With each new calendar year come new trends and technologies that shape the airline industry and the way people travel around the world. While it’s hard to make exact predictions about where technology will be in a few months or years, we can explore the current state of innovation and make inferences about where these new developments will take us. As things currently stand, these are the trends experts have their eyes glued to:
1. Profit Per Passenger Takes Priority
When you pay for an airline ticket, you might assume that the airline you’re booking on is making a lot of money. In reality, the profit margin on your ticket is tiny, sometimes even non-existent.
On a one-way flight in 2017, the average profit per passenger for the seven largest U.S. airlines was just $17.75 (or 9 percent). And for smaller airlines, the profit margin was closer to 4 or 5 percent. Fees – including checked baggage, flight change and cancellations fees, and seat selection charges – are where the real money is made.
In the coming months, airline profitability (and overall financial stability) will increase by prioritizing profit per passenger over cost per seat.
“The present focus on high-volume, low-fare sales runs counter to the best interest of airlines,” Aviation Week explains. “The strategy turns seats into low-yield commodities, which keeps the industry from reaping adequate profits from operations. Congestion and a focus on cost-per-seat instead of yield-per-passenger, have also resulted in poor passenger experience.”
2. Growth in Intra-Regional Routes
One of the ways airlines will bolster profitability and improve passenger experience is by increasing the focus on new intra-regional (as opposed to long-distance) routes to relieve congestion.
“Intra-regional routes represented 80 percent of global air traffic in 2016, and will continue to be the largest traffic flow segment, growing 5 percent CAGR through 2036, compared to the projected 3.8 percent CAGR growth of inter-regional travel,” Aviation Week notes.
While intra-regional growth will be nominal in the United States, it’s expected to soar in other countries and regions like the Middle East (8.8 percent CAGR), South Asia (8 percent CAGR), Russia (7.6 percent CAGR), and East Asia (6 percent CAGR).
Between now and 2036, it’s estimated that the 60-to-150-seat aircraft segment will double to meet the demand for intra-regional routes. Flying the right sized aircraft will prove especially important for airlines looking to maximize profits.
3. Updates and Modifications to Legacy Avionics
In the airline industry, updating aging assets is one of the keys to long-term success and growth. Improving reliability between the wings means placing as much emphasis on avionics technology as on on-time departures and comfortable first-class seats.
As legacy avionics are modernized, aircraft become more reliable and can face more challenging environments with less friction and resistance. This leads to greater profitability for airlines and a safer, more seamless experience for customers.
4. Growing Dependence on Consumer Analytics
As with just about any industry, mounds and mounds of data are emerging. Collecting it is easy. Figuring out what to do with it is the challenge. Expect leading airlines to take this challenge to heart and begin utilizing data for tremendous growth.
As WNS explains, “This huge pile of data is a gold mine that contains very crucial information on passenger profiles, choices and preferences that can be leveraged by airlines to develop product offerings, strike away product/service offerings that do not appeal to customers, monitor challenges faced by customers and provide customized solutions, predict customer needs and preferences by the analysis of historical data and effectively cross- and/or up-sell additional products or services.”
5. Augmented Reality
Augmented reality (AR) has been a promising technology for years, though real-world applications have been slow to develop. The airline industry could be one niche where AR provides real value for both companies and customers.
At certain airports – such as London’s Gatwick Airport – AR is already being used as a wayfinding mechanism. Passengers simply use the camera function on their mobile devices to view directions through the terminal and find their gate. Clever uses like this will become more common as passengers become more comfortable with the technology.
Exciting Things Coming
There will never be a lack of innovation in the airline industry. Investments in technology on so many levels – transportation, security, shipping, logistics, etc. – will continue to be made at astounding rates.
Exciting and invigorating advances are coming down the tarmac. Keep your eyes on the horizon and prepare for new technology to revolutionize the airline industry over the next 12 to 18 months.