2021/22 Undergraduate Module Catalogue

AVIA2060 Economics and Management of Air Transport

20 creditsClass Size: 60

Module manager: Dr Zia Wadud
Email: Z.Wadud@leeds.ac.uk

Taught: Semesters 1 & 2 (Sep to Jun) View Timetable

Year running 2021/22

This module is not approved as a discovery module

Module summary

The aviation sector possibly uses the principles of economics more than any other businesses. Decisions such as where and when to fly, with what aircraft, at what price, within what regulations and competitive market, who to partner with, what type of network to maintain are all strongly grounded in economics theory. The economic principles are often combined with other practical tools and techniques to make business decisions in an airline or an airport project. This module outlines the economic principles related to airline and aviation decision making, both in a recurring and time-bound project setting.At the end of the module, the students will gain the knowledge to be able to answer interesting questions such as:- Why is it difficult to make money in the airline business?- Why and how do airlines price differently for the same flight? - Why are low cost carriers so successful?- Why did Concorde fail?- Why is carbon trading discussed for airlines?

Objectives

The module aims to familiarise students with the economic and management aspects of the aviation industry.The module covers the principles of economics, as applied to aviation, demand for air travel, airline cost structures, market structures, demand forecasting and pricing strategies.

Learning outcomes
On completion of this module, students should be able to:
1. Gain insight into the key economics concepts related to aviation and airline business;
2. Analyse and apply the economic concepts in airline decision making;
3. Apply statistical and econometric modelling techniques to analyse demand pattern;
4. Gain an appreciation of the market and regulatory environment that aviation operates in and why;
5. Apply quantitative techniques in making business decisions and project planning;
6. Understand the basics of managing aviation related projects.

Skills outcomes
Students acquire the following competencies in the module. In each case, the means of acquiring the competency is shown. These competencies correspond with those specified in "The Accreditation of Higher Education Programmes", Third edition, Engineering Council, 2014. P = Practiced ACTIVELY, F= Formatively Assessed, S = Summatively Assessed. Discussions refer to both in-class discussions of questions from broad to highly focused and semi-structured discussion centred around numerous case studies.
SKILL D1: HOW MANIFESTED: P - the module as a whole is about using economics principles to evaluate business and user behaviour. S - assessment through essays and presentation of relevant topics and the final examination.
SKILL D3: HOW MANIFESTED: P - discussions in class and tutorial problem solving and some quantitative exercises in risk and uncertainty in decision making. S - assessment through the final examination.
SKILL D4: HOW MANIFESTED: P - discussions in class and tutorials on problem solving related to operations and maintenance decision. S - assessment through the final examination.
SKILL D6: HOW MANIFESTED: S - students will write an essay on a relevant topic and present it in a seminar for summative assessment (s). Communication skills are a big part of it.
SKILL ELSEE 2: HOW MANIFESTED: P - in class discussions and lectures, the module is focused on commercial and economic aspects of airline and airport decision making. S - assessment through final examination.
SKILL ELSEE 3: HOW MANIFESTED: P - in class discussions - the last third of the module focuses specifically on project management theories and application thereof in aviation. S - assessment through final examination.
SKILL ELSEE 6: HOW MANIFESTED: P - primarily through in class discussions and quantitative tutorials on risk and uncertainty in economic decision making. F + S – formatively during tutorials, then through final examination.
SKILL EP5: HOW MANIFESTED: P - in class discussion on company organization and relevant laws, discussions on airline regulations and its economic impacts. S - assessment through final examination.

Syllabus

Principles of economics:
- Aviation and the economy
- Basics of demand, demand vs. traffic
- Basics of supply
- Market equilibrium
- Demand and supply curve shifts
- Elasticities
Demand for air travel:
- Demand and supply terminology
- Nature of demand
- Demand and traffic
- Revenue and demand
Airline cost structure:
- Cost components and cost functions
- Economies of scale, scope and density
- Break even and operating leverage
- Legacy vs. low cost operators
Market structure:
- Competition, monopoly, oligopoly, monopsony, monopolistic competition
- Pricing and output determination
- Free market vs. regulation
Demand forecasting:
- Methods for demand forecasting
- Statistical basics
- Time series
- Regression analysis
- Choice modelling
Airline pricing:
- Price discrimination, segmentation
- Dynamic pricing
- Yield management
Special topics:
- Deregulation
- Low cost airlines
- Open skies
- Airline alliances & mergers
Airports:
- Revenues
- Setting charges
- Non-aeronautical activities
Environmental economics:
- Externalities
- Aviation's environmental effects
- Addressing externalities
Decision making:
- Types of decisions
- Qualitative and quantitative techniques
- Discounted cash flow techniques
- Multi-criteria analysis
- Decision trees
- Risk analysis
Project management:
- Project cycle
- Feasibility study
- Project planning techniques
- Managing people: leadership, motivation, teamwork
- Goal setting
- Organisational structure

Teaching methods

Delivery type	Number	Length hours	Student hours
Lecture	17	2.00	34.00
Practical	1	2.00	2.00
Seminar	2	2.00	4.00
Tutorial	4	2.00	4.00
Private study hours			156.00
Total Contact hours			44.00
Total hours (100hr per 10 credits)			200.00

Private study

This module is taught as a flipped class and so students are expected to read and think about the detailed slides, prepare for the in-class discussion topics, prior to each lecture. Students also need to view the videos, animation and podcasts that seek to support various aspects of the module. A key aspect of private learning is working on the formative and summative assignments.

Opportunities for Formative Feedback

Formative feedback will be informal, through four quantitative problem-solving tutorial classes, which will also include some discussion on economic concepts.

Methods of assessment

Coursework

Assessment type	Notes	% of formal assessment
Presentation	Presentation of Essay Findings	20.00
Essay	2500 Words	30.00
Total percentage (Assessment Coursework)		50.00

Normally resits will be assessed by the same methodology as the first attempt, unless otherwise stated

Exams

Exam type	Exam duration	% of formal assessment
Online Time-Limited assessment	2 hr	50.00
Total percentage (Assessment Exams)		50.00

Normally resits will be assessed by the same methodology as the first attempt, unless otherwise stated

Reading list

The reading list is available from the Library website

Last updated: 14/12/2021

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