As a result of recent mergers, three airlines now carry over 90 percen

Question

As a result of recent mergers, three airlines now carry over 90 percent of one country's domestic traffic. Because prices are almost always higher in a marketplace where a few companies can choose to reduce greatly the total supply of goods or services than in a marketplace with many competitors, air ticket prices soon will rise.

Which of the following statements, if true, would most seriously weaken the conclusion drawn above?

A. Many airlines confirm more reservations, when possible, than there are seats available for any given flight.
B. Inflation in energy prices will cut into the profits of all major airlines if air ticket prices do not rise soon.
C. The number of flights departing from certain airports has been reduced in order to alleviate overcrowding.
D. Further mergers could occur among the smaller airlines that still control almost 10 percent of domestic traffic.
E. All the major airlines have gone into debt to buy large fleets of new airplanes, which they must fly as often and as nearly fully loaded as possible in order to avoid bankruptcy.

CR16839

Kritisood · Answer

IMO E as it gives a reason as to why airlines will NOT increase their fare prices. This is so because as per E they need to fly at full capacity and as frequently as possible to avoid bankruptcy. If they increase their prices; they may not be able to attract enough customers to fulfill these criterias.

Anupam93 · Answer

IMO E
Conclusion: Due to the merger, the airlines will offer fewer services in the marketplace, and ticket prices will increase.
Option E weakens the conclusion by stating that airlines will need to fly fully loaded, which means they need to increase booking.

Sushil117 · Answer

As a result of recent mergers, three airlines now carry over 90 percent of one country's domestic traffic. Because prices are almost always higher in a marketplace where a few companies can choose to reduce greatly the total supply of goods or services than in a marketplace with many competitors, air ticket prices soon will rise.

Which of the following statements, if true, would most seriously weaken the conclusion drawn above?

A. Many airlines confirm more reservations, when possible, than there are seats available for any given flight.
-irrelevant

B. Inflation in energy prices will cut into the profits of all major airlines if air ticket prices do not rise soon.
- strengthens the conclusion ,so ,wrong

C. The number of flights departing from certain airports has been reduced in order to alleviate overcrowding.
-irrelevant

D. Further mergers could occur among the smaller airlines that still control almost 10 percent of domestic traffic.
-irrelevant
 
E. All the major airlines have gone into debt to buy large fleets of new airplanes, which they must fly as often and as nearly fully loaded as possible in order to avoid bankruptcy.
-only option left after elimination of others.Also gives the reason as flights must be conducted often and fully loaded,so increasing price will have adverse effect.so this is the right answer

VBudhew · Answer

But as they have 90% of marketplace does it matter that really???

90% marketplace =====>>Monopoly====>Even if they raise the amount , it should not matter and they should gain profits ===> Even if the flights are not fully occupied they have increased the flights fare and thus the customer has to buy their tickets because of monopoly

I don't think this answer gives me proper clarification

mSKR · Answer

Which of the following statements,  if true,  would most seriously weaken the conclusion drawn above?

E. All the major airlines have gone into debt to buy large fleets of new airplanes, which  they must fly as often and as nearly fully loaded as possible  in order to avoid bankruptcy.

As per true statement E, it means they can only assure full flights if they keep the prices same as before. If prices are increased, it is possible that they may not be fully loaded.

Secondly, Other options are not even as close as option E. Other option indicates prices would increase due to decrease in demand or other factors.
So among given choices, E is best option:)

pranjalshah · Answer

"Because prices are almost always higher in a marketplace where a few companies can choose to reduce greatly the total supply of goods or services"

Prices will be higher if those companies have the freedom to reduce greatly the total number of flights or passengers per flight (they don't necessarily have to reduce but they at least have the choice to reduce). But  since all the major airlines have gone into debt to buy large fleets of new airplanes, which they must fly as often and as nearly fully loaded as possible in order to avoid bankruptcy , they cannot reduce the number of flights or passengers per flight.

Hence the air fare will not rise any time soon.

agrasan · Answer

Hi  IanStewart   DmitryFarber

A. Many airlines confirm more reservations, when possible, than there are seats available for any given flight.

I caught (E) at the first look but not 100% sure why (A) is not correct.
My reasoning is if airlines confirm more reservations than seats then there is  not a shortage of supply , hence, prices won't be higher.

Please correct me if I am wrong.

DmitryFarberMPrep · Answer

First, keep in mind that we are concerned about what airlines can choose to do. So even if this practice meant that there is no shortage of supply, that wouldn't change the fact that these airlines could choose to limit supply in the future. Second, we simply don't know what effect this practice has. In real life, I believe it's a way to ensure that flights are full so they don't have to run as many flights. But this doesn't mean that overall supply is up. In fact, if airlines didn't do this, they might have to run more flights with fewer filled seats, leaving lots of supply and possibly driving prices down. But this is all speculation, and far beyond what we can be expected to reason with any confidence on the GMAT. The simple version is again that we just don't know how this practice affects airlines' ability to reduce supply. As far as I can see, it doesn't.

agrasan

Hi IanStewart DmitryFarber

A. Many airlines confirm more reservations, when possible, than there are seats available for any given flight.

I caught (E) at the first look but not 100% sure why (A) is not correct.
My reasoning is if airlines confirm more reservations than seats then there is not a shortage of supply, hence, prices won't be higher.

Please correct me if I am wrong.

As a result of recent mergers, three airlines now carry over 90 percen

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As a result of recent mergers, three airlines now carry over 90 percen

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