Your company, based in Waco, Texas, has been looking for an expansion opportunity on the West Coast. A property has just come on the market in Oregon, and your company needs to move fast. The company requires that you and three colleagues (four total) travel to Medford, Oregon, on short notice—just two days from now. Your group must be in Medford by 1:00 pm to inspect the property and then meet at 9:00 am the next day to discuss a deal. You expect to be complete by 2:00 pm that day. A friend suggests that you might be able to save money if you charter a jet instead of flying commercially. That sounds like a crazy idea, but you decide to explore it anyway. Here are some assumptions:

• Origination (KACT) to destination (KMFR), one-way is 1,380 miles.

• Flying time is about 3+30 each way (average winds).

• A small jet should be able to make the trip non-stop. A Lear 35 has a range of about 2,200 miles and can seat six. Being an older aircraft, the charter cost for a Lear 35 averages only about $2,200 per hour.

• Employees get $200 per day for travel expenses if they are away from home for any part of the day. This covers all expenses except rooms, rental cars, and airfare.

• Hotel rooms in Medford are $150 per night.

• If traveling by commercial air, company policy requires business class (or better) if it is available, with fully refundable tickets.

• Travelers are mid-level executives who each make about $800 per day in salary ($100 per hour). They are in a paid status during their travel.

• The executives’ productivity factor is 2, so when they are gone from work, their company’s productivity is reduced by twice their salary ($1,600 per day per employee).

• The charter jet can fly in and out of KACT and KMFR, so a rental car is not required.

• If commercial air in or out of either airport is not available, the group will need to rent a car at $100 per day to get to and from the closest available airport.

• Travel on weekends is acceptable, but if that happens, the employer allows comp-time to make up for weekend work.

Instructions

To determine if chartering is feasible, you will need to compare costs for the trip using charter versus using commercial air. Items that you will need to consider:

• The cost of commercial airfare. Look up actual airfares available for travel; look for tickets for weekdays about two days in advance of the current day.

• The charter can operate whenever you need them.

• A travel analysis like this can get very involved. Try to stay away from getting too complex in your analysis. The given assumptions should be all you need, so don’t try to make up costs like parking, tips, and other costs that are not included in the assumptions.