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This paper examines the airline industry in the context of product differentiation. I will analyse both vertical and horizontal product differentiation.
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ABSTRACT This paper examines the airline industry in the context of product differentiation. I will analyse both vertical and horizontal product differentiation. The airline industry provides an excellent example of an industry where fierce competition has resulted in the cutting down of prices and an increase in variety for consumers. The industry development can be divided into three major phases, which are dominated by deregulation of the Airline Industry in the US and in Europe, the Persian Gulf War in 1991 and the WTO 9/11 disaster. Deregulation has introduced 'low-cost' airlines, which made the industry very competitive, lowering the cost of fares. These new 'no-frills' led to crucial changes in the structure of the industry and brought into it the concept of vertical integration which allowed customers to choose, if they preferred, to travel cheaply or pay extra for better quality travel. Fear of flying due to terror attacks posed a greater...
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