Introduction: In the following report we would like to present an economic analysis of the airline industry in United Kingdom. Airline industry is going through a period of profound transformation in the UK. A fundamental reshaping due to three remarkable developments, shrinkage of high-end demand for air travel that began in late 2000; the emergence of low-cost carriers and the increased transparency of alternative airline offerings and less expensive routes. Today, it’s one of the most competitive industries with all players trying to introduce new ways of fighting competition through services and lowers costs which are difficult due to the high costs of operations and capital investments. In this report, we aim to understand the dynamics of the airline industry in UK in terms of its competition. Competition and its changing trends: Competition in an airline industry is that of an oligopolistic nature where pricing and production strategies of individual firms in a market...