Question: Based on the Casino Air problem presented above, what load factor would the company have to achieve so that it obtained a 10 percentage-point increase
Based on the Casino Air problem presented above, what load factor would the company have to achieve so that it obtained a 10 percentage-point increase in the ROIC?
Casino Air offers air travel between Los Angeles and Las Vegas. Casino Air's invested capital is $9,000,000, corresponding to the investment in the three planes the company owns. Each of the planes can carry 60 passengers. Each plane does 6 daily trips from Los Angeles to Las Vegas and 6 from Las Vegas to Los Angeles. The price is $75 for each one-way ticket. The current load factor is 80 percent (i.e. 48 seats are sold on the average flight). The annual cost of operating the service and running the business is $45,000,000 (including all costs such as labor, fuel, marketing, gate fees, landing fees, maintenance, etc.) The company operates 365 days per year. The ROIC tree for Casino Air is given here
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