Easy Air has decided to look at a couple of options for dealing with its late flight problem. While the number of solutions could be endless, it has narrowed it down to two: increase the turn time for flights or invest more money in flight operations.

If it increases the turn time, it will see a reduction of 3% in passenger load, so revenues will be down. At the same time, however, canceled flight costs will drop 30% and turn time costs will increase 25%, while new tickets issued will drop 5% and reservations costs will drop 3%.

If, instead, it decides to invest more in flight operations, it will see a 3% increase in passenger load, so revenues will go up as problems diminish. Flight operation costs, however, would go up 25%, while canceled flights will drop 25%. Turn times will drop by 5%, while new tickets issued costs will increase 3% and reservations will increase 4%.You will need two data sheets to complete the incremental analysis on Template DB 5.1: Summary Easy Air for revenues and your solution to DB 4.2e-f for the activity information for the remainder of the problem. “New tickets issued” should include ticket counter and gate charges.

REQUIRED:

a. Using the two supporting worksheets, fill in the “as is” scenario column (column B) in your DB 5.1a-c template. The “as is” data is for 20x6. Note that the “profit” is actually just the difference between current revenues and the itemized costs that are affected by this problem.

b. Now, using the changes in assumptions noted above, fill in column C for the increased turn time. Since you have filled in the “as is” column, you can do the rest of your calculations directly on the worksheet.

c. Finally, using the assumptions for the flight operations alternative, fill in column D. Once again, use your “as is” column B as the basis for your calculations.

d. Turn in your completed worksheet.

e. What should Easy Air do? Why?