A group tour ten days out: 18 confirmed against a 20-seat group fare, with an accessible-travel and monsoon exposure
Green Trail Tours is ten days from departure on a six-night Kerala group tour sold at ₹28,500 per person on twin sharing, priced against a DMC land cost of ₹24,800 per person. The airline's group fare requires a minimum of 20 named passengers; the agency has 18 confirmed, with six enquiries still undecided. If the block is not booked at 20, the airline will reissue the 18 seats at individual fares that are ₹3,200 higher each. Cancelling the departure triggers a DMC charge of 25% of land cost per passenger plus full refunds. The group includes a 74-year-old wheelchair user travelling with his daughter, two diabetics and a couple who have never flown before. It is late August, the tail of the southwest monsoon, and the itinerary includes two nights on an Alappuzha houseboat and a day trip to a hill station reachable by a 32 km ghat road. The sales head has to recommend a course of action at the Monday review.
1. Compare three options - absorb the two unsold seats, reissue at individual fares, or cancel - and recommend one with numbers.
Read the worked answer
Option 1, absorb two seats: 2 × ₹24,800 = ₹49,600 spread over 18 passengers = ₹2,756 each. Cost per head ₹27,556; margin ₹944 each; total margin ₹16,992. Still positive.
Option 2, reissue at individual fares: cost per head ₹28,000 against a ₹28,500 selling price = ₹500 margin each = ₹9,000 total. Repricing to protect margin (₹31,700) would probably lose some of the 18 and leave a worse position.
Option 3, cancel: DMC charge 25% × ₹24,800 = ₹6,200 per passenger × 18 = ₹1,11,600 payable, plus refunds and damage to six live enquiries.
Recommendation: a three-day conversion push, with Option 1 as the declared fallback. If two enquiries convert, land cost stays at ₹24,800 per head and margin rises to 20 × ₹3,700 = ₹74,000. Absorbing two seats at ₹16,992 beats reissuing (₹9,000) and is not comparable with cancelling (−₹1,11,600). You never cancel a departure ten days out to close a ₹49,600 gap when the downside is six figures.
2. Two undecided families each ask for a ₹1,500 discount to confirm. Should the sales head agree? Show the arithmetic.
Read the worked answer
Yes - the arithmetic is not close.
With 20 passengers the group fare holds, so land cost stays ₹24,800 per head:
- 18 passengers at ₹28,500: margin ₹3,700 each = ₹66,600
- 2 passengers at ₹27,000 (after ₹1,500 discount): margin ₹2,200 each = ₹4,400
- Total margin = ₹71,000
Compare with 18 passengers absorbing two empty seats: ₹16,992.
Giving away ₹3,000 in discounts buys roughly ₹54,000 of additional margin, because it unlocks the group fare for everyone. Even one conversion helps: 19 passengers with one absorbed seat gives cost 20 × ₹24,800 ÷ 19 = ₹26,105, revenue 18 × ₹28,500 + ₹27,000 = ₹5,40,000, margin ₹44,000.
Conditions: the discount is time-bound (deposit within 48 hours), it is framed as a group-fare benefit rather than a price cut so the other 18 do not ask, and it is signed off as a sales promotion, not as a renegotiation of the published tariff - otherwise every future departure is priced from the discounted figure.
3. Identify three operational risks this specific group creates and what you would fix before departure.
Read the worked answer
1. Wheelchair user on a houseboat. Alappuzha houseboats typically board over a narrow gangplank with four to six steps, low door frames and no grab rails. Fix: written confirmation of a ground-floor cabin with an accessible washroom; two crew assigned to boarding; a land-based hotel held as a same-day alternative; a doctor's fitness note on file.
2. Monsoon operations. Late August brings sudden suspension of backwater boating and landslide-prone ghat roads. The 32 km ghat-road hill-station day is the weakest link: build a same-day substitution at low altitude, keep the coach driver's hours legal, and give the group the weather plan in writing so a cancellation is a known contingency rather than a shock.
3. Medical and dietary. Two diabetics need fixed meal times, a cool box for insulin and the houseboat chef briefed in writing; identify the nearest hospital to each night's stop and print it on the itinerary card; confirm the insurance covers a 74-year-old with reduced mobility. Separately, brief the first-time flyers on web check-in, baggage and airport wheelchair assistance. Each of these is cheap to fix now and expensive to fix on the ground.