Course Title: Airline Environments

Part A: Course Overview

Course Title: Airline Environments

Credit Points: 12.00

Course Code	Campus	Career	School	Learning Mode	Teaching Period(s)
ECON1209	City Campus	Postgraduate	115H Aerospace, Mechanical & Manufacturing Engineering	Distance / Correspondence	Sem 2 2007, Sem 1 2008, Sem 2 2008, Sem 1 2009, Sem 2 2009, Sem 2 2010
ECON1209	City Campus	Postgraduate	115H Aerospace, Mechanical & Manufacturing Engineering	Distance / Correspondence or Face-to-Face	Sem 1 2006, Sem 2 2006
ECON1210	China Airlines Ltd	Postgraduate	115H Aerospace, Mechanical & Manufacturing Engineering	Face-to-Face	Offsh 1 07, Offsh 3 07
ECON1211	Air Transport Training College	Postgraduate	115H Aerospace, Mechanical & Manufacturing Engineering	Distance / Correspondence	Offsh 3 07, Offsh 2 08, Offsh 3 08

Course Coordinator: Margaret Tein

Course Coordinator Phone: +61 3 9925 6150

Course Coordinator Email: tein@rmit.edu.au

Course Coordinator Location: 251.3.26

Course Coordinator Availability: Please contact by email to arrange appointment

Pre-requisite Courses and Assumed Knowledge and Capabilities

None

Course Description

A study of economic applications to the aviation and aerospace industry, and of the economic aspects of airline service with consideration given to the impact of government regulations, types of aircraft, airport problems, consumer interests, and competitive practices. Students will examine the evolution of market forces in the industry with a particular interest to airlines, airports, and manufacturing. Concepts of yield management, air passenger demand and supply, price and cost studies, airline economics, airline finance, airline and airport optimisation strategies, government role in aviation, international implications of competition and government regulation, economic analysis of safety and other relevant industry issues are examined. Particular emphasis will be placed in the increasingly international air transportation environment.

Objectives/Learning Outcomes/Capability Development

Objectives/Learning Outcomes/Capability Development
The Capabilities Of An Aviation Management Graduate – Post Graduate Level

Overall Integrative Capability: Proactive Problem Identification, Innovative Problem Solving and Empowering Communication

CAPABILITY: Responsible and Professional

Work Practices: Work within the ethical and legal framework of the industry while contributing to professional work settings through responsible, self-managed, independent work and effective participation in multidisciplinary teams.

Dimension of Capability: Personal Development

Descriptor:

• Awareness of and commitment to one’s own set of values.
• Observance of professional ethics.
• Taking responsibility and participating in one’s own career planning and development.
• Acting as a Reflective Practitioner leading to a personal continuous improvement process.
• Engagement in and commitment to career-long learning.
• Awareness of and commitment to one’s own set of values.

Dimension of Capability: Sustainability

Descriptor:

• Balance of the technical, economic, environmental and social demands of an industry-based situation.
• Protection of safety, health and welfare.

Dimension of Capability: Problem solving and decision making

Descriptor:

• Model organizational problems using a systems framework, recognising the impact on sub- and related systems.
• Use of a wide range of problem solving tools and techniques.
• Selectivity in the choice of data to be used to support decision-making.
• Access to information from a wide range of sources, discerning values, bias and usability.

Dimension of Capability: Technical Competence

• Conceptualise, plan, design and manage the interface between human and technical systems.
• Perform a range of analytical tasks as appropriate to the specialization within the industry.
• Design and conduct diagnostic activities within the specific industry discipline.

Dimension of Capability: Teamwork and Leadership

• Operate effectively within a complex organisational setting.
• Manage multiple hierarchical relationships.
• Work effectively within a team.
• Exhibit appropriate and effective professional behaviours in the team environment.
• Provide constructive feedback to colleagues.
• Resolve conflict within the team.
• Work with members of other disciplines in a team with conflicting needs.

Dimension of Capability: Communication

• Communicate effectively - that is to listen, observe, speak, and write.
• Communicate results and outcomes qualitatively, quantitatively, graphically, electronically and textually.
• Communicate processes of thinking and reflection.

CAPABILITY: Global perspective

Locate one’s professional practice within the global parameters of the industry recognizing the different cultural perspectives, national and local variations in legal, industrial and economic environments.

Dimension of Capability: Personal Development

• Awareness of and respect for other’s sets of values.
• Observance of professional ethics.
• Taking responsibility for understanding cultural differences.
• Acting as a Reflective Practitioner leading to a personal continuous improvement process.
• Engagement in and commitment to career-long learning.

Dimension of Capability: Sustainability

• Balance of the technical, economic, environmental and social demands of different cultural and national situations.
• Protection of safety, health and welfare.

Dimension of Capability: Problem-solving and decision-making

• Model organizational problems using a systems framework, recognising the impact on sub- and related systems within different cultural contexts.
• Use of a wide range of problem solving tools and techniques.
• Selectivity in the choice of data to be used to support decision-making.
• Access to information from a wide range of sources, discerning values, bias and usability.

Dimension of Capability: Technical Competence

• Conceptualise, plan, design and manage the interface between human and technical systems taking into consideration variations in local technical adoption rates.
• Perform a range of analytical tasks as appropriate to the specialization within the industry.
• Design and conduct diagnostic activities within the specific industry discipline and cultural context.

Dimension of Capability: Teamwork and Leadership

• Operate effectively within a complex organisational setting.
• Manage multiple hierarchical relationships.
• Work effectively within a multicultural team.
• Exhibit appropriate and effective professional behaviours in the multicultural team environment.
• Provide constructive feedback to colleagues.
• Resolve conflict within the multicultural team.
• Work with members of other disciplines in a team with conflicting needs.

Dimension of Capability: Communication

• Communicate effectively - that is to listen, observe, speak, and write appropriately within the cultural context.
• Communicate results and outcomes qualitatively, quantitatively, graphically, electronically and textually.
• Communicate processes of thinking and reflection.

CAPABILITY: Communication and Personal Engagement

Communicate the processes and results of organisational activities within the industrial sectors’ communities in forms consistent with the appropriate sector practices. Extend relationships through confident interactions across various levels and functions of the organisation and the industry’s sectors.

Dimension of Capability: Personal Development

• Awareness of and respect for divergent views.
• Observance of professional ethics.
• Taking responsibility for ones’ own communication style and responses of others to it.
• Acting as a Reflective Practitioner leading to a personal continuous improvement process.
• Engagement in and commitment to career-long learning.

Dimension of Capability: Sustainability

• Balance of the technical, economic, environmental and social demands of different cultural and personal backgrounds.
• Protection of safety, health and welfare.

Dimension of Capability: Problem-solving and decision-making

• Explain organizational problems and associated solutions within a systems framework, recognising the impact on individuals and groups with different perspectives and views.
• Use a wide range of problem solving tools and techniques.
• Selectivity in the choice of data to be used to support decision-making.
• Access to information from a wide range of sources, discerning values, bias and usability.

Dimension of Capability: Technical Competence

• Professionally communicate the conceptualisation, planning, design and management of the interface between human and technical systems taking into consideration variations in personal technical adoption rates.
• Discuss the performance of a range of analytical tasks as appropriate to the specialisation within the industry.
• Participate in the design and conduct diagnostic activities within the specific industry discipline and cultural context.

Dimension of Capability: Teamwork and Leadership

• Communicate effectively and collaboratively within a complex organisational setting.
• Manage multiple hierarchical relationships.
• Work effectively within a multicultural team.
• Facilitate effective and appropriate interactions between colleagues and subordinates across the organisation hierarchy.
• Provide constructive feedback to colleagues.
• Resolve conflict within the multicultural team.
• Work with members of other disciplines in a team with conflicting needs.

Dimension of Capability: Communication

• Communicate effectively - that is to listen, observe, speak, and write appropriately within the cultural context.
• Communicate results and outcomes qualitatively, quantitatively, graphically, electronically and textually.
• Communicate processes of thinking and reflection.
  

By the end of this course students will be able to:

1. Explain the principles of microeconomic and macroeconomics with applications to the aviation industry.

2. Using historical data, explain the changes in air carrier traffic, cost structure, revenue, and operating characteristics.

3. Discuss the changes in the regulatory structure of air transportation, the reasons for regulating the aviation industry for over 40 years, the pros and cons of airline deregulation, and how these changes can be assessed statistically.

4. Discuss the structure of the passenger market in domestic and international travel and the changes pre- and post- deregulation.

5. Discuss the meaning of airline load factor, and using historical data on load factor, explain its implications to airline productivity, and profitability.

6. Describe the uses and general form (specification) of econometric and other analytical models utilized by aviation planners to describe demand and forecast activity/traffic.

7. Discuss the factors influencing airline network planning, the economics of aircraft and the effect on network planning, the framework for fleet planning, and use network planning software to study different scenarios of traffic demand and aircraft types.

8. Describe the multitude of devices used by air carriers to market their services in a complex, highly segmented market.

9. Discuss the characteristics of international air transportation, historical development, bilateral agreements, changes in the U.S. open skies policy, and deregulation of international aviation, and explain the role of international agencies in promoting the international aviation system.

10. List the economic issues behind the tremendous merger, acquisition, and leveraged buy out activity in the airline industry over the past decade.

11. Assess the economic viability of government subsidized airline service to small communities.

12. Recognize the structure of air transportation, economic regulation and deregulation, and the market structure of the industry.

13. Explain the economic objectives of nations achieved by air transportation, and the psychological motives of governments regarding air services.

14. Explain the policies regarding airline market entry and exit, and analyze industry take-over attempts or mergers with respect to the Antitrust Laws.

15. Recognize federally required accounting procedures and the cost structures of common, separable, out-of-pocket, and fully allocated costs, and analyze the advantages and disadvantages associated with line-haul costs.

16. Define the airline production function and factor costs, contrast labor and capital intensive nations, recognize the impact of advancing technological standards, and identify the monopolistic aspect of airport costs to the airline operator.

17. Analyze the demand characteristics for airline services, develop traffic estimations, and recognize the limitations of Fruham’s S-curve theory with respect to carrier market shares.

18. Explain the basic factors that determine airline rates, analyze and develop pricing models possible under price deregulation, recognize the disadvantages of discount pricing, and discuss the future of free competitive pricing.

Overview of Learning Activities

The focal strategy utilised in the whole course is the Management Learning Team (MLT). This group represents a project team whose members carry a dual responsibility. Firstly, MLT members carry a responsibility to the team for the learning and development of each member, and secondly, a responsibility for their own personal learning.

MLT’s are encouraged to explore the resources of the team for problem solving and addressing issues prior to seeking the guidance or assistance of an academic staff member.

The specific learning activities include:

Seminars
Workshops
On-call Consultation
Projects
Directed Research
Self-directed Learning
Fieldwork

Overview of Learning Resources

Texts and References:

Whilst there is no specific text set for this course. A range of relevant books are recommended in the references.

Reference Materials:

Bailey, E., Graham, D.R. & Kaplan, D.P. 1985, Deregulating the Airlines, MIT Press, Cambridge. 
Biederman, P. 1982, The U.S. Airline Industry: End of an Era, Praeger, New York. 
Butler, G. & Keller, M. 1999, Handbook of Airline Finance, McGraw-Hill, New York.
Caves, R. E. 1962, Air Transport and its Regulators, Harvard University Press, Massachusetts.
Daudel, S., Humphrey, B.K. & Vialle, G. 1994, Yield Management: Applications to Air Transport and Other Service Industries, Institute of Air Transport, London.
Doganis, R. 1991, Flying Off Course: The Economics of International Airlines, Routledge, London.
Doganis,R. 2001, The Airline Business in the Twenty-first Century, Routledge, London.
James, G. 1982, Airline Economics, Lexington Books, Lexington.
Jenkins, D. 2002, Handbook of Airline Economics, McGraw-Hill, New York.
Hanlon, P. 1996, Global Airlines Competition in a Transnational Industry. Reed, Oxford.
Holloway, S. 1997, Straight and Level: Practical Airline Economics, Ashgate, Aldershot.
Holloway, S. 2002, Airlines: Managing to Make Money, Ashgate, Aldershot.
Morrison, S. & Winston, C. 1986, The Economic Effects of Airline Deregulation, The Brookings Institution, Washington.
Morrison, S. & Winston, C. 1995, The Evolution of the Airline Industry, The Brookings Institution, Washington.
Meyer, J.R. & Oster, C.V., Jr. 1987, Deregulation and the Future of Intercity Passenger Travel, MIT Press, Massachusetts.
Morrell, P. S. 2002, Airline Finance, Ashgate, Aldershot.
O’Connor, W. E. 2001, An Introduction to Airline Economics, Praeger, New York.
Radnoti, T. 2002, Profit Strategies for Air Transportation. McGraw-Hill, New York.
Sturken, B. & Glab, J. 1994, Rapid Descent: Deregulation and the Shakeout in the Airlines, Simon & Schuster, New York.
Wells, T. A. 1999, Air Transportation A Management Perspective, Wadsworth, Belmont.

Electronic Resources:

http://w2.itn.net/airlines/
http://www.sec.gov/edgarhp.htm
http://www.helsinki.fi/WebEc/
http://epn.org/idea/economy.html
http://www.awgnes.com/

Overview of Assessment

Work Integrated Learning:

This course complies with the University’s WIL policy in that the courseware and assessment tasks were designed and developed by an industry practitioner to demonstrate current best practice. Furthermore all teaching and assessment is carried out by an industry practitioner teaching part time for the Program. Assessment tasks are focused on linking and applying theory studied to a real organisational problem or issue.

Assessment Tasks

Concept Paper - 30% weighting - 2000 words

Oral Presentation - 25% weighting - 30-minute presentation

Major Assignment  - 45% weighting - 5000 words