It is currently 16 Jan 2018, 03:33

### GMAT Club Daily Prep

#### Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

# Events & Promotions

###### Events & Promotions in June
Open Detailed Calendar

# Some airlines allegedly reduce fares on certain routes to a

Author Message
TAGS:

### Hide Tags

Manager
Joined: 26 Feb 2015
Posts: 110

Kudos [?]: 28 [0], given: 109

GPA: 3.92
Re: Some airlines allegedly reduce fares on certain routes to a [#permalink]

### Show Tags

17 Dec 2016, 17:01
B makes sense. I chose E as a result of forgetting it was a "weaken" question. Good thing it's only practice.

Kudos [?]: 28 [0], given: 109

Senior Manager
Joined: 13 Oct 2016
Posts: 287

Kudos [?]: 197 [0], given: 414

GMAT 1: 600 Q44 V28
Re: Some airlines allegedly reduce fares on certain routes to a [#permalink]

### Show Tags

10 May 2017, 05:40
Thanks milo for the explanation.

Now i am clear why the option is B and not E.
_________________

_______________________________________________
If you appreciate the post then please click +1Kudos

Kudos [?]: 197 [0], given: 414

Manager
Joined: 24 Nov 2014
Posts: 181

Kudos [?]: 246 [2], given: 21

GMAT 1: 800 Q51 V51
Some airlines allegedly reduce fares on certain routes to a [#permalink]

### Show Tags

25 Jun 2017, 09:04
2
KUDOS
Expert's post
Here is why E cannot be right.

From the argument:

Quote:
Some airlines allegedly reduce fares on certain routes to a level at which they lose money,

In other words, while holding fares at the level necessary for driving away competitors, the airline doing so loses money.

Here's what E says.

Quote:
E. When airlines dramatically reduce their fares on a particular route, the total number of air passengers on that route increases greatly.

Notice, what E say does not undermine the conclusion, because even with the increase in passengers mentioned in E, the airline offering the lower prices will continue to lose money. A money losing fare level is a money losing fare level regardless of how many passengers an airline has at that level. So, adding the information provided by E does not change the conclusion that the strategy is not profitable.
_________________

Marty Murray
GMAT Coach
m.w.murray@hotmail.com
http://infinitemindprep.com

Kudos [?]: 246 [2], given: 21

Senior Manager
Joined: 15 Jan 2017
Posts: 360

Kudos [?]: 7 [0], given: 830

Re: Some airlines allegedly reduce fares on certain routes to a [#permalink]

### Show Tags

17 Sep 2017, 08:13
Hoping that experts would help me out here with the reasoning - I was stuck between B and E and picked E.
How does B win over E?
(B) Airline executives generally believe that a company that once underpriced its fares to drive away competitors is very likely to do so again if new competitors emerge. - This means that competition won't enter the market of that particular route; cause the initial company would reduce its prices again. A contender

(E) When airlines dramatically reduce their fares on a particular route, the total number of air passengers on that route increases greatly.This means that the particular airline would make profits, another contender

So one talks about profit (E) and one talks about competition (B); and both weaken - can anyone help me on this?

Kudos [?]: 7 [0], given: 830

Manager
Joined: 24 Nov 2014
Posts: 181

Kudos [?]: 246 [0], given: 21

GMAT 1: 800 Q51 V51
Some airlines allegedly reduce fares on certain routes to a [#permalink]

### Show Tags

19 Sep 2017, 18:31
Hoping that experts would help me out here with the reasoning - I was stuck between B and E and picked E.
How does B win over E?
(B) Airline executives generally believe that a company that once underpriced its fares to drive away competitors is very likely to do so again if new competitors emerge. - This means that competition won't enter the market of that particular route; cause the initial company would reduce its prices again. A contender

(E) When airlines dramatically reduce their fares on a particular route, the total number of air passengers on that route increases greatly.This means that the particular airline would make profits, another contender

So one talks about profit (E) and one talks about competition (B); and both weaken - can anyone help me on this?

One key to getting the correct answer to a CR question is being very clear regarding what conclusion you are seeking to weaken or strengthen.

Here is the conclusion to this argument in this question.

this method of eliminating competition cannot be profitable in the long run.

Notice, in order to be profitable, the airline has to increase fares.

E does not indicate that the airline will be profitable, as E says what will happen when the fares are STILL DRAMATICALLY REDUCED. As long as the fares are dramatically reduced, the route will not be profitable no matter how many passengers take that route.

B, by indicating that it is likely that other airlines will stay out of the market even if the airline controlling the route increases prices, shows a path to profitability for the airline that took control of the route by underpricing the competition.
_________________

Marty Murray
GMAT Coach
m.w.murray@hotmail.com
http://infinitemindprep.com

Kudos [?]: 246 [0], given: 21

Intern
Joined: 01 Aug 2017
Posts: 4

Kudos [?]: 1 [0], given: 4

Location: India
Schools: HBS '20, Booth '20
GMAT 1: 730 Q51 V50
GPA: 4
Re: Some airlines allegedly reduce fares on certain routes to a [#permalink]

### Show Tags

19 Sep 2017, 21:26
I would go with D. The argument is that the competitors will come back once the airline starts increasing the fares. The option D says that if an airline goes out of the particular route, it is not easy for it to come back. Hence the airlines that are thrown out of competition cannot easily come back.

Hence according to me, D is the best answer.

Please correct me if I'm wrong.

Kudos [?]: 1 [0], given: 4

Intern
Joined: 24 Aug 2017
Posts: 8

Kudos [?]: 6 [0], given: 1

Re: Some airlines allegedly reduce fares on certain routes to a [#permalink]

### Show Tags

20 Sep 2017, 00:12
I would go with D. The argument is that the competitors will come back once the airline starts increasing the fares. The option D says that if an airline goes out of the particular route, it is not easy for it to come back. Hence the airlines that are thrown out of competition cannot easily come back.

Hence according to me, D is the best answer.

Please correct me if I'm wrong.

One way to look at it is to identify the conclusion. The conclusion is "any attempt to recoup the earlier losses by charging high fares on that route for an extended period would only provide competitors with a better opportunity to undercut the airline's fares". Remember, we want to weaken this conclusion.

Let's look at (D) On deciding to stop serving particular routes, most airlines shift resources to other routes rather than reduce the size of their operations.
This choice fails to weaken the conclusion. It does not state anything to how it could weaken that conclusion that we had above. Notice how it also changes the focus away from the conclusion.

However answer choice (B) does so. It states that "Airline executives generally believe that a company that once underpriced its fares to drive away competitors is very likely to do so again if new competitors emerge." Thus, it says that even if new competitors emerge, it will implement its previous strategy of underpricing. This weakens the argument because in the argument it essentially said otherwise. The conclusion stated that new competitors would emerge and cut the airline's fare.

Kudos [?]: 6 [0], given: 1

Intern
Joined: 17 Nov 2016
Posts: 20

Kudos [?]: 3 [0], given: 14

Re: Some airlines allegedly reduce fares on certain routes to a [#permalink]

### Show Tags

25 Nov 2017, 16:49
Conclusion: this method of elimination cannot be profitable in the long run.

Choice B shows a situation where the airline will charge higher fares with no competition, leaving the money losing fares and thus making profit in the long run.

Choice E point is that revenues will increase even if fares are kept low, but we don't know whether that will be enough to cover the costs. This choice does not ensure profitability, so it does not weaken the conclusion.

Kudos [?]: 3 [0], given: 14

Intern
Joined: 24 May 2017
Posts: 14

Kudos [?]: 0 [0], given: 518

Re: Some airlines allegedly reduce fares on certain routes to a [#permalink]

### Show Tags

26 Nov 2017, 00:28
I want to understand why option E is incorrect. In the long term, profitability may be sustained because of more number of passengers that the airlines managed to attract.

Whereas in option B, the airlines will again decrease prices thereby affecting profitability further.

Need an expert's opinion on this question.

Kudos [?]: 0 [0], given: 518

GMAT Club Verbal Expert
Status: GMAT and GRE tutor
Joined: 13 Aug 2009
Posts: 1340

Kudos [?]: 2268 [0], given: 501

Location: United States
GMAT 1: 780 Q51 V46
GMAT 2: 800 Q51 V51
GRE 1: 340 Q170 V170
Re: Some airlines allegedly reduce fares on certain routes to a [#permalink]

### Show Tags

28 Nov 2017, 20:53
Nikhil_as wrote:
I want to understand why option E is incorrect. In the long term, profitability may be sustained because of more number of passengers that the airlines managed to attract.

Whereas in option B, the airlines will again decrease prices thereby affecting profitability further.

Need an expert's opinion on this question.

Choice (E) only tells us that we will have more customers "when airlines dramatically reduce their fares on a particular route." But what will happen when the airline increases its fares? Will those customers stick around? If they do, will other airlines offer lowers prices to undercut the increased fares?

The author of the passage would argue that an increase in the popularity of the route wouldn't help of those customers just end up flying with competitors once we start charging higher fares to recoup our earlier losses. Thus, choice (E) doesn't impact the author's specific argument and should be eliminated.

Notice the words "for an extended period" in the passage. The author's concern is that if the airline charges higher fares for an EXTENDED period, then eventually rivals will undercut those prices. Choice (B) tells us that the airline can charge higher fares for a while and then, after an EXTENDED period, reduce the fares again if needed to drive away competitors. Even though the airline has to repeatedly lower its prices, with each cycle they'll enjoy an EXTENDED period of charging higher fares and recouping their losses.

I hope that helps!

In other words, the airline would take some losses and then gain them back by charging higher fares for a while. If competitors try to undercut the airline, they'll simply slash fares again for a while to drive out the competition and then repeat the cycle.
_________________

GMAT Club Verbal Expert | GMAT/GRE tutor at www.gmatninja.com (Now hiring!) | GMAT blog | Food blog | Friendly warning: I'm bad at PMs

Beginners' guides to GMAT verbal
Reading Comprehension | Critical Reasoning | Sentence Correction

SC & CR Questions of the Day (QOTDs), featuring expert explanations
All QOTDs | Subscribe via email | RSS

Sentence Correction articles & resources
How to go from great (760) to incredible (780) on GMAT SC | That "-ing" Word Probably Isn't a Verb | That "-ed" Word Might Not Be a Verb, Either | No-BS Guide to GMAT Idioms | "Being" is not the enemy | WTF is "that" doing in my sentence?

Reading Comprehension, Critical Reasoning, and other articles & resources
All GMAT Ninja articles on GMAT Club | Using LSAT for GMAT CR & RC |7 reasons why your actual GMAT scores don't match your practice test scores | How to get 4 additional "fake" GMAT Prep tests for \$29.99... in any section order

"Next-level" GMAT pronouns | Uses of "that" on the GMAT | Parallelism and meaning | Simplifying GMAT verb tenses | Comparisons, part I |
November webinar schedule

Kudos [?]: 2268 [0], given: 501

Re: Some airlines allegedly reduce fares on certain routes to a   [#permalink] 28 Nov 2017, 20:53

Go to page   Previous    1   2   3   [ 50 posts ]

Display posts from previous: Sort by