S27 · interview simulation
Teach back why a positive fare coefficient is not a pricing result
People, data and outputs in this scenario are simulated. Each stage is recorded when you commit; the reveal comes after.
- 4stages
- 25 minabout
- 0stages committed
The brief
A commercial manager (simulated) at the synthetic airline asks about the Istanbul-Paris route (IST-CDG, one daily flight, 1,096 flight-days from 2022 to 2024). Facts below were recomputed from the course database.
- A regression of log passengers on log average fare gives a coefficient of +0.82: higher-fare days have higher passengers.
- Splitting days into fare tiers (low, medium, high, one third of days each): average fare 180, 198 and 225 (database currency units); load factor 71.7%, 75.9% and 86.7%.
- No day on this route sold out (load factor of 0.98 or more on none).
The manager says: "So raising fares fills planes. Can we use this to set next season's fares?"
Rule of the exercise: write your explanation before reading any feedback. The interviewer then probes twice.
Stage 1 of 4
Simulated manager: "The data say that on days when we charge more, we carry more passengers. Why would you not use that? Explain it to me as if I were in the pricing meeting."
Explain what the coefficient does and does not say about raising fares, in plain language. Name the mechanism that produces it in this data.