Scenarios A, B and C for Your Aviation Operation: How to Plan When You Don't Know How Many Hours You'll Fly
This is the closing post of a four-week block on financial resilience. We’ve covered stress testing — what happens when shocks hit. Sensitivity analysis — which variables move the bottom line most. Zero-based budgeting — rebuilding the cost base from a blank page. Each tool answers part of the question. Today’s post brings them together.
The integrating exercise is scenario planning: building three coherent, forward-looking views of your operation — optimistic, base, pessimistic — and choosing decisions that survive across all three rather than across only the one you hope for.
Most aviation operators plan for a single future. They build one budget, one fleet plan, one pricing structure, one staffing model, and run them as if reality will more or less match the assumptions. When reality doesn’t match — and it never quite does — they patch, they react, they improvise. Sometimes they get away with it. Sometimes the patching itself becomes the problem.
Scenario planning is the alternative: stop pretending you know which future you’re operating in, build three plausible ones, and choose your decisions for the band rather than for the line.
What scenario planning actually is
A scenario is not a forecast. A forecast is a single best-guess prediction. A scenario is a coherent, internally consistent story about how a defined set of variables interact over a defined period, anchored to assumptions you can defend.
Scenario planning is the practice of building several scenarios — typically three for small operations, sometimes four or five for larger ones — and using them as the test bed against which strategic decisions are evaluated. A decision that performs well in Scenario B but fails in C is structurally different from one that performs adequately in all three. Scenario planning helps you tell them apart.
The three-scenario approach (A optimistic, B base, C pessimistic) is the most common because it’s the most actionable. Two scenarios feel like a binary choice. Five start to overwhelm. Three forces you to articulate the realistic spread of outcomes without drowning in detail.
Why aviation operations particularly need this
Three structural features make aviation businesses unusually well suited to scenario planning:
The dominant variables are uncertain on a 12-month horizon. As we saw in the sensitivity analysis post, hours sold and hourly rate are the two largest profit drivers. Both depend on factors largely outside the operator’s control — student intake, regulatory throughput, broader economic conditions, competing schools. A forecast that treats hours sold as a known quantity is, on the timescale that matters for decisions, fiction.
Big decisions are sticky. Hiring an instructor, signing an aircraft lease, committing to a hangar expansion — these aren’t easily reversed. A decision made on the assumption of one specific future and that fails in two of the three plausible ones has a long tail of consequences. Scenario planning surfaces this before the commitment, not after.
Cash buffers and credit facilities are size-determined by the worst case, not the average. If you size your liquidity to the base case and Scenario C arrives, you spend the year in survival mode. If you size it to Scenario C and B arrives, you have a buffer you didn’t strictly need but which reduces stress and creates optionality. Scenario planning gives you a defensible answer to “how much cash do we actually need?” rather than the usual back-of-envelope guess.
Building the three scenarios
The art is in calibrating the scenarios so that each is plausible. Too optimistic an A or too pessimistic a C and the exercise becomes theatre. Done well, all three feel like futures that could happen with reasonable probability — perhaps 25%, 50%, 25% subjective weights for A, B, and C respectively.
Here’s the method I use, applied to a flight school or ATO, with the same Meridian operation from the previous posts.
Step 1 — Define the variables. From the sensitivity analysis we already know which variables move the number. The five that matter most for Meridian are: total flight hours sold, hourly rate, fuel cost per hour, instructor wage costs, and student intake (which feeds back into flight hours over the year). For a small commercial operator, you might add charter rates and trip volumes. For a pilot-owner the variables are different: hours flown personally, fuel cost, maintenance reserves required, resale value at exit.
Step 2 — Set ranges, not points. For each variable, define what plausible upper and lower values look like over the next twelve months. Not best-case-imaginable; plausible. Not worst-case-imaginable; plausible. The discipline is to anchor each end to something defensible — historical data, comparable operations, an explicit assumption about a known external factor.
For Meridian, the ranges I’d use:
| Variable | Optimistic (A) | Base (B) | Pessimistic (C) |
|---|---|---|---|
| Flight hours sold | 3,300 | 3,000 | 2,550 |
| Hourly rate (€) | 230 | 220 | 215 |
| Fuel cost per hour (€) | 38 | 42 | 50 |
| Instructor wages (annual) | 145,000 | 150,000 | 158,000 |
| New student intake | 45 | 35 | 24 |
Note what each scenario reflects, qualitatively:
- A is a year where demand is healthy, the operation prices a modest increase through, fuel softens, and a strong cohort signs up.
- B is the central plan — basically what the owner currently expects.
- C is a year where demand softens (one fewer cohort, lower discretionary flying), pricing has to hold or even retreat, fuel rises moderately, and wage costs escalate slightly with general inflation.
None of these requires a catastrophe. C is not a stress-test scenario; it’s a plausible bad year. The catastrophic scenarios are still handled separately by the stress-testing framework from week one.
Step 3 — Build the P&L and cash flow for each. Same three-statement modelling discipline as the stress test. Twelve months of revenue, variable cost, fixed cost, EBITDA, operating cash flow, and a running cash balance. Three columns side by side. The output for Meridian, summarised:
| Scenario A | Scenario B | Scenario C | |
|---|---|---|---|
| Revenue | 845,000 € | 745,000 € | 633,000 € |
| Variable costs | 313,000 € | 297,000 € | 280,000 € |
| Fixed costs | 380,000 € | 385,000 € | 395,000 € |
| Net profit | ~115,000 € | ~63,000 € | ~–22,000 € |
| Year-end cash | ~85,000 € | ~48,000 € | ~–8,000 € |
This is the picture that drives the rest of the exercise.
Step 4 — Identify the decisions and test each across the scenarios. This is where scenario planning earns its keep. List the strategic decisions the operation faces in the next twelve months. For Meridian:
- Hire an additional instructor (€55,000 fully loaded)
- Renew the existing fleet lease vs. acquire a fifth aircraft (€90,000 down + 36 months financing)
- Implement a 5% pricing increase
- Expand into a second base of operations (€25,000 setup, then variable)
- Hold or release current cash buffer (€55,000 starting position)
Now stress each decision against each scenario. A decision that works in A but not B or C may still be worth doing — but only if it’s reversible cheaply when the scenario doesn’t materialise. A decision that works in all three is structurally robust and should be prioritised. A decision that works only in A is a bet, not a plan, and should be treated as such.
For Meridian the decision matrix usually comes out something like:
| Decision | Survives A | Survives B | Survives C | Verdict |
|---|---|---|---|---|
| Pricing +5% | ✓ | ✓ | ⚠ marginal | Do it |
| Hire one more instructor | ✓ | ✓ | ✗ destroys cash | Defer or contract part-time |
| Acquire 5th aircraft | ✓ | ⚠ tight | ✗ insolvency risk | Wait |
| Expand to second base | ✓ | ✗ cash drain | ✗ severe | Hold |
| Hold full cash buffer | ✓ | ✓ | ✓ critical | Mandatory |
Notice the pattern. Conservative actions (pricing, holding cash) survive all three; aggressive growth actions survive only A. The scenario matrix forces this honesty. Without it, the owner’s natural optimism — and human optimism is real, especially in pilots — pushes toward the growth actions because they’re the most exciting in the conversations the owner has with themselves.
Step 5 — Define triggers. Scenarios are not static. The world will reveal, over the year, which one is materialising. Triggers are observable signals that tell you which scenario you’re in, well before year-end:
- Student intake at the September cohort below 28 → C is materialising; pause discretionary spending
- Fuel cost in any month above 47 € per hour → C is partially materialising; adjust pricing communications
- Cohort sign-ups in March/April above 38 → A is materialising; a tactical hire becomes plausible
The triggers convert the static three-scenario picture into a dynamic one: at any moment in the year you have a sense of which scenario is winning, and your previously-defined responses kick in. This is what makes scenario planning operational rather than academic.
Decisions designed to survive all three
Some decisions are clearly anchored to a specific scenario. Other decisions, properly designed, can be made in a way that performs reasonably across all three. The art is in shifting decisions from the first category to the second wherever possible.
A few examples from aviation:
Pricing structure. A flat 5% rate increase is a single-scenario commitment. A pricing structure with a fuel-adjustment clause and a published annual review is robust across scenarios — it adjusts naturally to whichever fuel and demand reality emerges.
Capacity additions. A full-time instructor hire is a Scenario A decision. A standing relationship with two contract instructors who can be called for specific cohorts at known rates is robust across all three — you pay for capacity only when scenario A or B materialises.
Fleet expansion. Buying or financing a fifth aircraft is a Scenario A decision. Negotiating a wet-lease arrangement that can be activated for a specific high-demand period is robust across scenarios.
Cost commitments. A long-term marketing contract is a Scenario A decision. Project-based marketing engagements, sized to the cohort that’s actually materialising, are robust across scenarios.
Cash buffer. A buffer set to “what looks comfortable” is a Scenario B decision. A buffer set to the trough cash position of Scenario C, with a pre-arranged credit facility on top, is robust across all three.
The pattern: the more decisions you can shift from binary commitments to flexible structures, the better your operation performs across the spread of plausible futures. Scenario planning makes this design discipline visible.
The owner-pilot version
For a pilot-owner with a single financed aircraft, the scenarios are personal but the structure is the same:
- A: hours flown ahead of plan, instruction or shared-time income materialises, no major maintenance event
- B: hours flown roughly as expected, normal operating pattern, planned maintenance only
- C: a major life event reduces your flying time, an unexpected maintenance bill arrives, resale market softens
The decisions to test against this matrix include: keeping the aircraft vs. selling it, taking on co-ownership, pre-paying maintenance reserves, restructuring the loan. The same logic applies — decisions that survive only Scenario A are bets; decisions that survive all three are structural choices. Many owner-pilots discover, when they put the scenarios on paper, that the aircraft is a Scenario A asset they’ve been treating as a Scenario B one. That alone is a useful clarity.
How often to revisit
Scenario plans are perishable. Inputs change, assumptions evolve, new variables emerge. A scenario plan revisited annually but used quarterly is roughly the right cadence for most aviation operations:
- Annual full rebuild: rerun all three scenarios with fresh data, recalibrate ranges, identify new variables and decisions.
- Quarterly check-in: which scenario is materialising? Have any triggers fired? Do any decisions need to advance or be deferred?
- Ad-hoc on major news: a new regulation, a major competitor move, a macroeconomic shift, a fleet incident. Re-evaluate which scenario is now most likely.
Done this way, scenario planning isn’t a once-a-year ritual that produces a binder nobody opens. It becomes the rhythm by which the operation steers — making consequential decisions against a clear picture of the spread of plausible futures, not just against the single one in the owner’s head.
Tying the four-week sequence together
The block we close today began with stress testing — what happens when shocks hit. Then sensitivity analysis — which variables move the result most. Then zero-based budgeting — rebuilding the cost base from scratch. And now scenario planning — putting it all together into a forward-looking framework that drives decisions.
The four tools are designed to be used together:
- Stress testing answers “what’s the worst that could happen?”
- Sensitivity analysis answers “which variables are most worth defending?”
- Zero-based budgeting answers “is the cost base we’re defending the right one?”
- Scenario planning answers “given all the above, which decisions are robust across plausible futures?”
A flight school or aeroclub that runs all four — annual cycle, properly documented — is in a structurally different operational position from one that runs none. Not because the future becomes predictable. It doesn’t. But because the operation has stopped pretending it is, and is designed accordingly.
Looking ahead
Next week opens a new block on operational dashboards and metrics — starting with the financial dashboard for an ATO or aeroclub: which numbers actually deserve to be on the screen every Monday morning, and which ones are just there to make Excel feel busy. After four weeks of resilience-building, we move into the discipline of running the operation week to week with metrics that matter.
A scenario plan, properly built, is the closest thing a small aviation operation has to a strategic operating system. It defines the spread of plausible futures, identifies which decisions are robust and which are bets, and creates the triggers that tell you in real time which future is materialising. It does all this on the back of arithmetic that any owner who can read a P&L can execute with discipline.
What it requires is the willingness to stop pretending you know what’s going to happen, and instead plan deliberately for not knowing. That’s a different mental posture from the one most aviation owners default to, but it’s the one that lets businesses bend rather than break.
At AYRAM we run scenario planning as a closing exercise on most of our advisory engagements — both for buy-side clients evaluating a potential acquisition, and for owners assessing the strategic position of their existing operation. As independent buy-side advisors with no transactional incentives, the scenarios we build are the ones the numbers actually support, not the ones that flatter a particular conclusion.
If your operation has been running on a single forecast — and most do — the conversation about what scenarios A and C would actually look like is one of the most productive a few hours you’ll spend this year. We’re happy to be the conversation that starts it.