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5. Charter contracts are negotiable, and charter carriers receive many contract offers that do not promise $300 prices or 80-percent-full planes. Should the airline accept
5. Charter contracts are negotiable, and charter carriers receive many contract offers that do not promise $300 prices or 80-percent-full planes. Should the airline accept a charter flight proposal from a group that offers to guarantee the sale of 90 seats at $250? Why or why not?Suppose the following costs for a 10-hour round-trip flight apply to the time frame and expenses of an unscheduled 5-hour charter flight from Baltimore to Las Vegas (and return the next day) on a seven-year-old Boeing 737-800 with 120 occupied seats. Some costs listed in the table have been aggregated up to the flight level from a seat-level decision where they are incurred. Others have been allocated down to the flight level from an entry/exit or maintain-ownership company-level decision. Still other costs vary with the goo go flight-level decision itself. Your job is to analyze each cost item and figure out the "behavior of cost"-that is, with which decision each cost varies. Fuel and landing fees $5.200 Quarterly airframe maintenance re: FAA certificate 1,000 Unscheduled engine maintenance per 10 flight hours 1,200 Pro rala time depreciation for seventh year of airframe 7.200 Flight pay for pilots per round-trip flight 4,200 Long-term hangar facility lease 6,600 Annual aircraft engine operating lease 7,100 Base salaries of headquarters personnel 2,000 Food service with seat-by-seat purchase and JIT delivery at each departure 2,400 Airport ground crew baggage handling for two flight arrivals 450
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