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M.Sc. In Air Transport Management Program  › Courses  › Aviation Economics and Financial Analysis (Fall 2014)
Aviation Economics and Financial Analysis (Fall 2014)
Course Instructors

The course instructors include Dr. Michael Tretheway; Dr. David Gillen and Dr. Tuba Toru Delibasi. Dr. Tretheway and Gillen have responsibility for the entire course and Dr. Gillen will be present on site for the entire course of study. Their bio can be seen in the links below:

Dr. Michael Tretheway
Dr. David Gillen
Dr. Tuba Toru Delibaşı

Course Intent

This course will provide background in the economics of the airline industry as well as cover the essentials of airline finance. The course concludes with an examination of airport economics and the economics of aviation security.

Economics will cover the basics of supply and demand. It will cover the differences in the economics of various carrier business models (full service network carriers, low cost carriers, ultra low cost carriers and charter operations. It will discuss airline families, including co-owned major carriers (e.g., Lufthansa-Swiss-Austrian) and feeder carriers. Alliances will be covered. With the emergence of carrier families and alliances, it is increasingly important to understand how competition authorities review proposed acquisitions and alliances.

Airline finance will cover the basic sources of funds for carriers, financial analysis and financial planning. Financial settlements will be explained. Forecasting will be covered. Insurance will also be a topic addressed in this course. 

Course Format

42 hours of instruction
6 days, each with two 3.5 hour units
14 modules in total

Teaching level
  • This course is a course in master's degree.
  • Students will have basic knowledge of core business concepts in accounting, finance, marketing, but with some review to be provided, where necessary.
  • Students should have a basic knowledge of the aviation industry and must have a work experience with an airline company.
The course will be lecture based.

Course Requirements

The graded course elements and the assigned weights are listed below (100 percent total):
  • 20 percent - Individual contribution to class discussion ("participation")
  • 30 percent - Case study report
  • 50 percent - Final examination
Each component of a student's grade in this course will be assigned as a percentage grade (ranging from 0% to 100%). The final grade for the course will be calculated by multiplying each grade by the weight in the grading system described above.

Course letter grades will be assigned using the plus/minus system. As a guideline, students should target at least a performance level of 90 percent to earn an A- or above, 80 percent to earn a B- or above, and 70 percent to earn a C. The assignment of plus/minus within these general grade categories will be determined based on breaks in the overall distribution of grades and the instructor's discretion.

The more you put into the course, the more you get out of it.

Course Outline

Course outline can be reached from here.

Course Textbook
Lecture Notes
  • Lecture notes and other extras used in the lectures are given at the tables below:
Main Lecture Notes
Module 01 Introduction: The Aviation Value Chain 
Module 02 Sources of Finance
Module 03 Insurance 
Module 04 Financial Planning 
Module 05 Financial Analysis
Module 06 Demand and Supply 
Module 07 Costs 
Module 08 Airline Business Models 
Module 09 Mergers and Acquisitions 
Module 10 Mergers and Acquisitions: Regulation 
Module 11 Pricing 
Module 12 Airline Distribution 
Module 13 Air Cargo 
Module 14 Airport Economics 
Module 15 Economics of Aviation Security 

Course Readings
Other Materials  
Module 01 Aviation/Benefits Beyond Borders
The Aviation Value Chain: Economics Returns and Policy Issues 
Module 02 Industry Financial Performance
Aircraft Leasing
Sources of Finance
Module 03 Insurance Implications
The Insurance Crisis
Airline Insurance: Terror in the Air
Module 04-05 Airline Financial Planning and Appraisal
American Airline: DFW 12th Complex
Module 06 Airline Management Strategies for the 21st Century: Chapter 2
Airline Economics: Consumer Demand
Module 07 Airline Economics: Costs
Cost and Production Analysis: The General Concepts
Module 08 Full Service Airline vs Low Cost Carriers
Distortions of Airline Revenues: Why the Network Airline Business Model is Broken
Low-Cost, Start-Up Airlines: A New Paradigm
Module 09 Airline Alliances and Mergers: The Emerging Commission Policy
Analytical Perspectives on Mergers and Acquisitions: A Survey
Module 10
Antitrust Immunity and International Airline Alliances
The Economic Benefits Generated by Alliances and Joint Ventures
The Merger of Delta Airlines and NorthWest Airlines: An Antitrust White Paper
Module 11
Airline Management Strategies for the 21st Century: Chapter 2
Airline Pricing: Yield Management
Module 12
Computer Reservations Systems
The Structures and Trends in Airline Distribution
Module 13
The Air Cargo Industry
Reflecting the Prospects of an Air Cargo Carrier
Module 14
The Airport-Airline Relationship
The Evolution of Airport Ownership and Governance
Module 15
Economic of Aviation Security: Design, Governance, Performance, Financing and Policy


Other Materials
  • Other materials related to the course can be seen at the table below:
Other Materials  
List of Abbreviations
Airline Hub Optimization - Screening Bank Structures to Boost Hub Performance

  Case Study

  • Materials related to the case study can be seen at the table below:
  • Estonian Air's Big Buy is a Harvard University material, and is copyrighted for this case study. 
Case Study  
Case Study Project
A Brief Introduction to Cases, Case Analysis and Presentation
Estonian Air's Big Buy
Case Study Groups
Communication Information with the Lecturers