In a bid to promote regional tourism, the Civil Aviation Ministry has granted Sky Connect Airways Pvt. Ltd. a permit to operate four flights a week…

In a bid to promote regional tourism, the Civil Aviation Ministry has granted Sky Connect Airways Pvt. Ltd. a permit to operate four flights a week between cities P and Q (both directions), as part of its regional connectivity scheme. The airline plans to deploy a single aircraft with a seating capacity of 180 seats. Based on historical data for similar routes, the airline's revenue team estimates a normal occupancy of 65% throughout the year of 52 weeks. The airline's costing department has compiled the following data to assess the route's profitability and to evaluate a proposed fare-reduction scheme: Particulars Details One-way fare ₹7,800 Fuel cost (variable) ₹1,05,000 per flight Food served on board (non-chargeable basis) ₹140 per passenger Commission 6% of fare, applicable on all bookings Passenger tax ₹150 per passenger, payable to the airport authority Aircraft lease ₹3,80,000 per flight Landing charges ₹78,000 per flight Ground handling and parking charges ₹45,000 per flight You are required to: (i) CALCULATE the net operating income per flight. (ii) The airline expects that occupancy will increase to 130 passengers per flight if the fare is reduced to ₹7,150. Advise, with supporting calculations, WHETHER this proposal should be implemented. (iii) CALCULATE the Total Takings per flight for the current bookings (i.e., Net Takings plus Passenger Tax collected), which the finance team needs to report separately to the airport regulatory authority.