Once an airline publishes its schedule, the short run marginal cost of an additional passenger is...

Once an airline publishes its schedule, the short run marginal cost of an additional passenger is very low. Explain why the operation of revenue management systems may set some ticket prices below that needed to cover fully-allocated cost.

Expert Solution

Revenue management may sets a few tickets prices below that needed to cover fully-allocated cost in light of the fact that the airline needs to take care of as much expenses as possible, this is the reason there are tickets sold on below prices in the event that you are eager to get it until a minute ago, aircrafts do estimates about the purchase of tickets however there are times they don't have the foggiest idea whether the plane will go on full limit or only half, on that case is ideal to sell tickets below prices so that more clients can get it as opposed to having the plane going with just 10 travelers.

Rahul Sunny answered 2 years ago

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