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Safety is arguably the most important “quality” attribute of commercial aviation, yet it rarely figures into overt interfirm rivalry. Usually, airlines do not even allude to their safety record vis-à-vis rivals in their advertising and press statements. Moreover, statistical analysis by independent parties usually indicates that peer airlines within the same geographic region and segment of the industry have indistinguishable safety records (Barnett, 2010).

Quest for fair pricing equation continues. No one is happy with current online pricing equations and there now seems to be a real consensus that change must come. However, so far there has been little action, although new initiatives from three online vendors could signal that this is about to change.

Research analyzing competition and individual carriers' financial condition's influence on pricing behavior in the airline industry are presented in the first part of the book. The initial chapter by Manuel Hernandez, Anirban Sengupta, and Steven Wiggins directly tests whether competition creates a challenge for legacy carriers practicing nonlinear pricing such that passengers are charged different prices for the same flight without cost justification. The authors use transactions level data, which has the advantage of allowing an empirical examination of the effect of Southwest and other LCCs on both the level and structure of fares of legacy carriers. The analysis is performed by defining a menu of airline fare types according to restrictive ticket characteristics to then evaluate the competitive effects of both Southwest and other LCCs, including adjacent and potential competition from Southwest, on the relative pricing behavior of major carriers. Findings suggest that competition from Southwest has an important effect on both the level and fare structure of legacy carriers. In particular, direct and potential competition from Southwest both lower the fare per mile and compress the fare structure by decreasing the premia of the highest fares, including first-class tickets, over the lowest fares. Adjacent competition from Southwest and direct competition from other LCCs only seem to significantly affect the fare level.