The Eppley Airline Company

Distances to Major Cities (air miles)

1 2 3

	Tokyo	Hong Kong			Seoul
Seattle	4,785	6,639			5,166

Fixed Cost is: $25,450 per flight

Non fuel Variable Cost is: $12.50 per passenger

Fuel variable cost for average weight and baggage customer is:

$ .012 cents per mile

You will be flying a:

747-8 Intercontinental or 747-8I, will be capable of carrying up to 467 passengers

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Assignment:

1)What is the breakeven price per ticket for a fully loaded plane?

2) If your airline wants to achieve 50% gross operating margin, what ticket price per passenger must it charge for a plane at 50% capacity?

3) Assume you have priced the first 234 tickets with the assumptions of no. 2 above. How would you price the remaining capacity and why?

4) Post results for your group in the Canvas dropbox and we will go over in class.