Break$-$Even Analysis

The general formula for calculating break$-$owen units is

Break$-$Even Units $=$ Total Fixed Costs $/($Unit Solling Price $-$ Unit Variable Cost$)$

For airlines, costs are mainly foxed, variable cost is negligible, and break$-$even is calculated for load factor instead of units. The formula for calculating break$-$even load factor is

Break$-$Even Load Factor $=$ Cost per Available Seat Mile $/$ Yeld per Passenger Mile

QUESTION $4$

In Airline fare sales will reduce the yield. You can expect yield per passenger mile to drop $11\%$ for each month of fare sale. Calculate the brenk$-$even load factor if CASM is $$0\mathrm{.}23,$ regular fare is $$0\mathrm{.}40$ per mile, and you are oflering a two$-$month fare sale.

Answer