TRANS WESTERN AIRLINES Trans Western Airlines is considering a proposal to initiate air service between Phoenix, Arizona and Las Vegas, Nevada. The…

Trans Western Airlines is considering a proposal to initiate air service between Phoenix, Arizona and Las Vegas, Nevada. The route would be designed primarily to serve the recreation and tourist travelers that fre-quently travel between the two cities. By offering low-cost tourist fares, the airline hopes to persuade persons who now travel by other modes of transportation to switch and fly Trans Western on this route.In addition, the airline expects to attract business travelers during the hours of 7 AM. to 6 PM. on Mondays through Fridays. The fare price schedule or tariff would be designed to charge a higher fare during busi-ness-travel hours so that tourist demand would be reduced during those hours. The company believes that a business fare of $75 one way during business hours and a fare of $40 for all other hours would result in the passenger load being equal during business-travel and tourist-travel hours.To operate the route, the airline would need two 120-passenger jet aircraft. The aircraft would be leased at an annual cost of $3,800,000 each. Other fixed costs for ground service would amount to $1,500,000 per year. Operation of each aircraft requires a flight crew whose salaries are based primarily on the hours of flying time. The costs of the flight crew are approximately $400 per hour of flying time. Fuel costs are also a function of flying time. These costs are estimated at $500 per hour of flying time. Flying time between Phoenix and Las Vegas is estimated at 45 minutes each way.The costs associated with processing each passenger amount to $3. This includes ticket processing, agent commissions, and variable costs of baggage handling. Food and beverage service cost $7.80 per passenger and will be offered at no charge on flights during business hours. The cost of this service on non-business hour flights is expected to be recovered through charges levied for alcoholic beverages.If five business flights and three tourist flights are offered each way every weekday, and ten tourist flights are offered each way every Saturday and Sunday, what is the average number of passengers tat must be carried on each flight to break even? What is the breakeven load factor or percentage of available seats occupied on a route?2.