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Difficulty:
95%
(hard)
Question Stats:
37% (02:04) correct
63%
(02:15)
wrong
based on 577
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In an effort to increase revenues, Sky Air recently partnered with several airlines to create a joint frequent-flier program. In the new program, miles earned on all partner airlines can be combined for reward tickets valid on any airline in the partnership. Sky Air’s CEO cites a recent increase in the number of passengers on all the partner airlines as evidence that the new frequent-flier program is having the desired effect. Industry analysts doubt the CEO’s claim.
Which of the following, if true, best supports the analysts’ positions?
A. Air travel tends to be seasonal, with more passengers traveling during warmer months and holiday periods.
B. The recent increase in passenger rates for all the partner airlines was predicted by the lowest rates of air travel in the last decade.
C. Many travelers achieved reward tickets more quickly under the new frequent-flier program and redeemed them recently for free travel.
D. Travelers redeemed frequent-flier rewards on Sky Air’s partners more frequently than on Sky Air.
E. A study of frequent-flier programs showed that they generally result in increased long-term airline revenues.
Which of the following, if true, best supports the analysts’ positions?
A. Air travel tends to be seasonal, with more passengers traveling during warmer months and holiday periods.
B. The recent increase in passenger rates for all the partner airlines was predicted by the lowest rates of air travel in the last decade.
C. Many travelers achieved reward tickets more quickly under the new frequent-flier program and redeemed them recently for free travel.
D. Travelers redeemed frequent-flier rewards on Sky Air’s partners more frequently than on Sky Air.
E. A study of frequent-flier programs showed that they generally result in increased long-term airline revenues.
Updated on: 07 Sep 2016, 05:30
Originally posted by LogicGuru1 on 13 Aug 2016, 02:56.
Last edited by LogicGuru1 on 07 Sep 2016, 05:30, edited 1 time in total.
Last edited by LogicGuru1 on 07 Sep 2016, 05:30, edited 1 time in total.
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In an effort to increase revenues, Sky Air recently partnered with several airlines to create a joint frequent-flier program. In the new program, miles earned on all partner airlines can be combined for reward tickets valid on any airline in the partnership. Sky Air’s CEO cites a recent increase in the number of passengers on all the partner airlines as evidence that the new frequent-flier program is having the desired effect. Industry analysts doubt the CEO’s claim.
Which of the following, if true, best supports the analysts’ positions?
PREMISE 1) To increase revenue, Sky Air partnered with other airlines and formed a frequent flier program.
PREMISE 2) Miles earned on these airlines are combined together and then those combined miles earned can be converted into REWARD tickets on any of the partner airline.
CONCLUSION ) Sky Air's CEO says NUMBER OF PASSENGERS have increased on ALL PARTNER AIRLINES and that the new scheme is having a DESIRED EFFECT.
COUNTER CONCLUSION) Analyst says :- "NO THE CEO'S CLAIM IS WRONG. THE REVENUE HAS NOT INCREASED".
WE HAVE TO STRENGTHEN THE COUNTER CONCLUSION (ANALYST CLAIM) AND SHOW REVENUE HAS NOT INCREASED.
The answer is option C.
The desired effect that was intended when the partnership was formed was to INCREASE REVENUE.
CEO claims NUMBERS OF PASSENGERS have increased in all partners airline. Increase number does not necessarily means increased profit.
Imagine that for a reward ticket you need 1000 miles.
You have 200 miles from airline A, 200 miles from airline B, 200 miles from airline C, 200 miles from airline D and 200 miles from airline E. It means you have 1000 miles but you are not eligible for a reward ticket from any of the airline because they are from different different airlines. But the moment you allow them to be combined you get your self a reward ticket.
As you can see that no money was involved and yet one ticket was issued. Thus there was no profit but the number of passenger was increased by 1.
If thousands of people does that what will be scenario. A high increase in the number of passenger but zero revenues for the company and this will strengthen the Analyst point and destroys the CEO claims.
What options matches with our pre-thinking ... only option C.
C. Many travelers achieved reward tickets more quickly under the new frequent-flier program and redeemed them recently for free travel.
ANSWER IS C
A. Air travel tends to be seasonal, with more passengers traveling during warmer months and holiday periods.
WRONG :- IRRELEVANT. All we are interested in knowing does the revenue increase. This option tells us nothing. We cannot assume that the CEO made the statement during warmer or holiday season. He might have made the statement during winter season.
B. The recent increase in passenger rates for all the partner airlines was predicted by the lowest rates of air travel in the last decade.
WRONG:- Despite being the lowest price, profit can still be extracted.
Example
Previously Airline cost per person = 20 $, ticket price per person = 60 profit = 40
After partnersip Airline cost per person = 20 $, ticket price per person = 33 profit = 13
The airlines can still make profit despite lowest ticket price.
This will strengthen the CEO , we have to strengthen the analyst point which is reverse of this.
C. Many travelers achieved reward tickets more quickly under the new frequent-flier program and redeemed them recently for free travel.
CORRECTO :- As soon as you see the word FREE TRAVEL, you should know this is the correct answer. Travel is happening but no money is coming to airlines. Thus it strengthen the analyst point that partnership has not caused any profit for the airlines. (sky air or any other partner. No one made money)
D. Travelers redeemed frequent-flier rewards on Sky Air’s partners more frequently than on Sky Air.
WRONG :- FIRST :- This does not talk about what the rewards are. Is the reward a 10 % discount. A Tshirt, a free ticket.
More Frequently , less frequently is irrelevant. What if first time flier people bought tickets many tickets on sky air and accumulated many rewards points. But when it comes to reward they switched to other airlines. Thus Sky Air is profited double. FIrst by selling tickets , second by less people taking free rides in its ariline. This Option is actually CEO claims but we have to weaken it.
E. A study of frequent-flier programs showed that they generally result in increased long-term airline revenues.
WRONG :- This will strengthen the CEO and weaken the analyst.
Which of the following, if true, best supports the analysts’ positions?
PREMISE 1) To increase revenue, Sky Air partnered with other airlines and formed a frequent flier program.
PREMISE 2) Miles earned on these airlines are combined together and then those combined miles earned can be converted into REWARD tickets on any of the partner airline.
CONCLUSION ) Sky Air's CEO says NUMBER OF PASSENGERS have increased on ALL PARTNER AIRLINES and that the new scheme is having a DESIRED EFFECT.
COUNTER CONCLUSION) Analyst says :- "NO THE CEO'S CLAIM IS WRONG. THE REVENUE HAS NOT INCREASED".
WE HAVE TO STRENGTHEN THE COUNTER CONCLUSION (ANALYST CLAIM) AND SHOW REVENUE HAS NOT INCREASED.
The answer is option C.
The desired effect that was intended when the partnership was formed was to INCREASE REVENUE.
CEO claims NUMBERS OF PASSENGERS have increased in all partners airline. Increase number does not necessarily means increased profit.
Imagine that for a reward ticket you need 1000 miles.
You have 200 miles from airline A, 200 miles from airline B, 200 miles from airline C, 200 miles from airline D and 200 miles from airline E. It means you have 1000 miles but you are not eligible for a reward ticket from any of the airline because they are from different different airlines. But the moment you allow them to be combined you get your self a reward ticket.
As you can see that no money was involved and yet one ticket was issued. Thus there was no profit but the number of passenger was increased by 1.
If thousands of people does that what will be scenario. A high increase in the number of passenger but zero revenues for the company and this will strengthen the Analyst point and destroys the CEO claims.
What options matches with our pre-thinking ... only option C.
C. Many travelers achieved reward tickets more quickly under the new frequent-flier program and redeemed them recently for free travel.
ANSWER IS C
A. Air travel tends to be seasonal, with more passengers traveling during warmer months and holiday periods.
WRONG :- IRRELEVANT. All we are interested in knowing does the revenue increase. This option tells us nothing. We cannot assume that the CEO made the statement during warmer or holiday season. He might have made the statement during winter season.
B. The recent increase in passenger rates for all the partner airlines was predicted by the lowest rates of air travel in the last decade.
WRONG:- Despite being the lowest price, profit can still be extracted.
Example
Previously Airline cost per person = 20 $, ticket price per person = 60 profit = 40
After partnersip Airline cost per person = 20 $, ticket price per person = 33 profit = 13
The airlines can still make profit despite lowest ticket price.
This will strengthen the CEO , we have to strengthen the analyst point which is reverse of this.
C. Many travelers achieved reward tickets more quickly under the new frequent-flier program and redeemed them recently for free travel.
CORRECTO :- As soon as you see the word FREE TRAVEL, you should know this is the correct answer. Travel is happening but no money is coming to airlines. Thus it strengthen the analyst point that partnership has not caused any profit for the airlines. (sky air or any other partner. No one made money)
D. Travelers redeemed frequent-flier rewards on Sky Air’s partners more frequently than on Sky Air.
WRONG :- FIRST :- This does not talk about what the rewards are. Is the reward a 10 % discount. A Tshirt, a free ticket.
More Frequently , less frequently is irrelevant. What if first time flier people bought tickets many tickets on sky air and accumulated many rewards points. But when it comes to reward they switched to other airlines. Thus Sky Air is profited double. FIrst by selling tickets , second by less people taking free rides in its ariline. This Option is actually CEO claims but we have to weaken it.
E. A study of frequent-flier programs showed that they generally result in increased long-term airline revenues.
WRONG :- This will strengthen the CEO and weaken the analyst.
Amit05
18 Aug 2016, 00:48
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Amit05
Responding to a pm:
Argument:
- In an effort to increase revenues, Sky Air recently partnered with several airlines to create a joint frequent-flier program.
- In the new program, miles earned on all partner airlines can be combined for reward tickets valid on any airline in the partnership.
- Sky Air’s CEO cites a recent increase in the number of passengers on all the partner airlines as evidence that the new frequent-flier program is having the desired effect.
Industry analysts doubt the CEO’s claim.
Question: Which best supports the analysts’ positions?
Analysts doubt the CEO's claim. What is the CEO's claim? That recent increase in the number of passengers signals that the new program is effective i.e. it will increase revenue.
So what is the analyst's position?
That the "recent increase in the number of passengers will not lead to increased revenue for Sky Air"
A. Air travel tends to be seasonal, with more passengers traveling during warmer months and holiday periods.
This doesn't tell us that the recent time period corresponds to "warmer months" or "holiday periods" so it doesn't help us. If it helped connect recent period with extra passengers for a reason other than the new program, it COULD HAVE helped us but not necessarily
B. The recent increase in passenger rates for all the partner airlines was predicted by the lowest rates of air travel in the last decade.
This tells us what was expected because of low air travel in last decade. Higher travel was expected. But was the higher travel actually because people had been putting off travelling in the last few years and have now started again, we don't know.
C. Many travelers achieved reward tickets more quickly under the new frequent-flier program and redeemed them recently for free travel.
This option tells us that the program led to many passengers travelling in the recent times but they travelled for free. Hence this says that the increased passenger travel was because of the program but it will NOT lead to increase in revenues. This supports the analyst's position that the recent increase in number of passengers will not lead to increased revenue.
D. Travelers redeemed frequent-flier rewards on Sky Air’s partners more frequently than on Sky Air.
More people travelled for free on Sky Air's partners than on Sky Air. It doesn't reflect on the success/failure of the program on Sky Air. The program will be a success if more new people start travelling with Sky Air in a bid to collect rewards or its current customers start travelling even more. The actual redemption of rewards doesn't necessarily help the business (it could though.. say someone travelling on a partner airline travels on Sky air to redeem and finds it more suitable). On the flip side, it could have a negative impact too (too may people travelling free so fewer seats available for paying customers). All in all, what kind of an impact it has, we cannot say.
E. A study of frequent-flier programs showed that they generally result in increased long-term airline revenues.
It has nothing to do with the CEO's claim and the analyst's position. What impact THIS program will have, we do not know.
Answer (C)
