Question 1

American Airlines risks disappointing consumers who perceive Expedia and other middlemen as the go-to source for &#34;great deals.&#34; This is because consumers expect __________ when they buy tickets.&#10;A) reasonable competition&#10;B) a reasonable price&#10;C) little sacrifice&#10;D) satisfaction maximization&#10;E) all of the above

Accepted Answer

Value is based upon perceived satisfaction,that is,when consumers feel they have paid a "reasonable price."

Question 2

Expedia,Orbitz,Priceline,and travel agencies make their money off __________.&#10;A) commissions paid by the airlines to sell their tickets&#10;B) the profits they make by bulk ticket purchases from the airlines&#10;C) sophisticated scalping software&#10;D) fees the airlines pay to list tickets on GDS&#10;E) fees the airlines pay after a ticket is sold on the middlemen's GDS

Accepted Answer

The GDS ticket-sale model enables travel agents to sell tickets and collect fees from the sale of tickets via the GDS.

Question 3

Critics say that Direct Connect will allow American Airlines to raise its prices whenever it wants.

Accepted Answer

Supply and demand and other variables (e.g.,fuel prices)still determine what American Airlines charges and it will price it tickets to ensure the fewest empty seats accordingly.

Question 4

GDS evolved from YMS.

Accepted Answer

GDS (Global Distribution System) evolved from YMS (Yield Management System). YMS was initially developed to help airlines manage their inventory and pricing, and later evolved into GDS, which provides a wider range of services to travel agents and consumers.

Question 5

American Airline tickets are a commodity.If other agents can sell its tickets,then they have __________ that American Airlines does not have.&#10;A) status quo pricing&#10;B) competition&#10;C) a distribution&#10;D) supply and demand&#10;E) unit market share

Accepted Answer

American Airlines is clearly increasing its market share at the expense of middlemen,repeating a strategy it had used previously to squeeze out travel agencies.

Question 6

The in-house reservation Direct Connect is the latest example of __________,long used by airlines.&#10;A) eliminating competition&#10;B) penetration pricing&#10;C) a yield management system&#10;D) a ticket shopping bot&#10;E) selling for the brand

Accepted Answer

First developed in the airline industry,yield management systems (YMS)use complex mathematical software to profitably fill unused capacity.

Question 7

By removing itself from GDS-type retailers,American Airlines will maximize its ability for all of the following except __________.&#10;A) to increase ticket revenue&#10;B) to decrease marginal cost&#10;C) two-part pricing&#10;D) comparison shopping&#10;E) bundling with hotels, rental car agencies, and the like

Accepted Answer

Ticket shoppers using Direct Connect will not be able to compare flights to other carriers.

Question 8

Given American Airlines demands that Orbitz and other middlemen use its Direct Connect,the carrier sees a satisfactory profit.

Accepted Answer

American Airlines penetration pricing and behavior are more indicative of profit maximization.

Question 9

The GDS systems that Orbitz and other middlemen use is an extranet.

Accepted Answer

GDS systems are commonly used by travel agencies and online booking platforms like Orbitz as an extranet to access and display travel product information, availability, and pricing from various suppliers.

Question 10

By eliminating the number of online ticket shopping venues that sold its tickets,American Airlines improves __________.&#10;A) its status quo pricing&#10;B) its buyer dependence-those traveling in and out of its hubs&#10;C) its ability to absorb fuel costs&#10;D) its economies of scale&#10;E) all of the above

Accepted Answer

All of the above are improved by penetration pricing strategies that result in market share,more ways to compete,and more options to pass (or not pass)on costs to consumers.

Deck 46: Will a New Reservation System Translate to Higher Prices for Travelers?