Opportunity Cost Associated with Combination of Airlines Essay

Opportunity Price Associated with Merger of Flight companies


ECN 202

Feb . 15, 2013

The airline market on February 14, 2013 announced the merger of yankee Airlines and US Airways forming the biggest airline firm American (Mouawad, 2013). That leaves merely three airlines, American, Delta Air Lines and United Airlines to supply domestic and international support.

Airline executives claim that mergers are excellent for people as they provide more in order to more destinations. If this kind of were authentic than more destinations means the opportunity expense for people in the form of period spent traveling to larger international airports, would be decreased. Economists alert and I assume that the mergers and debt consolidation comes at a price for travelers as they will have fewer options. The economists notify that costs and fees probably go up (Mouawad, 2013), as a result raising the ability cost to get passengers, specifically flights among midsize cities, and those smaller cities may see reductions in service. If the small cities would have been to see reductions as the economist notify then the chance cost for the people would go as it would take the capsules longer to get to airports with service. This is also an example of limited analysis while the cost of the airlines doing a little bit significantly less in the way of services could result in fewer travelers.

''It's much easier to have tacit collusion with only three airlines'' said George Hoffer (Mouawad, 2013), a transportation economist at the University or college of Richmond. He continued to say " that helps make clear why fees have become and so uniform inside the industry in recent years”. He said every airlines have become charging costs beyond ticketed prices pertaining to things like examining bags, rebooking reservations or maybe picking seating or boarding early, thus raising the chance cost once again. The extra service fees are a developing share from the airline's income and are a huge reason for the industry's reconditioned profitability. The excess baggage fees would...

References: Air Fare Selling price Change Data. (2012). Gathered Feburary 15, 2013, via PlaneTickets Web site: http://www.planetickets.com/airfare.html

AMADEUS. (2013). Retrieved Febrary 15, 2013, via Travel Industry Wire Web site: http://www.travelindustrywire.com/article69062Airline_Ancillary_Revenue_Projected_to_Reach_______Billion_Worldwide_in_____.html

Mouawad, J. (2013, Feburary 15). The New York Times.