Download Advances in Airline Economics, Volume 1: Competition Policy by Darin Lee PDF

By Darin Lee

This can be the 1st in a brand new sequence of books at the economics of the airline undefined. The sequence is a suite of unique, state-of-the-art learn papers from a world panel of distinct individuals. quantity 1 will specialise in themes with regards to festival coverage and antitrust, reminiscent of the commercial effect of airline alliances (both foreign and domestic), predation, and incumbent responses to economical access. a part of a "New Series", this quantity specializes in pageant coverage and antitrust. Its individuals are foreign specialists within the box.

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Additional info for Advances in Airline Economics, Volume 1: Competition Policy and Antritrust (Advances in Airline Economics)

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This expansion was allegedly intended to drive Vanguard, Sun Jet, and Western Pacific out of the routes they had entered, and to obtain a reputation for predation that would prevent LCCs from entering other routes to and from Dallas/Fort Worth. The DOJ alleged in its complaint that AMR violated section 2 of the Sherman Act, which prohibits actual or attempted monopolization. Notably, the DOJ did not claim that AMR was engaged in predatory pricing, but rather predatory capacity expansion. 2 AMR’s Initial Response AMR’s response to the DOJ’s allegations was dated May 13, 1999, and denied the DOJ’s main claims.

Rather, as a minimum, economists have done revenue and cost comparisons at the flight level. Still, the question remains as to the appropriate measures of revenue and costs to be used for the test. Should a given flight’s revenues, for example, include some portion of the revenues of passengers connecting from or to other flights? Should the measure of flight costs include only variable costs, or should it also include fixed costs such as aircraft costs? Clearly, whether a carrier is found to be engaging in predatory conduct will turn on the answers to such questions.

6 See Brooke Group v. S. 209, 222 (1993). 28 ANDREW ECKERT AND DOUGLAS S. WEST Another issue that arises in carrying out a predation test in the airline industry is the treatment of product differentiation and price matching. As noted above, most complaints of predatory pricing come from LCCs and are directed at the price/capacity response of network carriers to their entry. Partly, the concern is that network carriers offer a higher quality product and more service than LCCs, and operate with higher costs.

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