Emirates Airlines is a major carrier based in UAE, and has made a strategy of cutting fares drastically on certain routes with large effects on air traffic in those markets. For example, on the Dubai - Delhi route the entry of Emirates Airlines into the market caused average fares to fall by 48 per cent and increased market revenue from AED 21,327,008 to AED 47,064,782 annually. On the Dubai - Huston route, however, the average fare cut in the market when Emirates entered was 70 per cent and market revenue fell from an annual AED 66,201,553 to AED 33,101,514.

(a) Calculate the Price Elasticity of Demands for the Dubai - Delhi and Dubai - Huston routes.

(b) Explain why the above market elasticities might not apply specifically to Emirates Airlines.

(c) Explain why the fare reduction on the Dubai - Huston route may still be a profitable strategy for Emirates Airlines.