In the paper by Morrell (2017), the author studies the allocation of fuel costs betweenpassengers and cargo on long-haul passenger flight, and whether the use of fuel surcharge onpassenger and cargo traffic would be sufficient to help cover the extra fuel costs as a result of fuelprice increases. Consider a flight by British Airway from London to Los Angeles using B747-400as an example. Suppose that the flight has 519 seats, and passenger load factor is 85%. The flightalso carries 12 tons of cargo in its lower deck compartments. Further suppose that extra fuel costincurred on the flight is $26,557.

(1) Assuming only passenger fuel surcharge is imposed on the passengers taking this flight, howmuch fuel surcharge per passenger would be needed to offset the extra fuel cost per flight?
(2) How much fuel surcharge per passenger would be needed to offset the extra fuel costthat is allocated to passenger traffic only?

Answer rating: 100% (QA)

1 The total extra fuel cost is 26557 and the total capacity of the flight is 531 with 51... View the full answer