Strategic Planning in Times of Uncertainty: A time to challenge traditional approaches?

Author: Daniel Bloch - Principal at Bloch Aviation Advisory, IE University

Nowadays, it near goes without saying that effectively dealing with uncertainty has become the new gold standard for business, let alone one’s daily life. Whereas companies and individuals alike could oft-expect an element of foreseeability to their endeavours, be it through the expected ebbs and flows of a business cycle to one’s go-to café for their Saturday morning coffee, so much of what we’ve come to know has been left by the proverbial wayside. So the question remains, how does one manage to not only survive, but excel in times of uncertainty? For the aviation industry, one of the major roots behind this question comes from unlocking the secret to predicting when and where demand will begin to re-emerge in a meaningful way.

Alas, the first caveat to grasp when addressing this question is that no one really knows. Crucially however, this fact shouldn’t act as an excuse for the airline sector and its band of experts to let proceedings simply take its course and in turn, move on a purely reactive basis. It is vital for the industry to continue pursuing a proactive mentality toward spotting the new and re-emerging opportunities before they arise, thereby giving the best chance to maximise gains from the array of green-shoot markets that will invariably begin to appear sooner rather than later. With this in mind, airlines are all too aware right now that traditional approaches to network planning, fleet optimisation, revenue management etc., have been made fundamentally redundant, largely given their ability to design strategies for 6-12 months in advance have been all but entirely impeded. Once again however, this can’t lead to a laissez-faire approach to strategy development, in which aviation stakeholders adopt a defeatist mentality of ‘we are completely tied down until X takes place.’

Rather, now is the time to be using this surplus in under-utilised human capital, talent and brain power, placing the notion of ‘Asking the Right Questions’ as the highest priority and modus operandi. We are now talking consistently about creating an industry that is simultaneously more profitable, sustainable and safer, a golden triangle if you will, but how do we expect to get there if we are not forcing our sector’s best to question the way we’ve worked to-date; especially now, as our industry faces its gravest existential challenge in its history. Ironically, this downturn in operations gives us the invaluable and otherwise inaccessible time to do just that, but are we brave enough to capitalise on it?

Coming back to the notion of proactively spotting the opportunities before they arise, one of the key considerations to make will be the lack of reliance we will be able to place upon historic data. As such, aviation like many industries, revels in its analysis, optimisation and practical application of enormous data-sets. After all, since the turn of the millennium, aviation has become a fundamentally data-driven sector and make no mistake, it still is and will continue to be well beyond the era of COVID-19. The point to be made here however, is that the complete unprecedented scale and nature of the Coronavirus means that our love of long-winding excel sheets and neatly coloured graphs might need to be reconsidered for the time-being. I have lost count of how many aviation webinars I have attended over the past months, and if they all have had something in common, it’s been the use of some form of graph predicting the growth of traffic (of which there has been a range of non-unanimous predictions) that have been formulated on largely quantitative bases.

In other words, observing past data for passenger traffic in a given region, reflecting upon the enormous drop that COVID-19 has generated, and then based on a mixture of ‘best’ or ‘conservative’ estimates for that region’s past recovery behaviour, looking to extrapolate demand figures over the foreseeable future. And from there, we then try and plan a strategy around these estimates. But even if these estimates look to account for empirical factors (political, social, health etc.) in that market’s improvement, generating a specific and quantifiable growth rate within the unfolding context of the pandemic must be considered a virtually impossible thing to do.

We only need to look to the case study of China to recognise this. Over the past couple of months, as China came out of its first wave of COVID-19, the sector jumped right ahead in stating domestic demand would rebound fast at X, Y or Z%, with the likelihood of some stabilisation taking place. Sure enough, this temporarily occurred and of course, some of our industry experts' crystal balls were proven to be right. But what often was left unaccounted for in China’s domestic traffic models seen one or two months ago, was the possibility of a second COVID-19 wave hitting Beijing, which in turn has sent demand for regional air-travel plummeting again. Essentially what we can see here is the need for more agile and empirical methodologies to assist in our strategic development. Whereas data driven planning works for times of heightened predictability, it is left in a position where it can’t and shouldn’t be neglected altogether, but critically needs the accompaniment of human insight and input in times of such uncertainty.

In turn, buying into the proactive approach that this article is advocating for, the aviation industry must use this moment as an opportunity to adapt into a more efficient and flexible version of its former self. And the beauty is, anyone who wants to be a part of this movement and work toward the solidification of this vital sector’s future, can be! The fact is, I am certain that the answers to how aviation can approach strategic development in times of uncertainty will invariably lie within ourselves; as human beings in the midst of the greatest human struggle of our era. Factors such as volatility in emotion, behaviour, spending, perception of places to travel, these are things that will never be truly understood or reflected in quantitative analysis, tables and graphs. We need to become more adept at understanding the qualitative side to our business, and then incorporating them into our predictive modelling.

Just as we’ve historically sought to understand the humanistic factors that drive a demographic to purchase a holiday at 2:13am on a Tuesday morning, we must now extrapolate the qualitative focus. In a current day context for example, this might be analysing why despite handling the Coronavirus well, might a given country not be generating the consumer demand expected of it under traditional modelling? To get to this level of efficacy, we will need a sector-wide pursuit of understanding humanistic factors to unprecedented levels, of which takes time, resources and energy; this of course explains the alternate appeal of efficient and time-saving data-driven solutions! But again to reiterate, with the body of under-utilised human talent across the sector that is currently sitting idly by, why not use this time to promote the generation of new, mixed-method approaches for forecasting, of which can better reflect the unpredictable nature of our times?

Indeed, the chessboard is currently not laid out in a favourable position, but if the next two or three moves are played right, then the foundations might just be laid for a memorable and timely victory. What’s more, it will propel the aviation industry to become better off in the long-run, more capable of dealing with future shocks, and more in touch with both its employees and customers alike. Simply put, a human crisis requires human-oriented solutions!