Case Detail

Case Summary

The Hawaiian Airline Industry, 2001–2008

Case Number: 5-108-005, Year Published: 2008

HBS Number: KEL351

Request PreviewBuy

Key Concepts

Price Wars, Tacit Collusion, New Entry

Abstract

Two Hawaiian airlines' cooperative environment is disrupted by the entry of a third competitor, Mesa Airways. The price war leads to fares as low as $0 and causes more than $100 million in losses in the first year with no end in sight. Industry risk factors for price competition were reduced in 2001 when the government granted a one-year reprieve from anti-trust laws, but increased dramatically after Mesa's announced entry. The learning objective of this case is to demonstrate how industry risk factors drive price competition. The initial circumstances are supportive of a tacit collusion between two firms; following the entry of the third airline, conditions were more conducive to a devastating price war.

Number of Pages: 6

Extended Case Information

Teaching Areas: Economics, Strategy

Geographic: Hawaii

Industry: Airline

Organization Name: Hawaiian Airlines, Aloha Airlines, Mesa Airways

Organization Size: Medium

Decision Maker Position: CEO

Decision Maker Gender: Male

Year of Case: 2008