Several airlines have recently intensified their fierce : GMAT Critical Reasoning (CR)
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# Several airlines have recently intensified their fierce

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Several airlines have recently intensified their fierce [#permalink]

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26 May 2010, 01:09
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Several airlines have recently intensified their fierce competition for business by offering tickets, that if purchased 2 days in advance, cost as much as 40% less than the heretofore lowest-priced "super-saver" tickets, which require a 30day advance purchase. The airline's long-term gains from tickets bought under this new plan will be enourmous bc unlike earlier discount tickets, these are not refundable.

The author assumes which of the following about discounted airline tickets in predicting long-term gains in airline revenue?

A. More discounted, advance purchase tickets are purchased than are actually used.
B. Tickets requring 30day advance purchase are not profitable for airlines.
D. Airlines will have to discontinue offering 30day advance purchase tickets when they begin offering 2-day advance purchase tickets.
E. The majority of the 2 day advance purchase tickets offered by a given airline will be sold to passengers who have not previous flown on that airline.
[Reveal] Spoiler: OA

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Re: Several airlines have recently intensified their fierce [#permalink]

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26 May 2010, 02:56
A
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26 May 2010, 03:27
IMO B

initially i thought A but 'More discounted, advance purchase tickets are purchased than are actually used' does not mean that they are less profitable than the new offfer.

B. Tickets requring 30day advance purchase are not profitable for airlines.

OA plz?
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Re: Several airlines have recently intensified their fierce [#permalink]

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26 May 2010, 06:54
it should be A
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Re: Several airlines have recently intensified their fierce [#permalink]

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26 May 2010, 06:56

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Re: Several airlines have recently intensified their fierce [#permalink]

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27 May 2010, 01:42
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Premise:

Case1:30 day advance tickets -> some discount but are refundable on cancellation.
Case2:32 day advance tickets -> cost 40% less than the one above and are non refundable.

Conclusion:Thus, airlines is hoping that more people will book the tickets of case 2 considering the bigger discount and hoping that the trend to cancel the tickets continue, thereby increasing their long term gains.

Assumption:

A) More discounted, advance purchase tickets are purchased than are actually used.

Hope I am right
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Re: Several airlines have recently intensified their fierce [#permalink]

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27 May 2010, 01:52
IMO its A. If only more discounted tickets are purchased and not used then it would maximize profits
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Re: Several airlines have recently intensified their fierce [#permalink]

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27 May 2010, 02:04
If tickets are sold then that will maximise the profits. How does using them affect the profits. Moreover, it's not mentioned that the tickets are refunded often.
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Re: Several airlines have recently intensified their fierce [#permalink]

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27 May 2010, 02:12
The assumption that discounted tickets are bought but no being used = no refund : therefore the airline's long-term gains from tickets bought under this new plan will be enormous.
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Re: Several airlines have recently intensified their fierce [#permalink]

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27 May 2010, 02:34

Assumption is that business travelers do not plan their flights a month earlier.Thats why new 2-day tickets with 40 discount will be successfull, since business travelers will definitely fly.
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Re: Several airlines have recently intensified their fierce [#permalink]

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27 May 2010, 10:11
IMO A..

below is the reasoning

A. More discounted, advance purchase tickets are purchased than are actually used.- This explains why the gains from the new Plan will be enourmous. More Discounted--> More Tickets Purchsed--> More Probability of Ticket Cancellations due to short period of 2 days-->So more tickets Purached than actully used..and since these tickets are non-refundable the gain is more to Airline

B. Tickets requring 30day advance purchase are not profitable for airlines.-This Doenst explain why the gains from the new plan will be more.

D. Airlines will have to discontinue offering 30day advance purchase tickets when they begin offering 2-day advance purchase tickets. -This Doesnt lead tho the Conclusion

E. The majority of the 2 day advance purchase tickets offered by a given airline will be sold to passengers who have not previous flown on that airline.- Out of Scope

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Re: Several airlines have recently intensified their fierce [#permalink]

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27 May 2010, 10:30
OA is A.

Good job guys.
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Re: Several airlines have recently intensified their fierce [#permalink]

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30 Apr 2011, 01:22
if month-advanced tickets are used then that means no refunds are asked for , and that means the new scheme of more discounts for 2-day advance tickets has no benefits for airline companies.

because these airline companies are not stupid, they will not bring such a scheme without profit.

so a number of people who book 2 months in advance must have been asking for refunds after not using the purchased tickets.
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Re: Several airlines have recently intensified their fierce [#permalink]

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02 May 2011, 13:36
A
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Re: Several airlines have recently intensified their fierce [#permalink]

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16 Jan 2015, 05:37
Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

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Re: Several airlines have recently intensified their fierce [#permalink]

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02 Jun 2016, 10:33
Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.
Re: Several airlines have recently intensified their fierce   [#permalink] 02 Jun 2016, 10:33
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