Reference no: EM133039482

The Chicago to Atlanta flight is a popular route for our airline.

A one-way ticket for this flight currently costs $350. The plane that flies this route holds 220 passengers. The fixed costs of flying this route (i.e., flying an empty plane) are $13,000, and the airline incurs a variable cost of $80 (food, beverages) for every passenger flying on the plane. Quite often, the airline will oversell this flight route, as past data has shown that on average only 99% of people who reserved a ticket actually show up for the flight (i.e., this is known as ticket utilization). People who have reserved (and therefore paid for) a ticket for the flight are not provided a refund or credit if they do not show up for the flight. However, in situations where the flight is overbooked, the airline must reimburse passengers who show up for the flight but cannot board due to overbooking; for their ticket (i.e., $350) plus pay an additional $200 in compensation costs.

Competition is fierce for the Chicago to Atlanta route, and the airline realizes that it may need to reduce the current ticket price. They have asked you to provide them with projections for sales, net income, and profit margin for this route based on different ticket prices. They have indicated that the average number of reservations for this route is 224, and therefore suggest you use that figure as a base for your calculations. Using an appropriate data table, calculate sales, and net income, and profit margin values for Chicago to Atlanta flights with ticket prices ranging I603 - Fall 2021 - 5 of 7 from $200 to $400, in $10 increments.