(Product Mix Decisions) Swift Airlines has a daily return flight from Saskatoon, Saskatchewan, to Calgary, Alberta. The aircraft for the flight has a capacity of 120 passengers. Swift sells its tickets at a range of prices. Its business plan works on the basis of the following mix of ticket prices for each day's flight:

Business	30 @ $300	$9,000
Economy regular	40 @ $200	$8,000
Advance purchase	20 @ $120	$2,400
Seven-thy purchase	20 @ $65	$1,300
Standby	10 @ $30	$300
Revenue	120 tickets	$21,000

Swift's head office accounting department has calculated its costs per flight as follows:

Cost per passenger (additional fuel,	$25 per passenger X 120 tickets sold = $3,000
insurance, baggage handling, etc.)	Â
Flight costs (aircraft lease, flight and cabin	$7,500 per flight
crew, airport and landing charges, etc.)	Â
Route costs (support needed for each	$2,000 (based on one-half of the daily cost of
destination)	$4,000-balance charged to return flight)
Business overhead	$3,000 (allocation of head office overhead)
Total	$15,500

This results in a budgeted profit of $5,500 per flight, assuming that all seats are sold at the budgeted price. The head office accountant for western Canada routes has advised the route manager for Calgary that while the Saskatoon-Calgary inbound leg is breaking even, losses are being made on the Calgary-Saskatoon outbound leg. If profits cannot be generated, the route may need to be closed, with the aircraft and crew being assigned to another route. The route manager for Calgary has extracted recent sales figures, a typical flight having the following sales mix:

Business	18 @ $300	$5,400
Economy regular	28 @ $200	$5,600
Advance purchase	16 @ $120	$1,920
Seven-day purchase	15 @ $65	$ 975
Standby	10 @ $30	$ 300
Revenue	87 tickets	$14,195

The route manager has calculated a loss on each outbound flight of $1,305. She believes that there is a market for 48-hour ticket purchases if a new fare of $40 is introduced, as this would be $5 less than the price charged by a competitor for the same ticket. She estimates that she could sell 15 seats per flight on this basis. This would not affect either the seven-day purchase or standby fares, which are usually oversubscribed. The additional revenue of $600 (15 @ $40) would cover almost half of the loss. The route manager has prepared a report for her manager asking that the new fare be approved and allowing her three months to prove that the new tickets could be sold.

Comment on the route manager's proposal.