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CEO vs Analyst's view

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CEO vs Analyst's view

by sandeep_thaparianz » Sat Jun 30, 2012 2:27 am
In an effort to increase revenues, Sky Air recently partnered with several airlines
to create a joint frequent-flier program. In the new program, miles earned on all
partner airlines can be combined for reward tickets valid on any airline in the
partnership. Sky Air's CEO cites a recent increase in the number of passengers
on all the partner airlines as evidence that the new frequent-flier program is
having the desired effect. Industry analysts doubt the CEO's claim.
Which of the following, if true, best supports the analysts' positions?
A. Air travel tends to be seasonal, with more passengers traveling during
warmer months and holiday periods.
B. The recent increase in passenger rates for all the partner airlines was
predicted by the lowest rates of air travel in the last decade.
C. Many travelers achieved reward tickets more quickly under the new
frequent-flier program and redeemed them recently for free travel.
D. Travelers redeemed frequent-flier rewards on Sky Air's partners more
frequently than on Sky Air.
E. A study of frequent-flier programs showed that they generally result in
increased long-term airline revenues

OA after some discussion
i am confused between C and D
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by Birottam Dutta » Sat Jun 30, 2012 3:07 am
D is the correct answer.

The CEO of Sky Air cites the recent increase in the number of passengers on all the partner airlines as evidence that the new frequent-flier program is having the desired effect---what is the desired effect?...That of increase in revenues.

So, we need to look for an option which says that the revenues of Sky Air may not be increasing in spite of increase in number of passengers in partner airlines.

Here D shows how the increase may not be generating revenues for Sky AIr because frequent fliers are redeeming rewards on partner airlines more frequently. If this is true, then the revenues of Sky Air may not be increasing.

Hence, D!
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by veenu08 » Sun Oct 06, 2013 3:19 am
Why A can't be the answer ?
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by theCodeToGMAT » Sun Oct 06, 2013 5:36 am
veenu08 wrote:Why A can't be the answer ?
{A} - INCORRECT; We are not told that the statistics on which CEO is quoting were of during holiday season
R A H U L
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by vinay1983 » Sun Oct 06, 2013 5:58 am
sandeep_thaparianz wrote:In an effort to increase revenues, Sky Air recently partnered with several airlines
to create a joint frequent-flier program. In the new program, miles earned on all
partner airlines can be combined for reward tickets valid on any airline in the
partnership. Sky Air's CEO cites a recent increase in the number of passengers
on all the partner airlines as evidence that the new frequent-flier program is
having the desired effect. Industry analysts doubt the CEO's claim.
Which of the following, if true, best supports the analysts' positions?
A. Air travel tends to be seasonal, with more passengers traveling during
warmer months and holiday periods.
B. The recent increase in passenger rates for all the partner airlines was
predicted by the lowest rates of air travel in the last decade.
C. Many travelers achieved reward tickets more quickly under the new
frequent-flier program and redeemed them recently for free travel.
D. Travelers redeemed frequent-flier rewards on Sky Air's partners more
frequently than on Sky Air.
E. A study of frequent-flier programs showed that they generally result in
increased long-term airline revenues

OA after some discussion
i am confused between C and D
I think the correct option is C.

A is incorrect because it tries to introduce new information. Note that "the increase" as mentioned by the CEO is on an average. So, we cannot for definitely say that the info mentioned in Option A is correct or is deemed to be correct. We can treat this as irrelevant or out of scope
You can, for example never foretell what any one man will do, but you can say with precision what an average number will be up to!
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by theCodeToGMAT » Sun Oct 06, 2013 6:02 am
Yeah Vinay, I also believe the Answer is [spoiler]{C}[/spoiler]
R A H U L
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by abhimak » Wed Oct 09, 2013 3:11 am
sandeep_thaparianz wrote:In an effort to increase revenues, Sky Air recently partnered with several airlines
to create a joint frequent-flier program. In the new program, miles earned on all
partner airlines can be combined for reward tickets valid on any airline in the
partnership. Sky Air's CEO cites a recent increase in the number of passengers
on all the partner airlines as evidence that the new frequent-flier program is
having the desired effect. Industry analysts doubt the CEO's claim.
Which of the following, if true, best supports the analysts' positions?
A. Air travel tends to be seasonal, with more passengers traveling during
warmer months and holiday periods.
B. The recent increase in passenger rates for all the partner airlines was
predicted by the lowest rates of air travel in the last decade.
C. Many travelers achieved reward tickets more quickly under the new
frequent-flier program and redeemed them recently for free travel.
D. Travelers redeemed frequent-flier rewards on Sky Air's partners more
frequently than on Sky Air.
E. A study of frequent-flier programs showed that they generally result in
increased long-term airline revenues

OA after some discussion
i am confused between C and D
A, B & E OUT. Irrelevant.

CEO of sky Air claims that frequent-flier program is successful. Clearly, it is not about the sky air or partner; it is about overall frequent flier program. So D is out.

C is the answer.
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by [email protected] » Thu Oct 17, 2013 10:14 pm
Conclusion: Sky Air's CEO cites a recent increase in the number of passengers
on all the partner airlines as evidence that the new frequent-flier program is
having the desired effect.

But the conclusion is based on the "assumption" that increased number of passengers on partner airlines will increase revenue at Sky Air.

Analyst doubts CEO's claim because they doubts the "assumption".

Cheers!

Vikas
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by cd86 » Thu Oct 17, 2013 11:10 pm
C has got to be the answer.

D.Travelers redeemed frequent-flier rewards on Sky Air's partners more
frequently than on Sky Air. : This is not evidence that Sky air is still doing badly (as the analyst says and which is what we are trying to support) because , even if sky air does worse than other partner airlies, the slight increase might actually still be adding to sky airs revenues. So sky air might not be as good , but still doing something better than what it was doing previously.Hence D might actually be supporting the CEOs claims. So D rejected.
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by AppleBees » Fri Oct 18, 2013 6:11 am
IMO B

CEO: Program increases revenue
Analyst: Disagree with the CEO

We need to determine which option is against CEO's claim.

A: It can be a good option but the argument does not say whether "recent" is during warmer/holiday times

B: CEO claims the new program is the reason for increases in the number of passengers, but if the number only increased due to lower rates, then the new program is not necessarily the factor creating the desired effect (increase revenue). This could be the answer

C: Airlines can increase revenues by selling drinks, merchandise, providing services, and even make money on return trips. Just because travelers are redeeming free travels, does not constitute to a decrease in revenue. Supports CEO's claim

D: Other airlines may benefit more from this program, but it does not prevent Sky Air increasing its revenue. It may not get the biggest piece of the pie, but it's still getting some. Supports CEO's claim

E: This one is obviously not the right answer... it supports CEO's claim.
Last edited by AppleBees on Fri Oct 18, 2013 6:20 am, edited 1 time in total.
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by AppleBees » Fri Oct 18, 2013 6:15 am
I just realized this is an old thread and may never get OA. Can we get an expert opinion on this?
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