- China Airlines currently flies twice a day from Guangzhou to Sydney and back and offers a connection Perth
- Want to know if they should create a direct flight from Guangzhou to Perth
- Goal: to calculate profitability. Knowing that profit=revenue-cost, and revenue=price x quantity
Basic info for calculating revenue:
- Airline operates 2 flights from Guangzhou to Sydney and back
- Expected price of one flight from Guangzhou to Perth=$600
- About 20 ppl on the flight from Guangzhou to Sydney have Perth as their final destination.
When calculating revenue from the flight from Guangzhou to Perth, the website answer says you should do $600 x 40 (since 20 ppl/flight and 2 flights). i just have two quick questions about this:
1) If you're calculating quantity adjusting for 2 flights, shouldn't you also make price $1200? So shouldn't it be $1200 x 40?
2) Flying twice a day and back is a total of 4 flights right? So in order to calculate total revenue, you could calculate the revenue for one flight ($600 x 20) and multiply it by 4?