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 cancellation penalty). Calculate the following:
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)?
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