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# In an effort to increase revenues, Sky Air recently

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Director
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In an effort to increase revenues, Sky Air recently [#permalink]

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11 Aug 2007, 06:25
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33% (01:07) correct 67% (00:29) wrong based on 32 sessions

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14. 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.

Which of the following, if true, best supports the analysts’ positions?
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 predicted 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 Air’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.

[Reveal] Spoiler:
Folks, this question was already discussed in the post below but it did'nt closed to a convincing conclusion. Hence wish to revive it again.. Calling all CR gurus to comment..

http://www.gmatclub.com/phpbb/viewtopic ... hlight=air
[Reveal] Spoiler: OA

Last edited by abhimahna on 03 May 2017, 06:45, edited 1 time in total.
Edited the question and added OA

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Re: In an effort to increase revenues, Sky Air recently [#permalink]

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11 Aug 2007, 07:24
Amit05 wrote:
14. 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.

Which of the following, if true, best supports the analysts’ positions?
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
predicted by the lowest rates of air travel in the last decade.
C. Many travelers achieved reward tickets more quickly under the new
D. Travelers redeemed frequent-flier rewards on Sky Air’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.

Folks, this question was already discussed in the post below but it did'nt closed to a convincing conclusion. Hence wish to revive it again.. Calling all CR gurus to comment..

http://www.gmatclub.com/phpbb/viewtopic ... hlight=air

I picked A as this shows another reason for the increase - I didn't agree with the OA

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.

The way I interpret D would be the correct answer is that it is implying that the other airlines is benefiting from the new program but this does not include Sky Air. This answer doesn't tell us explicitly that Sky Air is worse off than before the program. What if the program did help Sky Air increase number of passengers but rate not as high as the other airlines? The CEO's comment is still valid.

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Re: In an effort to increase revenues, Sky Air recently [#permalink]

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11 Aug 2007, 07:49
Amit05 wrote:
14. 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.

Which of the following, if true, best supports the analysts’ positions?
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
predicted by the lowest rates of air travel in the last decade.
C. Many travelers achieved reward tickets more quickly under the new
D. Travelers redeemed frequent-flier rewards on Sky Air’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.

Folks, this question was already discussed in the post below but it did'nt closed to a convincing conclusion. Hence wish to revive it again.. Calling all CR gurus to comment..

http://www.gmatclub.com/phpbb/viewtopic ... hlight=air

I am bit inclined towards B.

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

How do we know that recent increase in the number of passengers has taken place during the warmer months and holiday periods??

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.

Seems to be best choice in my opinion.
It actually shows that the recent increase in the passengers was already predicted whereas Sky Air has recently partnered with several airlines to increase the revenue.
So the increase in the passengers is not essentially the outcome of recent partnership.

C. Many travelers achieved reward tickets more quickly under the new

It supports

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

Supports the CEO's claim.

It's written that:

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.

Frequest-Flier program is for the all airlines and not just for Sky Air's.
D is saying that Travelers redeemed frequent-flier rewards on Sky Air’s partners more frequently than on Sky Air , it doesn't mean that travelers have not redeemed rewards on Sky Air's. There may have been some increase in the no of travelers on Sky Air's also.
So overall the motive of new program is acheived, which supports the CEO's claim.

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

Supports the CEO's claim.

- Brajesh

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Re: In an effort to increase revenues, Sky Air recently [#permalink]

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11 Aug 2007, 07:53
beckee529 wrote:
Amit05 wrote:
14. 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.

Which of the following, if true, best supports the analysts’ positions?
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
predicted by the lowest rates of air travel in the last decade.
C. Many travelers achieved reward tickets more quickly under the new
D. Travelers redeemed frequent-flier rewards on Sky Air’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.

Folks, this question was already discussed in the post below but it did'nt closed to a convincing conclusion. Hence wish to revive it again.. Calling all CR gurus to comment..

http://www.gmatclub.com/phpbb/viewtopic ... hlight=air

I picked A as this shows another reason for the increase - I didn't agree with the OA

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.

The way I interpret D would be the correct answer is that it is implying that the other airlines is benefiting from the new program but this does not include Sky Air. This answer doesn't tell us explicitly that Sky Air is worse off than before the program. What if the program did help Sky Air increase number of passengers but rate not as high as the other airlines? The CEO's comment is still valid.

beckee529, I too had similar doubts but after looking at the post referred, I thought 1 explanation is right.
we need to look at it this way :
What is the desired effect ? - >>> Increased revenue.
What does the airline do to increase the revenue ? >>> Devices a new freq-flier program with other air-lines.
What does the program result into ? >>> Increased passengers.
Does this increase revenue for Sky Air ? >>>> Don't know.

The CEO says the passengers have increased. But does this answers the last question. Any choice that answers the last Q in negative will win.
Lets look at the options:
A) It does does answers whether revenue increased or not. There is no mention of time. Neither are measuring the revenue for a specified time.

B) (I choose this option) Even this does not answers the last Q. Increase in passengers does not necessarily mean increase in revenue for since other partners might be getting more share. And since the prices are low, volume should be high to generate an increase in revenue.

C) Irrelevant.

D) May be yes. Travelers preferred other partners more frequently than Sky. Hence a larger proportion of the increase in passengers might have benefited the partners more. Hence the program might not have had the desired effect.

E) Out of scope.

The questions you raised about CEO's point is valid. But what we need to find out is why Analysts do not agree with the CEO. D gives them the strongest reason as compared to other options.

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Re: In an effort to increase revenues, Sky Air recently [#permalink]

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11 Aug 2007, 08:59
Amit05 wrote:
beckee529 wrote:
Amit05 wrote:
14. 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.

Which of the following, if true, best supports the analysts’ positions?
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
predicted by the lowest rates of air travel in the last decade.
C. Many travelers achieved reward tickets more quickly under the new
D. Travelers redeemed frequent-flier rewards on Sky Air’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.

Folks, this question was already discussed in the post below but it did'nt closed to a convincing conclusion. Hence wish to revive it again.. Calling all CR gurus to comment..

http://www.gmatclub.com/phpbb/viewtopic ... hlight=air

I picked A as this shows another reason for the increase - I didn't agree with the OA

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.

The way I interpret D would be the correct answer is that it is implying that the other airlines is benefiting from the new program but this does not include Sky Air. This answer doesn't tell us explicitly that Sky Air is worse off than before the program. What if the program did help Sky Air increase number of passengers but rate not as high as the other airlines? The CEO's comment is still valid.

beckee529, I too had similar doubts but after looking at the post referred, I thought 1 explanation is right.
we need to look at it this way :
What is the desired effect ? - >>> Increased revenue.
What does the airline do to increase the revenue ? >>> Devices a new freq-flier program with other air-lines.
What does the program result into ? >>> Increased passengers.
Does this increase revenue for Sky Air ? >>>> Don't know.

The CEO says the passengers have increased. But does this answers the last question. Any choice that answers the last Q in negative will win.
Lets look at the options:
A) It does does answers whether revenue increased or not. There is no mention of time. Neither are measuring the revenue for a specified time.

B) (I choose this option) Even this does not answers the last Q. Increase in passengers does not necessarily mean increase in revenue for since other partners might be getting more share. And since the prices are low, volume should be high to generate an increase in revenue.

C) Irrelevant.

D) May be yes. Travelers preferred other partners more frequently than Sky. Hence a larger proportion of the increase in passengers might have benefited the partners more. Hence the program might not have had the desired effect.

E) Out of scope.

The questions you raised about CEO's point is valid. But what we need to find out is why Analysts do not agree with the CEO. D gives them the strongest reason as compared to other options.

good points, I can see how B would be a stronger answer than A. However, I still cannot reason how D is the OA without assuming more than what is mentioned in the passage.
taken from the passage: "In the new program, miles earned on all partner airlines can be combined for reward tickets valid on any airline in the partnership." What if passengers are choosing to fly with Sky Air and then redeeming their rewards with the other airlines? Couldn't that be a possibility? So in this case, D would be supporting the CEO's claims. Anybody else?

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Re: In an effort to increase revenues, Sky Air recently [#permalink]

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13 Aug 2007, 21:56
beckee529 wrote:
Amit05 wrote:
beckee529 wrote:
Amit05 wrote:
14. 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.

Which of the following, if true, best supports the analysts’ positions?
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
predicted by the lowest rates of air travel in the last decade.
C. Many travelers achieved reward tickets more quickly under the new
D. Travelers redeemed frequent-flier rewards on Sky Air’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.

Folks, this question was already discussed in the post below but it did'nt closed to a convincing conclusion. Hence wish to revive it again.. Calling all CR gurus to comment..

http://www.gmatclub.com/phpbb/viewtopic ... hlight=air

I picked A as this shows another reason for the increase - I didn't agree with the OA

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.

The way I interpret D would be the correct answer is that it is implying that the other airlines is benefiting from the new program but this does not include Sky Air. This answer doesn't tell us explicitly that Sky Air is worse off than before the program. What if the program did help Sky Air increase number of passengers but rate not as high as the other airlines? The CEO's comment is still valid.

beckee529, I too had similar doubts but after looking at the post referred, I thought 1 explanation is right.
we need to look at it this way :
What is the desired effect ? - >>> Increased revenue.
What does the airline do to increase the revenue ? >>> Devices a new freq-flier program with other air-lines.
What does the program result into ? >>> Increased passengers.
Does this increase revenue for Sky Air ? >>>> Don't know.

The CEO says the passengers have increased. But does this answers the last question. Any choice that answers the last Q in negative will win.
Lets look at the options:
A) It does does answers whether revenue increased or not. There is no mention of time. Neither are measuring the revenue for a specified time.

B) (I choose this option) Even this does not answers the last Q. Increase in passengers does not necessarily mean increase in revenue for since other partners might be getting more share. And since the prices are low, volume should be high to generate an increase in revenue.

C) Irrelevant.

D) May be yes. Travelers preferred other partners more frequently than Sky. Hence a larger proportion of the increase in passengers might have benefited the partners more. Hence the program might not have had the desired effect.

E) Out of scope.

The questions you raised about CEO's point is valid. But what we need to find out is why Analysts do not agree with the CEO. D gives them the strongest reason as compared to other options.

good points, I can see how B would be a stronger answer than A. However, I still cannot reason how D is the OA without assuming more than what is mentioned in the passage.
taken from the passage: "In the new program, miles earned on all partner airlines can be combined for reward tickets valid on any airline in the partnership." What if passengers are choosing to fly with Sky Air and then redeeming their rewards with the other airlines? Couldn't that be a possibility? So in this case, D would be supporting the CEO's claims. Anybody else?

Passengers prefer other airlines to redeem their vouchers, may be because of quality of service. If that is the case so then why would they prefer to pay for traveling on Sky Air.. You can take it this way... If given a choice, travelers prefer other Airlines more than sky Air for whatever reason which is proved by D. We are not given anything about travelers who pay and travel and how much proportion of it travel in sky. So it would incorrect to assume any thing out of it..
In other words even for vouchers tickets passengers prefer other airlines, why would they pay and travel by Sky ..? And the swelling number would be coz of other airlines..

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Re: In an effort to increase revenues, Sky Air recently [#permalink]

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14 Aug 2007, 20:50
I think its D. am i missing something here? this seems really clear that it is D. What is the OA answer?

These CR questions put in alot of extraneous information to throw you off, including in the different answers. Just extract what it is getting at. Sky air implemented program to increase THEIR revenue. CEO then cites increased air travel on OTHER AIRWAYS to cite program is effective. Program is ONLY effective if it increases THEIR REVENUE.

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

(Nothing to do with refuting CEO's claim. ANd geez, where does it mention anything about what season it is in the statement?)

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.
(Huh, I get halfway through this and cross it off. Off on another path...)

C. Many travelers achieved reward tickets more quickly under the new
(Again, bla bla bla bla, nothing to do with what we are looking for)

D. Travelers redeemed frequent-flier rewards on Sky Air’s partners more
frequently than on Sky Air.
(Bingo. Evidence to support analysists claim, that hell, perhaps Sky Air is not reaping the rewards, but the other guys are. Frequently is a nebulous definition, certainly not quantifiably, its not meant to hang you up on it, the gist is important, the other guys are benefiting more than sky air. hell, for all we know it costs sky air 20 billion dollars to implement this program, and unless they get a certain increase in travel to offset cost it hurts them. so dont get caught up in a numbers game.)

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

D.

Now i must look like an idiot if OA is not D.

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Re: In an effort to increase revenues, Sky Air recently [#permalink]

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15 Aug 2007, 09:11
Still its tough to say the answer is D...B stands as a contender.

The conclusion is that the program increases Sky air's revenues(first sentence).

So,D would have to make lots of assumptions to be true...B is much better.

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Re: In an effort to increase revenues, Sky Air recently [#permalink]

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16 Aug 2007, 02:59
what is the source of the question?

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Re: In an effort to increase revenues, Sky Air recently [#permalink]

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18 Aug 2007, 19:52
I went with D too.

Basically analyst says that partnering with frequent filer program resulted in increased revenue. One way to get that is if people use this airlines to gain points. The impact on the revenue would be much better if the use of these miles are done on some other airlines, because when passengers use the miles .. they don't pay .. its a discount they get.. and if that discount is given by some other airlines and they use the Sky to earn those discount points its great for the Sky Air revenue. D says that passengers use other airlines to redeem the miles.. hence supporting the analysis.
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Re: In an effort to increase revenues, Sky Air recently [#permalink]

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18 Aug 2007, 19:57
I think its D. None of the other options give us the answer.
CEO says program is a success( success means sky air's revenue increases). But most of the paasengers are travlling on partner airlines..not on Sky.

So, CEO is wrong and the program is not a success.

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Re: In an effort to increase revenues, Sky Air recently [#permalink]

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18 Aug 2007, 20:14
cruiser wrote:
I think its D. None of the other options give us the answer.
CEO says program is a success( success means sky air's revenue increases). But most of the paasengers are travlling on partner airlines..not on Sky.

So, CEO is wrong and the program is not a success.

Gud explanation cruiser....
Will go for D....

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Re: In an effort to increase revenues, Sky Air recently [#permalink]

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18 Aug 2007, 22:47
Well I do think that this question is slightly flawed in that it does not provide enough information...there is no implicit indication of what a "success" means. We are to assume that it is an increase of revenues.

In this case D is a very revealing answer as it illustrates that consumers are much more likely to fly on competitors airlines. What it really shows is that Sky Air is not very well liked, and that consumers are pleased that they can use their points on a competitors airline.

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Re: In an effort to increase revenues, Sky Air recently [#permalink]

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19 Aug 2007, 03:13
I am going with D. It talks about SKY not getting the FF miles. What is the OA?

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Re: In an effort to increase revenues, Sky Air recently [#permalink]

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12 Aug 2016, 23:36
Amit05 wrote:
14. 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.

Which of the following, if true, best supports the analysts’ positions?

C. Many travelers achieved reward tickets more quickly under the new

We have to prove that "program is not having the desired effect"
There could be 2 interpretation
1> Either program is not the factor
2> Or revenue is not increasing only no. of passenger is increasing.

Goal is to increase revenue.
Revenue = no. of passenger * rates
if one increases and other one decreases, then it should not offset the decreases.
or both increases.

A. Air travel tends to be seasonal, with more passengers traveling during
warmer months and holiday periods. :- Even if it is true, it is not doing anything to weaken or strengthen our analysis of revenue. what if the time CEO is considering is not of seasonal, then definitely CEO claim in up to the mark.

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.
I am although not able to understand what it is saying but I am assuming.

if
lowest rate of air travel =100 passenger rate >100

again this is not doing anything of significant. even if I assume that yes, rate has increased => no. of passenger can increase too by program..and revenue will increase too.

D. Travelers redeemed frequent-flier rewards on Sky Air’s partners more
frequently than on Sky Air. :- Even if travelers redeemed more in partner's, passengers has increased and so is revenue. where are they redeeming how is affecting CEO's claim.

C.Many travelers achieved reward tickets more quickly under the new

The CEO is claiming recently passenger has increased but they all are free riders.
Revenue = no. of passenger * (rates) for most passenger it is "0" because earlier they were having, let's say 50 miles, with 5 partner. it required earlier 250 miles to redeem now it's suddenly became possible and they are flying free so even though passengers has increased, they are not contributing factor at all.

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Re: In an effort to increase revenues, Sky Air recently [#permalink]

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13 Aug 2016, 02:56
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.

Which of the following, if true, best supports the analysts’ positions?

PREMISE 1) To increase revenue, Sky Air partnered with other airlines and formed a frequent flier program.
PREMISE 2) Miles earned on these airlines are combined together and then those combined miles earned can be converted into REWARD tickets on any of the partner airline.
CONCLUSION ) Sky Air's CEO says NUMBER OF PASSENGERS have increased on ALL PARTNER AIRLINES and that the new scheme is having a DESIRED EFFECT.
COUNTER CONCLUSION) Analyst says :- "NO THE CEO'S CLAIM IS WRONG. THE REVENUE HAS NOT INCREASED".

WE HAVE TO STRENGTHEN THE COUNTER CONCLUSION (ANALYST CLAIM) AND SHOW REVENUE HAS NOT INCREASED.

The desired effect that was intended when the partnership was formed was to INCREASE REVENUE.
CEO claims NUMBERS OF PASSENGERS have increased in all partners airline. Increase number does not necessarily means increased profit.
Imagine that for a reward ticket you need 1000 miles.
You have 200 miles from airline A, 200 miles from airline B, 200 miles from airline C, 200 miles from airline D and 200 miles from airline E. It means you have 1000 miles but you are not eligible for a reward ticket from any of the airline because they are from different different airlines. But the moment you allow them to be combined you get your self a reward ticket.
As you can see that no money was involved and yet one ticket was issued. Thus there was no profit but the number of passenger was increased by 1.
If thousands of people does that what will be scenario. A high increase in the number of passenger but zero revenues for the company and this will strengthen the Analyst point and destroys the CEO claims.

What options matches with our pre-thinking ... only option C.
C. Many travelers achieved reward tickets more quickly under the new frequent-flier program and redeemed them recently for free travel.

A. Air travel tends to be seasonal, with more passengers traveling during warmer months and holiday periods.
WRONG :- IRRELEVANT. All we are interested in knowing does the revenue increase. This option tells us nothing. We cannot assume that the CEO made the statement during warmer or holiday season. He might have made the statement during winter season.

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.
WRONG:- Despite being the lowest price, profit can still be extracted.
Example
Previously Airline cost per person = 20 \$, ticket price per person = 60 profit = 40
After partnersip Airline cost per person = 20 \$, ticket price per person = 33 profit = 13
The airlines can still make profit despite lowest ticket price.
This will strengthen the CEO , we have to strengthen the analyst point which is reverse of this.

C. Many travelers achieved reward tickets more quickly under the new frequent-flier program and redeemed them recently for free travel.
CORRECTO :- As soon as you see the word FREE TRAVEL, you should know this is the correct answer. Travel is happening but no money is coming to airlines. Thus it strengthen the analyst point that partnership has not caused any profit for the airlines. (sky air or any other partner. No one made money)

D. Travelers redeemed frequent-flier rewards on Sky Air’s partners more frequently than on Sky Air.
WRONG :- FIRST :- This does not talk about what the rewards are. Is the reward a 10 % discount. A Tshirt, a free ticket.
More Frequently , less frequently is irrelevant. What if first time flier people bought tickets many tickets on sky air and accumulated many rewards points. But when it comes to reward they switched to other airlines. Thus Sky Air is profited double. FIrst by selling tickets , second by less people taking free rides in its ariline. This Option is actually CEO claims but we have to weaken it.

E. A study of frequent-flier programs showed that they generally result in increased long-term airline revenues.
WRONG :- This will strengthen the CEO and weaken the analyst.

Amit05 wrote:
14. 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.

Which of the following, if true, best supports the analysts’ positions?
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
predicted by the lowest rates of air travel in the last decade.
C. Many travelers achieved reward tickets more quickly under the new
D. Travelers redeemed frequent-flier rewards on Sky Air’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.

Folks, this question was already discussed in the post below but it did'nt closed to a convincing conclusion. Hence wish to revive it again.. Calling all CR gurus to comment..

http://www.gmatclub.com/phpbb/viewtopic ... hlight=air

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Last edited by LogicGuru1 on 07 Sep 2016, 05:30, edited 1 time in total.

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Re: In an effort to increase revenues, Sky Air recently [#permalink]

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18 Aug 2016, 00:48
2
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Expert's post
Amit05 wrote:
14. 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.

Which of the following, if true, best supports the analysts’ positions?
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
predicted by the lowest rates of air travel in the last decade.
C. Many travelers achieved reward tickets more quickly under the new
D. Travelers redeemed frequent-flier rewards on Sky Air’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.

Folks, this question was already discussed in the post below but it did'nt closed to a convincing conclusion. Hence wish to revive it again.. Calling all CR gurus to comment..

http://www.gmatclub.com/phpbb/viewtopic ... hlight=air

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.

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Re: In an effort to increase revenues, Sky Air recently [#permalink]

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01 May 2017, 05:44
VeritasPrepKarishma wrote:
Amit05 wrote:
14. 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.

Which of the following, if true, best supports the analysts’ positions?
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
predicted by the lowest rates of air travel in the last decade.
C. Many travelers achieved reward tickets more quickly under the new
D. Travelers redeemed frequent-flier rewards on Sky Air’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.

Folks, this question was already discussed in the post below but it did'nt closed to a convincing conclusion. Hence wish to revive it again.. Calling all CR gurus to comment..

http://www.gmatclub.com/phpbb/viewtopic ... hlight=air

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.

Karishma,

Just for the sake of intellectual discussion, just wanted to show another view of looking at this question.Please let me know what is the flaw in my thinking , thank you.

Option C says that indeed many people have earned miles and now they are redeeming them for free travel.
How does this go against the CEO?

Wasn't this what he intended?

In order to earn the miles people had to first travel by paying, so when all those miles were being accumulated, the respective airlines was earning revenues.

This was the CEO's plan.

The CEO had hoped to earn revenues by tempting people with more flier miles.So while people were earning all those miles the Airlines were earning revenues, were they not?

Similar to how we use our credit cards.
Each time we use our card we accumulate a few reward points.
At the same time the credit card company earns revenue with our each spend.
Over time we accumulate a lot of reward points.
While we are redeeming those reward points an analyst claims that this redemption has not earned any revenue for the bank would that statement be correct.
The logic of giving more reward points is that we may be motivated by 2 things:
1) Choose a particular bank's card over others , the one which is more rewarding.
2) Use that card more often to accumulate more points.
Why does a particular bank want us to use its card and not others? Because it earns a certain revenue each time we use its card.
Hence it tempts/ offers us reward points.
Then we may use those reward points to make some free purchases later.
Now can we say that those free purchases have not led to an increase of revenue for the credit card company?
Weren't the banks earning revenue while we were collecting those reward points?
The Credit card company had already done the necessary calculations and accordingly gave us our free items making sure that by the time we are eligible for a certain product redemption, Credit card company had already earned enough revenue,and could not incur a loss by giving us that product for free. Which is NOT free in a way.

As we know the costlier products require more reward points for redemption, so by the time we have accumulated those much reward points, the bank has made sure that we have earned enough revenue for the bank.

So now in this question , when the passengers are traveling with their hard earned miles, why do we feel that the passengers have not already earned the required amount of revenue for the Airline.

I felt option A was the best among the lot , but as you have stated , the increase in passengers has not been linked to the holiday or warm season. Nevertheless I chose A as the logic for not choosing C I have given above.

Please let me know what could be the flaw in this view.

Thank you.
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Re: In an effort to increase revenues, Sky Air recently   [#permalink] 01 May 2017, 05:44
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