In Lesson 9 and 10 we have learned about pricing strategies in imperfectly competitive markets. Firms follow many pricing strategies to maximize their profits in imperfectly competitive markets. We will learn about pricing strategies of airline companies (oligopoly firms). The article that you will discuss provides a perspective on the unique attributes of airline tickets as compared to tickets for sporting events or concerts. Perspectives from both the business and consumer side are both compelling.

Article: WSJ Article “If Only Airline Tickets Were Like Sports Tickets (Links to an external site.)”

You can find the article here https://www.wsj.com/articles/if-only-airline-tickets-were-like-sports-tickets-1540386771

or If Only Airline Tickets Were Like Sports Tickets – WSJ.pdf

Directions

Please discuss all of the following questions in your initial discussion submission.

1. What type of price discrimination do we see in the article? Describe the price discrimination practiced by airlines with regard to business and leisure travelers?
2. If prices were fixed (i.e. without any price discrimination) and they increased, how might that affect airline revenue with its mix of price-sensitive leisure travelers and business travelers?
3. Why have airlines instituted high change fees (i.e., fees that are greater than a possible loss in profit from a change) and prevented the resale of tickets?
4. Suppose an airline has two options: (1) set lower prices for tickets booked in advance and higher prices for tickets booked at the last minute; or (2) set the same price regardless of booking date. Which option is more profitable?
5. Have you ever tried to buy a concert or sporting tickets that were only available from speculators or resellers? Describe how this model would affect both leisure and business passengers if it were used for airline tickets. How would it change airlines?

Participation Expectations

Your initial discussion submission to the questions above must be at least 400 words and specifically reference some concept or content from the coursework lesson. You must complete your initial comment by the end of Lesson 11. See the Course Schedule for dates. Please note that you cannot edit, change, or delete your submissions. Thus, please double check your submission before you submit it.

After completing your initial submission, you will be able to see the comments by your peers. Read these posts your peers have made, and reply to at least two students by providing them with suggestions to improve their answers, making comments, or asking questions about their comments. Peer responses should reflect one or more of these types: 1) agreement with extension, 2) an alternative perspective with rationale, or a 3) respectful challenge with counter argument. Each of your peer responses are expected to be at least 100 words (in total, at least 200 words). You must complete your peer comments by the end of Lesson 12. See the course schedule for dates.

Rubric

Weight of the assignment is 4% of the final grade. Please note that the accompanying rubric will be used for your complete submissions including the initial comments and peer comments. To view the rubric, click the three dots icon towards the top right of the page and select Show Rubric. Seventy percent of your grade is for initial comments and 30% of grade will be for peer comments. If you don’t respond to peer comments, you will lose 30% of your discussion grade.

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