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Thread: Please go through this as if I am a moron!

  1. #1
    Mar 2009
    Number of seats per plane: 120
    Average load factor (percentage of seats filled): 75%
    Average full passenger economy fare: $70
    Average variable cost per passenger: $30
    Fixed operating expenses per month: $1,200,000

    What is the break-even point in number of flights (hint: you need to use load factor)?

    And please one at a time!
    Last edited by mr fantastic; May 12th 2009 at 02:28 AM. Reason: Merged posts
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  2. #2
    Sep 2007
    Number of seats on a plane - 120
    Average load factor - 75%

    So in other words, every flight on average has 90 people on it.

    Average fare per passenger $70
    Average costs per passenger $30

    In other words, we make on average $40 per passenger.

    So for a flight, we usually have 90 people, and we make $40 per person, so 90 * $40 means $3600 profit per flight.

    We need to cover $1,200,000 in expenses per month, making $3600 per flight.

    1200000 / 3600 = 333.3 flights before you break even (i.e. 333rd flight you're at a loss, 334th you've made a small profit).

    Moral of the story, the aviation business sucks.
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