Questions:

1. Charter contracts are negotiable, and charter carriers receive many contract offers
that do not promise $300 prices or 80-percent-full planes. Should the airline accept
a charter flight proposal from a group that offers to guarantee the sale of 90 seats
at $250? Why or why not?

2. What are the total contributions of the charter flight with 90 seats at $250 per seat?

3. What is the segment-level contribution of a separate group that is willing to join the 90-seat-at-$250-per-seat charter on the same plane and same departure but only wishes to pay $50 per seat for 10 seats?

Transcribed Image Text:

Firm-specific demand in the scheduled airline industry is segmented by customer class and is highly uncertain so that an order may not lead to realized revenue and a unit Firm-specific demand in the scheduled airline industry is segmented by customer class and is highly uncertain so that an order may not lead to realized revenue and a unit