Describe the nature of service competition in the airlines.

Primary service competition is on frequency and timing of flights. The premium flight departures are early morning (7AM to 10AM) and late afternoon (4PM to 6PM). The demand difference for flights taking off 3 hours later between the same city pairs is significant.

The airlines also compete through attempts to differentiate their service through advertising of amenities (e.g., on time arrival, friendliness, live satellite television, and frequent flyer programs).

Some airlines are competing through no-frills service (e.g., Southwest). They charge lower fares but there is also a lower level of service with respect to items like snacks and drinks. Additionally no frills typically has only one class of service.