QATAR AIRWAYS

& AIR CANADA

A CASE STUDY BY:
GUALBERTO, KATRINA COLLEAN
MANGUIAT, KLARENCE
MARASIGAN, KIM DENIEL

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Before take off,
YOUR TITLE
GOES HERE
SUBTITLE GOES HERE

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STEP 1:
Recognize and define the problem

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 STEP 1: RECOGNIZE AND DEFINE THE PROBLEM

Qatar Airways and Air

Canada both offered Special
Fares on the same year. The
group analyzed the following
data to know if both airlines
gained profit or loss from
the Special Fares.

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STEP 2:
IDENTIFY THE ALTERNATIVES AS POSSIBLE
SOLUTIONS.

There are only two feasible alternatives for this

problem, these are:

1. To continue offering the promo for flights.

2. To not continue offering the promo for

flights.

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STEP 3: IDENTIFY THE COSTS AND BENEFITS ASSOCIATED WITH EACH FEASIBLE ALTERNATIVE

QATAR AIRWAYS
Standard Price Promo
Variable Costs:
Fuel $ 15,987,647,698.00 $ 20,987,647,698.00
Maintenance 156,477,632.00 556,477,632.00
Variable Selling Expense 912,351.00 2,517,661.00

Fixed Cost:
Pilot Salary 76,786,655.00 76,786,655.00
Flight Steward Salary 2,889,976.00 2,889,976.00
Insurance 5,000,000.00 5,000,000.00
Depreciation 2,250,000.00 2,250,000.00
General and Administrative 812,789.00 812,789.00
Expense

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STEP 3: IDENTIFY THE COSTS AND BENEFITS ASSOCIATED WITH EACH FEASIBLE ALTERNATIVE

AIR CANADA
Standard Price Promo
Variable Costs:
Fuel $ 18,111,952,479.00 $ 19,231,952,579.00
Maintenance 148,912,940.00 150,000,000.00
Variable Selling Expense 986,512.00 986,512.00

Fixed Cost:
Pilot Salary 80,152,683.00 80,152,683.00
Flight Steward Salary 2,016,600.00 2,016,600.00
Insurance 3,696,555.00 3,696,555.00
Depreciation 5,250,000.00 5,250,000.00
General and Administrative 912,335.00 912,335.00
Expense

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STEP 4: ESTIMATE THE RELEVANT COSTS AND BENEFITS FOR EACH FEASIBLE ALTERNATIVE

QATAR AIRWAYS
Standard Price Promo
Variable Costs:
Fuel $ 15,987,647,698.00 $ 20,987,647,698.00
Maintenance 156,477,632.00 556,477,632.00
Variable Selling Expense 912,351.00 2,517,661.00

TOTAL $ 16,145,037,681.00 $ 21,546,642,99.00

Fixed Cost:
Pilot Salary 76,786,655.00 76,786,655.00
Flight Steward Salary 2,889,976.00 2,889,976.00
Insurance 5,000,000.00 5,000,000.00
Depreciation 2,250,000.00 2,250,000.00
General and Administrative 812,789.00 812,789.00
Expense

TOTAL $ 82,739,420.00 $ 82,739,420.00

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STEP 4: ESTIMATE THE RELEVANT COSTS AND BENEFITS FOR EACH FEASIBLE ALTERNATIVE

AIR CANADA
Standard Price Promo
Variable Costs:
Fuel $ 18,111,952,479.00 $ 19,231,952,579.00
Maintenance 148,912,940.00 150,000,000.00
Variable Selling Expense 986,512.00 986,512.00

TOTAL $ 18,261,651,931.00 $ 19,382,939,091.00

Fixed Cost:
Pilot Salary 80,152,683.00 80,152,683.00
Flight Steward Salary 2,016,600.00 2,016,600.00
Insurance 3,696,555.00 3,696,555.00
Depreciation 5,250,000.00 5,250,000.00
General and Administrative 912,335.00 912,335.00
Expense

TOTAL $ 88,331,618.00 $ 88,361,618.00

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 STEP 5:
ASSESS QUALITATIVE FACTORS.

The Qualitative Factors that affected the two

airlines are the following:

• Quality of the service

• Quality of the aircraft
• Ratings by previous passengers
• Competition
• Holiday Season

The group analyzed that the following

qualitative factors have greatly affected the
decision-making of passengers onto which airline
They will book their flights.

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STEP 6: MAKE THE DECISION BY SELECTING THE ALTERNATIVE WITH THE GREATEST OVERALL
NET BENEFIT.

AIR CANADA
STANDARD

Revenue $26,200,795,888.00
Less: Variable Expense
Fuel $18,111,952,479.00
Repairs and Maintenance $148,912,940.00
Variable Selling Expenses $786,512.00 $18,261,651,931.00
Contribution Margin $7,939,143,957.00
Less: Direct Fixed Expenses
Pilot’s Salary $80,152,683.00
Flight Steward Salary $2,016,600.00
Depreciation $3,696,555.00
Insurance $5,250,000.00
General and Administrative Expense $912,335.00 $92,028,173.00
Net Income $7,847,115,784.00

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STEP 6: MAKE THE DECISION BY SELECTING THE ALTERNATIVE WITH THE GREATEST OVERALL
NET BENEFIT.

AIR CANADA PROMO

Revenue $30,300,995,900.00
Less: Variable Expense
Fuel $19,231,952,579.00
Repairs and Maintenance $150,000,000.00
Variable Selling Expenses $986,512.00 $19,382,939,091.00
Contribution Margin $10,918,056,809.00
Less: Direct Fixed Expenses
Pilot’s Salary $80,152,683.00
Flight Steward Salary $2,016,600.00
Depreciation $3,696,555.00
Insurance $5,250,000.00
General and Administrative Expense $912,335.00 $92,028,173.00
Net Income $10,826,028,636.00

For Air Canada, offering the Special Fares or Promos has been beneficial for them rather than just sticking to the
standard price of the tickets for the year 2019 because their net income increased by $2,978,912,852 from the
previous year. ALPINE SKI HOUSE 12
STEP 6: MAKE THE DECISION BY SELECTING THE ALTERNATIVE WITH THE GREATEST OVERALL
NET BENEFIT.

QATAR AIRWAYS
STANDARD
Revenue $19,889,876,759.00
Less: Variable Expenses
Fuel $15,987,647,698.00
Maintenance $156,477,632.00
Variable Selling Expenses $912,351.00
Contribution Margin $3,744,839,078.00
Less: Direct Fixed Expenses
Pilot Salary $76,786,655.00
Flight Steward Salary $2,889,976.00
Insurance $5,000,000.00
Depreciation $2,250,000.00
General and Administrative $812,789.00
Net Income $3,657,099,658.00

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 STEP 6: MAKE THE DECISION BY SELECTING THE ALTERNATIVE WITH THE GREATEST OVERALL
NET BENEFIT.

QATAR AIRWAYS
PROMO
Revenue $22,989,876,759.00
Less: Variable Expenses
Fuel $20,987,647,698.00
Maintenance $556,477,632.00
Variable Selling Expenses $2,517,661.00
Contribution Margin $1,443,233,768.00
Less: Direct Fixed Expenses
Pilot Salary $76,786,655.00
Flight Steward Salary $2,889,976.00
Insurance $5,000,000.00
Depreciation $2,250,000.00
General and Administrative $812,789.00
Net Income $1,355,494,348.00

On the other hand, contrary to Air Canada, Qatar Airways suffered a decrease in their net income by $2,301,605,310
on the year 2019 when they offered the Special Fares or the Promos compared to the income solely on the standard
price for the flight tickets of the previous year.
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TAKE OFF….

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