Chapter 6 - “Analyzing Managerial Decisions: United Airlines”
After looking for the original source document that was referred to in the case to no avail, I am going to provide you with my introduction to this case. The case is really asking you to consider if United Airlines should shut down one of its flights because it is not meeting its cost on that flight (i.e. marginal analysis). You could consider this from both a short and long-run perspectives. Over the short-run, the easy answer might be yes, when we are just looking at the one flight and not considering that there could be connections occurring outside of this flight that could be profitable. In addition, you may want to consider the sunk costs that are embedded in this case. So, on one hand, you have to discuss the point-to-point flight and, on the other, you have to consider any additional profits that this firm might make as a result of keeping the flight.
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