Airgo Inc. is an international airline company headquartered in New Delhi, India. The company was incurring losses for several quarters until the first quarter of 2021. During the first quarter of 2020, it incurred an operating loss of ₹22 million with a revenue of ₹148 million. In the first quarter of 2021, however, it earned 308 million revenue with an operating income of ₹122 million. The level of fixed costs remained the same throughout.

1. Calculate the operating expenses for Airgo Inc. for the first quarter of 2020 as well as 2021. 

2. Determine the cost function of Airgo Inc., that is, the fixed cost and the variable cost, as a percentage of the sales revenue. 

3. Explain how the company could increase its operating income by ₹158 million with an increase in revenue of ₹160 million within just one year.