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In turbulent times universities should look for inspiration to private sector companies such as the budget airline business, writes Alistair Moffat.

How is a university like an airline? Or, financially speaking, like any other private sector firm for that matter? These questions don’t have punchlines, but they are becoming more relevant to the higher education sector under current government policy.

First universities are all seeking to generate a financial surplus in order to retain stakeholder confidence and to fund investment. Funds from public sources for capital expenditure remain low, especially for capital projects to support teaching. Surplus is therefore not a dirty word; indeed it is an absolute necessity for most universities. While historically a surplus of around 3 per cent of turnover was considered adequate, the need for investment means this has had to increase to a sector average of between 5 per cent and 6 per cent.

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