INTRODUCTION TO AIR TRANSPORT ECONOMICS AND PLANNING
This short course was held in November 2001 at the
University of Westminster. Please refer to the Short
Course page for an up-to-date programme of events.
INTRODUCTION TO THE AIR TRANSPORT INDUSTRY
This presentation provides an overview of the airline business and sets the background
to the course. The development of demand over time is traced along with the global
spread of air traffic. The major airlines and airports are identified and differences
between cargo and passenger, scheduled and charter services explained. Key economic
indicators are introduced and financial performance assessed. The nature of demand for
air travel is evaluated. Technological developments and safety issues are then briefly
AIR TRAFFIC MANAGEMENT
This presentation starts by explaining the components of air traffic management and its
international organisation through ICAO. Eurocontrol is then described in more detail,
including issues of airspace capacity and flow management. Typical controller tasks and
the impact of new technology in areas such as data links are demonstrated. Finally, the
funding of ATC services is examined and future issues addressed.
THE INTERNATIONAL REGULATORY FRAMEWORK
This presentation outlines the historical organisation of international civil aviation
from the Chicago Convention to the present day. The Freedoms of the Air are explained
with the use of examples and a typical bilateral air services agreement is studied.
Pooling agreements between airlines and the role of IATA are analysed. The consequences
of the economic regulation of air transport for airlines and passengers are then
AIRLINE COST STRUCTURES
This presentation starts by defining direct and indirect costs and tracing the
development of the different cost items over time. The escapability of costs in the
short and long term is examined. The major components of airline operating costs
(e.g. labour, fuel, airport, marketing and distribution) are compared for different
airlines around the world. The economics of different aircraft types are then
THE ECONOMICS OF LOW-COST AIRLINES
This presentation probes behind the headlines to assess how low-cost airlines can
function successfully at fare levels often a fraction of their major counterparts.
The distinguishing characteristics of low-cost airlines are identified in terms of
their product and operations; an investigation is made into the pros and cons of
using secondary airports. The impact of low-cost airlines on demand is researched
and some potential future challenges identified.
IMPACT OF DEREGULATION
This presentation follows the progress of airline deregulation over the last 20 years,
The key US developments are identified, including hubs and mergers. The European
Commission's liberalisation packages are then explained, along with the remaining
regulatory safeguards. The international impact is examined in terms of the pattern of
air services, new entry, product and pricing strategies. The competition effects of
airline alliances are considered, along with the concept of franchising.
AIRLINE CORPORATE PLANNING
This presentation provides an introduction to airline corporate planning and strategic
management issues. Analytical methods such as SWOT charts, PESTE charts and Ansoff
matrices are developed. Techniques for strategy evaluation are identified and successful
and unsuccessful strategies demonstrated.
ACCOUNTING AND FINANCE FOR AIR TRANSPORT
This presentation looks at how to understand an airline balance sheet and financial
statements; factors particular to the airline and airport businesses are explained.
Specific issues such as leasing and sources of finance are then addressed.
AIRLINE PRICING AND REVENUES
This presentation examines the rationale for differential pricing and yield management.
Cost- based differences by cabin are identified. The principal fare types and conditions
are explained and various marketing initiatives illustrated. The distribution of demand
over time is examined and the purpose of unofficial discount fares discussed. Airline
yields are disaggregated by type of operation and market.
This presentation starts by focusing on airport runway capacity and issues such as the
layout of the airfield, vortex separations and pattern of traffic. It then moves on to
look at the economics of slots and different allocation methods, including recent EU
proposals. Terminal design and planning issues are addressed for specific passenger
AIRPORT ORGANISATIONAL STRUCTURES
This presentation probes the ownership and management characteristics of major airports
in Europe and around the world. The trend towards privatisation is explained and various
methods of accomplishing this such as share flotation, trade sale or management contract
are discussed. Examples are given of different types of airport companies and the move
towards globalisation. The different structure of airports in the United States is
considered for comparison.
This presentation considers the basic cost and revenue streams at an airport. Aeronautical
charging regimes are explained and strategies for generating commercial revenues from
shops, services and facilities are discussed. A particular emphasis is given to
comparisons of airport unit costs, revenues, profitability and labour productivity. The
concept of economic performance benchmarking is introduced.
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