Colorado Airlines is operating at full capacity on its Denver to New York route, offering three flights each day on this route, using Boeing 737s, each with a capacity of 120 passengers. Airline management wants to determine the least expensive way to increase daily capacity from 360 passengers to 480 passengers. One possibility is to add one more Boeing 737 per day. The other possibility is to replace the current equipment with larger Boeing 727s, which hold 160 passengers each. In either case, management believes the planes will continue to operate at full capacity. To ascertain the least expensive way to increase passenger capacity on the Denver-to-New York route, management has asked you to determine what drives the airlines operating costs.

Required:

Consider the following cost drivers:

a) Number of flights per day

b) Number of miles flown per day

c) Number of passengers served per day

d) Number of passenger miles (miles flown per day multiplied by number of passengers)

For each of the following costs below, identify the most appropriate cost driver from the above list (a,b,c,d).

Ground personnel who serve passengers at the ticket counter and at the gate.

Cockpit crew salaries (Federal Aviation Administration regulations limit pilots to fly no more than a certain number of hours per month).