You are the Chief Operating Officer (COO) of Alpha Airlines. In order to survive and profit in an intensely competitive environment, you attempt to manipulate THREE (3) main variables as shown below: Profitability = [yield x load factor] – cost where • Cost = total operating costs divided by available seat km (ASK) • Yield = total operating revenues divided by the number of revenue passenger km (RPK) • Load factor = ratio of RPK and ASK which measure capacity utilisation In an 8000-km flight from City ‘A’ to City ‘B’, 300 tickets were sold but only 248 passengers showed up. Of these 248 passengers: - 10 were First Class passengers with each paying an average fare of $1,800 - 50 were Business class passengers including a frequent flyer. The frequent flyer paid nothing while other Business Class passengers paid an average fare of $1,250 - 188 were Economy Class passengers with each paying an average fare of $500 The plane, a Boeing 747, has a seating capacity of 416 passengers. Total operating costs for the flight was $200,000. (a) Calculate the profitability of this flight. Show clearly all calculations and state assumptions (if any). (10 marks) (b) To improve profitability, you examine two strategies. One strategy is to push up the load factor. The second strategy is to increase fares. Appraise each strategy and provide supporting calculations. Show clearly your calculations and state assumptions. (25 marks) .