Due to high jet fuel costs, airline carriers are looking for new ways to increase revenues and thereby counteract declining profits. Airline A has proposed increasing the number of passengers that can fit on its airplanes by creating several standing room only "seats" in which passengers would be propped against a padded backboard and held in place with a harness. This proposal, since it relates to passenger safety, cannot be implemented without prior approval by the Federal Aviation Administration.

The above statements, if true, indicate that Airline A has made which of the following conclusions?
The addition of standing room only "seats" will generate more revenue than the cost of ensuring that these seats meet safety standards.
The Federal Aviation Administration will approve Airline A's specific proposal.
The revenue generated by the addition of standing room only "seats" is greater than the current cost of jet fuel.
There are no safer ways in which Airline A can increase revenues.
Passenger safety is less important than increasing revenue.

When I first saw this question I agreed with the answer given (a), but when thinking about it a bit more I can think (c) is just as good if not better. If the jet fuel costs are even the same, adding the new service will not "counteract declining profits". The thinking of the airline must be profit oriented and not just revenue oriented. Thoughts?

I think that C goes a bit too far. With A, the airline must assume that the potential revenue from selling these seats is higher than the cost of ensuring that they are safe; in other words, they have calculated that they will make money by adding the seats. Since this is about profit that seems good.

C goes too far. The argument says that they are going to create "several" standing room only "seats". That could mean just a few rows in a plane with many more rows of standard seats. Does this mean that the management has concluded that these possibly few rows will pay for the fuel for the entire plane? Not necessarily, but instead just that they will add profit to the flight.

Hope this helps!

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Jamie Nelson
ManhattanGMAT Instructor