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People Express

�PPeople Express, founded in April 1981, grew rapidly on the basis of low fares and no-frills service. It soon became a leading airline and __1__ changed the industry as firms constantly engaged in price wars to lure passengers. Then, People Express' bubble __2__ because it overexpanded, consumer complaints mounted and other airlines matched its fares on popular routes. In 1986, People Express __3__ hundreds of millions of dollars and was forced to sell out to Texas Air, the owner of Continental and Eastern Airlines.

In early 1987, Texas Air __4__ People Express into its Continental division and industry observers believed __5__ the costly fare wars would be ended. They could not have been more wrong. To stimulate business for its __6__ continental Airlines, Texas Air instituted a new low fare category __7__ MaxSaver. The fare offered prices that were up to 40 per cent lower than "supersaver" rates offered __8__ all airlines. For example, the round-trip MaxSaver fare from New York to Houston was $70. The MaxSaver fares were immediately matched by all major airlines, __9__ feared losing business.

While MaxSaver rates were low, they also had restrictions. Tickets could not be __10__ or flight times modified after purchase. Passengers would have to stay over either a Saturday or Sunday. Reservations had to be made at least two days __11__, and there were limited seats available.

Three weeks after MaxSaver rates were __12__, American Airlines announced plans to raise its discount fares and require 30-day __13__ purchasing for its lowest fares. It felt it could not continue at the rates in effect. However, just 10 days __14__, Ameriacn Airlines had to revise its plan. Texas Air refused to abandon the MaxSaver fare; it even extended the program into the busy summer season. Competitors went along and the price war raged on, __15__ an executive's comment that "nobody's cost structure can survive MaxSavers."

1. A) little

B) slowly

C) quick

D) radically

2. A) burst

B) explode

C) opened

D) disappeared

3. A) gained

B) made

C) lost

D) disappeared

4. A) emerged

B) merged

C) has combined

D) mixed

5. A) what

B) which

C) where

D) that

6. A) expand

B) to extend

C) expanded

D) extended

7. A) called

B) calling

C)to call

D) calling on

8. A) to

B) for

C) with

D) by

9. A) what

B) that

C) which

D) this

10. A) put off

B) canceling

C) destroyed

D) canceled

11. A) before

B) in advance

C) ahead of

D) later

12. A) introduced

B) brought in

C) taken in

D) adapted

13. A) advanced

B) before

C) ahead

D) prior to

14. A) lately

B) later

C) late

D) latter

15. A) despite of

B) despite

C) in spite

D) although

KEY: DACBD CADCD BAABB