Aviation has often operated within a high-externality, high-VUCA — volatility, uncertainty, complexity, and ambiguity — environment, but in recent years the effects have become stronger. Within the industry, there are key strategies and tactics to mitigate these effects. To learn more, we sat down with aviation industry longtimers Elizabeth Maclean and Mike Evans, now co-managing directors of strategic and crisis communications firm Herdwick Communications, who specialise in helping organisations adapt to these issues.
“The aviation industry has always been an environment where VUCA has dominated and therefore successful airlines have managed to build agility into their strategic planning and business models,” Evans explains. “The largest challenge, speaking to our airline clients, is supply side issues — spare parts, aircraft delivery delays and skilled human resources. This is a legacy from the COVID pandemic and does not appear to be easily rectifiable in the short term.”
This supply side issue is echoed across the sub-sectors within aviation, from digital onwards: maintenance, repair and overhaul; ground and flight operations; safety; sustainability; and more.
“We are observing our clients delaying product launch and wet-leasing/short term leasing to cover gaps in the operating schedule caused by maintenance and delivery delays. This leads to increased costs, product inconsistency and lost opportunities,” Evans says. “Uncertainty surrounding the supply side of the business, such as crew shortages and delays in aircraft deliveries, can result in flight cancellations, postponements of route expansion and even route reductions. Additionally, volatility in demand can create short-term opportunities that airlines must be prepared to take advantage of in order to maximise revenue.”
Flexibility is the oft-cited watchword for this era of aviation, but how can airlines build this into their day-to-day operations while leaving space to make the most of opportunities that arise?
“All teams, including engineering, maintenance, fleet and route planning, sales, marketing, and customer service, must be highly coordinated and work together efficiently to make quick decisions,” Evans explains. “The key to success lies in this coordination, with each discipline bringing its expertise to the decision-making table and explaining how it can mitigate risk and move quickly. Without this collaboration, decisions will be unbalanced and suboptimal, resulting in a negative impact on the company’s overall performance and reputation. By these operational teams working together, agile decision-making can be undertaken and help the C-suite make informed strategic decisions that will protect the company’s long-term goals.”
The growth of digital tools and connectivity in particular can make this job easier, as management information becomes increasingly robust, automated and real-time. But the fundamentals, as ever, remain focussed in the teams and the ways they work together. Removing silos within businesses — and in certain cases across businesses, whether through colocation or integration via technologies like Slack and Teams — is crucial.
At the end of the day, Evans says, “during times of volatility in both the demand and supply side of the airline industry, it is crucial that airlines remain focused on their long-term goals and be less rigid about the path they take to achieve them.”
These long-term goals include structural changes to the way that the industry operates, including the trajectory to achieve net zero and to reduce the overall emissions of aviation. Losing sight of this goal in the rush to adapt would create an existential risk.
Here, Elizabeth Maclean says, “airlines need to clearly define and articulate their sustainability strategy. The challenge over the next few years will be how quickly decarbonisation can be achieved when the technology is arguably 10 years away. Today, the aviation sector accounts for approximately 2% of global CO2 emissions. By 2030, as others decarbonise, we can expect the proportion or aviation’s CO2 to be significantly higher.”
Looking to the future, she emphasises, “when forecasting demand for the future we need to be cognisant of changes to passenger behaviour as they progress their path to net zero. Furthermore, there is a risk that Governments may use taxation to distort demand. Airlines need to start or progress their sustainability journeys and the industry needs to take a leadership position and clearly level expectations.”
Author: John Walton
Published: 28th July 2024
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