Scandinavian Airlines: The Green Engine Decision

Case Solution

Jennifer Lynes
Ivey Publishing ()

Scandinavian Airlines (SAS) is an innovator in strategic environmental management in the aviation industry. Being a pioneer can have both advantages and disadvantages. This case deals with the airline’s decision to invest in the best available environmental technology for a fleet of new aircraft that would serve them for the next 25 years. The technology for these low-emission engines had been around since the 1970s, but was never really commercialized. SAS felt pressure from regulators on potential new fees and taxes that could affect future fleet operating costs. Despite these expected future costs, SAS’s director of aircraft and engine analysis was unable to make any economic case in favor of the more expensive engines at the time of the decision. The challenge for the fleet development team was to convince the SAS management team to spend the additional 5 million kr (SEK) per aircraft on the twin burner engine. As companies face increasing pressures regarding greenhouse gas emissions and climate change, this case study provides an opportunity to discuss and analyze various environmental concepts, including strategic environmental management, introducing the best available environmental technologies, the role of internal environmental leadership in a large company and the effect of market mechanisms to improve the environmental performance of a sector. The case illustrates the complexity of environmental decisions when it comes to striking a balance between meeting ambitious commitments and dealing with real business capabilities and external pressures.

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