Freek van Essen is corporate strategy director at Air France-KLM. He states that using scenario based strategy in the airline industry is not easy.
The airline industry is a highly competitive, global and very volatile industry. If something happens in the world, no matter what, it almost always has an effect on airlines in terms of demand (and price levels), as well as cost levels. This causes the profitability margins in this industry to be very thin. And this affects how people think; they tend to be very operationally driven, focused on risk reduction and minimizing the impact of volatility. Long term investmensts can only be done once, since the margins are so thin. In those complex circumstances, decision-makers often prefer one ‘truth’ about the future. They are not aways looking for the many options and uncertainties of scenario planning.
However, when scenario planning is used, it can lead to important new insights. Air France-KLM for example has created an option as an outcome of using scenario based strategy: biojet fuel as an alternative to fossil fuel.
Below, you can find a summary of Freek van Essen’s speech or watch the summary video.
