Question:

Southwest Airlines has been sued for monopolizing flights between San Francisco Airport (SFO) and Los Angeles Airport (LAX) during rush hour by raising prices to twice the levels it charges for non-rush hour flights between these airports even though its airplanes are only two-thirds full. Southwest has 80% of the flights during rush hour between these airports but only 40% of all flights between these airports and only 20% of the flights between all bay area airports and all Los Angeles airports. For a flight to take off or land, an airline must have takeoff or landing rights. Southwest owns 80% of such rights during rush hour. The remaining rush-hour rights are all currently in use.

A. You have been hired as an expert to argue that rush-hour flights between SFO and LAX is a relevant market and that Southwest has monopoly power in that market.

1. Explain an approach to market definition that is inspired by the merger guidelines and explain what kinds of information would be helpful to you in making your arguments if you feel more information would be helpful.
2. Assuming that you convince the court that rush-hour flights between SFO and LAX is a relevant market, what other showings or arguments would be helpful or necessary to demonstrate monopoly power?

B. If the plaintiff succeeds in showing that Southwest Airlines has a monopoly of rush hour flights between SFO and LAX, a relevant market, will the plaintiff win a case under Section Two of the Sherman Act?