What if the airline offers refundable business class tickets

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Reference no: EM13243393

In the model for airline seat pricing, we studied the case of non-refundable tickets. What if the airline offers refundable business class tickets. You can buy a business class ticket and return it for a full refund if you do not fly. The airline will sell all returned business class tickets at the last minute at the leisure class price. You may assume that the business traveller who has to fly cannot expect to buy a last minute leisure class ticket because there are so many leisure class customers in line. What is the optimal price of these refundable business class tickets? How many refundable tickets should it offer assuming there is no non-refundable business class tickets? Should the airline offer this kind of business class ticket rather than non-refundable ones?

Reference no: EM13243393

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