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Sustainability Analysis of the Airline Industry – Low Cost Carriers and Full Service Carriers

Kotze, Robyn LU (2017) In IIIEE Theses IMEN56 20171
The International Institute for Industrial Environmental Economics
Abstract
The aviation industry is perceived as being unsustainable in the long term due to foreseen continuous growth and the use of finite natural resources. To become more sustainable airlines need to address sustainability in their business model and business strategies. This research explores how the two airline carrier types, Ryanair, an LCC, and Scandinavian Airlines (SAS), an FSC, have addressed sustainability in their business models and business
strategies, using a European case study approach. From the research conducted learning’s were extracted for both FSC and LCC.

This research utilised a generic three-lense viewpoint being: strategy, operations and culture, together with a more specific viewpoint of environmental stewardship... (More)
The aviation industry is perceived as being unsustainable in the long term due to foreseen continuous growth and the use of finite natural resources. To become more sustainable airlines need to address sustainability in their business model and business strategies. This research explores how the two airline carrier types, Ryanair, an LCC, and Scandinavian Airlines (SAS), an FSC, have addressed sustainability in their business models and business
strategies, using a European case study approach. From the research conducted learning’s were extracted for both FSC and LCC.

This research utilised a generic three-lense viewpoint being: strategy, operations and culture, together with a more specific viewpoint of environmental stewardship strategy, to review how Ryanair and SAS have addressed sustainability within the airline. Ryanair and SAS are both
doing well in the strategic integration of sustainability due to their large investments in fleet renewal and advancements, which reduce fuel consumption and emissions, thereby contributing to sustainability. Ryanair is not succeeding, however, with regard to operational and cultural integration and environmental stewardship. Ryanair’s low cost strategy focus is providing the lowest possible airfare for customers therefore sustainability is not a priority. Ryanair has poorly addressed sustainability in the following areas: leadership, communication,
reporting, stakeholder pressure, embedding environmental consciousness, diffusion and translation of best practices and so forth. The research determined that SAS is the opposite of Ryanair in regard to operational and cultural integration and environmental stewardship. SAS is proving to be successful in addressing sustainability in their business model and business strategy. SAS’s product differentiation strategy leans strongly towards sustainability, which has resulted in complete sustainability integration approach in all business functions within the airline. SAS is transparent and informative on their sustainability effort, which is highlighted through their strong communication, reporting, and leadership and stakeholder pressures. SAS embeds environmental consciousness in all aspects of the airline, diffuses and translates best practices through their numerous environmental programmes established by their ISO 140001
certified environmental management system.

Ryanair’s low cost strategy results in minimal efforts towards addressing sustainability in their business model and business strategy. A learning Ryanair can take from SAS is that they should place conscious effort towards addressing sustainability to improve their environmental stewardship and sustainability standing. A learning that SAS can gain from
Ryanair is that certain aspects of their low cost strategy could be of potential benefit to SAS, such as the increased focus on digital services, less waste production due to minimisation of services and aircraft maximisation. (Less)
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author
Kotze, Robyn LU
supervisor
organization
course
IMEN56 20171
year
type
H2 - Master's Degree (Two Years)
subject
keywords
LCC, FSC, sustainability, business models, business strategies, environmental stewardship
publication/series
IIIEE Theses
report number
2017:05
ISSN
1401-9191
language
English
id
8923132
date added to LUP
2017-08-30 12:46:36
date last changed
2017-08-30 12:46:36
@misc{8923132,
  abstract     = {The aviation industry is perceived as being unsustainable in the long term due to foreseen continuous growth and the use of finite natural resources. To become more sustainable airlines need to address sustainability in their business model and business strategies. This research explores how the two airline carrier types, Ryanair, an LCC, and Scandinavian Airlines (SAS), an FSC, have addressed sustainability in their business models and business
strategies, using a European case study approach. From the research conducted learning’s were extracted for both FSC and LCC.

This research utilised a generic three-lense viewpoint being: strategy, operations and culture, together with a more specific viewpoint of environmental stewardship strategy, to review how Ryanair and SAS have addressed sustainability within the airline. Ryanair and SAS are both
doing well in the strategic integration of sustainability due to their large investments in fleet renewal and advancements, which reduce fuel consumption and emissions, thereby contributing to sustainability. Ryanair is not succeeding, however, with regard to operational and cultural integration and environmental stewardship. Ryanair’s low cost strategy focus is providing the lowest possible airfare for customers therefore sustainability is not a priority. Ryanair has poorly addressed sustainability in the following areas: leadership, communication,
reporting, stakeholder pressure, embedding environmental consciousness, diffusion and translation of best practices and so forth. The research determined that SAS is the opposite of Ryanair in regard to operational and cultural integration and environmental stewardship. SAS is proving to be successful in addressing sustainability in their business model and business strategy. SAS’s product differentiation strategy leans strongly towards sustainability, which has resulted in complete sustainability integration approach in all business functions within the airline. SAS is transparent and informative on their sustainability effort, which is highlighted through their strong communication, reporting, and leadership and stakeholder pressures. SAS embeds environmental consciousness in all aspects of the airline, diffuses and translates best practices through their numerous environmental programmes established by their ISO 140001
certified environmental management system.

Ryanair’s low cost strategy results in minimal efforts towards addressing sustainability in their business model and business strategy. A learning Ryanair can take from SAS is that they should place conscious effort towards addressing sustainability to improve their environmental stewardship and sustainability standing. A learning that SAS can gain from
Ryanair is that certain aspects of their low cost strategy could be of potential benefit to SAS, such as the increased focus on digital services, less waste production due to minimisation of services and aircraft maximisation.},
  author       = {Kotze, Robyn},
  issn         = {1401-9191},
  keyword      = {LCC,FSC,sustainability,business models,business strategies,environmental stewardship},
  language     = {eng},
  note         = {Student Paper},
  series       = {IIIEE Theses},
  title        = {Sustainability Analysis of the Airline Industry – Low Cost Carriers and Full Service Carriers},
  year         = {2017},
}