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

Question 1

American Airlines risks disappointing consumers who perceive Expedia and other middlemen as the go-to source for "great deals." This is because consumers expect __________ when they buy tickets.

A) reasonable competition
B) a reasonable price
C) little sacrifice
D) satisfaction maximization
E) all of the above

Answer 1

A
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 __________.

A) commissions paid by the airlines to sell their tickets
B) the profits they make by bulk ticket purchases from the airlines
C) sophisticated scalping software
D) fees the airlines pay to list tickets on GDS
E) fees the airlines pay after a ticket is sold on the middlemen's GDS

Answer 2

E
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.

Answer 3

False
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.

Question 5

American Airline tickets are a commodity.If other agents can sell its tickets,then they have __________ that American Airlines does not have.

A) status quo pricing
B) competition
C) a distribution
D) supply and demand
E) unit market share

Question 6

The in-house reservation Direct Connect is the latest example of __________,long used by airlines.

A) eliminating competition
B) penetration pricing
C) a yield management system
D) a ticket shopping bot
E) selling for the brand

Question 7

By removing itself from GDS-type retailers,American Airlines will maximize its ability for all of the following except __________.

A) to increase ticket revenue
B) to decrease marginal cost
C) two-part pricing
D) comparison shopping
E) bundling with hotels, rental car agencies, and the like

Question 8

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

Question 9

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

Question 10

By eliminating the number of online ticket shopping venues that sold its tickets,American Airlines improves __________.

A) its status quo pricing
B) its buyer dependence-those traveling in and out of its hubs
C) its ability to absorb fuel costs
D) its economies of scale
E) all of the above