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In the news: Low-fare carriers such as Spirit, Allegiant, and Frontier have been successful at gaining market share by offering low base fares but then
In the news: Low-fare carriers such as Spirit, Allegiant, and Frontier have been successful at gaining market share by offering low base fares but then charging for everything from seat assignments to snacks to carry on bags. In response, the major airlines (Delta, United, and American) introduced a new fare category called Basic Economy that mimics the low-fare competition. How does this strategy allow the major airlines avoid a prisoner's dilemma outcome? (chapter Summary, page 281)
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