Tuesday, 1 October 2013

The planning crises

The infamous failure of IATA member airlines to predict financial losses in 2009 revealed the dark side of planning practices spread widely across the aviation industry. The figures were adjusted three times within the period of nine months, starting with US$ 2.5 billion in December 2008 and ending with US$ 11billion in September 2009 - the gap too wide to account for any excuses including increased uncertainty caused by the ongoing financial crises.
While failures of near-term predictions illustrate the magnitude of the gap between plans and reality, fallacies in strategic planning fetch more deeply, right to the core of the business. The damages they cause are long term, costly, and often impossible to mend. Like in the case of airport capacity crises in Europe, where high concentration of traffic at a number of major hubs has already reached or exceeded infrastructural limitations (with Heathrow in the lead). According to EU and Eurocontrol, despite slower air traffic growth in the next 20 years Europe still faces a major airport capacity crunch due to infrastructural limitations that can have damaging effects on the continent’s aviation system and connectivity. Similar warnings have been around for almost a decade, but ignored by major airlines. Growth in quantity ahead of quality and obsession with short-term gains has pushed operational disruptiveness and associated costs up, over the digestible level for many airlines.

What is the reason for such obvious and highly damaging oversights in planning? It seems that our human tendencies play a great part, as Rolf Dobelli explained in his book ‘The art of thinking clearly’.

‘So why are we not natural-born planners? The first reason: wishful thinking. We want to be successful and achieve everything we take on. Second, we focus too much on the project and overlook outside influences. Unexpected events too often scupper our plans.’ ‘Step-by-step preparation amplifies the planning fallacy. It narrows your focus even more and thus distracts you even more from anticipating the unexpected.’ ‘The problem is that experts enjoy free rein with few negative consequences. If they strike it lucky, they enjoy publicity. If they are completely off the mark, they face no penalties – either in terms of financial compensation or in loss of reputation. This win-win scenario virtually incentivises them to churn out as many prophecies as they can muster.’

Related post: How plans can go wrong