Answered step by step
Verified Expert Solution
Question
1 Approved Answer
An airline is currently evaluating two separate strategies for the forthcoming Winter 2021/2022 season for short haul operations. A number of scenarios are being evaluated
An airline is currently evaluating two separate strategies for the forthcoming Winter 2021/2022 season for short haul operations. A number of scenarios are being evaluated versus the actual performance from prior year (ie. Winter 2020/2021). The following details are relevant: Note: you should assume that the same number of seats will be actually flown under any scenario outlined. Winter 2021/2022 season represents the calendar months November 2021 to March 2022 Total Seat Capacity operated in Winter schedule 3,800,000 seats Winter 2020/2021 Seat Load Factor 70% (prior year figure for comparison) Winter 2020/2021 Average Fare per Passenger 85 (prior year figure for comparison) Average Retail Spend per Passenger 20 Revenue Management have provided the following additional details based on their historic pricing experience of the Winter season: Every 5 increase in average fare per passenger ecreases expected seat load factor by 2% Every 5 decrease in average fare per passenger increases expected seat load factor by 3% 1) You have been asked to evaluate the following with respect to actual revenue for Winter 2020/2021 a. The impact on revenue of applying a 9.00 increase to all passenger fares for Winter 2021/2022 compared to Winter 2020/2021 b. The impact of decreasing passenger fares by 5 but increasing average retail spend per passenger by 3 for Winter 2021/2022 compared to Winter 2020/2021 c. What change in retail spend per passenger would make the lowest change in revenue scenario of a) and b) above equal the highest change scenario
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started