Question
Peter Belobaba's groundbreaking dissertation states: For the profit-maximizing airline, an objective of maximizing total revenue is more appropriate than maximizing overall passenger yield (avg. revenue
Peter Belobaba's groundbreaking dissertation states: "For the profit-maximizing airline, an objective of maximizing total revenue is more appropriate than maximizing overall passenger yield (avg. revenue per passenger mile). Given a commitment to operate a scheduled flight with a fixed operating cost, and acknowledging the very low marginal costs of carrying additional passengers on the flight, an airline that maximizes the total flight revenues will in fact, maximize operating profits." Explain how economic reasoning/theory supports Dr. Belobaba's thesis.
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