Should the airline remain in business

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Reference no: EM131165713

Blue Jet Airlines has an evening flight from Kansas City to Chicago with an average of 80 passengers and a return flight the next afternoon with an average of 50 passengers. The plane makes no other trip. The charge for the plane remaining in Chicago overnight is $1,200 and would be zero in Kansas City. The airline is contemplating eliminating the night flight out of Kansas City and replacing it with a morning flight. The estimated number of passengers is 70 in the morning flight and 50 in the return afternoon flight. The one-way ticket for any flight is $200. The operating cost of the plane for each flight is $11,000. The fixed costs for the plane are $3,000 per day whether it flies or not. (a) Should the airline replace its night flight from Kansas City with a morning flight? (b) Should the airline remain in business?

Reference no: EM131165713

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