Question

________ carriers, including Delta, United and American provide a full range of services, where Low Cost Carriers like Southwest keep costs low by providing limited service?

1) Full-service
2) Low-cost
3) Budget
4) Economy

Answer 1

Full-service carriers, which include Delta, United, and American Airlines, offer a wide range of services unlike Low Cost Carriers like Southwest that focus on keeping costs low. Predatory pricing is a strategy used by incumbents to remove competitions.

Step-by-step explanation:

The carriers referred to in the question are Full-service carriers. These include airlines such as Delta, United, and American Airlines, which offer a full range of services compared to Low Cost Carriers. Low Cost Carriers like Southwest are known for keeping operational costs low by offering fewer services compared to full-service airlines.

In the context of competition, full-service carriers sometimes engage in aggressive pricing strategies to outcompete new entrants. This practice is known as predatory pricing, where a large incumbent airline may drastically reduce prices to drive out less-established competitors. Once the competition is eliminated, the incumbent can then increase the prices. This type of market behavior has raised concerns regarding competition within the airline industry, especially following a series of mergers among major carriers.