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Table of Contents
1Characteristics and trends in airline operations
	1.1 The paradox
	1.2 The essence of airline planning
	1.3 Rapid technological change
	1.4 The economic impact of new technology
	1.5 Declining yields
	1.6 A cyclical industry
	1.7 International focus shifts to East Asia
	1.8 A passenger and freight business
	1.9 The nature of the airline product
2Traditional bilateralism – the impact of economic regulation
	2.1 Two regulatory regimes
	2.2 Non-economic technical and safety regulations
	2.3 The growth of economic regulation
	2.4 Bilateral air services agreements
	2.5 Purchasing traffic rights
	2.6 Inter-airline pooling agreements
	2.7 The role of IATA
	2.8 Limited regulation of non-scheduled air services
	2.9 Operational constraints imposed by the traditional regulatory framework
3Liberalisation – open markets, open skies and beyond
	3.1 The case for and against regulation
	3.2 Mounting pressures for liberalisation
	3.3 Open market phase of liberalisation: 1978–91
		3.3.1 Renegotiation of US bilaterals
		3.3.2 Focus switches to Europe
		3.3.3 Liberalisation spreads
		3.3.4 The new rules of the game
	3.4 The United States pushes for ‘open skies’: 1992 onwards
	3.5 Creating the European Common Aviation Area
	3.6 Clouds in the ‘open skies’
	3.7 European Court changes the rules
	3.8 Towards a trans-Atlantic common aviation area?
	3.9 Liberalisation spreading worldwide
	3.10 The significance of the regulatory environment
4The structure of airline costs
	4.1 The need for costing
	4.2 The traditional approach to airline costs
	4.3 Direct operating costs
		4.3.1 Cost of flight operations
		4.3.2 Maintenance and overhaul costs
		4.3.3 Depreciation and amortisation
	4.4 Indirect operating costs
		4.4.1 Station and ground expenses
		4.4.2 Costs of passenger services
		4.4.3 Ticketing, sales and promotion costs
		4.4.4 General and administrative costs
	4.5 Trends in airline costs
	4.6 The concept of escapability
		4.6.1 Variable and fixed direct operating costs
	4.7 Allocation of costs for operating decisions
5Determinants of airline costs
	5.1 Management control of costs
	5.2 The influence of demand on costs
	5.3  Externally determined input costs
		5.3.1 Price of aviation fuel
		5.3.2 User charges
		5.3.3 Commission payments for sales and distribution
	5.4 The cost of labour
	5.5 Aircraft type and its characteristics
		5.5.1 Aircraft size
		5.5.2 Aircraft speed
		5.5.3 Take-off performance and range
		5.5.4 Engine performance
		5.5.5 Impact of aircraft type on costs
	5.6 Route structure and network characteristics
		5.6.1 Stage length
		5.6.2 Frequency of services
		5.6.3 Length of passenger haul
	5.7 Airline marketing and product policy
		5.7.1 Product and service features
		5.7.2 Sales, distribution and promotion policies
	5.8 Financial policies
		5.8.1 Financial strategies
		5.8.2 Timing and size of aircraft orders
		5.8.3 Methods of finance
		5.8.4 Depreciation policy
	5.9 Corporate strategy
	5.10 Does airline or fleet size matter?
	5.11 The quality of management
6The low-cost model
	6.1 Emergence of low-cost airlines
	6.2 The essence of the low-cost model
	6.3 More seats and higher aircraft utilisation
	6.4 Cost advantages of LCCs – easyJet versus Bmi
	6.5 The impact of high seat factors
	6.6 Is the LCC’s cost advantage sustainable?
	6.7 Revenue advantages
	6.8 Future trends
7The economics of passenger charters
	7.1 Charters – the first low-cost model
	7.2 The nature of the charter product
	7.3 Adapting to a changing market
	7.4 Vertical integration – horizontal consolidation
	7.5 Cost advantages of charter operations
		7.5.1 Direct operating costs
		7.5.2 Indirect operating costs
		7.5.3 High seating density
		7.5.4 High load factors
	7.6 Planning and financial advantages
	7.7 Do series charters have a future?
8Airline marketing – the role of passenger demand
	8.1 The interaction of supply and demand
	8.2 Key stages of airline marketing
	8.3 The motivation for air travel
	8.4 Socio-economic characteristics of air travellers
	8.5 Market segmentation
	8.6 The seasonality problem
	8.7 Factors affecting passenger demand
	8.8 Income and price elasticities of demand
9Forecasting demand
	9.1 The need for forecasts
	9.2 Qualitative methods
		9.2.1 Executive judgement
		9.2.2 Market research
		9.2.3 Delphi techniques
	9.3 Time-series projections
		9.3.1 Exponential forecasts Average rate of growth Moving average growth Exponential smoothing
		9.3.2 Linear trend projections Simple trend Moving average trend
	9.4 Econometric or causal models
		9.4.1 Regression models
		9.4.2 Air freight models
		9.4.3 Gravity models
		9.4.4 Assessment of econometric models
	9.5 Choice of forecasting technique
10Product planning
	10.1 Key product features
	10.2 Schedule-based features
	10.3 Comfort-based product features
	10.4 Convenience features
	10.5 Airline image and branding
	10.6 The ‘hubbing’ concept
	10.7 The economics of hubbing
11Pricing for profit?
	11.1 Objectives of airline pricing policy
	11.2 Three key variables
	11.3 Inherent instability of airline fares
	11.4  Impact of the internet on airline pricing
	11.5 Cost-related or market pricing?
	11.6 Choice of price and product strategies
	11.7 Traditional structure of international passenger fares
		11.7.1 Normal fares: First, Business and Economy
		11.7.2 Preferential fares
		11.7.3 Promotional fares
	11.8 New pricing strategies
	11.9 The importance of revenue management
	11.10 Passenger tariffs and costs
	11.11 Determinants of airline passenger yields
12The economics of air freight
	12.1 Freight traffic trends
	12.2 The key players
	12.3 The demand for air freight services
	12.4 Freight and passenger markets differ
	12.5 The challenge of the integrated carriers
	12.6 Role of freight forwarders or ‘global logistic suppliers’
	12.7 The economics of supply
		12.7.1 Belly-hold capacity
		12.7.2 Combi aircraft
		12.7.3 All-cargo aircraft
	12.8 The pricing of air freight
		12.8.1 Structure of cargo tariffs
		12.8.2 Pricing is market- not cost-based
		12.8.3 Freight yields
	12.9 Marginal profitability?
	12.10 Beyond the crisis – prospects and challenges
13Future prospects – an unstable industry?
	Negotiated in bilateral air services agreements
		Supplementary rights
Glossary of common air transport terms

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