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In 2002 and early 2003, virtually every major carrier was under bankruptcy protection or claimed to be on the verge of bankruptcy (Brooks, 2007).
The airline industry is characterized by an oligopoly market structure, a form of imperfect competition in which a limited number of firms dominate the industry. Oligopoly firms have market power in setting or altering prices for their products by establishing various output levels. Since airlines produce similar outputs and compete with their industry rivals, any action a competing airline takes is noticed by its competitors. Consequently, rivals may react with price-cutting or other attempts to enhance market share...
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