Question
Can someone help with this question. On your new position as the newest Board Member of your respective airline. As you know, these are turbulent
Can someone help with this question.
On your new position as the newest Board Member of your respective airline. As you know, these are turbulent times ain the airline industry with rising fuel costs, upheaval in the Middle East and terrorismplots in the United States and Europe. In addition, the airline industry is an oligopoly as there are 4 major domestic airlines. Your first task is to set a price for a flight that matches your competitor's.For every dollar that your price is above your competitors - you will lose 1% market share which translates to losing $200,000 for the month of May. For every dollar you are below the average price of your competitor's you will gain 1% market share which means your profit will increase $200,000 for the month of May. Your Planning Department believes you have currently have 25% of the market of 1,000,000 passengers for the month of May. Your fixed costs are $1,000,000 for the month of May and your variable cost is $125/per passenger for May.You need to cover your fixed cost and stockholders want a return of at least 5% for the month of May.
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