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Interview Question

Analyst Interview(Student Candidate)

A flight's about to take off with still empty seats. A

  customer offers you X amount of money for the flight, what are the factors to consider in whether you should accept the offer?
Answer

Interview Answer

2 Answers

0

Fuel mostly

Interview Candidate on Feb 13, 2011
5

Well not just fuel. It's clear that you have to think about whether the weight that the customer adds with regards to fuel cost is less than X. You also have to think about the long term effects of offering the seat at that price. If you set a precedent to always accept X dollars a minute before the flight where X is above cost, then why would people ever buy tickets in advanced when they know that they can get a cheaper flight the day of? You should also take into consideration the elasticity of the ticket to this customer. If this is a business customer, he will most likely not care what the cost is, only that he gets to the destination on time and is thus more likely to accept a counter offer X + Y (even we still make money at X). If it is a pleasure traveler, they are less likely to accept a counter offer and it may be okay to accept price X.

Other things to think about besides fuel is Mileage Program cost, chance that you will be able to sell extras on the flight to this customer (e.g. inflight food, headphones, etc), along with any other costs that allowing an extra customer to fly. (Similar to fuel, I'm not sure if fuel prices differ based on location, but if, for example this flight were from NYC-LAX, fuel in NYC is A/gal, fuel in LAX is B/gal where A<B, then you have to consider the extra price of just letting the NYC fuel sit on the plane vs burning it in the air and the buying it in LAX (since each customer adds weight which adds to fuel consumption)).

bensw on Jan 13, 2012

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