module specification

This module introduces the vital appreciation of the management of airline costs as a key management skill for commercial airline managers. The airline industry in particular is highly volatile because of the complex costs of production of the service and is subject to violent external shocks on a regular basis. A sound financial strategy is therefore vital to airline survival and the module introduces techniques and tools to assess the steps to take for long term profitability.

The module takes an in-depth look at factors affecting costs, revenues and profitability at both airlines and airports and the ramifications of any such changes. Attention will also be given to forecasting travel demand from available data.

The module aims are therefore to evaluate the complex range of financial issues that airline managers have to address to ensure a sustainable business in the long term and how to manage the critical aspects of negative financial exposure that are common in the sector.

N/A

Managing Costs

Airline and airport cost classifications and financial statements         LO1/2                             

Fuel Hedging and risk management                                                     LO1

Aviation Investment and its appraisal techniques

Theory and Practice in aircraft/aviation financial evaluation           LO1                                                       

Buy versus Lease Decision- Making including fleet planning                  LO2                                         

Forecasting and route analysis                                                               LO2                                                                                 

Sources of finance

Sources of finance for airlines and airports                                    LO1

Outsourcing of services and cost benefit analysis                          LO1

Forecasting elements of the syllabus will include;

• Forecasting methods for air routes;
• Forecasting passenger levels and passenger demand to determine airport capacity;
• Causal methods for predicting passenger figures and propensity to fly.

The formal delivery of the teaching and learning will be based on three contact hours per week spread over 12 weeks. The contact hours will be formed of a two-hour interactive session which draws from teaching and learning strategies such as workshops, lectures, guest speakers, case study discussions, panel discussions and debates, videos, online Weblearn platforms, as well as scenario-based real time activities and simulations.

Peer to peer learning will also feature within the programme as students work together to develop solutions to practically based solutions and assess/ critique the relevant impact.

Groupwork will form a large part of the sessions, with student participating in active learning as they disseminate and discuss relative experience and acquired knowledge.

The remaining hour of contact time will be a seminar-based approach where students will explore current themes and trends in more detail and carry out appropriate calculations using excel.

We will also make use of alumni students to provide a careers perspective for this section of the industry and make use of guest lecturers to provide contextual learning.

Within the module there is significant opportunity to participate in proactive learning activities via the use of Weblearn facilities which promote inter-active discussions between both peers and lecturers and enables learners to share resources and access links to external journal articles, websites and other sources.

Discussion and debate are actively encouraged both within the classroom context and via Weblearn. Students participating in this degree come from a variety of backgrounds and often have a wealth of industry experience upon which to draw. It is useful to access this via proactive and inter-active classroom management.

Students have a responsibility to prepare for forthcoming lectures so as to ensure that they fully understand the concepts discussed and, so as they can participate fully in debates and discussions. This can be done via accessing the module specifications on-line or via Weblearn, and ascertaining the forthcoming weeks lecture content.

On successful completion of the module students will have knowledge of or be able to:

1. Critically appraise a variety of financial strategies airlines and airports can use to manage their financial exposure to operational aspects of the business.
2. Analyse complex data and evidence pertaining to forecasting techniques and their importance to the aviation sector in relation to strategy and costs/profit.

Assessment of this module will include evaluation of a route analysis weighted at 60% and an exam weighted at 40%. The first assignment requires each student to propose a new route for an airline of their choice. Each student will be required to produce a 1800 word report detailing their justification for the viability of the route. The exam will consist of multiple-choice questions on financial appraisals, financial statements, etc and also essay type questions on financial decision making, sources of finance, fuel hedging, etc.

Core Reading List

Morrell, S. (2017) Airline Finance, Ashgate Publishing, Aldershot

Vasigh,B. (2017)  Foundations of Airline Finance, Ashgate Publishing, Aldershot

Clark, P. (2017) Buying the Big Jets, Ashgate Publishing, Aldershot

Additional Reading List

Jorge-Calderon, D. (2016) Airline Finance and Investment in the Global Economy. Ashgate Publishing, Aldershot.

Baker, H. K. and Martin, G. S. (2011). Capital Structure and Corporate Financing Decisions: Theory, Evidence, and Practices. New Jersey: John Wiley and Sons Inc

Berk, J. and DeMarzo, P. (2013). Corporate Finance, 3rd Edition. Boston, Mass: Pearson/Addison Wesley.

Specific Aviation Journals:

There are a range of e journals of management generally and the aviation industry to access via the online library facilities for this module.  For example – The Journal of Air Transport Management, Aviation Management and Education, Airline Business, Airport Business, Flight International etc.  

Reading list Talis

https://rl.talis.com/3/londonmet/lists/2ADE48E4-C90D-B8F1-AF17-933AECD9F2BA.html?lang=en-GB&login=1