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Essay / Research Paper Abstract
A 5 page paper discussing the industry structure that emerges as mergers and acquisitions continue to occur within the airline industry. It is not the old airlines that consistently gain highest ratings in customer satisfaction, safety, efficiency and performance, but rather Southwest - the only one that refused to operate in the same manner as the older, more established airlines. The anti-competitive bent to which major airlines cling ultimately is bad for them as well as for consumers. Whereas a loose oligopoly may be beneficial in the airline industry, one that is as highly concentrated as that which exists now is not. Bibliography lists 3 sources.
Page Count:
5 pages (~225 words per page)
File: CC6_KSairOligo.rtf
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Unformatted sample text from the term paper:
of corporate growth through merger and acquisition has become so common that many of us fail to give it a second thought. The practice can affect competition and therefore
customer choice, price or quality. As the airline industry continues to consolidate, it achieves a firmer grasp on its tight oligopoly industry structure.
Oligopoly The short definition of oligopoly is that it is the form of an industry "when there are a small number
of firms selling in a single market" (Friedman, 1990). This situation occurs when the optimal size of the firm is so large that the market can support only a
relatively few competitors. There are many airlines of course, but only a relatively few represented in most markets. The largest airports (and markets) in the world and in
the United States are served by greater numbers of airlines, but smaller locations may be served by only a half dozen or so.
Porters Five Forces can be used to explain the limited number of competitors in specific markets. Porters distinction of "ease of entry" directly explains the self-limiting practices that airlines
employ. The Federal Aviation Administration (FAA) requires not only that airlines post travel schedules, but that they adhere to them as well. The result is that any airline
entering a new market must ensure that there will be enough passengers to support the costs of operation in that market. A plane scheduled to depart for Chicago at
8 am must do just that, whether it carries a full complement of passengers or not. Airlines do have the option of canceling the flight, but they still generally
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