Oriole Airlines plans to offer a $25 discount to anyone who books a fl

Question

Oriole Airlines plans to offer a $25 discount to anyone who books a flight directly through the airline's Web site. The executives reason that this strategy will increase net profits by encouraging consumers to visit the Oriole Airlines website directly rather than shop for less expensive flights through independent Websites that list fares from different airlines.

Which of the following, if true, would present the most serious potential weakness of the plan?

A. Many rival airlines already offer discounts to people who book flights directly through their Web sites.
B. Most consumers who shop for flights on independent Web sites find that Oriole's fares are the lowest.
C. Many independent Web sites that list fares from different airlines do not include special discounts that airlines offer only through their own Web sites.
D. Consumers who shop for less expensive fares through independent Web sites usually book flights through those Web sites rather than directly through airline Web sites.
E. Oriole Airlines fares are generally not more than $20 less expensive than the least expensive fares from rival airlines for similar flights.

KarishmaB · Accepted Answer

Here is what we know: People visit independent websites (such as Makemytrip) to get the cheapest flights. They are able to see fares of many airlines on those sites.
Oriole plans to lure customers to their own website by offering a $25 discount (which independent sites do not offer). It hopes that to get that discount, people will come directly to Oriole and book from there (and will not see cheaper flights of other airlines). 
This is how Oriole plans to increase its profits.
For all purposes, we assume that Oriole's fares are the same everywhere since we are not given that this is not the case.

Aim of the plan: Increase net profits

What will weaken the plan?

A. Many rival airlines already offer discounts to people who book flights directly through their Web sites.

This is perhaps a reason to offer the discount too. If rivals are offering, Oriole may be losing business because of that. To get a level playing field, Oriole should offer too. The profits may increase if it is level playing field.

B. Most consumers who shop for flights on independent Web sites find that Oriole's fares are the lowest.

This is a problem. Oriole does well when people shop at independent websites. Their fares are the lowest so people likely book Oriole. Now, if Oriole attracts them to its own website by offering $25 discount, all that happens is that Oriole loses $25 on every transaction. Hence, cost increases for Oriole and it might end up seeing a decrease in net profit, forget about increasing it.
Hence, this certainly weakens our plan.

C. Many independent Web sites that list fares from different airlines do not include special discounts that airlines offer only through their own Web sites.

It is something already assumed by the plan. It changes nothing.

D. Consumers who shop for less expensive fares through independent Web sites usually book flights through those Web sites rather than directly through airline Web sites.

The opposite of this would have been troublesome for us. If consumers were "window shopping" at independent websites and then actually booking directly through airline websites, that would be bad for Orione's plan. People would still look at independent websites and find the cheapest flight and in case they chose Orione, they would come to Orione's website and get the discount and book here. That could lead to reduction in profit. 
But as given, (D) has no impact on our plan. Our plan assumes that people shop at independent websites.

E. Oriole Airlines fares are generally not more than $20 less expensive than the least expensive fares from rival airlines for similar flights.

This is a bit confusing. I will re-write it by assuming a value for "not more than $20".
"Not more than $20 less expensive" could be "$10 less expensive" or "$0 less expensive" or even "$50 more expensive" etc.

If Oriole's flights are generally cheaper than the cheapest, then as happened in option (B), it weakens our plan.
But if Oriole's flights are $50 more expensive than the cheapest, our plan could work.

Hence option (E) doesn't tell us how our plan will be impacted.

Answer (B)

ashutosh_73  - There were some issues in the logic you used so I have explained how to think about this question above.

ChiranjeevSingh · Answer

I'll address the popular options B, D, and E.

Option B : If most consumers already find you the cheapest, we understand that most consumers would purchase your tickets without the discount. So, this discount will reduce your price of ticket without increasing the number of tickets sold (because people buy your tickets in any case since you are the cheapest)

Option D : It says that people looking for cheap fares usually book their flights through independent websites rather than airline websites. But isn't that the problem Oriole was trying to solve its discount? Yes. It wanted to offer discounts so that people do not purchase tickets through independent website and rather come directly to its website. Actually, this option seems to suggest a rationale for offering the discount. Thus, this option supports the argument.

Let's look at the  opposite of option D  - people looking for cheap fares usually book their flights through airline websites rather than through independent websites.

In this case, offering a discount doesn't make a lot of sense since people, in any case, are booking through the airline's website. Thus, the opposite of option D weakens the argument.

(We need not have done the exercise of looking at the opposite of option D. I did that just to be clear about the impact of D. If any option is a strengthener, its negation will be a weakener.)

Option E : It's quite difficult to comprehend. Even I had to spend extra time just to comprehend it. However, once I understood the option, it was not difficult to reject this option.

Oriole Airlines fares are generally not more than $20 less expensive than the least expensive fares from rival airlines for similar flights.

I  first tried  to understand the following version of the option:

Oriole Airlines fares  are generally $20 less expensive  than the least expensive fares from rival airlines for similar flights.

This statement means that fares of OA = least expensive fare from other airlines - $20

So, the statement means that the fares of OA are cheaper than the cheapest fares of other airlines by $20.

Having understood this statement, I take a jab at the original statement:

Oriole Airlines fares are generally not more than $20 less expensive than the least expensive fares from rival airlines for similar flights.

Now, I can understand this statement. So, $20 is the cap. OA fares are not cheaper by "more than $20" than the cheapest fares of other airlines.

Thus, the price advantage in favor of OA airlines is not more than $20.

Now, having understood this statement, we can evaluate its impact on the argument.

Since it is a negative statement, I ask myself, "What if the price advantage in favor of OA airlines were more than $20?"

That would mean OA tickets are the cheapest by more than $20. This would weaken the argument, just as option B did.

Thus, the opposite of this option weakens the argument. Thus, option E is NOT a weakener.

gmatophobia · Answer

This is a plan-goal question

Plan:    To offer a $25 discount to anyone who books a flight directly through Oriole Airlines's Web site

Goal:     Increase net profits by encouraging consumers to visit the Oriole Airlines website directly rather than shop for less expensive flights through independent Websites

In coming up with the plan, the executives have assumed that independent websites list flights that are less expensive than those by Oriole Airlines. If the flights operated by Oriole Airlines are offered at the lowest fare on the independent websites, the consumers may not have an incentive to visit Oriole Airlines's website.

Answer Choice Elimination:

A. Many rival airlines already offer discounts to people who book flights directly through their Web sites.

This option suggests that many rival airlines already have similar discount strategies in place. While this could potentially affect Oriole's competitive position, it doesn't directly address the effectiveness of Oriole's plan to increase net profits by offering a discount for direct bookings through its website. Hence, we can eliminate A.

B. Most consumers who shop for flights on independent Web sites find that Oriole's fares are the lowest.

This option presents a significant weakness in the airline's plan. If consumers already find Oriole's fares to be the lowest on independent websites, they may not have sufficient incentive to visit Oriole Airlines's website to book the flight. We can keep option B for now. The option provides a piece of additional information that challenges the core assumption of the plan. Let's keep B.

C. Many independent Web sites that list fares from different airlines do not include special discounts that airlines offer only through their own Web sites.

This option slightly strengthens the plan. The option provides us with a reason why should consumers book a flight through the airline's Web site and not from independent websites. The consumers may get a cheaper price on the airlines' website. Hence we can eliminate this option.

D. Consumers who shop for less expensive fares through independent Web sites usually book flights through those Web sites rather than directly through airline Web sites.

While the option undermines the plan, the information presented in Option D doesn't directly address the core assumption. Firstly this option provides us with information about a subset of customers, who shop for less expensive fares. However, the goal targets all customers. Second, we don't know if the discount offered by Oriole Airlines makes its flight the least expensive. If so, the consumers may be motivated to visit the airline's website. After all, these are price-sensitive consumers. Hence, we can eliminate D.

E. Oriole Airlines fares are generally not more than $20 less expensive than the least expensive fares from rival airlines for similar flights.

This option states that the price difference is small. However, the discount might still be enough to attract customers. Hence, we can eliminate E.

Option B

TOBEATHATPERSON · Answer

MartyMurray  I think option D is just irrelevant 
Would you help for judging?

Posted from my mobile device

MartyMurray · Answer

The reasoning of the argument involves the idea that Oriole Airlines will do better if consumers come directly to its website to book flights rather than use independent websites.

Here's (D):

D. Consumers who shop for less expensive fares through independent Web sites usually book flights through those Web sites rather than directly through airline Web sites.

We see that (D) has no effect on the argument.

For one thing, regardless of whether consumers who shop for less expensive fares through independent Web sites book flights through those Web sites rather or through airline Web sites, if they are finding fares that are less expensive than Oriole's fares, they won't book flights with Oriole.

Furthermore, if, with the plan implemented, consumers go directly to Oriole's site, then they won't be booking flights with other airlines either through independent sites or directly with the other airlines. In other words, the plan works by keeping consumers off independent sites. Thus, (D) does not weaken the argument. After all, what consumers would do if they were on the independent sites is irrelevant since, if the plan works, they won't be using those sites.

TOBEATHATPERSON · Answer

Thanks for clarifying! And why Answer B is answer is that,
if already Oriole price is the lowest, lowing price via Oriole's site will not effect for net profit right? 
Consumers who shop for less expensive flights through independent Websites will not visit Oriole's site because of low price cuz they already know it's the lowest.

egmat · Answer

Hi,

Let's understand what Oriole Airlines is trying to achieve:
 
 If a customer visits an independent website, they will have flights available from various airlines. 
 A customer looking for the least expensive flight will easily pick any airline that offers the least expensive flight that suits their requirements. 
 Because flights from various airlines are visible to the customer, there are chances that they will book a cheaper flight of any other airline, and Oriole will lose that customer. 
 Oriole is trying to avoid this scenario by attracting the customer to their own website by offering a discount.  They expect that customers will only check their flights and book one of them, and Oriole will not lose these customers.   
However, just consider the   scenario in which Oriole flights are the cheapest on the independent websites. In such a case, even without offering the additional discount, Oriole will not lose customers looking for the cheapest flights.

In such a scenario, the plan may actually lead to a loss of $25 per booking instead of increasing the profit .  Thus, this scenario presents a weakness of the plan.

Choice B   is in line with this scenario and hence is correct.

Hope that helps,
Happy learning!

TOBEATHATPERSON · Answer

Hmm I think the idea that actually leading to loss has assumption...
I thought B just weaken increasing net profit because customer already know price is the lowest and not go to airlines' website

Posted from my mobile device

MartyMurray · Answer

Think about it.

If the price is lower on Oriole's website, then customers will still have a reason to go to Oriole's website rather than book flights through independent sites. After all, in that case, customers can book flights for even less on Oiriole's website.

So, what's the issue?

The issue is that, if, as (B) says, customers already find that Oriole's prices are the lowest, then by offering the flights for $25 less, Oriole won't get any more customers. After all, in that case, customers who were choosing on the basis of prices were already booking with the lowest cost provider, which is Oriole.

So, if (B) is true, Oriole won't get more customers by implementing the plan.

However, Oriole will get LOWER PRICES, $25 less per flight. So, it's likely that, by implementing the plan, Oriole will end up with about the same number of customers but lower prices. So, Oriole will likely experience a reduction, rather than an increase, in profits because of its implementing the plan.

Thus, (B) shows that the plan likely will not work.

egmat · Answer

Watch this solution to see how a seemingly complex Critical Reasoning question transforms into a straightforward task through effective visualization.
This video demonstrates the power of creating a mental image or diagram to break down the argument's structure.  By visualizing the relationships between premises and conclusions, you'll be able to quickly identify logical gaps and easily eliminate trap choices.

https://www.youtube.com/watch?v=s1K1zQKNo6Q

This approach not only simplifies the question but also significantly reduces the time needed to arrive at the correct answer. Remember, mastering the art of visualization can be your secret weapon in tackling even the most challenging CR questions on the exam.

RiyaJ0032 · Answer

but aren't you assuming here, that the prices at which Oriole's ticket is offered through independent websites, those prices are higher than the price after a 25$ discount?

Why is this assumed?

Afterall , the stem clearly mentions that the executive has decided to offer a 25$ discount, because the independent websites which sell Oriole's tickets list them cheaply

so although the exec is offering a 25$ discount, the profit earned would still be higher than those earned when customers buy the tickets through an independent site

if this wasn't the case and if 25$ discount would make the exec earn less money than what he earns when the tickets are sold through independent websites, why would he offer a 25$ discount?

ChiranjeevSingh 
 KarishmaB

KarishmaB · Answer

No. Read the argument again. We are given that the exec doesn't want people to see cheaper options (of other airlines) listed by independent websites. We assume here that Oriole 's listed price is the same everywhere but on its own website, there is an extra $25 discount. 
But if Oriole is the cheapest on the independent websites then Oriole will lose money by offering discount and that is why (B) works.

mpobisetty · Answer

Could you please explain "without increasing the number of tickets sold" part  ChiranjeevSingh ?

B says:  Most consumers who shop for flights on independent Web sites find that Oriole's fares are the lowest.

"Most" could mean 51%. So, for the remaining 49%, it seemed to me that a $25 discount by OA might entice them to buy OA tickets.

Hence, while the profit "per ticket" will come down because of this $25 discount, the total profit of OA might increase because of the potential increase in the number of tickets sold. Hence, I was not convinced about B.

Would appreciate your inputs on this.

ChiranjeevSingh · Answer

I have recorded my response in the below video:

https://www.youtube.com/watch?v=LsK-qTyJP9I

mpobisetty · Answer

Thanks for recording the video  ChiranjeevSingh  Sir. Actually I went thru the responses of other experts as well:

egmat : the plan  may  actually lead to a loss of $25 per booking instead of increasing the profit

MartyMurray :  Oriole will  likely  experience a reduction, rather than an increase, in profits because of its implementing the plan.

So, these people seem to be also referring to "what  may  happen". Hence, I reasoned that if B is true, what  may  happen is that the profits of OA may actually go up as a result of the plan.

ChiranjeevSingh · Answer

There are a couple of points here:

1. There is no "may" - for customers who were going to purchase our tickets anyway, we "will" incur a loss of $25. There is no "may"
2. Likely is not the same as "may" - What is likely in light of some information is what is indicated by the information.

So, again, thinking in terms of possibilities in strengthen weaken questions is not helpful.

cfa93 · Answer

Can someone tell me, if in absence of (B), (D) would be best choice?

because B is clearly best answer, there is a potential threat of cannibalisation,

but D is also not completely irrelevant also worse weakener than B. if customer's habit is not to visit official web-sites then offering those discounts through web-sites may not achieve effect.

egmat · Answer

cfa93  Choice (D) has a fundamental flaw: it describes  current  consumer behavior but doesn't account for how a  $25  discount might  change  that behavior. Think about it this way:

The plan's premise is that the discount will  incentivize behavior change  
 (D) merely states what consumers "usually" do  without  this incentive 
 Even if  90\%  of consumers prefer comparison sites today, a  $25  discount could shift that to  70\%  or  50\%

The Critical Distinction

(B) - Profit Destroyer:  Shows the plan will  actively hurt  net profits through cannibalization
 (D) - Implementation Challenge:  Suggests the plan  might  face adoption hurdles, but doesn't prove it won't work

If (B) Were Removed

The best answer would likely be  (E) , not (D). Here's why:

If Oriole's fares are only  $20  cheaper than rivals, and they offer a  $25  discount for direct booking, customers could actually find  cheaper  flights with rivals on comparison sites. This directly undermines the profit goal.

Strategic Framework for CR Weakeners

When evaluating weakeners, prioritize:
 
  Direct profit impact  (like cannibalization in B) 
  Mathematical contradictions  (like the pricing issue in E) 
  Behavioral assumptions  (like D) - usually weakest

Remember: "Might not work perfectly" ≠ "Will definitely harm profits"

You can practice similar CR Weaken questions  here  (you'll find a lot of OG questions) - select  Critical Reasoning  and  Weaken  question types. You can select the difficulty level as per your current ability levels.

ChiranjeevSingh · Answer

Passage Analysis

Oriole Airlines plans to offer a $25 discount to anyone who books a flight directly through the airline's Web site.

This airline is planning to offer a discount to people who book their flight directly from their website.

The executives reason that this strategy will increase net profits by encouraging consumers to visit the Oriole Airlines website directly rather than shop for less expensive flights through independent Websites that list fares from different airlines.

The statement offers the  reason  for the plan to offer a discount stated in the first statement. The  reason  is that offering this discount will increase net profits because the strategy of offering discounts will encourage customers to visit the airline website directly. So people will directly visit the airline website and not shop for less expensive flights through independent websites that list fares from different airlines.

So it's important to understand this rationale precisely, otherwise, a lot of people may form their assumptions about the  reason  for the strategy. The strategy of the plan is to offer a $25 discount to anyone booking directly through the website. Is that an attempt to make the airline's fares the cheapest? No, the $25 discount is not really an attempt to make these fares  the cheapest ; otherwise, they could have offered the discount to people surfing on independent websites also. The rationale here is that we want people to directly come to our websites. We don't want them to even go to independent websites.

Why? Again, it's important to understand the "why" here. In some other situations, the  reason  to want people to come directly to us could be that we don't want to offer commissions to the independent websites. But that's not the case here. The case here is that people look for  less expensive flights through independent Websites that list fares from different airlines .

Essentially, we want them to come directly to ours so that they don't end up looking for less expensive fares and eventually end up buying a ticket from some other airline. So we don't want to offer the cheapest, but by offering a discount, we want them to come directly to us so they don't end up going to the cheapest one. This is the  rationale .

Deconstructing the Question

Which of the following, if true, would present the most serious potential weakness of the plan?

We are looking for an option that presents the most serious weakness of the plan, so we are looking for the strongest weakener of the plan.

The plan is to offer discounts to anyone booking directly through the website, and the  goal  is to increase net profits. So, we are looking for an option that indicates that the plan will not lead to the  goal : by offering the discount, we will not have an increase in net profits.

Options Evaluation

(A) Many rival airlines already offer discounts to people who book flights directly through their Web sites.

Incorrect.    This option has  no impact  on whether the plan will lead to the goal or not. Whether other airlines offer such discounts or none of the airlines offer such discounts, there will be no impact on the plan.

(B) Most consumers who shop for flights on independent Web sites find that Oriole's fares are the lowest.

Correct.    This option says that a majority of customers who shop for flights on independent websites find that Oriole's fares are the lowest. If a majority of these people find that Oriole's fares are the lowest, in that case, it is counter-productive to offer a $25 discount to people to book through our website directly. Because they are going to book our tickets in any case, offering such people a discount would actually reduce net profit rather than increasing net profit.

Now, you may be thinking that this option says  most consumers , not  all consumers . It says more than 50%; it doesn't say 100% of consumers find Oriole fares the lowest. If it said  all consumers , then it would be an even better  weakener ; the magnitude of weakening would increase. But even with  most  or a  majority , it is still a  weakener , just that the magnitude is lower than it could have been.

Let's say the option used  some  instead of  most . In that case also, the option would be a  weakener ; it is just that the magnitude of weakening would be extremely small. Rather, it would be so small that I wouldn't think it would be correct. I would expect there to be another correct option because  some  means at least one; one or two consumers finding you to be the cheapest doesn't really impact the plan of a company. On the contrary, a majority of customers finding you to be the cheapest—that can certainly have an impact on the company's plan.

(C) Many independent Web sites that list fares from different airlines do not include special discounts that airlines offer only through their own Web sites.

Incorrect.    Let's consider the opposite of this option.

"Let's say that the independent websites actually listed fares, including the special discounts that airlines offer only through their own websites."

Wouldn't this be good for our plan? In this case, the customers going to the independent websites would find our fares with the discount included, so it's more likely that they will find us the cheapest. I think this is  supporting  the plan.

In light of this - that the opposite of option C would support the plan - I would say that option C directly is against the plan, so it is a  weakener .

I would also say that it's a very  mild weakener . Why is it very mild? Because the whole objective of the plan is to get the customers directly on our website. In that case, even if independent websites do not include our special discount, it doesn't have a great impact on our plan to increase net profits by getting the customers directly on our website.

(D) Consumers who shop for less expensive fares through independent Web sites usually book flights through those Web sites rather than directly through airline Web sites.

Incorrect.    Let's try to understand what this option is saying. It's talking about consumers who are shopping for less expensive fares through independent websites. So they go to this independent website, find the cheapest fare, and now this option is saying that they actually end up booking through the independent website rather than going to the airline website.

Once these consumers have figured out the cheapest fare, does it really matter where they are really booking? The whole point of the plan was that people don't really go to these websites to find the cheapest one, because if we are not the cheapest, then we will miss out on the ticket. People have already figured out the cheapest; whether they are booking through an independent website or going to our competitor's airline website doesn't really impact the plan.

(E) Oriole Airlines fares are generally not more than $20 less expensive than the least expensive fares from rival airlines for similar flights.

Incorrect.    The given option is quite hard to understand. It contains  not ,  more , and  less , so two comparisons with a negative—extremely hard to really understand. So let's do away with the negative and try to understand it.

"E1) Oriole Airlines fares are generally  more than  $20 less expensive than the least expensive fares from rival airlines for similar flights."

As I look at it, I can see that here also, people may get confused with both  more  and  less  being there. So let's replace  more than $20  with just  $20 .

"E2) Oriole Airlines fares are generally $20 less expensive than the least expensive fares from rival airlines for similar flights."

Now this option variation is much easier to understand. It means that Oriole's fares are generally $20 less expensive than the least expensive fares from rival airlines for similar flights. This variation is saying that Oriole's airline fares are the cheapest, which is what exactly the correct option B was saying.

Now let's try to understand the meaning of E1: This variation means that Oriole's fares are not just $20 less expensive, they are  more than  $20 less expensive, which means that they are $21 less expensive, or it could be $30 less expensive. So still, they are less expensive than the least expensive fare from competitor airlines.

With this understanding, let's try to understand the original option. The original option said  not more than $20 , which means that it is putting a cap at $20. So it can be $19, $18, $10. It can be zero dollars also. Can it also mean negative dollars? Yes, it can also mean negative. When we are putting a cap of  not more than $20 , we are fine with negative numbers also, mathematically. In essence, option E says that Oriole's fares have a cap of $20 in terms of how much cheaper they are than the cheapest ones from the competitor.

So this option is essentially putting a cap on how significant the difference can be in terms of the fare. But—this is an important but—this option is not saying how typically Oriole's fares are cheaper than the cheapest. It could be that they are never cheaper than the cheapest, and it could also be that they are generally cheaper than the cheapest. This option is just saying that generally, the difference in favor of Oriole is not more than $20, but it does not say how frequently it is in favor of Oriole.

Rather, the only thing that this option does is put a maximum cap in terms of the difference in favor of Oriole. And if you think about it, the bigger the difference in favor of Oriole, the worse it is for the plan (Refer option B). Putting a cap is actually working slightly in favor of the plan rather than against the plan. So this option is  definitely not a weakener .

Oriole Airlines plans to offer a $25 discount to anyone who books a fl

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Oriole Airlines plans to offer a $25 discount to anyone who books a fl

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