+1-415-670-9189
info@expertsmind.com
How might air eagle implement price discrimination that is
Course:- Accounting Basics
Reference No.:- EM13601546




Assignment Help
Assignment Help >> Accounting Basics

Airline pricing, considerations other than cost in pricing. Air Eagle is about to introduce a daily round-trip flight from New York to Los Angeles and is determining how it should price its round-trip tickets.
The market research group at Air Eagle segments the market into business and pleasure travelers. It provides the following information on the effects of two different prices on the number of seats expected to be sold and the variable cost per ticket, including the commission paid to travel agents:
Number of Seats Expected to Be Sold
Price Charged Variable Cost per Ticket Business Pleasure
$ 500 $ 65 200 100
2,100 175 180 20
Pleasure travelers start their travel during one week, spend at least one weekend at their destination, and return the following week or thereafter. Business travelers usually start and complete their travel within the same work week. They do not stay over weekends.
Assume that round-trip fuel costs are fixed costs of $24,000 and that fixed costs allocated to the round-trip flight for airplane-lease costs, ground services, and flight-crew salaries total $188,000.

Required
1. If you could charge different prices to business travelers and pleasure travelers, would you? Show your computations.

2. Explain the key factor (or factors) for your answer in requirement 1.

3. How might Air Eagle implement price discrimination? That is, what plan could the airline formulate so that business travelers and pleasure travelers each pay the price desired by the airline?




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Accounting Basics) Materials
Actual revenues and expenditures reported on a budget and actual comparison schedule should be prepared on the same basis as budgeted revenues and expenditures, even if a ca
ACC 211 (a)Describe the department in which you are working in or one in which you are familiar with. Do you agree that to properly evaluate the manager of the department,the
Calculate the project's net present value (NPV). Calculate the project's internal rate of return (IRR). Calculate the project's profitability index. Calculate the project's di
What is the expected return on the convertible to EduSoft? Does this cost appear to be consistent with the convertible bond's risk - How do convertible bonds help reduce agen
Using the data in BE3-3, journalize the entry on July 1 and the adjusting entry on December 31 for Zubin Insurance Co. Zubin used the accounts Unearned Insurance Revenue and I
During the past year, a company completed the following transactions related to the acquisition of property and the construction thereon of a new factory:
What are the signs you would look out for in the financial statements for the possibility of bad debts? What are the advantages and disadvantages of allowing customers to ma
The data is clearly not normally distributed since the phenomenon in question is typical of an exponential random variable. Carry about an appropriate test to validate the h