An airline is currently evaluating two separate strategies for the forthcoming Winter 2021/2022 season for short...

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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 (i.e. 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 Winter 2020/2021 Seat Load Factor (prior year figure for comparison) Winter 2020/2021 Average Fare per Passenger (prior year figure for comparison) Average Retail Spend per Passenger 3,800,000 seats 70% 85 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 decreases 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? 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 (i.e. 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 Winter 2020/2021 Seat Load Factor (prior year figure for comparison) Winter 2020/2021 Average Fare per Passenger (prior year figure for comparison) Average Retail Spend per Passenger 3,800,000 seats 70% 85 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 decreases 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?

Answer rating: 100% (QA)

Lets break down each part of the question a Impact on revenue of applying a 900 increase to all passenger fares for Winter 20212022 compared to Winter 20202021 Given Winter 20202021 average fare per p... View the full answer