A new report highlights the opportunities and challenges facing aviation up to 2035

The Future of the Airline Industry 2035 study commissioned by IATA’s Industry Affairs Committee aims to help airline management anticipate the key risks and opportunities that their businesses could face between now and 2035.

Carried out by the School of International Futures, the study looks at how external forces—from geopolitics to technological innovation and environmental concerns—could shape aviation’s future. 

This study will help us to start conversations today about what we will need in 10 and 20 years’ time

“This is about taking a long-term view on the value of aviation,” says Simon Ralph, IATA’s Director of External Affairs. “And it should help us to engage with governments to achieve smarter regulation to deliver that value. 

“A smarter regulation framework for aviation won’t happen overnight. This study will help us to start conversations today about what we will need in 10 and 20 years’ time.”

Four scenarios

The Future of the Airline Industry 2035 establishes 11 themes affecting air traffic demand: geopolitics, data, Africa and Asia-Pacific, government, security and borders, privacy and trust, business models, economy, values and communities, environment, and technology.

These are explored in the context of four potential scenarios; new frontiers, sustainable future, resource wars, and platforms. The scenarios envisage different outcomes for the world. 

One explores the eastward shift of power, another sees the world prospering through successful sustainability, a third predicts a war over resources and the final scenario assesses a world dominated by elite agendas. 

The study allowed us to consider a variety of implications for the industry and to set out the industry-level recommendations 

All present challenges and opportunities for the airline industry. The study purposely makes these scenarios extreme and accepts that the more likely future will combine elements of all four. But pushing boundaries provides a wider perspective.  

“It allowed us to consider a variety of implications for the industry and to set out the industry-level recommendations to combat or support those implications,” says Ralph.

Whatever the scenario, for example, the fallout from geopolitical tensions necessitates global institutions, such as ICAO, and global standards remain relevant. A recommendation stemming from this development is that IATA engages early with such emerging institutions as the New Development Bank to influence aviation policy in the years ahead.

In other words, the future of aviation will not be influenced by Ministries of Transport alone. “We need to instigate relationship-building dialogues with a multitude of other government departments beyond transportation, such as a ministry of finance,” reveals Ralph.

“The study shows that the interests of a variety of stakeholders will cross in the years ahead, so it’s important to find common ground. We need to get everybody around the same table.”

No last word

Perhaps the only true “known” in the study is that 2035 will be different. The Future of the Airline Industry 2035 is nevertheless an essential companion in deliberations at airline and industry level. Most importantly, it can help guide airline strategy by introducing the many elements that must be considered in the longer term.

“We hope that the material will spur new thoughts and catalyze new ideas,” Ralph notes.

“We will update the study when new drivers of change enter the scene, or when ones that we have underestimated surprise us, as I am sure they will. There is no last word on the future.” 

A discussion on how individual themes and scenarios could interact will run over the next few issues of Airlines International and online

Starting the discussion on: Airports of the future

Airports are not certain to expand into cities in their own right, so-called aerotropoles, with their own hinterland of associated businesses. It may be that they shrink as the  cost of human resources rises and technology improvements allow increasing automation  in the name of efficiency, and possibly safety.

Of course, it is equally possible that rather than being eliminated, human resources could be redeployed to improve the flight and airport experience and capitalize on passenger flows, extending the airport shopping experience to a range of other facilities.

Airports are no longer just a point of departure; they are leisure facilities that offer dining, shopping, and much more

Ensuring airline needs are considered with all airport planning is the key recommendation emerging from the Future of the Airline Industry 2035 study. It is also recommended that IATA uses the strategic review of the Worldwide Slot Guidelines to improve the efficient use of capacity and guard against proposed revenue commitment from airlines and the market allocation of slots.

“As we have seen across the world, airports are no longer just a point of departure; they are leisure facilities that offer dining, shopping, and much more,” says Claudia Sender, Senior Vice President of Clients, LATAM Airlines Group. “Technology is also playing an increasingly important role, enabling the streamlining of airport processes and an increase in automation, which provides passengers with more leisure time. 

“These tendencies, combined with increasing passenger traffic and investment in infrastructure, would indicate that airports will likely get bigger, not smaller.”

Starting the discussion on: Privacy and trust

The Future of the Airline Industry 2035 study argues that airlines could be deeply affected by drivers of change that may as yet be under the radar.

Privacy and trust, for example, refers to the tension between the potential offered by big data and other forms of technology development—in terms of how people and devices are monitored and marketed to—and the threat of fraud, cyber-terrorism and espionage.

Put simply, if we mismanage their data, they are going to stop providing it

In short, will people be willing to give up increasing amounts of data to capture potential benefits? Data privacy and surveillance will doubtless be major topics as people redefine their relationship with companies, governments, and each other.

“Now that we can measure, monitor and analyze all information that customers provide us about their experience, along with all the operational data associated with our industry, the opportunities for growth are endless,” says Andrew Parker, Group Executive, Government, Industry and International Affairs, Qantas.

“Privacy issues will always be a factor,” he continues. “However, it should not be limiting. Ensuring privacy and sound management of the information our customers provide should be fundamental to the management of the data.

"Put simply, if we mismanage their data, they are going to stop providing it.

"Making sure that we adhere to the best possible management practices for data will ensure that we can continue to receive it and act on the outcomes that this new information points us towards.”

Datalex’s Vice President, Product Strategy, Gianni Cataldo, agrees that for global airline brands, data privacy is the cornerstone of brand trust. 

Customer loyalty and retention will rely on value-driven and personalized offers

“Despite the anxiety, we find that consumers are willing to share data for a fair exchange,” he says. “For example, payments are a particularly data-sensitive area.

"As we extend and enhance new forms and methods of payments, we find that consumers will share data if it enables a more seamless, frictionless experience with a brand they trust to treat that data securely.” 

Clearly, the critical issue is what constitutes a fair exchange from the consumer perspective.

It cannot be that the retailer alone profits. Those consumers that provide a comprehensive array of data need to benefit in a definable way, perhaps by the offer of a discounted price.

“Customer loyalty and retention will rely on value-driven and personalized offers which require an understanding of fair exchange and commitment to data security,” concludes Cataldo.

The Future of the Airline Industry 2035 report is available here

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