Question

In a recent year Continental Airlines filled about 50% of the available seats on its flights, a record about 15% below the national average.
Continental could have eliminated about 4% of its runs and raised its average load considerably. The improved load factor would have reduced profits, however. Give reasons for or against this elimination. What factors should influence an airline’s scheduling policies?
When you answer this question, suppose that Continental had a basic package of 3,000 flights per month, with an average of 100 seats available per flight. Also suppose that 52% of the seats were filled at an average ticket price of $200 per flight. Variable costs are about 70% of revenue.
Continental also had a marginal package of 120 flights per month, with an average of 100 seats available per flight. Suppose that only 20% of the seats were filled at an average ticket price of $100 per flight. Variable costs are about 50% of this revenue. Prepare a tabulation of the basic package, marginal package, and total package, showing percentage of seats filled, revenue, variable expenses, and contribution margin.



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  • CreatedNovember 19, 2014
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