Will American Airline and US Airways merge going to cause monopoly in Essay

Will American Airline and US Airways merge going to cause monopoly in major city'airfare - Essay Example Once the two airlines merge, they will operate as a single entity within the airline industry. Combining these firms’ business is seemingly detrimental to major city airfare. In this respect, there are diverse and dynamic arguments with regard to monopolization of major city airfare. The American Airlines-US Airways merger, however, is less likely to cause airfare monopoly in major cities. In their domestic and international operations, both American Airline and US Airways operate alongside other major airlines such as Delta and United Airlines. Monopoly over airfare would have to outperform other major airline in terms of air ticket prices. In this respect, the American Airlines-US Airways merger has limited chances of controlling airfare due to high competition in the industry. Although the merger could make American Airlines the biggest airline globally (Rosenbloom, 2014), the airline will still have to face stiff competition from other major airlines both locally and internationally. Without necessarily accounting for all major airlines, American Airlines will have to face Delta, United, and Southwest airlines as far as the domestic airline industry is concerned. Due to the competition factor, the firm, even after the merger, cannot base its primary operational strategy on airfare control. Airfare in major cities remains influenced by demand and supply factors, aspects that the merger would have to address before realizing monopolized airfares. Airfare-based monopoly will be difficult to realize in a highly competitive industry. Debates on the American Airlines-US Airways merge contend that air ticket prices could increase following the move (Rosenbloom, 2014). Critical to note, however, is that customers are rational as far price and utility are concerned. With or without the merger, consumer tastes, preferences, and decisions will still be critical to account for. This merger

The Economic Environment of Business Essay Example | Topics and Well Written Essays - 3500 words

The Economic Environment of Business - Essay Example This paper aims at indentifying the structure in which Ryanair operates while addressing how it has adopted its market strategies to gain entry into new markets. Also the regulatory issues that it has had in regards to the existing market will be discussed. Lastly, the paper will consider the directions it is taking in terms of international expansion, capital acquisition and challenges faced. In order to understanding the airline industry it is important to understand the customers first. The airlines on the other hand are customers to airline manufacturers like Boeing and Airbus (Palmer & Ponsonby 2002). The governments and the global economic structure are the other factors that highly affect the airline business. It is important to appreciate however that despite the industry having many players and obstacles, it is ever growing in terms of companies expanding while others coming up. The airline business has enhanced international trade and investment for many years thereby taking a huge stake in encouraging globalization (Gregory & Marilyn 2004). This means that many other industries in the global economy highly depend on it. The airline industry has been on a steady growth of about 7% for the past decade in respect to expansion moves but not necessarily profitability. However, business and tourism travel hugely increased over the same period owing to the increased l iberalization of the world trade (Nigel et al. 2003). The European tourism market is shifting to Eastern Europe to destinations that were not considered for tourism there before. The IATA predicts that the airline business will grow tremendously by about 5% to 8% in the coming decade having grown at a rate of 5% this past one (Miriam 2010). However, the same body predicts that the industry will generally grow at a lower pace in America and Europe. The basic reason behind this arises from the fact that these respective industries are already fully developed.