Oriole Airlines plans to offer a $25 discount to anyone who books a flight directly through the airline's Web site....
GMAT Critical Reasoning : (CR) Questions
Oriole Airlines plans to offer a $25 discount to anyone who books a flight directly through the airline's Web site. The executives reason that this strategy will increase net profits by encouraging consumers to visit the Oriole Airlines website directly rather than shop for less expensive flights through independent Websites that list fares from different airlines.
Which of the following, if true, would present the most serious potential weakness of the plan?
Passage Analysis:
| Text from Passage | Analysis |
|---|---|
| Oriole Airlines plans to offer a \(\$25\) discount to anyone who books a flight directly through the airline's Web site. |
|
| The executives reason that this strategy will increase net profits by encouraging consumers to visit the Oriole Airlines website directly rather than shop for less expensive flights through independent Websites that list fares from different airlines. |
|
Argument Flow:
The argument presents a business strategy (offering discounts for direct bookings) and then explains the executives' reasoning for why this strategy will work (it will drive customers away from comparison sites and increase profits).
Main Conclusion:
Offering a \(\$25\) discount for direct website bookings will increase Oriole Airlines' net profits.
Logical Structure:
The executives believe that by offering the discount, customers will book directly through Oriole's site rather than using comparison shopping sites. This behavioral change is expected to result in higher net profits for the airline.
Prethinking:
Question type:
Weaken - We need to find information that would reduce belief in the conclusion that the \(\$25\) discount strategy will increase net profits
Precision of Claims
The key claim is very specific about causation and outcome: offering a \(\$25\) discount will increase NET PROFITS by getting customers to book directly instead of using comparison sites
Strategy
To weaken this argument, we need to find scenarios that show how the \(\$25\) discount strategy could actually hurt net profits or fail to achieve its goal. We should look for ways the strategy could backfire, cost more than it saves, or fail to redirect customers as intended. The key is focusing on NET PROFITS - not just revenue or customer behavior alone
'Many rival airlines already offer discounts to people who book flights directly through their Web sites.' While this might reduce the competitive advantage of Oriole's strategy, it doesn't necessarily doom the plan. Oriole could still benefit from encouraging direct bookings even if competitors do the same thing. This doesn't directly threaten the core profit mechanism.
'Most consumers who shop for flights on independent Web sites find that Oriole's fares are the lowest.' This is devastating to the plan's profit goal. If customers already discover Oriole has the best prices when comparison shopping, then the $25 discount essentially gives away money to people who would have chosen Oriole anyway at full price. Instead of stealing customers from competitors, Oriole is just reducing profit margins on sales they would have gotten regardless. This directly contradicts the goal of increasing net profits.
'Many independent Web sites that list fares from different airlines do not include special discounts that airlines offer only through their own Web sites.' This actually supports Oriole's strategy rather than weakening it. If comparison sites don't show the $25 discount, it makes direct booking through Oriole's site more attractive, which aligns with their goal.
'Consumers who shop for less expensive fares through independent Web sites usually book flights through those Web sites rather than directly through airline Web sites.' This describes current behavior but doesn't necessarily mean Oriole's discount won't change that behavior. A $25 incentive could be enough to alter booking patterns, so this doesn't present a serious weakness.
'Oriole Airlines fares are generally not more than $20 less expensive than the least expensive fares from rival airlines for similar flights.' This suggests Oriole's prices are competitive but doesn't directly undermine the discount strategy. The $25 discount could still help them win customers from competitors, making this less damaging than choice B.