In a recent year Continental Airlines filled about 50 percent of the available seats on its flights, a record about 15 percent below the national average. Continental could have eliminated about 4 percent of its runs and raised its average load considerably. The improved load factor would have reduced profits, however. Give reasons for or against this elimination. What factors should influence an airline’s scheduling policies?
When you answer this question, suppose that Continental had a basic package of 3,000 flights per month, with an average of 100 seats available per flight. Also suppose that 52 percent of the seats were filled at an average ticket price of $200 per flight. Variable costs are about 70 percent of revenue.
Continental also had a marginal package of 120 flights per month, with an average of 100 seats available per flight. Suppose that only 20 percent of the seats were filled at an average ticket price of $100 per flight. Variable costs are about 50 percent of this revenue. Prepare a tabulation of the basic package, marginal package, and total package, showing the percentage of seats filled, revenue, variable expenses, and .
