A regional airline is considering providing a new daily service between two locations. The aircraft has a maximum capacity of 200 passengers and each flight incurs a fixed cost of $27,000 regardless of the number of passengers. In addition, a cost is also incurred of $75 per passenger to cover such things as catering, booking, baggage handling.

 

The company is thinking of charging $225 per ticket. How many passengers will the airline need on each flight to break even? Find the break-even point algebraically and illustrate it using an EXCEL graph. Based on your analysis, will Hit-and-Miss realize a profit or a loss if 160 seats are sold for a particular flight? Explain briefly.

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2.  The airline knows from previous experience that they are unlikely to sell more than 80 percent of seats on any one flight. Assuming they sell exactly this many, what price per seat should they charge to break even?
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The company also has the option of accepting a cargo contract. Under this contract, the airline will receive $5,000 per flight for transporting cargo but, because of the extra weight, it will have to reduce its maximum number of passengers to 190. Find the new break-even ticket price for a full flight.