Let's start with the conclusion of this argument:

Long-term gains from tickets bought under this new plan will be enormous because, unlike earlier discount tickets, these are not refundable.

Here's how the author's logic breaks down:

• Under the new plan, airlines offers tickets that, if purchased 2 days in advance, cost as much as 40% less than the heretofore lowest-priced tickets.
• These tickets are not refundable (unlike earlier discount tickets).
• Therefore, the airline's long-term gains from tickets bought under this new plan will be enormous.

OK, so we know that tickets bought under the new plan cost less than the lowest-priced tickets already available. Yet, the author concludes, the airline's long-term gains from these tickets will be enormous.

Whatever assumption the author is making should explain how long-term gains will be enormous, despite the lower cost of these tickets. So we're looking for information that explains how sales of advance tickets contribute to these expected long-term gains in revenue.

Remember, the missing information doesn't have to prove the conclusion. It just has to fill out the logic that the author is relying on to reach this conclusion in the first place.


This is the only answer choice that provides a logical link between the purchase of advance tickets and gains in revenue:

• Under the new plan, airlines offers tickets that, if purchased 2 days in advance, cost as much as 40% less than the heretofore lowest-priced tickets.
• These tickets are not refundable (unlike earlier discount tickets).
• More discounted, advance purchase tickets are purchased than are actually used. So 2-day-advance ticket sales result in revenue gain, from advance ticket purchases that otherwise could have been refunded.
• Therefore, the airline's long-term gains from tickets bought under this new plan will be enormous.

Choice (A) identifies a potential source of revenue that we previously could not see: advance ticket purchases that cannot be refunded when customers decide not to use the tickets. If we assume that a portion of tickets are consistently unused and consequently refunded, then eliminating refunds would logically result in more revenue.

This is enough for us to keep choice (A) as we evaluate everything else. And even if you're iffy on Choice (A), every other choice is simply not viable:


So what? This information does absolutely nothing to explain how the new 2-day advanced purchase tickets could lead to long-term gains in revenue. Choice (B) only deepens the paradox without filling the logical gap we're asked to fill, so let's eliminate it.


It's tempting to imagine that the number of 2-day-advance purchases will be incredibly massive, therefore leading to a kind of long-term growth that isn't currently supported by 30-day advance purchases.

The only problem is, Choice (C) doesn't give us that imaginary explanation. It doesn't even imply that explanation, because the only information we get from (C) is that few business travelers buy 30-day advance tickets.

As with Choice (B), this answer choice doesn't tell us anything that would explain how the new 2-day advance purchase tickets could lead to long-term gains in revenue. And just like Choice (B), it should be eliminated.


This information has nothing to do with growth of long-term revenue. Eliminate it.


Like Choice (C), this answer choice uses language that sounds like growth. And like Choice (C), this choice doesn't give us any logical explanation for the long-term revenue growth that we care about.

Identifying who is purchasing the 2-day-advance tickets does not explain how these purchases lead to enormous long-term gains in revenue.

Eliminate (E), and the only good choice we're left with is (A).

I hope this helps!
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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

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 - Irrelevent

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

ykaiim.. Please post the OA

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.

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.

Good one;
Answer A, there was confusion between C and B. The B option 30-day advance purchase are not profitable for airlines; They are not profitable thats way the airlines have introduced 2 day adv. purc. tickets. So its wrong. Option C - if few passengers purchased that 30 day adv. pur. tic. then it will weaken the argument conclusion. Option A is also controversial; but you can guess, since few tickets are used hence the airline needs to refund the amount of unused / not needed tickets to customers. The new tickets are non- refundable - will make profits as long term gain.

Advance Purchase Tickets are refundable and hence not profitable.
So, its Simply A..

Thanks.

GMATNinja gmat1393 GMATNinjaTwo nightblade354

Can anyone explain why option 'A' is correct?

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