Question

midwest airlines flies a short nonstop with 137 passenger planes. Considering all the costs of owning each plane plus the salaries for their crews and the fuel costs and the fuel costs and landing fees, the fixed cost for a single flight is $10,400. If the costs associated with each passenger total is $48 per passenger and the average ticket price is $157 , what percentage of seats must be filled for the flight to break even?

Answer 1

Let number of seats that must be filled for the flight to break even is x seats

Total passenger cost at break even = $48 * x = $48x

Fixed cost = $10,400

Total cost = $48x + $10,400

Total revenue = $157 * x = $157x

At break even,

Total revenue = Total cost

157x = 48x + 10,400

157x - 48x = 10,400

109x = 10,400

x = 10400/109 = 95.41 or 96 seats

Break-even number of seats = 96 seats

Calculate percentage of seats that must be filled for the flight to break even -

Percentage = (Break-even number of seats/Total seats) * 100 = (96/137) * 100 = 70%

Thus,

70 percent of seats must be filled for the flight to break even.