In late 1993, ValuJet the low-cost, no frills airline, entered the Atlanta market with a niche strategy. Content with taking a small piece of Deltas regional business, ValuJet focused strictly on providing short haul flights from Atlanta to 12 Southern cities. What makes ValuJets strategy interesting is the way in which they used game theory masterfully to compete with Delta. ValuJet openly announced that their intention was not to dominate the market. Where giant Delta may offer a dozen flights per day to one city, ValuJet planned on running only three or four, at greatly reduced fares.

Analyze how the game would end when ValuJet develops a strong customer base. use what you learned in game theory to analyze ValuJet and Deltas strategies, the possible response to each others strategies and the equilibrium.