FlyAway is an airline business. It is in the tertiary sector. It offers low-price flights for business customers in country J. Customers have to pay extra for luggage and food on the flight. It is a very competitive market. The Marketing manager knows that improving customer service is important. Bookings and advertising are done through FlyAway's ticket shops and its website. The Marketing manager cannot decide whether to close its ticket shops and use only e-commerce. Table 1: Selected information about two of FlyAway's routes Route | Average number of passengers per flight | Average price per ticket ($) | Break-even number of passengers per flight ---|---|---|--- 1 | 85 | 80 | 70 2 | 110 | 60 | 90

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2017). The mark or mark type is shown in brackets.

1. [2] Clear understanding: e.g. business or industry which provides OR sells services [1] to consumers OR OR other sectors of the economy
2. [1] Some understanding e.g. provide services
3. [2] Good Application Correct answer 6 600 ($ not needed)
4. [1] Some application e.g. Method Price × number of passengers OR 110 x 60
5. [1] Knowledge Shows the expected level of profit OR loss at different levels of output
6. [1] Application to show which routes to expand or cut
7. [1] Knowledge Shows the margin of safety
8. [1] Application if sell over 70 OR 90 tickets
9. [1] Knowledge Helps planning OR forecasting OR decision making
10. [1] Application about passenger numbers
11. [1] Knowledge Can see what will happen if costs OR prices change
12. [1] Application to see if should close its (ticket) shops
13. [1] Knowledge Help apply for finance
14. [1] Knowledge Training so that employees know what to do
15. [1] Analysis in case of any problems on route
16. [1] Application (airline)
17. [1] Knowledge Seek feedback e.g. carrying out surveys
18. [1] Analysis to help improve customer loyalty
19. [1] Application about the airline
20. [1] Knowledge Set OR enforce clear standards OR use Quality Assurance
21. [1] Analysis to ensure that employees provide a consistent service
22. [1] Knowledge Recruit suitable OR knowledgable employees
23. [1] Analysis so can provide a quicker service to customers
24. [1] Application to work in its shops
25. [1] Knowledge Treat employees well OR motivate employees
26. [1] Analysis so want to help its passengers
27. [1] Knowledge Handle complaints OR queries quickly
28. [1] Knowledge Open more outlets in cities
29. [1] Analysis so more convenient to buy for customers
30. [1] Application to sell tickets
31. [1] Knowledge better communication
32. [1] Application e.g. text if flights are delayed
33. [1] Knowledge Less labour OR rent needed
34. [2] Analysis so reduced costs which lower break-even
35. [1] Application (airline/break-even)
36. [1] Knowledge Will need more employees with technical skills
37. [2] Analysis to run website which will add to recruitment costs
38. [1] Application (website)
39. [1] Knowledge Security issues e.g. risk of fraud OR hacking OR problems if system does not work
40. [1] Knowledge Not everyone has access to internet or is willing to use internet
41. [1] Knowledge Cannot attract passing trade
42. [1] Application without a shop
43. [1] Knowledge Harder to stand out against competitors
44. [1] Application as a competitive market
45. [2] Analysis so less able to attract potential customers
46. [1] Knowledge Most people prefer to buy via internet