(b) i. Using the information in Table 1 and Table 2 and other information, calculate the price to customers for a return journey to and from Birmingham airport. [ 3 ] ii. Using your answer to (b) i. calculate the contribution per return Birmingham airport journey. [ 3 ]
Question A1 Premier Taxis (PT) is a taxi business in Bradford. PT is owned by two friends, Christine and Sally, who set up the business as a private limited company in 2015 after both had been made redundant from their public sector jobs. Christine and Sally decided from the very beginning of their business that they would use the fact that they were the only all-female taxi business in Bradford as their unique selling point (USP). In the early days of the business, Christine worked in the small office they had rented in town taking bookings from customers, while Sally did all of the driving. The business soon became extremely popular with customers and the reputation they had quickly established for reliability and competitive pricing meant that they had to recruit additional drivers PT currently employs five drivers who work a mixture of full and part-time hours. Christine and Sally now share managing customer bookings and drive taxis as and when needed. Many of PT's customers are people travelling to the local airport which is just 15 kilometres away from their town centre office. However, over recent months they have been receiving a number of enquiries from people who want to take a taxi to other UK airports. Christine and Sally see this as an opportunity to expand their business and are considering offering a return taxi journey from Bradford to Birmingham and Manchester Airports. However, if they go ahead with this plan, they will need another vehicle and one which can take larger groups of people and their luggage. Christine has carried out some research and has identified a suitable vehicle for the longer airport journeys. The running costs of this vehicle is shown in Table 1. Table 1: Running Costs of MPV for Longer Airport Journeys Fixed Costs per month (based on 5000kms) 1000 Variable Costs per kilometre 0.20 Sally has carried out primary market research to forecast the monthly demand for taxi journeys to Manchester and Birmingham airports. The results of her research are shown in Table 2. Table 2: Research data for Taxi Journeys from Bradford to Birmingham and Manchester Airports Airport Return Forecast Competitor Maximum distance from average prices for amount people Bradford number of same will pay for (Kms) return journey return taxi to journeys per airport month Birmingham 400 8 220 - 250 235 Manchester 170 10 100 - 115 110 PT currently uses cost-plus pricing by adding a profit margin of 50% to the full cost per kilometre. Christine and Sally are keen to promote their new service to existing and potential customers. They also think that offering a fixed price for a return journey to both Birmingham and Manchester Airports will be attractive to potential users of the service. Question A1 Premier Taxis (PT) is a taxi business in Bradford. PT is owned by two friends, Christine and Sally, who set up the business as a private limited company in 2015 after both had been made redundant from their public sector jobs. Christine and Sally decided from the very beginning of their business that they would use the fact that they were the only all-female taxi business in Bradford as their unique selling point (USP). In the early days of the business, Christine worked in the small office they had rented in town taking bookings from customers, while Sally did all of the driving. The business soon became extremely popular with customers and the reputation they had quickly established for reliability and competitive pricing meant that they had to recruit additional drivers PT currently employs five drivers who work a mixture of full and part-time hours. Christine and Sally now share managing customer bookings and drive taxis as and when needed. Many of PT's customers are people travelling to the local airport which is just 15 kilometres away from their town centre office. However, over recent months they have been receiving a number of enquiries from people who want to take a taxi to other UK airports. Christine and Sally see this as an opportunity to expand their business and are considering offering a return taxi journey from Bradford to Birmingham and Manchester Airports. However, if they go ahead with this plan, they will need another vehicle and one which can take larger groups of people and their luggage. Christine has carried out some research and has identified a suitable vehicle for the longer airport journeys. The running costs of this vehicle is shown in Table 1. Table 1: Running Costs of MPV for Longer Airport Journeys Fixed Costs per month (based on 5000kms) 1000 Variable Costs per kilometre 0.20 Sally has carried out primary market research to forecast the monthly demand for taxi journeys to Manchester and Birmingham airports. The results of her research are shown in Table 2. Table 2: Research data for Taxi Journeys from Bradford to Birmingham and Manchester Airports Airport Return Forecast Competitor Maximum distance from average prices for amount people Bradford number of same will pay for (Kms) return journey return taxi to journeys per airport month Birmingham 400 8 220 - 250 235 Manchester 170 10 100 - 115 110 PT currently uses cost-plus pricing by adding a profit margin of 50% to the full cost per kilometre. Christine and Sally are keen to promote their new service to existing and potential customers. They also think that offering a fixed price for a return journey to both Birmingham and Manchester Airports will be attractive to potential users of the service
