(Solution Download) A. J. Munopilee is the owner of Munopilee Air, the only airline currently flying between Erewhon and


A. J. Munopilee is the owner of Munopilee Air, the only airline currently flying between Erewhon and El Dorado. It flies two roundtrip flights per day, with the average flight being about 85 percent full. A new entrant, UpStart Airways, has announced plans to offer an additional two flights per day in the Erewhon-El Dorado market. However, its entrance must be approved by the PAB (Polite Aeronautics Board). A. J. and his co-directors argue before the PAB that UpStart should not be allowed such entry because Munopilee asserts that UpStart?s entry will only cause both Munopilee and UpStart to fly inefficiently small numbers of passengers?each operating planes that are less than half full. Munopilee points to its current load factor or occupation rate of 85 percent as evidence that the market is not big enough for both carriers to operate efficiently. Evaluate the argument put forward by Munopilee Air. Do you think it is valid or not?

 







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