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 set of unique, state of the art examine papers from a global panel of distinctive members. quantity 1 will concentrate on issues on the topic of pageant coverage and antitrust, similar to the commercial effect of airline alliances (both foreign and domestic), predation, and incumbent responses to low-budget access. a part of a "New Series", this quantity makes a speciality of festival 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)
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. If a network carrier matches the fares of an LCC, the LCC views it as effective price undercutting.
Law On May 13, 1999, the Department of Justice (DOJ) of the United States filed a complaint against AMR Corporation and its subsidiaries American Airlines, Inc. 26 These allegations concerned capacity increases on routes out of Dallas/Fort Worth International Airport (DFW). 28 According to the initial complaint, AMR engaged in predatory conduct against Van guard Airlines, Sun Jet, and Western Pacific, all LCCs, who during the 1990s entered or announced plans to enter several routes to or from Dallas/Fort Worth, where AMR had its largest hub.
Third, it was concluded that average variable costs constitute about two thirds to three quarters of total costs, and that American Airlines did not operate with revenues below average variable costs. 18 14 A comparison of the elements that need to be proved in predatory pricing cases in various jurisdictions has been made by Niels and Ten Kate (2000). 15 Continental Airlines, Inc. v. , 824 F. Supp. D. Tex. 1993). 16 A discussion of this case is given in Clouatre (1995). 17 This summary of the plaintiffs’ position was obtained from a review of various transcripts from the case.