Question

In the late 1990’s, Vanguard Airlines operated as a low-cost carrier, offering low prices and limited services, out of Kansas City, Missouri. Not long after its inception, Vanguard began offering a significant number of flights based out of Midway International Airport in Chicago, Illinois as well. When Vanguard expanded to Midway, incumbent airlines, such as Delta, quickly responded to its low fares by offering many competing flights at comparably low prices. The intense price competition ultimately caused Vanguard to exit Midway in 2000 and file for bankruptcy in 2002. At varying points in time, the airline industry has been described as a contestable market; does the example of Vanguard support or refute this characterization of the airline industry? Explain.​

Answer 1

Airline industry it self is a big industry in the world where in todays world it need to be expanded to meet its demand . Expansion of airlines industry need huge investment witch can be financed from industry bank and investors how ever these investors need security for their result on investment .

In the above case the airline industry seems to be expanding its business over the various countries there by huge financial requirement is needed however an airline indutry in todays market is of huge demand and thus i m against the above case where the industry is shown bankrupt . In the above case there may be the inproper maintainance of accounts and commucation gap which lead it to the bankcrupt .