Second City Airlines owns one aircraft (capacity =120 passengers) and can operate 20 scheduled one-way flights between NewYork City and Pittsburgh each week. It charges a fixed one-way fare of $150 per passenger. Fuel and other flight-related costs are $5,000 per one-way flight. On-flight meal costs are $11 per passenger. Sales commissions averaging 6% of fare are paid to travel agents. Flying crew, ground crew, advertising and other administrative costs amount to $210,000 each week.

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Comment on your answers to parts A & B. Second-City can lease (cancelable with a month notice) another aircraft (capacity=120 passengers) that can provide an additional 20 one-way flights in a week. Flying crew, ground crew, advertising and other administrative costs (including the lease for the airplane) will increase by $100,000 per week. Would you recommend leasing the second aircraft assuming that this route has enough demand? Explain with supporting numbers and other factors.