Problem - You are employed by Sunshine Airlines and your boss has asked you to do some price comparisons on competing airlines. Once you gather the data, you are required to prepare a business memo to your boss, Mr. Smith, with your findings.
Required:
1. Identify a minimum of two airlines that depart from a major airport located closest to you. This will be your departure city. Your destination will be Honolulu, HI.
2. Calculate round-trip fares for the following two dates. You may choose to go directly to the airline or use one of the Internet-based travel companies such as Expedia, Orbitz, Travelocity, etc.
a. Departing this Friday and returning the following Friday. Try to use any last-minute pricing sales if available.
b. Departing three weeks from this Friday and returning the following Friday.
3. Calculate the difference between the two fares for each airline.
4. Compare all of the fares and analyze the difference.
5. Decide whether these airlines are generating any positive contribution margin on either of these fares.
6. Identify examples of both fixed and variable costs that each airline would incur.
7. Analyze whether the costs are variable or fixed in relation to an individual passenger.
8. Prepare a business memo to your boss that includes the required information and conclude which of these two airlines is your closest competitor.