Exploring predatory pricing in the airline industry

In this article, the authors study the economic principles behind the concept of predatory pricing. They first present an overview of airline deregulation, followed by a discussion of legal and economic views of predatory pricing as well as how its has evolved as a concept during the past thirty years. The authors describe methods used by airlines in practicing price discrimination. The current approach proposed by the U.S. Department of Transportation regarding their determination of whether a major carrier is demonstrating anti- competitive, predatory behavior is also discussed.