6-94. Each Tuesday, Ryan Airlines reduces its one-way ticket from Fort Wayne to Chicago from $125 to $40. To receive this special $40 price, the customer must buy a round-trip ticket. Ryan has a nonrefundable 25% penalty
fare for cancellation; it estimates that about nine-tenths of 1% will cancel their reservations. The airline also
estimates this special price will cause a passenger traffic increase from 400 to 900. Ryan expects revenue for the
year to be 55.4% higher than the previous year. Last year, Ryan's sales were $482,000. To receive the special rate,
Janice Miller bought two round-trip tickets. On other airlines, Janice has paid $100 round trip (with no cancella-
tion penalty). Calculate the following: LU 6-2(2)
a. Percent discount Ryan is offering.
b. Percent passenger travel will increase.
c. Sales for new year.
d. Janice's loss if she cancels one round-trip flight.
e. Approximately how many more cancellations can Ryan Airlines expect (after Janice's cancellation)?
6_95
A local Dunlrinn