::: vuaskari.com ::: GDB- MGT402 LAST DATE 23-JAN2012

Semester "Fall 2011"

GDB "Discussion Question"

"Jet International Airlines (JIA) – a Republican Country based airliner is operating more than 1,400 flights annually with 23 planes of different ranges on domestic and international routes. With a stable stream of cash flows, the company has earned a pre tax profit of Rs. 3,450 million during the last year. Due to cost effective operations, JIA is enjoying competitive position in the industry.   The company's Strategic Business Development Unit (SBDU) has recently discovered Green Valley - a jewel among the many beautiful valleys in the district of Northern City in the Northern area of Country and features pine forests, crystal clear lakes, cool mountain streams, Deep Cold River, and famous for its trout. SBDU has advised the top management to launch a regular daily flight from Central City to Northern City on day round trip basis. After going through some preliminary study, JIA has decided to operate this route as an independent tour operator. A new business segment in the company has been set up under the name of "Tour Entertainers" (TE).   JIA has inducted staff of 10 qualified persons and has planed to incur Rs. 0.5 million on their training. The company has signed a 3-years lease contract with Planes Lessor Incorporation (PLI) to acquire a new 100-seats "Smart Plane" to operate on this rout. PLI is also responsible for both the periodic and on-demand maintenance of this plane. The company's SBDU head – Mr. Management Accountant has estimated the following cost figures:   Monthly Fixed Costs (FC): Lease Rentals of the plane                  Rs. 14.28 million Flight Crew expenses                                 2.25 million Office Salaries etc.                                     1.78 million Office expenses at Northern City                 0.89 million      After conducting meetings with various divisions, the SBDU has analyzed the following costs per person on a day round trip on this tour flight and the Management Accountant has verified these figures. They are: Passenger boarding cost                                 Rs.   8,000 Fuels and ready-to-take-off expenses                     1,500 Meals and other services                                        350 Other value added (net, phone, movies etc)              150               While feeling calm upon the feedback of this new venture's advertising campaign, the central management of JIA has approved to launch introductory price of Rs. 18,000 per day round trip ticket for each passenger."   Required:   Keeping in view the above situation answer the following questions: 1)      Determine the number of passengers that JIA must carry each month to break even.   2)      If at breakeven determined in (1) above, JIA operates any flight at full of passengers, determine the total net income of the flight per day round trip.   3)      JIA has a promotional plan to carry 10 newly wed couples to Northern City every month free of cost by balloting. In this case, how many additional passengers, JIA must carry to break even in each month?   4)      At present break even level, each flight is left unfilled with some passenger seats. To fill these seats, the TE manager is thinking to offer 5 members group, a complete 3-day trip armed with complete boarding and lodging, 3 group dinners, and daily sight seeing with the company maintained vehicle including driver and a guide on an additional cost of Rs. 25,000 per passenger. SBDU has approved per passenger charges at Rs. 27,000 in addition to a ticket at discount price of Rs. 8,000 per passenger. You are required determine the worth of this proposal.                  Just provide your final answers in concise manner. Avoid for providing details of formulas and calculations   Instructions:   Read the following instructions before giving your comments on GDB:   Use the font style "Times New Roman" and font size "12". Your answer should be relevant to the topic i.e. clear and concise. Do not copy or exchange your answer with other students.  Two identical / copied comments will be marked Zero (0) and may damage your grade in the course. Books, websites and other reading material may be consulted before posting your comments but copying or reproducing the text from books, websites and other reading materials is strictly prohibited. Such comments will be marked as Zero (0). Obnoxious or ignoble answer should be strictly avoided.

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Thanks & Regards

Syed Brothers

MBA Multi Semester Fall 2010

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