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In an effort to increase revenues, Sky Air recently [#permalink]
04 Jan 2005, 15:13
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In an effort to increase revenues, Sky Air recently partnered with several airlines to create a joint frequent-flier program. In the new program, miles
earned on all partner airlines can be combined for reward tickets valid on any airline in the partnership. Sky Airâ€™s CEO cites a recent increase in the number of passengers on all the partner airlines as evidence that the new frequent-flier program is having the desired effect. Industry analysts doubt the CEOâ€™s claim.
Which of the following, if true, best supports the analystsâ€™ position?
a) Air travel tends to be seasonal, with more passengers traveling during warmer months and holiday periods.
b) The recent increase in passenger rates for all the partner airlines was preceded by the lowest rates of air travel in the last decade.
c) Many travelers achieved reward tickets more quickly under the new frequent-flier program and redeemed them recently for free travel.
d) Travelers redeemed frequent-flier rewards on Sky Airâ€™s partners more frequently than on Sky Air.
e) A study of frequent-flier programs showed that they generally result in increased long-term airline revenues.
The passage starts off with "In an effort to increase revenues..." and later goes on to quote the CEO of SKY air in "...as evidence that the new frequent-flier program is having the desired effect.."
The desired effect is the increase in SKY's revenue figures and the CEO claims that it is increasing because of the frequent flier program. However, the analysts think otherwise. Now, there is a very thin line here - a classic trick. What do the analysts think otherwise about? (a) Whether or not he frequent flier program is helping the partnership or (b) Whether or not the revenue of SKY is increasing?
Since the original intention was to increase SKY's revenue, D is the only argument which leads us to think that in spite of the fact that the number of passengers has increased, there has been no direct impact on SKY's revenue because "Travelers redeemed frequent-flier rewards on Sky Airâ€™s partners more frequently than on Sky Air."