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 wouldBased 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

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!