy and so such as Southwest and JetBlue. Then, oil prices, which with are approximately 35% of an airline's total operating than the older, more established airlines. costs, were rising, and the recent financial recession occurred that led to a significant decrease in the num- Justice Department began to look more favorably upon ber of business travelers (who are the most lucrative requests by airlines to merge their operations, expand source of revenue for an airline). These circumstances their route structures, and reduce their cost structures. led to billions of dollars in losses for most major US. The downside for passengers of merger and horizontal orld, and it competed against five however, was the exception because it has always pur- withstand faling ticke prices arisng costs better With many major airlines facing bankruptcy, the

Explanation / Answer

1. Consolidation allows 2 companies to pool their resources and essentially create a system that requires less need for large inventory by any one party. This allows the market competition to be resolved a little and also, allow the companies to essentially reduce their needs for both the resources and manpower which could be utilized with the resources of the other party.

2. The disadvantages of airlines consolidating include job layoffs and raise at the price of the fare, which can essentially be regulated by the airlines due to the decreased number of flights. This also allows 2 parties to pool their resources and essentially create more competition for the other companies in the market.

3.southwest airlines have catered to the market needs where they have regulated the prices constantly to allow them to conform to the changes in the market. They have always kept their fare prices comparable and have never imposed additional charges like baggage fee which has allowed them to keep the cost and prices in check while essentially providing cheaper flights to the people and creating a dominance in that sector of the market.

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