What will likely happen to the demand for flights to fiji

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Reference no: EM133364295

Case Study #2- Read the scenario and answer the questions below. Congratulations, you're getting married! You've decided to go to either Fiji or Hawaii on your honeymoon and while looking up the cost of flights, you come across this LA Times article: Since Southwest began to challenge the established major airlines in the 19903, the low-cost carrier has become so well known for forcing competitors to reduce fares that industry insiders have dubbed it the "Southwest Effect." Last week, Southwest launched services from California to Hawaii causing the average airfare among all carriers flying between the two states to fall 17%. Experts say that the average fare will edge back up slightly in the next few weeks, especially as bigger carriers begin to offer high-end services such as roomier seats and extra perks.

Questions:

1. Is now a good time to fly to Hawaii? Why?

2. As honeymoon destinations, are Hawaii and Fiji substitutes or complements? Why?

3. What will likely happen to the demand for flights to Fiji as a result of lower fares to Hawaii? Why?

4. Is the "Southwest Effect" the result of a change in demand or a change in supply? Why?

5. Why did major airlines lower their fares when Southwest entered the Hawaii market?

6. How does Southwest expect to make more profit by having lower prices than their competitors?

7. Why is it very unlikely that all of the larger, major airlines will stop flying to Hawaii?

8. If you ran a major airline, what would you do to prevent customers from switching to Southwest other than lowering the price of your ?ights? Would your strategy affect demand or supply?

9. Identify a different market, otherthan the airline industry, that is affected by lower airline fares to Hawaii. Explain how buyers or sellers in this other market are negatively or positively affected.

10. Would you preferto honeymoon in Fiji or Hawaii? Why?

Reference no: EM133364295

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