Reference no: EM132562678

'S' Air operates 35 scheduled round-trip flights between 'S' and Paris each week. It charges a fixed one-way fare of $200 per passenger. S air can carry 150 passengers per flight. Fuel and other flight-related costs are $5,000per flight. On-flight meal costs are $5 per passenger. Sales commission averaging 5% of sales is paid to travel agents. Flying crew, ground crew, advertising, and other administrative expenditures for the route amount to $400,000 each week.

Question 1: S air accepts standby passengers on flights 30 minutes before takeoff if space is available. Assume standby passengers book their tickets through a travel agent, and that the airline pays a flat $6 commission per standby ticket rather than a 5% sales commission. What is the minimum price S Air should charge a standby passenger to cover the incremental costs associated with that passenger?