This document consists of 3 printed pages and 1 blank page.
SP (NF) S59867/3
© UCLES 2004
UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS
General Certificate of Education Advanced Level
Paper 4 Data Response and Essays (Supplement)
2 hours 15 minutes
READ THESE INSTRUCTIONS FIRST
If you have been given an Answer Booklet, follow the instructions on the front cover of the Booklet.
Write your Centre number, candidate number and name on all the work you hand in.
Write in dark blue or black pen on both sides of the paper.
You may use a soft pencil for any diagrams, graphs or rough working.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Answer Question 1 and any two questions from Section B.
At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part question.
You may answer with reference to your own economy or other economies that you have studied where
relevant to the question.
Answer this question.
Airlines gamble on no-frills pricing.
European airlines including British Airways (BA), KLM and Lufthansa have done what almost no
American full-service airline has been willing to do. They have altered their fare structure to keep
customers from switching to low-cost competitors. Despite the airline’s massive losses of $348
million on flights within Europe, BA has reduced some fares by almost 80%.
Many of the giant European airlines have very high costs that limit how aggressively they can
compete with smaller airlines, but BA has recognised the threat that low-cost competitors pose.
The low-price competitors carried 16 million passengers in 2001 – a 26% increase from a year
earlier – and it is expected that this will increase further and that they will carry a quarter of
European passengers by 2010. Despite the price cuts, the cheapest seats on BA are still more