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CR Airline routes

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Director
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CR Airline routes [#permalink] New post 05 Oct 2006, 04:12
00:00
A
B
C
D
E

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(N/A)

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0% (00:00) correct 0% (00:00) wrong based on 0 sessions
Please xplain your answers...I have a problem with the OA.
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 [#permalink] New post 05 Oct 2006, 04:28
B is my answer.

As the existing airlines are likely to undercut the prices, new entrants will not be so willing to enter the segment.
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 [#permalink] New post 05 Oct 2006, 05:38
One more for B.

Author of the passage assumes the airlines will increase fees while in fact they may just keep them low when new competitors enter the market.
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 [#permalink] New post 05 Oct 2006, 05:45
What makes cutting price not a successful strategy in long run, as pointed out in the passage, is the possibility that competitors would make use of that strategy while the winner have to rise the fare. B weakens this by pointing out that new competitors predict the winner may employ the strategy again ----> that is to say, new competitors probably dare not to make use of the strategy.

B stands.
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 [#permalink] New post 05 Oct 2006, 06:10
B is the answer.
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 [#permalink] New post 05 Oct 2006, 06:26
Another one for B.
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 [#permalink] New post 05 Oct 2006, 06:28
This is just a never ending price war cycle in the airline industry. Once they drive away competitors, airlines jack up their fares until a new competitor enters the market, at which point they slash their prices again. The airline that can keep operating with the lowest fares for the longest period of time (even at a loss) will eventually prevail.
  [#permalink] 05 Oct 2006, 06:28
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