Scandinavian Airlines (SAS): The Green Engine Decision
Arguments for and against purchasing the green engines:
a. From the perspective of the Director of Aircraft and Engine Analysis, two arguments for purchasing the green engines include; producing significantly lower NOx emissions and would represent a strong commitment to the future environmental improvement of the airline. With the anticipation of increased emissions charges and taxes in the European industry, the company could have positive financial implications with the minimized risk of future operational limitations from the combination of international, federal, regional and local legislation. The Director of Aircraft and Engine Analysis could argue against the purchase of the green engines on the basis of cost and uncertainty of raised emissions regulations. The total cost of purchasing the green engines was estimated at kr 12 billion or 1.714 billion US dollars. The director was also unable to produce figures on the economic payback of the purchase and use of the green engines. To support the argument of uncertainty, The regulatory structure of the industry made it hard to make any clear predictions on the anticipated increase in emissions charges and taxes.
b. From the perspective of the SAS Management Team, two arguments for purchasing the green engines include; staying true with their commitment to environment policy and avoiding the potential emissions cap at certain airports. The environmental commitment policy that SAS values as a company will be appreciated by the environmentally conscious culture in Scandinavia. To avoid the potential emissions cap would mean SAS could avoid the financial disaster that included a fleet of planes that possibly could be grounded at the company’s main hub. The SAS Management Team could argue against the purchase of the green engines on the basis that the costs of the technology used would be significant, and unanticipated complications could add even more...
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