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# Several airlines have recently intensified their fierce

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Director
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Several airlines have recently intensified their fierce [#permalink]

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07 Nov 2005, 17:44
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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 percent less than the heretofore lowest-priced "supersaver" tickets, which require a 30-day advance purchase. The airlines' long-term gains from tickets bought under this new plan will be enormous because unlike earlier discount tickets, these are not refundable.

The authoer 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 requiring 30 day advance purchase are not profitable for airlines

d) Airlines will have to discontinue offering 30-day 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 previously flown on that airline.
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07 Nov 2005, 18:32
A.

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

if everyone who buys a ticket travels, there is no difference if the ticket is refundable or non-refundable, bases on which the author is making conclusion.
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07 Nov 2005, 18:57
hmmm, I have doubts
I would go for E

they can only make money if they attract new customers...if they keep the same customers but that the price is 40% less than before, they will actually loose money

By the way i don't understand very well the meaning of sentence A...
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Antoine

Tuck School of Business at Dartmouth
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07 Nov 2005, 19:14
A because it refers to the non-refundable policy;
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07 Nov 2005, 19:52
Going with A.

Stimulus says that LT gains will def happen because these tix are not refundable. So, the factor here is the tix are refundable vs non-refundable.

joemama142000 wrote:
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 percent less than the heretofore lowest-priced "supersaver" tickets, which require a 30-day advance purchase. The airlines' long-term gains from tickets bought under this new plan will be enormous because unlike earlier discount tickets, these are not refundable.

The authoer 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 requiring 30 day advance purchase are not profitable for airlines

d) Airlines will have to discontinue offering 30-day 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 previously flown on that airline.
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07 Nov 2005, 20:04
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07 Nov 2005, 20:43
waow...I was totally lost here
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Antoine

Tuck School of Business at Dartmouth
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07 Nov 2005, 22:07
I would go with A)
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07 Nov 2005, 23:50
A is correct.
B - Too much inference.
C - No such reference in the argument.
D - Too much inference.
E - Too much inference.
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08 Nov 2005, 00:22
I have never heard of the word "heretofore!!!"

Before reading the answer options... In order for the new plan to be successful we can assume

1) A lot of people will buy these last minute tickets
2) The total proceeds from supersaver tickets and "super-supersave" tickets will be provide positive gross margins.
3) Reason why airlines is giving 40% discounts is because the supersaver ticket is not profitable.

Now to the options

a) Out of scope
b)
c) Out of scope
d) Out - This is not a correct assumption
e) Out of scope

I pick B.
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08 Nov 2005, 12:25
I will choose A.

an airline can only earn revenue once the purchased ticket has been used for journey. now for the discounted advance ticket sale is not profitable, and 2 days in advance tickets are sold at 40% discount, but they are non refundable. still by offering this airlines are expecting long term profit.

the missing logical gap here is, probably there are people who purchase advance ticket but do not perform the journey andreturn the ticket.
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09 Nov 2005, 10:00
A for me.

If we negate A, the non-refunable policy has no effect. The conclusion can not be convincing.
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09 Nov 2005, 10:44
One more for A .
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09 Nov 2005, 10:48
A is the assumption.
09 Nov 2005, 10:48
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