Towards aviation biofuels

Damien Brault & Charlotte Nilausen

Student thesis: Master thesis

Abstract

This paper is a Master Thesis for the MIB course on Copenhagen Business School. The project has been carried on for Scandinavian Airline Systems. In response to climate change mitigation and in the process of reducing their CO2 emissions, SAS has expressed their desire to use aviation biofuels in the near future, as soon as they will be available on the market; we have developed a four level strategy road map that identifies potential strategic opportunities for SAS to enter the biofuel industry. Great amounts of uncertainties are linked with biomass and biofuel technologies, thus controlling risks are essential in order to enter the industry. Numerous stakeholders are involved, such as; politicians, airline associations and companies, suppliers, certification processors, customers, NGOs, experts etc… and they all have to be taken into consideration. SAS has the opportunity of reducing the uncertainties by being upfront and create dialogue with the stakeholders and by making political interference; they have the opportunity of gaining advantages through shaping adequate regulations and avoid harmful risks. This first step allows SAS to move on to the second stage: setting up a supply-chain. This is costly due to the large infrastructure and production sites needed. However, trough the development of partnerships and close collaboration with biofuels suppliers, SAS might lead tremendous system improvements, that further results in costs reductions. Such a strategy will be resource consuming and need strong commitments, therefore it is essential that the underlying uncertainty has been reduced and risks are under control. Our third stage implies the opportunity to create competitive first-mover advantages by adding value to the SAS brand through an engagement in biofuels, and hereby increase revenues. Through a branding strategy, SAS is able create new business models such as e.g. becoming a biofuel distributor. Such investments might be risky and irreversible but have a strong potential of product differentiation and revenues. Then the final level of our strategic road map will only be reachable if SAS has followed the prior levels without having encounter major issues. The opportunity of enhancing the brand value and awareness might offer sustained competitive advantage. The difficulty resides in keeping the high level of quality through continuously scanning risks and uncertainties due to the high irreversibility level of this stage. If SAS succeed and devote sufficient resources, this stage might open a total new area of improvements, and this could give birth to innovative business practices that could change the rules of the game within sustainable aviation.

EducationsMSc in Management of Innovation and Business Development, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2010
Number of pages143