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Profits have been decreasing for several years at Pegasus Airlines.In an effort to improve the company’s performance, the company isthinking about dropping several flights that appear to beunprofitable.

A typical income statement for one round-trip of one such flight(flight 482) is as follows:

Ticket revenue (180 seats × 40% occupancy × $250 ticket price)	$	18,000			100.0	%
Variable expenses ($16.00 per person)		1,152			6.4
Contribution margin		16,848			93.6	%
Flight expenses:
Salaries, flight crew	$	1,800
Flight promotion		780
Depreciation of aircraft		1,750
Fuel for aircraft		5,600
Liability insurance		4,800
Salaries, flight assistants		1,400
Baggage loading and flight preparation		1,750
Overnight costs for flight crew and assistants at destination		700
Total flight expenses		18,580
Net operating loss	$	(1,732	)

The following additional information is available about flight482:

1. Members of the flight crew are paid fixed annual salaries, whereasthe flight assistants are paid based on the number of round tripsthey complete.

2. One-third of the liability insurance is a special charge assessedagainst flight 482 because in the opinion of the insurance company,the destination of the flight is in a “high-risk” area. Theremaining two-thirds would be unaffected by a decision to dropflight 482.

3. The baggage loading and flight preparation expense is an allocationof ground crews’ salaries and depreciation of ground equipment.Dropping flight 482 would have no effect on the company’s totalbaggage loading and flight preparation expenses.

4. If flight 482 is dropped, Pegasus Airlines has no authorization atpresent to replace it with another flight.

5. Aircraft depreciation is due entirely to obsolescence. Depreciationdue to wear and tear is negligible.

6. Dropping flight 482 would not allow Pegasus Airlines to reduce thenumber of aircraft in its fleet or the number of flight crew on itspayroll.

Required:

1. What is the financial advantage (disadvantage) of discontinuingflight 482?