The airline industry is continuing its post-pandemic growth, and there are specific trends to look out for. At the same time, carriers are grappling with issues such as climate change, health and safety and implementing new technology. Here are some of the trends to look out for beyond 2023.

Airline Industry Trends in 2023 and Beyond

Airline industry experts have voiced their opinions and provided forecast figures for various industry trends. These include new technologies, environmental concerns, corporate travel, adapting business models and different strategies for growth.

• New Technologies
  

Technology is one of the major drivers of change in the airline industry. The industry is currently dynamic as companies embrace the latest technology. These improvements go beyond just in-flight amenities, emissions reduction and improving customer experience.
Here are some of the airline industry trends in 2023 touching on technological innovations:

1. In-Flight Connectivity

Connectivity has become a business necessity, given that the world has become increasingly interconnected. The demand for connectivity during a flight continues to increase, leaving behind the need to disconnect mobile phones and other electronics while in the air.

This demand comes after airports have begun provisioning free Wi-Fi within their premises. One example of this offering is from Delta Airlines, where they have taken the initiative to provide passengers free Wi-Fi for domestic and international flights. Many expect more airlines to follow suit, making flights more entertaining. In addition, this initiative also allows professionals to conduct their business while in flight.

2. Biometrics

The use of biometric technology will eventually become the primary method for the identification and verification of passengers. This can include retinal scanning, fingerprint authentication and facial recognition. The use of biometrics has the potential for better customer service.

These technologies can help reduce queueing since airline and airport staff can more efficiently process passengers. Passengers with specific needs can be provided for using their information as they are identified using biometrics.

This technology can also enhance safety and security in our airports. They can be integrated with onboarding, airport check-in processes, migration formalities, and boost border control. Airlines can also use them for baggage claims and allow travelers to track their luggage in real-time.

3. Automation

With the help of artificial intelligence and other similar technologies, airlines can automate certain parts of their processes. An example of which includes online check-ins and boarding. There is also the possibility of aircraft completing entire journeys without any intervention from the pilots. Pilots will still be on board to secure the aircraft in case of an emergency, ensuring that the plane completes the flight safely.

4. Big Data

With the help of big data and artificial intelligence, airlines can better finetune their marketing strategies to suit prevailing customer behaviors. As a result, there will be no need to second guess any strategic decisions. Instead, companies will change their offerings and services based on facts.

• Environmental Concerns

The airline industry is undergoing increasing pressure due to growing concerns regarding climate change. Many carriers invest in sustainable fuels to reduce carbon emissions. In addition, industry players are changing their operations and policies to achieve greater sustainability.

However, much work is needed, and many in the industry feel that carriers may not hit their 2050 goals. By that target year, companies believe they can reach net zero, even though some may not be that optimistic about it.

According to the 2022 Aviation Industry Leaders Report, Helane Becker from Cowen & Company has raised a significant concern. Becker warns that: 

"If the airline industry doesn't take the lead on [reducing emissions], then governments will, and [industry players] may not like what they will require."

Currently, the industry needs to implement a four-part action plan:

1. Using sustainable fuels

2. Improving energy efficiency

3. Utilizing carbon offsets

4. Developing alternative technologies

Estimates show that sustainable aviation fuel can help airlines reduce their carbon dioxide emissions by 80 percent compared to the current jet fuel formulas. Today, many airbus aircraft already use jet fuel formulas containing 50 percent sustainable aviation fuel. Further, besides carbon emissions, airlines are looking to reduce other pollutants such as sulfur oxides, soot particles, and nitrogen oxides to do their share in caring for the environment.

• Corporate Travel

One of the airline industry trends in 2023 emphasizes corporate travel, one of the major industry segments. With businesses and economies worldwide opening up, the demand for corporate travel is expected to grow in the coming years. It accounts for a significant portion of an airline's revenue.

North America Accident and Health Division President, Chris Martin, observes that 75 percent of business travelers see the pandemic and its associated travel restrictions have reduced their ability to serve clients and maintain their relationships with their business partners.

In addition, health and safety issues are being raised due to the recent pandemic. In a post-COVID-19 world, around 87 percent of business travelers have expressed concern about getting infected. Business travelers are twice as likely to feel comfortable traveling when health protocols are in place since their trips are crucial to their livelihood. Moreover, 75 percent of travelers are more than willing to pay extra just to keep the middle seats empty during their trips.

Sander Stomph, KLM Royal Dutch Airlines vice president, notes that airline companies are making adjustments anticipating the many changes that will happen in a post-pandemic world. This includes reducing interactions during onboarding, how meals are served in flight, and how an aircraft needs to be cleaned.

Airlines also need to reinvent revenue management and the handling of bookings data, says Stomph. Some airlines have incorporated shopping data to forecast demand and adjustments made by forecasting experts since the booking data before the pandemic were no longer valid.

Air Canada's director of revenue optimization, Richard Cleaz-Savoyen says that they have devised a method that allows them to switch between manual forecasts and the use of historical data. They use it for their no-show forecasts, allowing their team to transition to historical data for demand forecasts. As airlines adjust their protocols, they slowly become better positioned to offer customized corporate travel solutions.

• Key Players in the Airline Industry

The current top players in the airline industry include:

• American Airlines Group

• United Airlines Holdings

• Delta Air Lines

• Lufthansa Group

These industry key players use the four most important business models:

• Full-Service Carriers: These carriers offer a range of onboard and pre-flight services, including economy, business, first class, and service class. In addition, they provide checked-in baggage and in-flight meals. Air carriers that use this model include American Airlines, British Airways and Lufthansa.

• Low-Cost Carriers: These carriers operate around the provision of value-for-money services. They operate smaller aircraft and smaller fleets, often attracting budget travelers. Airlines that operate using this model include Southwest Airlines, Ryanair, and Eurowings.

• Cargo Airlines: Also known as freight carriers, these airlines primarily focus on transporting freight and cargo. Carrier companies using this model include Emirates SkyCargo, Lufthansa Cargo, FedEx Express, and UPS Airlines.

• Charter Airlines: These airlines cater to tourists and private travelers, offering passenger services. Some consider the business model the middle ground between low-cost and full-service carriers.

• Strategies for Future Growth

Getting the airline industry back in business will require some time, and carriers must adjust their businesses. However, air carriers can capitalize on specific strategies for future growth:

Aircraft Leasing

Air Lease Corporation's CEO, John Plueger, comments that aircraft leasing became a significant business model that moved the industry forward during the pandemic. Many airlines went on to lease their aircraft to transport PPEs, medical equipment and vaccines during the last three years. Plueger also sees this model continuing to thrive beyond 2023.

Cargo

The air freight market remains strong, and indicators show a continued demand in the future, according to data from the International Air Transport Association (IATA). In addition, the popularity of e-commerce has driven this business model forward, making it one of the strategies for future growth in the airline industry.

Fleet Resizing

Airlines may need to resize their fleet to accommodate new technology and future market demand. Boeing's Vice President for Commercial Marketing, Darren Hulst, comments that airlines won't profit from large aircraft that only serve a subset of their network. The same is true for small aircraft that cannot scale considering the cost per seat.

Navigating the Airline Industry's Future

The airline industry is slowly but surely getting back on track, and if you're interested in navigating the changing times, it helps to get expert insight into this industry. At CI Azumano, we combine our industry expertise with market-leading technology to help your business overcome future challenges. Fill out this contact form and our specialists will be happy to discuss future risks and boost growth opportunities for your enterprise