Until 2008 there were two airlines serving the Hawaiian inter-island market: Hawaiian Airlines and Aloha Airlines provided reasonably-priced service among the five major islands. But on March 20, 2008, Aloha declared Chapter 11 (reorganization) bankruptcy. One month later the bankruptcy was converted to Chapter 7 liquidation. There were two main factors that led to Aloha's bankruptcy. The first was soaring fuel prices. The second was the entry of a new competitor, go! airlines, a subsidiary of the Mesa Air Group. go! had entered the market in June 2006. They engaged in what can only be described as predatory pricing. For example, on June 9, 2007, the airline announced fares of $1 on many interisland routes.

You learned in the course about predatory pricing that some firms use barrier to entry.

1. Did go! engage in predatory pricing? And why?
2. Why was Mesa Air Group able to charge such low prices and stay in business while Aloha went bankrupt?
3. In which of the four market structures you learned in the curse predatory pricing is more common and why?