DirectJet is a small regional airline based in northern Europe. It operates a small number of jet aircraft and could initially produce only 400,000 ASMs per day. However, the output rate picked up as soon as management learned to schedule their flights more efficiently, save turnaround time on the ground, decrease fuel consumption, and so on. Suppose that the average cost per seat mile during the first year was as shown below and that the variable factors will continue to become more productive as total output measured in ASM continues to increase.

a. Obtain the estimated regression function. Does a linear regression function appear to give a good fit?

b. Test the overall significance of the regression parameters.

c. Write the estimated equation for this relationship.

d. Based on the above statistics, forecast the average cost per seat mile when total output reaches 1 and 1.2 million ASM.

e. Interpret slope and intercept in your estimated regression function. Do they provide any relevant information? Explain.

f. Calculate MSE and MAD for the independent variable.
g. Perform an F-test to determine whether or not there is a lack of fit of a linear regression function.

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ASM CASM 400,000 15.82 350,000 16.85 500,000 12.15 450,000 10.25 400,000 10.95 500,000 10.01 490,000 9.75 530,000 9.00 580,000 9.65 380,000 12.89 480,000 9.25 380,000 15.00 340,000 16.00