Airline industry experts generally believe that because of the “highly competitive” nature of U.S. airline markets, it is usually impossible to pass on higher jet fuel prices to passengers by raising ticket prices.
a. What factors do you suppose contribute to making U.S. airline markets “highly competitive”?
b. Accepting the premise that U.S. airline markets are indeed highly competitive, analyze in both the short run and long run the difficulty of raising ticket prices when jet fuel prices rise.