Introduction to Introduction to Aviation EconomicsAviation Economics

The economic characteristics of The economic characteristics of the Airlines Business the Airlines Business

Introduction to Airline industryIntroduction to Airline industry

• Air travel remains a large and growing industry.Air travel remains a large and growing industry.

• It facilitates economic growth, world trade, international It facilitates economic growth, world trade, international investment and tourism and is therefore central to the investment and tourism and is therefore central to the globalization taking place in many other industries.globalization taking place in many other industries.

• Travel for both business and leisure purposes grew Travel for both business and leisure purposes grew strongly worldwidestrongly worldwide

Introduction to Airline industryIntroduction to Airline industry

• In domestic and international competitive market, aviation economic should be well managed with the existence of LCC airline companies.

•To compete with the LCCs, To compete with the LCCs, aviation fraternity should aviation fraternity should understand the concept of understand the concept of aviation economics aviation economics characteristics and characteristics and strategies.strategies.

OverviewOverview• Economists usually describe the certificated airline Economists usually describe the certificated airline

industry as industry as an oligopolistic economic structurean oligopolistic economic structure

• That is, this industry composed of few firms (can That is, this industry composed of few firms (can be 5/ 10/ 100) producing either similar or be 5/ 10/ 100) producing either similar or differentiated products. differentiated products.

• Apart of few sellers and typically characterized by Apart of few sellers and typically characterized by high barriers to entryhigh barriers to entry

• Airline business also has its own distinguish Airline business also has its own distinguish featurefeature

• Q: Name other possible oligopolistic industriesQ: Name other possible oligopolistic industries

4

Other characteristics of oligopolistic industryOther characteristics of oligopolistic industry

• Substantial economic scale: Substantial economic scale: Increase of size Increase of size in operations leads to decrease of firm’s in operations leads to decrease of firm’s costs in a long term costs in a long term – Large scale of production afforded by intensive labor Large scale of production afforded by intensive labor

and management specialization of job responsibilities, and management specialization of job responsibilities, technological and products utility efficiency make technological and products utility efficiency make possible of low costs possible of low costs

– So, if market demand only sufficient to support few large So, if market demand only sufficient to support few large firms of optimum size, only few such firms will survivefirms of optimum size, only few such firms will survive

– It’d be hard for new and small firms to compete with It’d be hard for new and small firms to compete with these large firmsthese large firms

• Growth merger: Growth merger: Many of oligopolies Many of oligopolies resulted from mergers of competing firms resulted from mergers of competing firms (i.e. Am Bank, CIMB)(i.e. Am Bank, CIMB)– The purpose of “merging” is to gain The purpose of “merging” is to gain

• Substantial increase in market shareSubstantial increase in market share• Greater economies of scaleGreater economies of scale• More buying power in purchasing of resourcesMore buying power in purchasing of resources

Other characteristics of oligopolistic industryOther characteristics of oligopolistic industry

• Mutual Dependence: Mutual Dependence: When there are only When there are only few firms in a market, it matters very much few firms in a market, it matters very much what their rivals do (i.e. Malaysia Airlines what their rivals do (i.e. Malaysia Airlines vs. Air Asia)vs. Air Asia)– The competitor’s reactions play a vital role The competitor’s reactions play a vital role

when setting priceswhen setting prices– In these games, the participants try to win by In these games, the participants try to win by

formulating strategies that anticipate the formulating strategies that anticipate the counter-reactions of their opponentscounter-reactions of their opponents

Other characteristics of oligopolistic industryOther characteristics of oligopolistic industry

• Price rigidity and non-price competition: Price rigidity and non-price competition: Firms are more likely to maintain their Firms are more likely to maintain their constant prices constant prices – As a result, firms engage in various forms of As a result, firms engage in various forms of

non-price competition like advertising and non-price competition like advertising and customer servicecustomer service

– Price reductions occur only under severe Price reductions occur only under severe pressures resulting from weakened demand ad pressures resulting from weakened demand ad excessive capacity (i.e. The case of Malaysia excessive capacity (i.e. The case of Malaysia Airlines)Airlines)

Other characteristics of oligopolistic industryOther characteristics of oligopolistic industry

However, other economic characteristic : However, other economic characteristic : The Airlines as an Oligopolists? The Airlines as an Oligopolists?

• We have discussed earlier on We have discussed earlier on characteristics of oligopolistic industrycharacteristics of oligopolistic industry

• Apparently the airline industry also share Apparently the airline industry also share some of the oligopolistic features: some of the oligopolistic features: – Number of carriers and market shareNumber of carriers and market share– High barriers of entryHigh barriers of entry– Economies of scaleEconomies of scale– Growth through mergerGrowth through merger

9

Number of carriers and market shareNumber of carriers and market share

• Recently there has been increment in airline Recently there has been increment in airline firms with the addition of small certificated firms with the addition of small certificated airlines and demise of some larger airlines airlines and demise of some larger airlines (A once in a blue moon in M’sia but an (A once in a blue moon in M’sia but an apparent situation in the U.S. and Europe)apparent situation in the U.S. and Europe)

• BUT, they either liquidated, merged or never BUT, they either liquidated, merged or never operated or decertified.operated or decertified.

• So, the largest airline own ond retain the So, the largest airline own ond retain the power in market sharepower in market share

10

• Unquestionably, with this small numbers of Unquestionably, with this small numbers of airline companies and concentration of airline companies and concentration of market share (Just like the aviation climate market share (Just like the aviation climate in M’sia)..in M’sia)..

• It meets the first characteristic of It meets the first characteristic of oligopolistic industriesoligopolistic industries

11

Number of carriers and market shareNumber of carriers and market share

High Barriers of EntryHigh Barriers of Entry

• In recent years, it is difficult to get access In recent years, it is difficult to get access to many markets due toto many markets due to– Difficulty to obtain terminal space at many hub Difficulty to obtain terminal space at many hub

airportsairports– The financial outlays risk (i.e., advertising, The financial outlays risk (i.e., advertising,

personnel and aircraft operation cost) personnel and aircraft operation cost) compete with the airline at its hubcompete with the airline at its hub

– Airport terminal capacity (i.e. Air Asia Airport terminal capacity (i.e. Air Asia competing with M’sia Airlines at KLIA)competing with M’sia Airlines at KLIA)

• So, it is difficult to enter the airline industry So, it is difficult to enter the airline industry and it is even harder during the start-up and it is even harder during the start-up stage as the major airlines dominated the stage as the major airlines dominated the power to buy in the marketpower to buy in the market

• This phenomenon match with the second This phenomenon match with the second criterion of oligopolistic firmscriterion of oligopolistic firms

High Barriers of EntryHigh Barriers of Entry

Growth through MergerGrowth through Merger

• Airlines in particular growth through merger Airlines in particular growth through merger (Although, it is not the case in M’sia)(Although, it is not the case in M’sia)

• Merger can Merger can – Increase market shareIncrease market share– Increase market power (greater ability to control Increase market power (greater ability to control

the market for and the price of its service than the market for and the price of its service than does a smaller, more competitive producer)does a smaller, more competitive producer)

– Eliminating bankruptcy and competition Eliminating bankruptcy and competition

• Like in the U.S: Merger decrease no. of Like in the U.S: Merger decrease no. of certificated airlines (From 17 in 1950 to certificated airlines (From 17 in 1950 to remaining 12 in 2002)remaining 12 in 2002)

• This merger for growth feature makes the This merger for growth feature makes the airline business fits as oligopolistic airline business fits as oligopolistic businessbusiness

Growth through MergerGrowth through Merger

Mutual DependenceMutual Dependence

• Airlines industry involves rivalry among a Airlines industry involves rivalry among a number of airlines number of airlines

• An action taken by a particular airline would An action taken by a particular airline would yield counter-reactions of their rivals or yield counter-reactions of their rivals or opponentsopponents

• Like, MAS vs. Air Asia (at domestic level) and Like, MAS vs. Air Asia (at domestic level) and MAS vs SIA (at international level)MAS vs SIA (at international level)

• It is a fact that rivalry in airlines industry It is a fact that rivalry in airlines industry counter react with one another for profit gaincounter react with one another for profit gain

16

Price Rigidity and Nonprice CompetitionPrice Rigidity and Nonprice Competition

• Airline industry also oligopolistic in its priceAirline industry also oligopolistic in its price• Airliners are much comfortable maintaining Airliners are much comfortable maintaining

constant price rather than rocking the boat, constant price rather than rocking the boat, so to speak…so to speak…

• Why?Why?– Mutual DependenceMutual Dependence– Fear of Price WarFear of Price War

• Oligopolistic pricing has become the norms Oligopolistic pricing has become the norms in airline industryin airline industry

17

The Airlines Special Economic Characteristics:The Airlines Special Economic Characteristics:

• Government Financial AssistanceGovernment Financial Assistance

• High Technological TurnoverHigh Technological Turnover

• High Labor and Fuel ExpensesHigh Labor and Fuel Expenses

• Sensitivity to Economic FluctuationsSensitivity to Economic Fluctuations

• Close Government RegulationClose Government Regulation

Government Financial AssistanceGovernment Financial Assistance

• Unlike other oligopolistic industries (i.e. Unlike other oligopolistic industries (i.e. Mobile and Internet services), the Mobile and Internet services), the government units have played a major government units have played a major roles in the growth of airport-airways roles in the growth of airport-airways systems (i.e. Malaysia Airlines)systems (i.e. Malaysia Airlines)

• National airways system was maintained National airways system was maintained by the federal government at minimal cost by the federal government at minimal cost to users of the systemto users of the system

• Most commonly, the fees charged for Most commonly, the fees charged for landing aircraft, maintaining office and landing aircraft, maintaining office and operational space do not repay the operational space do not repay the operating costs of the airport (Take the operating costs of the airport (Take the case of LCCT)case of LCCT)

• As a result, airline industry benefited from As a result, airline industry benefited from the financing of the airport-airways system the financing of the airport-airways system (which is the major cost element)(which is the major cost element)

Government Financial AssistanceGovernment Financial Assistance

High Technological TurnoverHigh Technological Turnover

• Technological advances in flight equipment Technological advances in flight equipment over the short span of 30 years have come at over the short span of 30 years have come at an extremely rapid pacean extremely rapid pace

• Airlines spend lots of money on flight re-Airlines spend lots of money on flight re-equipment cycle, approximately at every 8 equipment cycle, approximately at every 8 yearsyears

• Plus, capital spending in hiring and training Plus, capital spending in hiring and training personnel, and in modifying facilities to personnel, and in modifying facilities to accommodate the new aircraft and associated accommodate the new aircraft and associated equipment equipment

21

High Labor & Fuel ExpensesHigh Labor & Fuel Expenses

• These are two biggest expenses (Typically These are two biggest expenses (Typically 60%)60%)

• LaborLabor: Airline employees are men and women : Airline employees are men and women with highly developed skills and with with highly developed skills and with correspondingly high incomescorrespondingly high incomes– Plus, airline needs a large number of manpowerPlus, airline needs a large number of manpower

• FuelFuel: No other industry has been subjected to : No other industry has been subjected to the severe increases of fuel prices that the the severe increases of fuel prices that the airlines have experienced over the past 15 airlines have experienced over the past 15 years.years.

22

• Fuel price Costs Ticket Price = Less Fuel price Costs Ticket Price = Less Passenger, Less Profit…Passenger, Less Profit…

• At times, purchasing fuel-efficient aircraft At times, purchasing fuel-efficient aircraft (that burn less fuel than others) also can (that burn less fuel than others) also can be very costly than do less-efficient aircraftbe very costly than do less-efficient aircraft

• Moreover, the actual price of fuel far Moreover, the actual price of fuel far outside any airline’s span of control outside any airline’s span of control

High Labor & Fuel ExpensesHigh Labor & Fuel Expenses

Sensitivity to Economic Fluctuations Sensitivity to Economic Fluctuations (Recession)(Recession)

• Unlike other durable good like automobile Unlike other durable good like automobile industries, whenever recession takes place, it industries, whenever recession takes place, it is much slower for the airline industry to is much slower for the airline industry to recoverrecover

• Why? Because of the apparent impacts of Why? Because of the apparent impacts of recession on air travelrecession on air travel– People postpone long-distance travelPeople postpone long-distance travel– Companies cut back business trip/ no/ of people Companies cut back business trip/ no/ of people

sent on a given tripsent on a given trip– Fewer people travel first classFewer people travel first class

• Unlike other industries, airlines still have to Unlike other industries, airlines still have to continue make payments to creditors and continue make payments to creditors and outstanding debtors (primarily flight outstanding debtors (primarily flight equipment) even during recessionequipment) even during recession

• Further, although airline can furlough Further, although airline can furlough certain volume related employees, it’d certain volume related employees, it’d involve extensive retraining costs when involve extensive retraining costs when personnel are brought back or new personnel are brought back or new personnel are hiredpersonnel are hired

Sensitivity to Economic Fluctuations Sensitivity to Economic Fluctuations (Recession)(Recession)

The major questionsThe major questions

• If the airline industry is oligopolisticIf the airline industry is oligopolistic– How can a new airliner enter and survive in this industry?How can a new airliner enter and survive in this industry?

– How would existing airliners compete with the new airliner and How would existing airliners compete with the new airliner and retain themselves in the industry?retain themselves in the industry?

• How to overcome to these oligopolistic barriers How to overcome to these oligopolistic barriers in airline business?in airline business?– Airlines can independently make profits in each areas of Airlines can independently make profits in each areas of

aviation economic activitiesaviation economic activities

• This is where aviation economics deals with This is where aviation economics deals with profit making and lowering costs in aviation profit making and lowering costs in aviation activitiesactivities

Airlines Profitable Economic ActivitiesAirlines Profitable Economic Activities

• There are five major parts of economic There are five major parts of economic activities:activities:– Part I:Part I: The Demand for Airline Services The Demand for Airline Services– Part II:Part II: Airline Route Feasibility/ Planning Airline Route Feasibility/ Planning– Part III:Part III: Fixed-Base Operation (FBO) Fixed-Base Operation (FBO)– Part IV:Part IV: Fleet Planning Fleet Planning– Part V:Part V: Maintenance, Repair, Overhaul (MRO) Maintenance, Repair, Overhaul (MRO)

• Each of these share the aims on how to Each of these share the aims on how to lower the costs and gain profitlower the costs and gain profit

Part 1: The Demand of Airline ServicesPart 1: The Demand of Airline Services

• Demand is defined as the various amounts Demand is defined as the various amounts of a product or service that consumers are of a product or service that consumers are willing and able to purchase at various willing and able to purchase at various prices at a particular period of timeprices at a particular period of time

• Determining the demand would the help Determining the demand would the help the airlines in setting the price, estimating the airlines in setting the price, estimating and managing their costs and calculating and managing their costs and calculating how they can gain profits how they can gain profits

• This is where the airlines will deal with This is where the airlines will deal with how certain forecasting methods can help how certain forecasting methods can help the airline gain profit the airline gain profit

• Forecasting is Forecasting is – The attempt to quantify in a future time periodThe attempt to quantify in a future time period– It is about predicting and estimating some It is about predicting and estimating some

future volume or financial situationfuture volume or financial situation

Part 1: The Demand of Airline ServicesPart 1: The Demand of Airline Services

Part 2: Airline Route Planning/ FeasibilityPart 2: Airline Route Planning/ Feasibility

• This where airlines deal with the application of This where airlines deal with the application of forecasting method in determining the costs forecasting method in determining the costs of a route of one flight from one destination to of a route of one flight from one destination to another eitheranother either– Domestic orDomestic or– International International

• In terms of …In terms of …– Flight personnelFlight personnel– Fuel consumptionFuel consumption– Facilities and Airport costFacilities and Airport cost– Passenger Movement and Air CragoPassenger Movement and Air Crago

PART 3: Fixed Based Operations (FBO)PART 3: Fixed Based Operations (FBO)

• In the aviation industry, a In the aviation industry, a fixed base fixed base operatoroperator (also known as (also known as fixed base fixed base of operationof operation), or ), or FBOFBO, is a service , is a service center at an airport that may be a center at an airport that may be a private enterprise or may be a private enterprise or may be a department of the municipality that department of the municipality that the airport serves.the airport serves.

• At a minimum, most FBOs offer aircraft fuel, oil, At a minimum, most FBOs offer aircraft fuel, oil, and parking, along with access to washrooms and parking, along with access to washrooms and telephones. Some FBOs offer additional and telephones. Some FBOs offer additional aircraft services such as hangar (indoor) aircraft services such as hangar (indoor) storage, maintenance, aircraft charter or rental, storage, maintenance, aircraft charter or rental, flight training, deicing, and ground services flight training, deicing, and ground services such as towing and baggage handling.such as towing and baggage handling.

• FBOs may also offer services not directly FBOs may also offer services not directly related to the aircraft, such as rental cars, related to the aircraft, such as rental cars, lounges, and hotel reservations.lounges, and hotel reservations.

PART 3: Fixed Based Operations (FBO)PART 3: Fixed Based Operations (FBO)

• Among services provided by FBOs areAmong services provided by FBOs are– Ground HandlingGround Handling

• Cabin ServiceCabin Service• CateringCatering• Ramp ServiceRamp Service• Passenger ServicePassenger Service

– Field Operations ServiceField Operations Service

Ground HandlingGround Handling

• Many airlines subcontract ground handling to an Many airlines subcontract ground handling to an airport or a airport or a handling agent,handling agent, or even to another or even to another airline.airline.

• Ground handling addresses the many service Ground handling addresses the many service requirements of a passenger aircraft between the requirements of a passenger aircraft between the time it arrives at a terminal gate and the time it time it arrives at a terminal gate and the time it departs on its next flight. departs on its next flight.

• Speed, efficiency, and accuracy are important in Speed, efficiency, and accuracy are important in ground handling services in order to minimize the ground handling services in order to minimize the turnaround time (the time during which turnaround time (the time during which

the aircraft must remain parked at the gate)the aircraft must remain parked at the gate)

• Airlines with less-frequent service or fewer Airlines with less-frequent service or fewer resources at a particular location sometimes resources at a particular location sometimes subcontract ground handling or on-call aircraft subcontract ground handling or on-call aircraft maintenance to another airline, as it is a short-maintenance to another airline, as it is a short-term cheaper alternative to setting up its own term cheaper alternative to setting up its own ground handling or maintenance capabilities.ground handling or maintenance capabilities.

• Most ground services are not directly related Most ground services are not directly related to the actual flying of the aircraft, and instead to the actual flying of the aircraft, and instead involve other tasks.involve other tasks.

Ground HandlingGround Handling

Cabin ServicesCabin Services

• These services ensure passenger comfort. These services ensure passenger comfort. They include such tasks as cleaning the They include such tasks as cleaning the passenger cabin and replenishment of on-passenger cabin and replenishment of on-board consumables or washable items board consumables or washable items such as soap, pillows, tissues, blankets, such as soap, pillows, tissues, blankets, etc.etc.

CateringCatering

• Catering includes the unloading of unused food Catering includes the unloading of unused food and drink from the aircraft, and the loading of and drink from the aircraft, and the loading of fresh food and drink for passengers and crew. fresh food and drink for passengers and crew.

• Airline meals are typically delivered in Airline meals are typically delivered in trolleys.trolleys. The empty or trash-filled trolley(s) from the The empty or trash-filled trolley(s) from the previous flight is replaced by a fresh one. previous flight is replaced by a fresh one.

• Meals are prepared mostly on the ground in Meals are prepared mostly on the ground in order to minimize the amount of preparation order to minimize the amount of preparation (apart from chilling or reheating) required in the (apart from chilling or reheating) required in the air.air.

Ramp ServiceRamp Service• This includes services on the ramp or This includes services on the ramp or

apron, such as:apron, such as:– Guiding the aircraft into and out of the parking Guiding the aircraft into and out of the parking

position (by way of Aircraft marshallingposition (by way of Aircraft marshalling– Water cartage (to refill fresh water tanks)Water cartage (to refill fresh water tanks)– Refueling, which may be done with a refueling Refueling, which may be done with a refueling

tanker truck or refueling pumpertanker truck or refueling pumper– Passenger stairs (used instead of an aerobridge Passenger stairs (used instead of an aerobridge

or air stairs, some budget airlines use both to or air stairs, some budget airlines use both to improve turnaround speed) etc.improve turnaround speed) etc.

Passenger ServicePassenger Service• This includes services inside the airport terminal This includes services inside the airport terminal

such as:such as:• Providing check-in counter services for the Providing check-in counter services for the

passengers departing on the customer airlines.passengers departing on the customer airlines.• Providing Gate arrival and departure services. Providing Gate arrival and departure services.

The agents are required to meet a flight on The agents are required to meet a flight on arrival as well as provide departure services arrival as well as provide departure services including boarding passengers, closing the flight, including boarding passengers, closing the flight, etc.etc.

• Staffing the Transfer Counters, Customer Staffing the Transfer Counters, Customer Service Counters, Airline Lounges, etc.Service Counters, Airline Lounges, etc.

Field Operation ServiceField Operation Service

• This service dispatches the aircraft, This service dispatches the aircraft, maintains communication with the rest of maintains communication with the rest of the airline operation at the airport and with the airline operation at the airport and with Air Traffic Control.Air Traffic Control.

PART 4: Fleet Planning; Aircraft lease PART 4: Fleet Planning; Aircraft lease and Purchase and Purchase

• Aircraft leasesAircraft leases are a number of types are a number of types of leases used by Airlines and other of leases used by Airlines and other aircraft operators. aircraft operators.

• Airlines lease aircraft from other airlines Airlines lease aircraft from other airlines or leasing companies for two main or leasing companies for two main reasons; to operate aircraft without the reasons; to operate aircraft without the financial burden of buying them, and to financial burden of buying them, and to provide temporary increase in capacity. provide temporary increase in capacity.

• The industry has two main leasing types, The industry has two main leasing types, wet leasing which is normally used for wet leasing which is normally used for short term leasing and dry leasing which is short term leasing and dry leasing which is more normal for the longer term leases. more normal for the longer term leases.

• The industry also uses combinations of wet The industry also uses combinations of wet and dry when for example the aircraft is and dry when for example the aircraft is wet-leased to establish new services then wet-leased to establish new services then as the airlines flight or cabin crews become as the airlines flight or cabin crews become trained they can be switched to a dry lease.trained they can be switched to a dry lease.

PART 4: Fleet Planning; Aircraft lease PART 4: Fleet Planning; Aircraft lease and Purchase and Purchase

• When purchasing aircraft, it allows an airline to When purchasing aircraft, it allows an airline to purchase additional aircraft in the future at an agreed purchase additional aircraft in the future at an agreed price and dateprice and date

• When placing orders for new aircraft, airlines When placing orders for new aircraft, airlines commonly obtain commonly obtain optionsoptions from the aircraft from the aircraft manufacturer, for example Airbus or Boeing. manufacturer, for example Airbus or Boeing.

• These options allow the airline to delay the purchase These options allow the airline to delay the purchase of additional aircraft until market conditions become of additional aircraft until market conditions become clearer and the purchase can be justified. It also clearer and the purchase can be justified. It also reserves the airline a place in the manufacturing reserves the airline a place in the manufacturing queue, for a guaranteed delivery slot. queue, for a guaranteed delivery slot.

PART 4: Fleet Planning; Aircraft lease PART 4: Fleet Planning; Aircraft lease and Purchase and Purchase

• When the airline finally exercises its When the airline finally exercises its options, it can place its order without options, it can place its order without having to join the beginning of the queue having to join the beginning of the queue which otherwise may delay the delivery of which otherwise may delay the delivery of the aircraft for years. the aircraft for years.

• If future conditions don't justify expansion If future conditions don't justify expansion of the airline's fleet, the airline is not of the airline's fleet, the airline is not obligated to purchase the aircraftobligated to purchase the aircraft

PART 4: Fleet Planning; Aircraft lease PART 4: Fleet Planning; Aircraft lease and Purchase and Purchase

• Depending on economic conditions, Depending on economic conditions, manufacturers often sell aircraft manufacturers often sell aircraft purchasing options below the real value of purchasing options below the real value of the aircraftthe aircraft

• Therefore, in this case determining of the Therefore, in this case determining of the demand, need and costs is important for demand, need and costs is important for an airline to decide whether to lease or an airline to decide whether to lease or purchase aircraft.purchase aircraft.

PART 4: Fleet Planning; Aircraft lease PART 4: Fleet Planning; Aircraft lease and Purchase and Purchase

PART 5: Maintenance Repair PART 5: Maintenance Repair Overhaul (MRO)Overhaul (MRO)

• Aircraft MROAircraft MRO is the overhaul, repair, is the overhaul, repair, inspection or modification of an aircraft or inspection or modification of an aircraft or aircraft componentaircraft component

• Maintenance includes the installation or Maintenance includes the installation or removal of a component from an aircraft or removal of a component from an aircraft or aircraft subassembly, but does not include:aircraft subassembly, but does not include:– Elementary work, such as removing and Elementary work, such as removing and

replacing tires, inspection plates, spark plugs, replacing tires, inspection plates, spark plugs, checking cylinder compression, etcchecking cylinder compression, etc

46

– Servicing, such as refueling, washing Servicing, such as refueling, washing windowswindows

– Any work done on an aircraft or aircraft Any work done on an aircraft or aircraft component as part of the manufacturing component as part of the manufacturing process, prior to issue of a certificate of process, prior to issue of a certificate of airworthiness or other certification documentairworthiness or other certification document

PART 5: Maintenance Repair PART 5: Maintenance Repair Overhaul (MRO)Overhaul (MRO)

Group Discussion: SO….Group Discussion: SO….

• Is airline and Oligopolistic industry?Is airline and Oligopolistic industry?

• If YES, why?If YES, why?

• If NOT, why?If NOT, why?

• The CONCLUSION is……?The CONCLUSION is……?

• Choose any of the major area of airline Choose any of the major area of airline economic activities and discuss how would economic activities and discuss how would you make profits from the area chosenyou make profits from the area chosen