Air Eagle is about to introduce a daily round-trip flight from New York to Los Angeles and is determining how to 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: (Click the icon to view the pricing and ticket information.) (Click the icon to view additional information.) Data table Pleasure travelers start their travel during one week, spend at least 1 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 $24,600 and that fixed costs allocated to the round-trip flight for airplane-lease costs, ground services, and flight-crew salaries total $185,000. Requirement 1. If you could charge different prices to business travelers and pleasure travelers, would you? Show your computations. Before determining if you would charge different prices to business travelers and pleasure travelers, calculate the total contribution margin at each price for each type of traveler. Air Eagle would maximize contribution margin and operating income by charging business travelers a fare of Air Eagle would maximize contribution margin and operating income by and pleasure travelers a fare of where business travelers are charged pleasure travelers. Requirement 2. Explain the key factor (or factors) for your answer in requirement 1. Business travelers are relatively price companies. Pleasure travelers are price because they must get to their destination during the week (exclusive of weekends) and their fares are paid by their because they have to pay for their own airfare. (Round the percentages to the nearest tenth percent, X.X%.) An increase in fares from $700 to $2,000 will deter only % of the business passengers from flying with Air Eagle. In contrast, a similar fare increase will lead to a(n) % drop in pleasure travelers. The drop in demand for the pleasure travelers offset by the total contribution margin for pleasure travelers. Requirement 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? Answer true or false to the following two statements in regards to how Air Eagle can implement price discrimination. Airlines can require that a Saturday night stay is needed to qualify for the $700 discount fare. This requirement would discriminate between the passenger categories. The statement above is illegal because airlines are service companies rather than manufacturing companies and because these practices destroy competition