In an effort to increase revenues, Sky Air recently partnered with sev

Responding to a pm:

Argument:

- 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 Air’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 CEO’s claim.

Question: Which best supports the analysts’ positions?
Analysts doubt the CEO's claim. What is the CEO's claim? That recent increase in the number of passengers signals that the new program is effective i.e. it will increase revenue.

So what is the analyst's position?
That the "recent increase in the number of passengers will not lead to increased revenue for Sky Air"

A. Air travel tends to be seasonal, with more passengers traveling during warmer months and holiday periods.

This doesn't tell us that the recent time period corresponds to "warmer months" or "holiday periods" so it doesn't help us. If it helped connect recent period with extra passengers for a reason other than the new program, it COULD HAVE helped us but not necessarily

B. The recent increase in passenger rates for all the partner airlines was predicted by the lowest rates of air travel in the last decade.

This tells us what was expected because of low air travel in last decade. Higher travel was expected. But was the higher travel actually because people had been putting off travelling in the last few years and have now started again, we don't know.

C. Many travelers achieved reward tickets more quickly under the new frequent-flier program and redeemed them recently for free travel.

This option tells us that the program led to many passengers travelling in the recent times but they travelled for free. Hence this says that the increased passenger travel was because of the program but it will NOT lead to increase in revenues. This supports the analyst's position that the recent increase in number of passengers will not lead to increased revenue.

D. Travelers redeemed frequent-flier rewards on Sky Air’s partners more frequently than on Sky Air.

More people travelled for free on Sky Air's partners than on Sky Air. It doesn't reflect on the success/failure of the program on Sky Air. The program will be a success if more new people start travelling with Sky Air in a bid to collect rewards or its current customers start travelling even more. The actual redemption of rewards doesn't necessarily help the business (it could though.. say someone travelling on a partner airline travels on Sky air to redeem and finds it more suitable). On the flip side, it could have a negative impact too (too may people travelling free so fewer seats available for paying customers). All in all, what kind of an impact it has, we cannot say.

E. A study of frequent-flier programs showed that they generally result in increased long-term airline revenues.

It has nothing to do with the CEO's claim and the analyst's position. What impact THIS program will have, we do not know.

Answer (C)