Virgin Blue airline commenced us operation in Australia as a domestic carrier in

Question

Virgin Blue airline commenced us operation in Australia as a domestic carrier in August 2000. Starring with a 'tin shed terminal facility, Virgin Blue promoted an image as a low -cost airline with a high level of customer care. The two competitors Qantas and Ansett, where long established in Australia with convenient and more-comfortable terminal facilities. So Virgin Blue had to come up with another way of marketing its airline to Australian consumers. Market researchers told Virgin Blue that air travelers were confused, that Ansett and Qantas were exploiting the domestic airline market, and that the market was suffering from elitist positioning. Consumers wanted reliable and low-cost air travel, but it was not available. From this understanding. Virgin Blue tackled what it identified as the most crucial issues: in the words of its advertisers 'credibility and Aussieness. 'Virgin Blue's advertising company Cummins & Partners launched a campaign to position Virgin Blue as 'a brand that challenges people to fly more for less.' The slogan 'Keep the air fair' was used in a series of commercials featuring Virgin owner Sir Richard Branson. Within four years of launching the airline. Virgin Blue secured 34% of the market. During this same time period, 30% of domestic air travelers traveled with Virgin Blue for the first time and 85% of those who initially traveled with Virgin Blue were flying with Virgin Blue again. To prevent any further loss of market share, Qantas responded by creating a new cut-price subsidiary airline, Jetstar. However, this move has only resulted in the transfer of Qantas domestic market share to its new subsidiary. In the highly competitive domestic environment. Virgin Blue has maintained its position, whilst Qantas's market share has dropped to just over 50%. having passed some 12% of its share to Jetstar. Thus. Virgin Blue had been successfully introduced into the Australian domestic travel market in 2001 and continues to maintain the position in the market. What probabilities arc given in this case? Use these probabilities and the probability laws to determine what percentage of domestic travelers traveled with Virgin blue at least twice in the last 4 years. Is age category independent of the willingness to travel with this new airline? Reliable statistics suggest that approximately 12% of all domestic travelers are in the 35-49 age category. Suppose 24% of the domestic travelers who traveled with Virgin Blue for the first time during the initial 4-year period were in the 35-49 age category. Use this information to determine whether age is independent of traveling with Virgin Blue for the first time during the 4-year period. Explain your answer.

Explanation / Answer

Answer to question# 1)

The probabilities provided are:

.

Now we need to find the probability of domestic travellers traveling atleast twice in four years with virgin blue

P(at least twice) = P(twice) + P(thrice) + P(all four times)

P( at least twice) = 0.85*0.15*0.15 + 0.85*0.85*0.15 + 0.85*0.85*0.85

P(at least twice) = 0.019125 + 0.108375 + 0.614125

P( at least thice) = 0.741625

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