Final answer:
A start-up airline providing no-frills service at the lowest price in the Northeastern U.S. would follow a cost leadership strategy. This approach often faces challenges like predatory pricing from established competitors.
Step-by-step explanation:
A start-up airline that serves the Northeastern U.S. and attempts to provide basic air travel service at the absolute lowest price would be following a strategy of cost leadership. This business approach focuses on gaining a competitive advantage by offering services at a lower cost than competitors within the industry. It's a common tactic for new market entrants aiming to establish their customer base.
However, new entrants like this small airline may face difficulties such as predatory pricing from large incumbent airlines. Incumbents may drastically lower prices, in a practice known as predatory pricing, to push new entrants out of the market. Once new entrants are eliminated, these larger airlines may then raise prices back up, a pattern that can dissuade other potential competitors from entering the market in the future. Examples of this practice include the case where ValuJet accused Delta of predatory pricing.