In her book Discrete Choice Modeling and Air Travel Demand (Ashgate Publishing, 2010), Per Laurie Garrow details how airlines have predicted how changes in flight prices will affect their market share. Use this example to perform some similar analysis. Delta Airlines wants to determine the profit maximizing price to charge for a 9 a.m. New York to Chicago flight. A focus group has been shown 16 different flights and asked if it would choose a flight if the flight were available. The results of the survey are in file Airlinedata .xlsx, and a sample is shown in Figure 18-11. For example, when shown a Delta 8 a.m., four-hour flight with no music (audio), video, or meals, priced at $300, 78 people chose that flight over choosing not to take a flight at all (Delta = 0, United= 1).

a. Which airline (Delta or United) has more brand equity on this route?

b. Delta wants to optimally design a 9 a.m. flight. The flight will have audio and take six hours. There are 500 potential flyers on this route each day. The plane can seat at most 300 people. Determine the profit maximizing price, and whether Delta should offer a movie and/or meals on the flight. The only other flight that day is a $350 United 8 a.m., five-hour flight with audio, movies, and no meals. Delta's cost per person on the flight breaks down as follows: Item Cost Per Person Fuel $60 Food $40 Movie $15 Help Delta maximize its profit on this flight.