Consider the airlines’ marketing situation, particularly in the
United States. On a single city-pair one airline may predominate
flying, say, 50 per cent of all who travel to barcelona or
travel between those two cities by air even though it only
flies, say, 45 per cent of the seats. It has this extra market
share because it flies more flights each day than its
competitors and it has proved that frequencies are a dominant
force in attracting traffic. Maybe the airline is not making
money on that route for any one of a dozen reasons. Perhaps it
is breaking even or earning a bit, but not enough. It is
spreading some overheads which would have to be paid whether it
flew that route or not— and it might even be that rarity, a
profitable route. But there’s always room for improvement. How
about cutting costs? Well, it could fly bigger, more efficient
aircraft and cut its cost per passenger mile that way. But if it
does that it will have to reduce frequencies or it will be
flying more empty seats and be worse off th