Operating in the Southwestern States, Lancer Airlines Hopes to Avoid

question 330

Multiple Choice

Operating in the southwestern states, Lancer Airlines hopes to avoid entering the price war that currently is taking place between several airlines on the east coast. The best strategy to avoid severe price competition is to:

• A) provide frequent travelers the added value of special fringe benefits.
• B) cut costs and services in order to maintain profit margins.
• C) reduce flights and in-flight services, and lay off employees.
• D) determine the break-even price and charge slightly more than that.

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Definitions:

Nearest Whole Number

A round-off method where decimal values are rounded to the closest integer.

Net Operating Income

A financial metric that calculates a company's profit after subtracting operating expenses, excluding taxes and interest payments.

Traceable Fixed Expense

Fixed costs that can be directly associated with a specific product, department, or segment of a business, facilitating more accurate financial analysis.

Net Operating Income

The profit generated from a company's core business operations, excluding expenses and revenues not directly related to its main activities.