Delta Airlines has frequent (every hour or every two hours) flights between key metropolises in the Northeast - they call these flights the "Delta Shuttle" service.At the time of writing this problem set, the Shuttle service is offered between New York and Boston (LGA-BOS), DC (LGA-DCA), and Chicago (LGA-ORD).

In the late 90s, Delta offered special student pricing on the Boston route, perhaps due to the fact that Boston is a college city (Boston University, Boston College, MIT, Harvard, etc.), but then discontinued the program in early 2000.Now Delta is re-considering decisions on their shuttle route.The MD-88 plane has 148 seats and the Embraer 175 has 76 seats.Please see the accompanying Excel with the pricing data.

1.Graph quantity (x-axis) v price (y-axis) for the business and youth segment.So you should have two separate charts.Add a trendline to each chart & include the formula for the trendline. https://www.excel-easy.com/examples/trendline.html

2.On a new sheet in your Excel, using the trendlines for prices between $220 and $20 (at increments of $10) find the quantity each segment will buy, as predicted by the trendlines.So now you should have a new sheet with Price, Quantity Predicted Y, and Quantity Predicted B.

HINT: your trendline from (1) will be in the format of Price = a*Quantity + b.To do (2) you will need to use algebra to get the formula so that it is Quantity = c*Price + d.

3.Using what you did in (2), find MR for each segment.

4.What is MC? How will you find it? Why do you think this?

5.What is the maximum profit Delta can earn by flying the Embraer 175?

a.Should they offer different student v business passenger pricing?

b.What pricing should they sell seats at? What quantity will they sell, what will be their revenue, and what will be their profit? If you answered yes in (5a), give price and quantity for each the youth and business segment.

6.What is the maximum profit Delta can earn by flying the MD-88?

a.Should they offer different student v business passenger pricing?

b.What pricing should they sell seats at? What quantity will they sell, what will be their revenue, and what will be their profit? If you answered yes in (5a), give price and quantity for each the youth and business segment.

7.Which aircraft should Delta use? Why? Please explain and support your answer.

8.Say Delta does decide to use group-based pricing to differentiate between the business and youth segments, what are potential challenges to that strategy or problems to implementing it you could foresee? How could you mitigate those?

DATA SET

COST

Week Price Business Quantity Busines Price Youth Quantity Youth 19 S 190 82 S 86 8 20 190 86 8 21 200 76 90 7 22 S 200 73 S 90 7 23 S 200 85 90 8 24 200 81 90 25 200 78 90 8 26 205 75 92 8 27 205 84 92 7 28 205 75 92 6 29 S 205 85 92 7 30 205 74 92 7 31 195 80 88 8 32 195 77 88 8 33 195 74 88 LO 34 195 82 85 9 35 195 91 85 9 36 185 89 85 |LD 37 185 86 33 LD 38 185 82 83 LD 39 185 95 83 9 40 185 84 83 10 41 175 102 79 11 42 175 92 79 10 175 92 70 12 175 92 70 11 15 175 87 70 13 46 175 92 70 12 165 95 74 12 48 165 94 74 12 19 165 92 74 12 50 175 92 79 9 51 S 175 92 79 11 52 S 175 93 79 10Delta Airlines Aircraft Operating Costs Cost Per Block Hour (Block Hour is the time from gate departure to gate arrival) E-175 $4,457 MD-88 $6,128 Pilots $592 Pilots Salaries and Wages $363 Salaries and Wages $458 Pilot Training 56 Pilot Training 35 Benefits and Payroll Taxes $175 Benefits and Payroll Taxes $172 Per Diem/ Personnel $48 Per Diem/ Personnel $47 Purchased Goods $2,263 Purchased Goods $3,463 Fuel/Oil $2,250 Fuel/Oil $3,450 Insurance $13 Insurance $13 Other (inc. Tax) SO Other (inc. Tax) Maintenance $1,267 Maintenance $1,387 Labor 565 Labor $56 Materials $168 Materials $163 Third Party $270 Third Party $337 Total Direct $485 Total Direct $556 Burden $279 Burden $274 Aircraft Ownership $104 Aircraft Ownership $20 Rentals $68 Rentals $123 Depreciation and Amortization $36 Depreciation and Amortization $79 Other 230 Other $391