business strategies in the aviation industry

Session 5
Overview
In this session:
1. The basic principles of business strategies in
the aviation industry
2. How aviation strategies are developed at a
national and supra-national level
3. A practical case of aviation business strategies
implemented by a national authority
4. The case of the European Aviation Strategy
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Contents
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1. Business strategies in the aviation industry
2. Components of aviation business strategies
3. Planning and implementing business strategies in aviation
4. National aviation Strategies
5. Case Study: South African Aviation Strategic Plan 2012 – 2017
Business Strategies in the Aviation Industry
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• Almost all key players in the aviation industry engage in strategic
planning
• There are no specific methodologies or procedures regarding
business strategies for the aviation industry. The generic business
methods, approaches and procedures we studied before, also
apply to the aviation industry
• The benefits of developing strategies include setting a purposeful
course of action, leading to the achievement of some key
objectives
• Aviation strategies include high levels business plans, usually
followed-up by other, more specific, lower level plans (operational)
Components of Aviation Business Strategies
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Usually, aviation business strategies contain the following
ingredients:
1. High level contents
2. Limited in time (i.e. 5-years plan)
3. Contain the strategic statements (mission, vision, goals, values)
4. Contain strategic analyses (past, present, future)
5. Establish SMART targets/ objectives
6. Establish roles and responsibilities
7. Establish guiding principles and methodologies (if applicable)
8. Define priorities and focus areas
9. Risk analysis and management
10. Establish KPIs to measure progress
11. Establish action plans
Planning Aviation Business Strategies
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• Usually, a top-down process
• Strong commitment from the very top
• The Board of Directors usually define:
➢ Level of ambitions/ expectations
➢ Strategic directions
➢ The “Big Picture”
• The Planning Department recommends:
➢ Assumptions
➢ Business Model
➢ Scenarios
Typical Planning Cycle
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Strategic Planning Board of Directors
Management
Contributions Producing a Business Plan
Distribution
National Aviation Strategies
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[Please, follow your lecturer’s
instructions]
EXERCISE
(30:00)
Case Study
South Africa
Aviation Strategic plan 2012 – 2017
Overview
• The strategic planning process for the five-year
period commencing in 2012/13, was aimed at
addressing the impact of changes to provide the
foundation for building a sustainable organization
and a springboard for success into the future.
• In the report, a number of perspectives were
considered, namely, global trends, African industry
dynamics, South African industry trends, and
internal organizational challenges.
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Structure
The report covers the following points:
1. Strategic overview
2. Strategic objectives
3. Risk management
4. Resources
5. Links to other plans
6. Turnaround strategy
7. Critical success factors
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PESTEL analysis
Findings from PESTLE analysis reveal opportunities in the following areas:
• Establishment of a robust revenue model that is able to sustain the SACAA mandate through economic
cycles;
• Robust management information and risk management capabilities;
• Strengthening efforts in promoting and investing in aviation skills development to enable the growth of
the industry;
• Delivery against the role that the organization must play in promoting and developing harmonized civil
aviation activities and promoting civil aviation safety and security within the SADC region;
• Delivery against environmental obligations such as conducting industry awareness campaigns on
scheduled emissions deadlines, regulations and the impact thereof;
• Strengthening the legislation for optimal operation of the SACAA; and
• Engaging stakeholders in a proactive and meaningful manner to advance the growth of the industry.
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SWOT analysis
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Strategic objectives
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Strategic objectives
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Risks
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Risks
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EXERCISE
Read as a team the case on South Africa aviation strategic
plan and answer the following questions:
1. Does the report follow the best practices regarding
strategic plans? Why?
2. Critically identify and comment the three strongest and
the three weakest points of the report
3. Suggest a few improvements, that in your opinion are
important and should be there.
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Supra-National Aviation
Strategies
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[Please, follow your lecturer’s
instructions]
EXERCISE
(30:00)
Case Study
The European aviation strategy
Overview
On 7 December 2015, the EU Commission published a comprehensive strategy for
the European aviation sector
http://europa.eu/!Mw77Gd
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Why an Aviation Strategy for Europe?
The EU Aviation Strategy is a major pillar to:
• Generate growth for European business
• Foster innovation
• Let passengers profit from safer, cleaner and cheaper flights,
• Offering more connections
• The Strategy contributes directly to the Commission priorities of Jobs and
Growth, Digital Single Market, Energy Union and the EU as a global actor
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Strategy policies
The strategy contains the following policy proposals:
1. An ambitious EU external aviation policy
2. Tackling limits to growth both in the air and on the ground
3. Maintaining high EU standards
4. Innovation, investments and digital technologies
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Strategy documents
The European Aviation Strategy is spelled out in two
major documents:
1. An Aviation Strategy for Europe (Summary)
2. Supporting Document for the Aviation Strategy for
Europe (Comprehensive)
Moreover, you can find additional slides in the European
Commission website, highlighting the various policies
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Implementing the Strategy
Implementation of the European aviation strategy will take place into three
phases:
1. Proposal
2. Negotiation
3. Implementation
You can find additional information on this matter, in the European Commission
website, highlighting the various policies and timeline
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EXERCISE
Read as a team the case on the European aviation strategy and answer the
following questions:
1. Does the proposal follow the best practices regarding strategic plans?
Why?
2. Critically identify and comment the three strongest and the three
weakest points of the report
3. Suggest a few improvements, that, in your opinion, are important and
should be there.
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Conclusion
• Supra-national aviation strategies are rare since there is no legal obligation to do so. However,
supra-national regional powers, such as the European Union, can take this kind of initiative for
the purpose of achieving better coordination, greater effectiveness, protection, and benefits by
adopting a common course of action in air transport.
• Aviation strategies at a national level are uncommon, yet they do exist and fulfil an important
role. National aviation strategies are not mandatory according to ICAO standards and therefore
not all nations engage in this type of exercise.
• Governments tend to produce aviation strategic plans when they need to introduce sweeping
changes or face important challenges ahead. However, having a robust national aviation
strategic plan is just the beginning, not an end.
• National aviation strategic plans usually follow “best practices” in the industry, sharing a similar
structure and approach to different realities.
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Thank you!
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We’ll start again in 15 mins!
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BREAK
Readings
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• Civil Aviation Authority of South Africa, “South African CAA
Strategic Plan 2012/13 – 2017”, 2013
• European Commission, “An Aviation Strategy for Europe”,
COM (2015) 598 final, 2015
• European Commission, Commission Staff Working
Document, “An Aviation Strategy for Europe”, SWD (2015)
261 final, 2015