Questions 1 and 2

1. Estimate the salary cost function for Delta. Despite the fact you can choose between some feasible drivers, please use Revenue Passenger Miles for this part of the case. Use the High Low method.
2. Estimate the salary cost function for JetBlue. Use the high low method.

Now, let's discuss the results!

3. What conclusion can you make out of the comparison of both cost functions in 1 (above) and 2 (above).?

4. Some years after Deltas case situation, salaries were no longer the highest cost for Delta. Fuel prices increased dramatically after 2001. How can you deal with this new profitability threat from a cost management perspective? If costs cannot come down, how can we improve the profitability of a firm such as Delta?