Reference no: EM13224874

Airway Express has an evenign flight from L.A. to N.Y. with an average of 80 passengers and a return flight the next afternoon with an average of 50 passengers. The paln makes no other trip. The chage for the plan remaining in N.Y. overnight is $1200 and would be zero in L.A. The airline is contemplating eliminating the ngiht flight out of L.A. 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 nay flight is $200. The operating cost of the plan 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 L.A. with a morning flight? Please calculate and compare the profit under each flight.

(b) Should the airline remain in business? This question is asking shoudl Airway Express continue providing the flight between L.A. and N.Y.? Even Airway Express decides not to fly, it still has to pay the fixed costs of $3,000 per day. The evening flight with the return flight the next afternoon is counted as one day, not two days.