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Director
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Several airlines have recently intensified their fierce [#permalink]
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 26 May 2010, 02:09
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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. C. Few business travelers have taken advance of 30day advance purchase tickets 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.
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Manager
Joined: 15 May 2010
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Location: India
Concentration: Strategy, General Management
WE: Engineering (Manufacturing)
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Re: Several airlines have recently intensified their fierce [#permalink]
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26 May 2010, 03:56
A
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Re: Several airlines have recently intensified their fierce [#permalink]
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26 May 2010, 04:27
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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Manager
Joined: 09 Jan 2010
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Re: Several airlines have recently intensified their fierce [#permalink]
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26 May 2010, 07:54
it should be A
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Director
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WE 1: 3.5 yrs IT
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Re: Several airlines have recently intensified their fierce [#permalink]
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26 May 2010, 07:56
I already have the answer. If you can support your answer with your reasoning then that will be worth for everyone reading this post.
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Joined: 20 Apr 2010
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Re: Several airlines have recently intensified their fierce [#permalink]
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27 May 2010, 02:42
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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, 02:52
IMO its A. If only more discounted tickets are purchased and not used then it would maximize profits
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Director
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Re: Several airlines have recently intensified their fierce [#permalink]
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27 May 2010, 03:04
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, 03:12
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, 03:34
The answer is C.
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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Joined: 19 Feb 2009
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Re: Several airlines have recently intensified their fierce [#permalink]
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27 May 2010, 11:11
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. C. Few business travelers have taken advance of 30day advance purchase tickets - IrreleventD. Airlines will have to discontinue offering 30day advance purchase tickets when they begin offering 2-day advance purchase tickets. - This Doesnt lead tho the ConclusionE. 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 Scopeykaiim.. Please post the OA
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Re: Several airlines have recently intensified their fierce [#permalink]
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27 May 2010, 11:30
OA is A. Good job guys.
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"Several airlines have recently intensified..." [#permalink]
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12 Oct 2010, 21:57
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Could anyone explain the answer to this one:
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 “super-saver” 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 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 requiring 30-day advance purchase are not profitable for airlines.
(C) Few business travelers have taken advantage of 30-day advance purchase tickets.
(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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Manager
Joined: 08 Sep 2010
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Re: "Several airlines have recently intensified..." [#permalink]
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12 Oct 2010, 22:15
Straight A.
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Re: "Several airlines have recently intensified..." [#permalink]
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13 Oct 2010, 03:21
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Straight A. Reasons: On Negating the Option A the premise does not hold. This is because if Less tickets are used then most of the purchased tickets are refunded and the Planes are flying with empty seats leading to loss in revenue.
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Re: "Several airlines have recently intensified..." [#permalink]
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13 Oct 2010, 03:51
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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 “super-saver” 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 above statements say that more people purchase tickets in advance. The passage assumes that lots of these tickets go unused. So the airlines gains from these unused tickets because they are not refundable. Any statement which states that the tickets are not used would be the right answer.
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.
This statements mentions that the tickets are not used. hence this is the right answer.
(B) Tickets requiring 30-day advance purchase are not profitable for airlines.
Passage is not concerned whether the 30 -day advance purchase is profitable or not.
(C) Few business travelers have taken advantage of 30-day advance purchase tickets.
Not mentioned and irrelevant. Even if they take advantage of the advance tickets it is not profitable for the airlines in terms of revenue.
(D) Airlines will have to discontinue offering 30-day advance purchase tickets when they begin offering 2-day advance purchase tickets.
This is a consequence of the conclusion. Not an assumption.
(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.
Not an assumption and totally irrelevant.
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Manager
Status: Will Retake GMAT
Joined: 30 Jul 2010
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Concentration: General Management, Entrepreneurship
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Re: "Several airlines have recently intensified..." [#permalink]
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13 Oct 2010, 04:21
A clearly....
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Re: "Several airlines have recently intensified..." [#permalink]
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13 Oct 2010, 08:12
its A
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Re: "Several airlines have recently intensified..." [#permalink]
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13 Oct 2010, 08:28
not used ---> non refundable ----> enormous gain A
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Re: "Several airlines have recently intensified..." [#permalink]
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15 Oct 2010, 15:36
Thanks for the help guys.
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Re: "Several airlines have recently intensified..."
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15 Oct 2010, 15:36
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