One of my clients asked me to share my thoughts on this question, so I am posting here in hopes that everyone can benefit.
WaterFlowsUp wrote:
Company Alpha buys free-travel coupons from people who are awarded the coupons by Bravo Airlines for flying frequently on Bravo airplanes. The coupons are sold to people who pay less for the coupons than they would pay by purchasing tickets from Bravo. This marketing of coupons results in lost revenue for Bravo.
To discourage the buying and selling of free-travel coupons, it would be best for Bravo Airlines to restrict the
Okay, so before we jump into the answer choices, we need to assess the question, exactly what it is we are being asked to answer, and the situation that the passage presents. I like to start with the question as a frame for how I read and interpret the passage. This question is asking us how
Bravo Airlines, which I will hereafter refer to as B, can
restrict something in order to
discourage the buying and selling of free-travel coupons. How are these coupons being used or abused currently to warrant such a restriction? It is time to consult the passage.
Ah... now the situation should be all too clear:
Company Alpha, which I will hereafter refer to as A, is buying these coupons from frequent-flyer customers of B airplanes, then A is turning around and selling these coupons to
people, apparently anybody, since these travelers can save money buying vouchers from A as opposed to buying tickets directly from B. The result: B is losing revenue. It would thus be in the best interest of B to restrict something about these free-travel coupons to reverse the trend and increase revenue instead. What do the answers have in store for us?
WaterFlowsUp wrote:
(A) number of coupons that a person can be awarded in a particular year
Analysis: We have no information on the
number of coupons that a person can currently be awarded in a given year. Maybe it is already restricted, maybe not. But the issue remains that these frequent flyers are able to sell their coupons to A, without restrictions. If, say, 1,000,000 frequent flyers are awarded one coupon per year but many of them still sell their coupons to A, then A can continue to resell these coupons to other potential customers of B airlines. It is hard to see how the current cycle will be broken, especially without more numbers in hand.
Red light.WaterFlowsUp wrote:
(B) use of the coupons to those who were awarded the coupons and members of their immediate families
Analysis: With this restriction in place, only the frequent flyers themselves--who, of course, were awarded the coupons in the first place for using B airlines--or those directly related to such people could
use the coupons, thereby limiting the selling of these vouchers to A, which could then not turn around and sell the same vouchers to anybody who wanted to book a flight with B. The buck stops here, you might say. If
people at large can no longer use the coupons, then they will stop purchasing them from A, assuming that A would even be buying them with the new policy in place. Thus, B stands to gain from such a restriction.
Green light.WaterFlowsUp wrote:
(C) days that the coupons can be used to Monday through Friday
Analysis: This is a nice little distraction, one that someone who was overthinking the question might blunder into. The logic might go that in the real world, flying is more popular on weekends, so if B restricts the days that the coupons can be redeemed to
weekdays, many flyers will no longer be able get a cheap seat on a desirable weekend flight. This sort of extra legwork, or bending over backwards to find a way to justify an answer, is a hallmark of an incorrect response. The GMAT™, furthermore, does not require outside knowledge of flight trends to answer its questions.
Red light.WaterFlowsUp wrote:
(D) amount of time that the coupons can be used after they are issued
Analysis: First off, as we encountered in (A), we have no information on the current window of redemption for the coupons, so there is no basis for comparison. You might also misinterpret
amount as the
number of times a coupon can be used, but
amount of time makes it clear that
time for redeeming a coupon is what would be restricted. The problem with restricting the time in this manner is that
all travelers would be impacted equally, so frequent flyers who had been issued the coupons could still turn around, sell to A, and A could then sell to anyone at large. When the whole world is your target customer, it might not be too hard to find
someone within that population who would want to purchase a discount fare from A instead of a full-price ticket from B. Yes, the inventory of free-travel coupons might go down for A, but nothing about this restriction would disrupt the business model of A, and the bottom line for B could be just as grim.
Red light.WaterFlowsUp wrote:
(E) number of routes on which travelers can use the coupons
Analysis: This policy change might upset the frequent flyers, but who cares? They could just continue to sell to A, who could in turn find
people to buy those restricted-destination free-travel coupons. This is not a good idea for B to implement to increase its revenue.
Red light.I hope the community may find this analysis useful. If you have any questions, feel free to ask. As always, good luck with your studies.
- Andrew
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