Question

Each Tuesday, Ryan Airlines reduces its one-way ticket from Fort Wayne to Chicago from $120 to $30. To receive this special $30 price, the customer must buy a round-trip ticket. Ryan has a nonrefundable 20% penalty fare for cancellation; it estimates that about seven-tenths of 1% will cancel their reservations. The airline also estimates this special price will cause a passenger traffic increase from 500 to 700. Ryan expects revenue for the year to be 55.5% higher than the previous year. Last year, Ryan’s sales were $489,000. 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).

a. Calculate the percent discount Ryan is offering. (Round to the nearest hundredth percent.)

b. Calculate the percent passenger travel will increase.

c. Calculate the sales for new year.

d. Calculate Janice’s loss if she cancels one round-trip flight.

e. Approximately how many more cancellations can Ryan Airlines expect (after Janice’s cancellation)? (Round down your answer to nearest whole number.)

Answer 1