Official Solution:
Starting at the beginning of 2015, SunDog Airlines replaced its turboprop planes with regional jets for all routes longer than 300 miles. SunDog sold between 10 and 30 percent more fares in 2015 than in any of the previous five years, yet it recorded substantially lower profits for each quarter of 2015 than for the same quarter in any of the previous five years. SunDog’s chief executive concluded that the jets' higher operating costs were responsible for the decline in profits.
Which of the following, if true, most seriously weakens the chief executive’s conclusion?
A. All of the other airlines that operate regional jets on the affected routes saw higher profits for 2015 than for any of the preceding five years.
B. On passenger surveys conducted throughout 2015, passengers rated the regional jets significantly higher for both comfort and reliability than the turboprop planes that they replaced.
C. SunDog has been able to reduce the total number of flights it operates per day on its routes over 300 miles, because its regional jets carry twice as many passengers as did the turboprop planes that they replaced.
D. SunDog’s regional jets use less fuel per person aboard to fly a given distance than did the turboprop planes that they replaced.
E. Approximately 35 percent of the fares that SunDog sold in 2015 were promotional fares that it sold to passengers on its new regional jets at a price equal to the airline’s own per passenger cost.
SunDog’s chief executive attributes the decline in the airline’s year-over-year profits for 2015 to
higher operating costs for the new regional jets, as compared to the operating costs for the turboprop planes used previously.
To weaken this argument, we need some other factor that could have reduced SunDog’s profits for 2015 as compared to 2010-2014. Because profit is revenues less costs, this alternative factor could act either (i) by increasing the airline’s costs or (ii) by decreasing its revenues for 2015 relative to the foregoing years.
Choice (E) states that 35 percent of SunDog’s 2015 airfares were sold at cost, meaning that those fares contributed exactly zero to the airline’s 2015 profits. The total number of fares that SunDog sold for 2015 ranged between 10 and 30 percent greater than the corresponding figures for 2010 through 2014; this whole range lies below 35 percent, so the zero-profit fares cover the entire increase in fares sold for 2015 with some to spare. Thus the number of fares that SunDog sold
for a profit was actually
lower in 2015 than in any of the five preceding years.
This decrement in revenue provides an alternative explanation for the decline in SunDog’s profits that has nothing to do with operating costs, so (E) is the correct answer.
INCORRECT ANSWERS: (A) Only SunDog’s finances are relevant to this argument; no comparisons are being made to any other airline. Furthermore, the SunDog CEO’s central claim is about the relative [un]profitability of regional jets, compared to turboprop planes; there is no indication that any of the other airlines ever made a switch to jets from turboprops, so the other airlines’ financials have no relevance to that claim. (B) Comfort and reliability have no direct bearing on revenues, costs, or profits, so this choice is irrelevant.
(C) The reduction in the total number of flights on the affected routes is not quantified, nor are we told how much the regional jets cost to operate as a multiple of the operating costs of the previous turboprop planes. Accordingly, there is no way to determine whether this reduced number of jet flights cost less than, the same as, or more than the previous slate of turboprop flights did to operate overall.
(D) The ratio of the jet’s to the turboprop’s fuel cost per person aboard is not quantified, nor are we told the total capacity of each regional jet as a multiple of the previous turboprop plane’s capacity. Accordingly, there is no way to determine whether SunDog’s
overall fuel costs have gone up, gone down, or remained unchanged.
Answer: E