Fares and Fees in the Airline Industry Navigating the various websites for low fares, avoidingfees for checked bags and priority seating, and finding the right flight schedule can be a real challenge for the average airline passenger. The complexity of options and sources for purchasing a tickethave expanded significantly in recent years. And the outlook for the future is far more complex, asnew search sites (Google, Hipmunk, etc.) become available and some airlines seek more control overwhere and how tickets on their flights are purchased. According to Forrester Research, an independent research company, the airlines want passengers to buy tickets based on value and not on lowprices. They do not want passengers to comparison shop. One major airline even announced that itwanted to deliver fare information directly to customers and to bypass search systems such as Expediaor Travelocity.Required1. Explain why you think competition in the airline industry is a cost leadership or a differentiation type ofcompetition.2. Provide an example or two of how you think the complexity of fares and fees in the airline industryaffects the sales and costs of the airlines.
Fares and Fees in the Airline Industry Navigating the various websites for low fares, avoiding
fees for checked bags and priority seating, and finding the right flight schedule can be a real challenge for the average airline passenger. The complexity of options and sources for purchasing a ticket
have expanded significantly in recent years. And the outlook for the future is far more complex, as
new search sites (Google, Hipmunk, etc.) become available and some airlines seek more control over
where and how tickets on their flights are purchased. According to Forrester Research, an independent research company, the airlines want passengers to buy tickets based on value and not on low
prices. They do not want passengers to comparison shop. One major airline even announced that it
wanted to deliver fare information directly to customers and to bypass search systems such as Expedia
or Travelocity.
Required
1. Explain why you think competition in the airline industry is a cost leadership or a differentiation type of
competition.
2. Provide an example or two of how you think the complexity of fares and fees in the airline industry
affects the sales and costs of the airlines.
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