Company Alpha buys free-travel coupons from people who are awarded the

Question

Company Alpha buys free-travel coupons from people who are awarded the coupons by Bravo Airlines for flying frequently on Bravo airplanes. The coupons are sold to people who pay less for the coupons than they would pay by purchasing tickets from Bravo. This marketing of coupons results in lost revenue for Bravo.

To discourage the buying and selling of free-travel coupons, it would be best for Bravo Airlines to restrict the

To discourage the buying and selling of free-travel coupons, it would be best for Bravo Airlines to restrict the

(A) number of coupons that a person can be awarded in a particular year

(B) use of the coupons to those who were awarded the coupons and members of their immediate families

(C) days that the coupons can be used to Monday through Friday

(D) amount of time that the coupons can be used after they are issued

(E) number of routes on which travelers can use the coupons

AndrewN · Accepted Answer

One of my clients asked me to share my thoughts on this question, so I am posting here in hopes that everyone can benefit.

Okay, so before we jump into the answer choices, we need to assess the question, exactly what it is we are being asked to answer, and the situation that the passage presents. I like to start with the question as a frame for how I read and interpret the passage. This question is asking us how  Bravo Airlines , which I will hereafter refer to as B, can  restrict  something in order to  discourage the buying and selling of free-travel coupons . How are these coupons being used or abused currently to warrant such a restriction? It is time to consult the passage.

Ah... now the situation should be all too clear:  Company Alpha , which I will hereafter refer to as A, is buying these coupons from frequent-flyer customers of B airplanes, then A is turning around and selling these coupons to  people , apparently anybody, since these travelers can save money buying vouchers from A as opposed to buying tickets directly from B. The result: B is losing revenue. It would thus be in the best interest of B to restrict something about these free-travel coupons to reverse the trend and increase revenue instead. What do the answers have in store for us?

Analysis: We have no information on the  number of coupons  that a person can currently be awarded in a given year. Maybe it is already restricted, maybe not. But the issue remains that these frequent flyers are able to sell their coupons to A, without restrictions. If, say, 1,000,000 frequent flyers are awarded one coupon per year but many of them still sell their coupons to A, then A can continue to resell these coupons to other potential customers of B airlines. It is hard to see how the current cycle will be broken, especially without more numbers in hand.  Red light.

Analysis: With this restriction in place, only the frequent flyers themselves--who, of course, were awarded the coupons in the first place for using B airlines--or those directly related to such people could  use  the coupons, thereby limiting the selling of these vouchers to A, which could then not turn around and sell the same vouchers to anybody who wanted to book a flight with B. The buck stops here, you might say. If  people  at large can no longer use the coupons, then they will stop purchasing them from A, assuming that A would even be buying them with the new policy in place. Thus, B stands to gain from such a restriction.  Green light.

Analysis: This is a nice little distraction, one that someone who was overthinking the question might blunder into. The logic might go that in the real world, flying is more popular on weekends, so if B restricts the days that the coupons can be redeemed to  weekdays , many flyers will no longer be able get a cheap seat on a desirable weekend flight. This sort of extra legwork, or bending over backwards to find a way to justify an answer, is a hallmark of an incorrect response. The GMAT™, furthermore, does not require outside knowledge of flight trends to answer its questions.  Red light.

Analysis: First off, as we encountered in (A), we have no information on the current window of redemption for the coupons, so there is no basis for comparison. You might also misinterpret  amount  as the  number  of times a coupon can be used, but  amount of time  makes it clear that  time  for redeeming a coupon is what would be restricted. The problem with restricting the time in this manner is that  all travelers  would be impacted equally, so frequent flyers who had been issued the coupons could still turn around, sell to A, and A could then sell to anyone at large. When the whole world is your target customer, it might not be too hard to find  someone  within that population who would want to purchase a discount fare from A instead of a full-price ticket from B. Yes, the inventory of free-travel coupons might go down for A, but nothing about this restriction would disrupt the business model of A, and the bottom line for B could be just as grim.  Red light.

Analysis: This policy change might upset the frequent flyers, but who cares? They could just continue to sell to A, who could in turn find  people  to buy those restricted-destination free-travel coupons. This is not a good idea for B to implement to increase its revenue.  Red light.

I hope the community may find this analysis useful. If you have any questions, feel free to ask. As always, good luck with your studies.

- Andrew

WaterFlowsUp · Answer

Only option that restricts the fliers to the awarded ones and their close family memebers is Option  B for Bravo

Nitishnautiyal · Answer

Ahhhh I see so the amount of time can be referred to the duration as well for redemption , confusing answer choice then

Posted from my mobile device

AndrewN · Answer

There is actually a single interpretation of option (D) that is correct, namely that the amount of time to redeem the coupon would be restricted. Perhaps you read the answer choice as  the amount of time s  that the coupons can be used after they are issued , but even there,  amount  would have to replaced by  number  for grammatical reasons. Furthermore, I think it is safe to assume that the vouchers can be used just once, or else B would clearly be aiming to run itself into the ground. The free-travel coupon should not be confused with a free-flights-for-life offer. (Why would the frequent flyers ever sell such a coupon to A in the first place?)

- Andrew

Sneha2021 · Answer

Hi  AndrewN   VeritasKarishma ,

Bravo Airlines to restrict the number of routes on which travellers can use the coupons

Why E is incorrect? 
Similar to B, E will also restrict the audience who can buy the coupons. 
In B, limited people can buy the coupons now. In E also, people who travel to those routes will buy the coupon. So what's the difference?

AndrewN · Answer

Hello,  Sneha2021 . The trouble with (E), as I see it, is that either way we interpret the  number of routes on which travelers can use the coupons , it does not deter Company Alpha from buying the coupons from Bravo Airlines customers and turning around to resell those coupons.

1) The number of routes will be restricted to predetermined destinations.

Analysis: In this case,  anyone  who wants to fly to these destinations can pick up the coupons from Company Alpha. Without further information on these destinations, we have no idea whether this move would achieve the aim the question stem sets up.

2) Travelers themselves can use the coupons on any of, say, three destinations of their choice, but not anywhere at large.

Analysis: All  any  traveler would need is a selection of one or two destinations, and that would do. If the idea is for Bravo to keep Alpha from reselling vouchers, then placing restrictions on just who can use the vouchers makes much more sense, as explained in my earlier post.

I hope that helps clarify a bit. I have to run to my next lesson!

- Andrew

KarishmaB · Answer

Sneha2021

Aim: discourage the buying and selling of free-travel coupons
What can be the plan?

Bravo should restrict what? Be careful of what the aim is. We want to discourage buying and selling of coupons. We don't want to discourage people who received them from using them.

Hence, option (B) is perfect.
(B) use of the coupons to those who were awarded the coupons and members of their immediate families

This would ensure that anyone other than the one who received the coupon (and her family) cannot use it. Hence, buying and selling of the coupons will stop.

All other options put some restrictions on the use of coupons by anyone. The aim is not to make it difficult to use the coupons; it is to discourage buying and selling of coupons. People who are awarded the coupons should be able to use them.

ImpactGMAT · Answer

Focus on main point- LOSS OF REVENUE - To stop this we need to select option which restrict reselling of coupon.

Only Option B stops reselling, all other options does not stop sale of coupon and will ultimately result in revenue loss

A_Nishith · Answer

Aim: discourage the buying and selling of free-travel coupons
What can be the plan?

Bravo should restrict what? Be careful of what the aim is. We want to discourage buying and selling of coupons. We don't want to discourage people who received them from using them.

Answer: B
(B) use of the coupons to those who were awarded the coupons and members of their immediate families

This would ensure that anyone other than the one who received the coupon (and her family) cannot use it. Hence, buying and selling of the coupons will stop.

dhairya18 · Answer

(A) Restrict the number of coupons a person can be awarded.
Effect: This might reduce the total supply of coupons, but it doesn't stop people from selling the ones they do get. The market still exists.

(B) Restrict the use of coupons to the awardee and their immediate family.
CORRECT. This "kills" the business model for Company Alpha. If a coupon can only be used by the person who earned it or their family, Company Alpha cannot sell it to a random stranger. The coupon becomes non-transferable to the general public.

(C) Restrict usage to Monday through Friday.
Effect: Company Alpha would just sell "weekday-only" coupons at a discount. The revenue loss continues for those specific days.

(D) Restrict the amount of time they can be used after issue.
Effect: This just creates an expiration date. Company Alpha would simply sell the coupons faster or at a steeper discount as the deadline approaches.

(E) Restrict the number of routes.
Effect: Similar to (C), Alpha would just specialize in the routes where coupons are still valid. Bravo still loses revenue on those specific routes.

I hope it helps!!

Company Alpha buys free-travel coupons from people who are awarded the

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