ABSTRACT
This chapter aims to describe the evolution of the air transport industry including airlines and airports. The airline industry has generated an average return on invested capital (ROIC) that is much lower than the weighted average cost of capital (WACC). The US Airline Deregulation Act of 1978 dramatically changed the financial condition of the global airline industry. The global airline industry is at an all-time high; the IATA expects the global airline industry to enjoy a net profit of $29.8 billion in 2017. The economic growth around the world, and lower fuel prices are the main contributors to remarkable performance of the industry. The airline industry is a good example of an oligopoly, in which a few airlines have the large majority of market share. The industry Herfindahl-Hirschman index (HHI) is a measure of US market consolidation. Indirect impacts derive from off-site economic activities that share a causal relationship with the aviation industry.
