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FUTURE

OF THE AIRLINE INDUSTRY 2035

1
Foreword to 2018 edition

Dear Reader,

Thank you for joining us on this journey into the future. We hope you find the report a
thought-provoking and insightful read into the factors which may shape the air transport industry
in the years to come.

IATA’s Industry Affairs Committee (IAC), a group of 20 airline heads of government affairs,
commissioned this study with the aim of anticipating the key risks and opportunities global
commercial aviation will face between now and 2035. The Committee had three specific goals in
mind when commissioning this study:

• Anticipate the opportunities and challenges the industry will face and take actions to
address them today. As arguably the most global of industries, the externalities international
air transport faces are numerous. From geopolitics to technological innovation, demographic
shifts to environmental concerns, the winds of change buffeting the industry can come from
many directions. Understanding the potential landscape in which airlines find themselves is
therefore critical to ensuring that aviation can grow sustainably in the future – and maximize
its potential to deliver the economic and social benefits that greater connectivity brings.

• Facilitate similar discussions at an airline and alliance level. It is our hope that our airline
members – and their alliances, as the case may be – will see value in this study and use it to
reflect on how they will be affected by future developments. How will their specific regulatory
and business environments be changed by the trends we’ve discussed here? How can alliances
address the risks, and take advantage of the opportunities, that some of these trends may give
rise to?
Since its first release in 2017, several airlines have taken this study as a starting point for a
strategic planning exercise, focusing on what the themes and implications mean for their
specific business model. For example, Air France-KLM gathered senior representatives from
various functions to explore how the company is prepared for the different scenarios outlined
in the report, and identifying actions needed to enhance the group’s ability to take advantage
of the trends outlined.

• Partner with governments to lay the groundwork for sustainable air connectivity
growth. By planning for changes that lie ahead using internationally accepted smarter
regulation principles, governments can ensure that their economies and societies will reap
the benefits of increased connectivity – and position aviation as a key contributor to the 2030
United Nations Sustainable Development Goals. The industry seeks to be a strategic partner in
that journey, and we look forward to exchanging views with our colleagues in government on
what the trends described herein mean for their specific countries and regions – and how best
to address them.
Over the past 12 months, IATA has hosted workshops with senior government officials in
Australia, Brazil, the European Commission, France, New Zealand and Nigeria. The objective of
these discussions was to delve into how the scenarios and themes in the report could impact
connectivity in their jurisdictions. While local characteristics differ, several common elements
came out from the discussions to date:

• A desire for regulators to understand better what is being done in other jurisdictions when it
comes to infrastructure approaches
• A recognition that changes in the geopolitical landscape will create new opportunities, but
also new challenges to maintain global approaches to aviation policymaking. How can global
institutions accommodate new aviation powers while maintaining a consistent approach that
has resulted in steady growth since the 1944 Chicago Convention?

• The evolution of consumer protection issues, looking specifically at multimodality, greater


numbers of passengers with disabilities and new products.

• Creating a sufficient pipeline of pilots to meet demand

• Data will be undoubtedly be a key regulatory theme of the future. Regulators expressed a
desire to understand better the data initiatives the industry is undertaking. Airlines recognized
a need to better track regulatory developments on data in key jurisdictions, as these are often
not initiated by transport ministries and departments.

In 2018 and 2019 we aim to continue our outreach with governments who are interested
in exploring the opportunities and challenges aviation may face in their countries, as well as
continuing our discussions with governments who have already identified actions needed to
“future-proof” their aviation connectivity.

The report is not meant to be the start and end of the conversation. It is the beginning of an
ongoing discussion on how to ensure that aviation continues to be in the business of freedom,
now and in the future. With that in mind, do share with us your insights, thoughts and feedback
at gia@iata.org.

Happy Reading.

Paul Steele

Senior Vice President

Member and External Relations

IATA

About IATA

The International Air Transport Association (IATA) is the trade association for the world’s airlines, representing
some 265 airlines or 83% of total air traffic. We support many areas of aviation activity and help formulate industry
policy on critical aviation issues. IATA is led by Alexandre de Juniac, Director General & CEO since September 2016.

About SOIF

School of International Futures (SOIF) is an independent strategic foresight consultancy set up to enhance the
capacity of business leaders, policy-makers, governments and international organizations to use and gain value
from horizon scanning and foresight. We help organizations think differently – and more confidently – about the
future.

3 © International Air Transport Association 2018


Future of the airline industry iv
Executive Summary

What should airlines be thinking about, and what steps should they start taking today
to be ready for the opportunities and challenges of the next 20 years?

This report sets out the findings In more concrete terms, do you We cast a wide net to identify
of a study exploring the forces know who your customers will sources of change, drivers,
shaping the future of aviation, and be in 2035? What routes will trends and other weak signals
looks at the potential implications you fly? Will you determine the that would impact the industry’s
for the airline industry. schedules, or will your customers, future operating environment.
or your government, or the neural We explored and prioritized
It was commissioned by IATA’s
network of the IT services compa- these with the IAC and industry
Industry Affairs Committee (IAC)
ny that now owns you? Will you be to develop alternative scenarios
carried out by School of
a global environmental pariah, or for the sector and surfaced a set
International Futures (SOIF), and
will you be the industry that made of implications and recommenda-
informed by exchanges with
a huge effort to clean up its act, tions, issues that IATA can start to
the airline industry and external
at the same time creating jobs engage with today.
experts.
and helping pull millions out of
An overview of the project is
New challenges are always on poverty?
provided overleaf in Figure 1. The
the horizon. It’s hard to find an
The good news is that, while the main steps were:
industry that hasn’t at some
future is unpredictable, there
point been knocked sideways by • Interviews and Horizon Scan
are steps we can take to be
unexpected developments or (Section 2)
better prepared for what it may
changes in the rules. Change can • Prioritization of drivers of
bring. As an aviation community,
be sudden and overwhelming, or change and theme develop-
armed with an analysis of future
gradual and unnoticed; in either ment (Section 3)
trends and acting with a common
case the result can be hard to
purpose you can take steps to • Scenario development (Section
manage – and sometimes fatal
influence how the future unfolds. 4)
– for organizations not actively
And as a commercial player in the
preparing for it. • Implications and recommenda-
airline industry, you can add these
tions (Section 5)
Technology – as newspapers, the insights to your strategic thinking
music industry and taxi companies to gain a competitive edge. Our recommendations are
have discovered – is a common collected together in Annex D. But
With this in mind, we started by the main purpose of the report
source of disruption. But drivers
exploring the question: is to get you to think about what
of change can also be political and
regulatory, social and economic What are the key drivers of change these changes will mean for your
– not forgetting environmental that IATA and airlines should be business.
factors and policies designed to thinking about to prepare for
address them. future opportunities and challeng-
es over the next 20 years?

1
PROJECT OVERVIEW

01 02

HORIZON SCAN AND INTERVIEWS TO PRIORTIZATION OF DRIVERS OF


IDENTIFY DRIVERS OF CHANGE CHANGE AND THEMES
A series of interviews was held with global An online assessment was conducted
trend specialists and experts in other IATA Industry Affairs Committee and
fields, as well as aviation experts. Material approximately 500 industry
from the interviews was taken together professionals* to gather industry views
with a literature review and horizon scan on the most important and uncertain
to identify a list of 50 drivers of change drivers of change (see Section 3). Drivers
(for information see Section 2 for the full were then grouped into 11 themes –
driver list see Annex E) important issues to explore during
scenario development (for information
see Section 4).
DRIVERS OF CHANGE

Shifting borders, boundaries and sovereignty


Infectious disease and pandemics

Defence priorities dominate civilian needs


Rising sea levels and reclaimed habitats
Alternative fuels and energy sources THEMES
Geopolitical instability
Trade protection and open borders
Resource nationalism

Water and food security


Global income inequality
Geopolitics
Geopolitics
Terrorism

Human-controlled weather

Urbanisation and the growth of megacities

Middle class growth in China and the Asia-Pacific region Africa and Asia-Pacific
Africa, Asia-Pacific and India
Cybersecurity
Security and borders
Unionisation of labour and regional independence Security and Borders
Global population growth fuelled by Asia and Africa

Passenger identity and fraud Environment


Environment
Global aging

Increasing influence of alternative regional and global institutions


Extreme weather Economy
Economy

Bribery and corruption


Circular economy Privacy
Privacy and
and Trust Trust
Environmental activism
Strength and volatility of global economy

Rise of populist movements


Privatisation of infrastructure
Price of oil
Alternative modes of rapid transport Values
Values and Communities
and Communities

Robotics and automation

Open data and radical transparency Technology


Technology

New aircraft designs


Expanding human potential Data Data
Concentration of wealth into a ‘Barbell’ economy
Government
Shifting ethnic, political and religious identity Government
New modes of consumption
Government ownership of airspace and critical infrastructure Business models
Business models
3D printing and new manufacturing techniques
Personal carbon quotas
Strength of governance
International regulation of emissions and noise pollution
Tensions between data privacy and surveillance
Internet(s) of Things
Virtual and augmented reality
Geospatial technology
Level of integration across supply chain
Disability, health and fitness
Changing nature of work and competition for talent
Anti-competitive decisions

*Solid lines represent drivers prioritised in the online exercise


03 04

SCENARIO DEVELOPMENT IDENTIFICATION OF IMPLICATIONS AND


Four contrasting scenarios were RECOMMENDATIONS
developed for the industry out to 2035. A set of implications was generated from
See Section 5 for how this was done, and a wind-tunnelling exercise, additional
the resulting scenario narratives. exploration of the scenarios, and inputs
from the horizon scan and interviews. A
selection of recommendations are
presented in Section 6, issues that are
important for IATA and its members to
engage with and steps that they can start
taking now to prepare for change.

SCENARIOS IMPLICATION CATEGORIES RECOMMENDATIONS

Geopolitical transitions and realignment Recommendation 1


Peace and security
Geopolitics | Geopolitical Transitions
and Alignments)
NEW FRONTIERS IATA should continue to support global
Turbulent world / Connected and Open
standards bodies such as ICAO, and think
New frontiers strategically about how the relationship
New markets between IATA and these institutions will
Inward or outward
Hubs and smaller airports
evolve. It will be important to maintain
Borders or conduits global standards for a global industry,
Infectious diseases especially in futures that are increasingly
Biohacking
Sustainability leadership
multipolar or where there are shifts in
SUSTAINABLE FUTURE Conspicuous consumption of energy the balance of power (see page 29)
Calm world / Connected and Open Global economy
Post-oil economy
Workforce and skills

Terrorism RECOMMENDATION 13:


Cyber security Data | Death or rebirth
Personal privacy
IATA should consider measures that
support airline ownership of data (e.g.
safeguarding privacy, commitment to
Consumer expectations
RESOURCE WARS common data protection procedures), and
Diversity
Turbulent world / Closed Data
Passenger care look to establish a global industry-wide
position on data protection. A more open
Sharing and post-sharing approach to data and interoperability at a
Automation of planes
Substitution
global and industry level may be more
Airports of the future positive for the industry and for
consumers (see page 37)
Death or rebirth
Frequent flyers and personalization
PLATFORMS Supply and flow
Calm world / Closed Data
RECOMMENDATION 19:
Technology | Airports of the Futures
IATA should build relationships with those
Infrastructure
Financial safety and regulation
responsible for urban planning (not just air
Military and government ownership infrastructure authorities) to ensure
Need to innovate industry needs are linked into
Catering for new customers infrastructure planning, particularly when
there are major plans for developments
around airports (see page 41)

Figure 1: Infographic depicting the main stages of the project.


Figure 1: Project overview
Figure 1: Project Overview
Future of the airline industry 4
Section 1 – Introduction

Over the past 30 years the airline These twin forces of technology The project was carried out in four
industry has seen a number of and (geo)politics featured heavily phases:
changes, such as the increased in the research we conducted for
market share of low-cost this study, and the consequences 1. Interviews and horizon
carriers (LCCs) as well as facing for the airline industry of the scan to identify drivers of
its fair share of challenges, from shifts and disruptions they could change. To prepare for change,
volcanoes erupting to infectious cause featured prominently in it is often what is going on
disease outbreaks. the material we gathered and the outside your industry that is
scenarios we produced. But they the greatest source of surprise.
The next 30 years are likely to be A series of interviews was held
are not the only drivers of change
more turbulent, as a new wave with global trend specialists and
that airlines need to look out for.
of technological change and experts in other fields, as well
innovation unfurls. Some see this In this context, this study began by as aviation experts. Material
wave sweeping the airline industry exploring the question: from the interviews was taken
away, citing as precedents the taxi together with a literature review
What are the key drivers of change
industry before Uber arrived, the and horizon scan to identify a
that IATA and airlines should be
music industry before internet list of 50 drivers of change (see
thinking about to prepare for future
downloads, and the printing Section 3).
opportunities and challenges over
industry before computer design
the next 20 years?
software.1 2. Prioritization of drivers of
change and themes. An online
And technology is not the only
assessment was conducted to
source of disruption. The UK’s
gather industry views on the
Brexit and the presidential elec-
most important and uncertain
tion in the United States remind
drivers of change identified
us that politics can always spring
in phase 1. Drivers were then
surprises. As a global industry,
grouped into 11 themes
subject also to national-level
–important issues to explore
regulation, the airline industry is
during scenario development.
highly sensitive to such surprises:
(See Section 4)
will, for example, the UK continue
to be party to existing European 3. Scenario development. Four
legislation governing airlines or will contrasting scenarios were
they need to renew agreements developed for the industry out
with European, US and other to 2035. See Section 5 for how
countries? this was done, and the resulting
scenario narratives.

4. Identification of implications
and recommendations.
In Section 6 we set out the
implications of the potential
changes that will affect the
airline industry over the next 20
years, together with some of the
steps that the industry can start
taking now to be prepared for
these changes.

5
Section 2 – Horizon scan and interviews to identify drivers of
change
Through interviews with domain weak signals from a wide range of and futurists. The interviews were
experts, desk research and fields, including new technologies, conducted using an adaptation
workshops with over 50 senior lifestyles, threats and potential of the ‘Seven questions’ format
airline representatives, we iden- wild cards, that might impact developed by Royal Dutch Shell, to
tified a shortlist of 50 drivers of the industry’s external operating elicit views on factors influencing
change (see Figure 2) that would environment. We consulted over the future. Interviews were
have an impact on the industry 200 sources including airline non-attributable to encourage
out to 2035. data sets and publications, openness from interviewees.
global trends reports, academic
An initial horizon scan was under- A list of interviewees is provided in
publications, think tanks, surveys
taken using a ‘STEEP’ framework Annex A.
and polls, blogs and alternative
(Society, Technology, Economics,
literature. The full set of drivers are available
Environment, Politics – see Figure
in Annex E (separate document).
2). The intention was to cast the In parallel, we conducted
net wide to identify both relevant 16 interviews with industry
drivers and trends, as well as representatives, sector experts

Drivers of change

Society Technology Environment Economy Politics

• Terrorism • Cybersecurity • International regulation • Global income inequality • Bribery and corruption
of emissions and noise
• Urbanization and the • Expanding human • Strength and volatility of • Geopolitical (in)stability
pollution
growth of megacities potential global economy
• Government ownership
• Resource nationalism
• Passenger identity and • Robotics and • Price of oil of airspace and critical
fraud automation • Personal carbon quotas infrastructure
• Level of integration
• Global aging • 3D Printing and • Water and food security along air industry supply • Strength of governance
new manufacturing chain
• Middle class growth in • Environmental activism • Anti-competitive
techniques
China and the Asia- • Shift to knowledge- decisions
• Extreme weather events based economy
Pacific region • Virtual and augmented
• Defense priorities
reality • Rising sea levels and
• New modes of • Privatization of dominate civilian needs
reclaimed habitats
consumption • Internet(s) of Things infrastructure
• Shifting borders,
• Human-controlled
• Tensions between data • Alternative fuels and • Concentration of wealth boundaries, and
weather
privacy and surveillance energy sources into a "Barbell economy" sovereignty
• Circular economy
• Global population • New aircraft designs • Unionization of • Increasing influence of
growth driven by Asia • Infectious disease and labor and regional alternative regional and
• Alternative modes of
and Africa pandemics independence global institutions
rapid transit
• Shifting ethnic, political • Open data and radical • Trade protection and
• Geospatial technology
and religious identity transparency open borders
• Disability, fitness and • Changing nature of work • Rise of populist
health and competition for movements
talent

Figure 2: 50 Drivers of Change for the Airline Industry

Future of the airline industry 6


Section 3 - Prioritization of drivers of change and themes

Key drivers of change Drivers assessed as having •


greater than average impact
An online assessment of the
and uncertainty
drivers of change was conducted
to prioritize drivers. The • Alternative fuels and energy
assessment form was sent to the sources
IATA Industry Affairs Committee • Cybersecurity
and approximately 500 industry
• Environmental activism
professionals around the world.
• Extreme weather events
Participants assessed the
importance and uncertainty of • Geopolitical (in)stability
drivers to 2035, and in some cases • Infectious disease and
proposed additional drivers. pandemics

During the online assessment • International regulation of


exercise, respondents identified emissions and noise pollution
13 drivers that (a) were likely to • Level of Integration along
have a high impact on the sector air-industry supply chain
out to 2035 and (b) where there • New modes of consumption
was a high level of uncertainty
as to what that impact would be. • Price of oil
These drivers indicated ‘critical un- • Strength and volatility of the
certainties’ that we would reflect in global economy
the scenario development. • Tensions between data privacy
and surveillance
• Terrorism
A summary and exploration of
these themes is set out in the
following pages.
For the full set of drivers see
Annex E.

7
Drivers of change assessed to have higher than average impact and uncertainty

Alternative fuels and energy sources Level of integration along air-industry supply
chain
Alternative fuels and energy sources have the
potential to disrupt the geopolitical balance of power, An integrated supply chain allows manufacturers
as well as to affect how businesses and the public to look into business processes across multiple
consume energy. In aviation, energy sources such as suppliers and disparate platforms to follow materials,
bioenergy or fuel cells may replace traditional fuels, components and people wherever they are. The
while advances in energy storage will favor the growth importance of emerging markets, economic growth
of renewables at a global level. How will the climate and the appetite of developing countries for natural
change and sustainability agendas affect government resources may boost global prices and make it trickier
and public attitudes? to configure supply chain assets. What will the supply
chain look like and will it handle increasing complexity
and demand volatility?

Cybersecurity New modes of consumption

The threat of cybersecurity is growing, becoming an Consumers throughout the world have been seeking
industry in itself and a major concern in the daily lives greater value from products and services, redefining
of people and businesses using technology. In the their relationship with ‘things.’ The concept of access
future, increased connectivity between real-world over ownership has changed as sharing models grow
devices including planes, cars and robots will blur the and thrive. We have already started to see a backlash
boundaries between virtual and physical security. As against one-size fits all technology, increased de-
skills and knowledge increase, will cybercrime become mands for authenticity and personalized experiences,
the tool of activists, governments and companies, or a sustainable consumption and desire for face-to-face
disruptive hobby? interaction. How will big data, transparency and
predictive analytics influence marketing and branding?

Environmental activism Price of oil

Environmental activism may come from many direc- After remaining unusually stable in the three years
tions, the public, the workforce, or even shareholders prior, crude oil prices fell precipitously in 2014 and
and governments. Generational and societal shifts the future outlook is uncertain. Will supply outstrip
may lead to new tools – younger people are more demand in the future? How will geopolitics, conflict
likely to participate in online activism than older and cartel behavior shape prices over the next 20
generations – while technology and cyber activism years? Persistent low prices may drive initial cost
provide new opportunities and threats. In the future, savings for transportation, but what are the global
might activists take a more militant stance through economic impacts.
provocative marketing strategies?

Extreme weather events Strength and volatility of global economy

Extreme weather events (whether wildfires, droughts, Instability and turbulence in financial markets has
extreme temperature, storms or snowfall) are expect- characterized much of the 21st century and may
ed to increase in both frequency and severity, driven continue. Economic shifts from West to East and
by climate change. How will governments, municipal- an increase in South-South trade are likely to have
ities and the industry mitigate and adapt? Will we be a significant impact on international politics and
able to predict, or outrun extreme weather? Might governance, as well as other trends such as increasing
extreme weather events damage infrastructure and inequality. As the economic influence of developing
disrupt communities with increasing frequency? nations increases, new markets, competitors and
demands will alter patterns of trade, changing what
goods are transported where.

Table 1: Drivers of change with greater than average impact and uncertainty

Future of the airline industry 8


Drivers of change assessed to have higher than average impact and uncertainty

Geopolitical (in)stability Tensions between data privacy and surveillance

Interstate warfare and violent deaths have declined Advances in connectivity and sensor networks are
since the 1950s, but one in four people on the planet likely to empower citizens by providing real-time
now live in fragile and conflict-affected areas. Increas- accountability and transparency. At the same time,
ingly, actors in these conflicts are not clearly defined, privacy and surveillance are likely to be high on the
but include individual acts of violence and terrorism, list of military and government concerns over the next
terrorist groups, warlords, mercenaries, militias and two decades. How much privacy will people be willing
cartels. Over the next 20 years, state fragility, religious to give up in return for convenience, economic benefit
and ethnic tensions, and mounting pressure on and security? For corporations, data breaches and cy-
global resources may sow the seeds of conflict. Will bercrime may require new measures to protect data;
these be fought on the ground, in cyberspace, or new privacy itself could become a valuable commodity.
arenas? Meanwhile, will stable parts of the globe be
destabilized by growing populism, and will nationalist
movements spill over onto the international stage?

Infectious disease and pandemics Terrorism

In the 1960s many infectious diseases were thought Terrorists have shown the ability to adapt to the
to be under control, but the emergence of new techniques and methods of counter-terror agencies
threats such as HIV, SARS, Zika virus as well as animal and intelligence organizations. Will democratization of
diseases such as BSE have reacquainted the world technology drive further shifts from (currently more
with the risks. Will future outbreaks limit people’s common) state-supported political terrorism towards
desire and freedom to travel, as well as presenting diverse, free-wheeling, transnational networks? States
significant economic challenges for the industry? with poor governance; ethnic, cultural, or religious
How might new technologies, for instance synthetic tensions; weak economies; and porous borders have
biology, help detect and cure disease? Might the next been breeding grounds for terrorism – but where will
pandemic be of human design? tomorrow’s threats come from, and will they be virtual
or physical?

International regulation of emissions and noise


pollution

The airline industry contribution to overall CO2


emissions is relatively low compared to other
transport sectors, although forecasts to 2050 vary
in optimism. Will standards such as the ICAO CO2
emissions standard (along with technology, operation-
al and infrastructure improvements) be sufficient to
meet international ambitions? What role will politics
and public perceptions play in the future? And will the
media be a friend or a foe? Could air travel become
conspicuous in a more sustainable world?

9
Theme development

We identified 13 key drivers that The drivers of change judged to As a result, we came up with the
display both high impact and high have high uncertainty, however, following 11 themes, some of
uncertainty. At the same time, we tended to be political, economic which refer to more than one
took account of drivers that have and environmental rather than driver of change (for example, the
a more predictable trajectory, as social and technological, although Environment theme includes driv-
well as those where there was technologies such as Internet of ers of change Extreme weather
less consensus on the level of Things and alternative modes of and Environmental activism – see
impact or uncertainty among transport were deemed to have mapping in Figure 3).
respondents. A lack of consensus highly uncertain outcomes in
Themes
can help to identify ‘weak signals’ 2035. For additional information
of change not yet on most peo- see Annex B. • Geopolitics
ple’s radar (see Annex B for more • Data
To bring in the potential impacts
information).
of some of the 50 drivers that • Africa and Asia-Pacific
Among the high impact drivers were outside the ‘top 13’ a
• Government
identified during the survey were workshop was conducted with
middle class growth in Asia-Pacific, industry representatives in March • Security and borders
geopolitics, financial stability, and 2016 to explore the drivers more • Privacy and trust
oil price. New technologies and deeply, consider interactions • Business models
aircraft designs were also in this between them and start to
• Economy
group. imagine scenarios airlines might
face in 2035. • Values and communities
• Environment
• Technology

Future of the airline industry 10


DRIVERS OF CHANGE

Shifting borders, boundaries and sovereignty


Infectious disease and pandemics

Defence priorities dominate civilian needs


Rising sea levels and reclaimed habitats
Alternative fuels and energy sources THEMES
Geopolitical instability
Trade protection and open borders
Resource nationalism

Water and food security


Global income inequality
Geopolitics
Geopolitics
Terrorism

Human-controlled weather

Urbanisation and the growth of megacities

Middle class growth in China and the Asia-Pacific region Africa and Asia-Pacific
Africa, Asia-Pacific and India
Cybersecurity
Security and borders
Unionisation of labour and regional independence Security and Borders
Global population growth fuelled by Asia and Africa

Passenger identity and fraud Environment


Environment
Global aging

Increasing influence of alternative regional and global institutions


Extreme weather Economy
Economy

Bribery and corruption


Circular economy Privacy
Privacy and
and Trust Trust
Environmental activism
Strength and volatility of global economy

Rise of populist movements


Privatisation of infrastructure
Price of oil
Alternative modes of rapid transport Values
Values and Communities
and Communities

Robotics and automation

Open data and radical transparency Technology


Technology

New aircraft designs


Expanding human potential Data Data
Concentration of wealth into a ‘Barbell’ economy
Government
Shifting ethnic, political and religious identity Government
New modes of consumption
Government ownership of airspace and critical infrastructure Business models
Business models
3D printing and new manufacturing techniques
Personal carbon quotas
Strength of governance
International regulation of emissions and noise pollution
Tensions between data privacy and surveillance
Internet(s) of Things
Virtual and augmented reality
Geospatial technology
Level of integration across supply chain
Disability, health and fitness
Changing nature of work and competition for talent
Anti-competitive decisions

*Solid lines represent drivers prioritised in the online exercise

Figure 3: Extract from Figure 1 showing the map of drivers to themes

11
The key elements included in the themes are as follows:

GEOPOLITICS AFRICA AND ASIA-PACIFIC SECURITY AND BORDERS

This set of drivers explores Trends in population growth, Key questions include open skies
aspects of geopolitics, including global aging and middle class and airspace management, border
the role of international institu- growth in Africa and Asia-Pacific restrictions and migration, and the
tions and governance, the degree are expected to have a large role of the military. Terrorism and
of peace or conflict in society, and impact on the airline industry, cybersecurity will also influence
level of international cooperation, influencing not only where the openness of borders.
openness and trade. Consider- people live but how they live. Concerns include future conse-
ation is given to relationships More travelers are expected from quences for security and safety
between the US and China and non-traditional markets where within the industry, and the impact
other regions as well as the role middle classes are growing. What on insurers. Will the industry keep
of corporations and non-gov- new demands will this place on pace with (or anticipate) new
ernmental actors. Instability may airlines and airports? What value and emerging forms of terrorism
have many sources: tensions in will the younger generation place driven by the democratization and
the Middle East, protectionism on cost and convenience, and on pace of technology?
in a world of scarcity, or flash- time? Although the potential of
PRIVACY AND TRUST
points around the world. Other this new demographic is recog-
factors include transitions from nized, uncertainty remains about The combination of trends in big
democracy to authoritarianism, how well the industry will meet data, automation and the internet
levels of international cooperation the needs of passengers as the of things is expected to lead to
and state-level interventions (or consumer base diversifies. And new opportunities, transforming
inertia). How will power shifts from will this new mobility lead increase how people and devices are
West to East disturb the status the spread of infectious diseases, monitored and marketed to
quo? particularly in the context of in real-time, as well as threats
increased urbanization? including increased potential for
DATA
cyber-terrorism and espionage. To
GOVERNMENT
This theme explores the impact of realize the opportunities, tensions
big data on businesses, govern- The origins and development between data privacy and surveil-
ment and the public, looking at of the airline industry have lance requirements will need to
how the ever-growing availability been heavily influenced by be addressed as people redefine
of data changes the nature of governments, whether through their relationship with companies,
society. At one extreme we may regulation, investment in infra- governments and each other.
see a connected world, with open structure, or support for flagship The trend towards open data
access to information and har- carriers. This relationship is likely and radical transparency on one
monized standards. At the other, to continue, despite the potential hand (to drive innovation or as
asymmetries between those who for a greater role for private demanded by consumers) may
own or control data and other actors in aviation, but how will the cause tensions, for example when
actors in society. Advances in big relationship between government companies want to protect secrets
data, predictive analytics, sensor and the industry evolve? How will to maintain a competitive edge.
technology, processing power, advances in technology and data
connectivity and storage pose be utilized and regulated, and how
significant challenges as well as will the military and civilian uses of
offering opportunities for busi- aviation be managed?
nesses and consumers. Improve-
The removal of restrictions on
ments in data and analytics are
foreign ownership, cross-border
expected to help airlines predict
consolidation and freedom of
and adapt to changes in supply
travel could be important issues
and demand in real-time.
for the success of the industry.
In the future, to what extent will
nations choose protectionism
over free markets?

Future of the airline industry 12


BUSINESS MODELS VALUES AND COMMUNITIES TECHNOLOGY

Will airlines remain autonomous As new generations, e.g. millen- The airline industry appears to
businesses, integrate with nials, enter the scene (and the react to new technology rather
other firms, or become commod- population ages) and the aviation than lead the way. Disruption to
ity suppliers? Where will future customer base diversifies, how existing airline models may come
revenue come from e.g. how will attitudes change? Will we from energy breakthroughs,
will non-aeronautical revenues see intergenerational divides? alternative modes of transport, big
be shared between airports Or more social travel? And what data and data transparency, new
and airlines? Might sharing demands will diversity and an manufacturing tools, and quantum
economy business models or new aging population place on the computing. At the same time,
technologies facilitating alternative industry? Issues include mobility some technologies may limit the
(international) point-to-point travel and health, entertainment and need to travel. There are concerns
disrupt the industry? In the future, connectivity, dietary requirements, that the industry is locked in the
will flying be a destination (‘air language. Will new travelers be current paradigm and blind to the
cruises’, slow travel, social travel)? more budget conscious; will they impact of disruptive factors. Over
How will technology affect existing demand higher sustainability or short to medium distances, how
supply chains and the life-cycle of transparency in their interactions will new modes of rapid transport
aircraft? What is the future role with corporations? How should (e.g. hyperloop) influence the way
of cargo, and what are the new the industry engage in debate and people and goods travel? And is it
frontiers of travel? discussion on these issues? inevitable that long-distance travel
will remain an airline monopoly?
ECONOMY ENVIRONMENT

The strength or otherwise of the Recognition of the impact of


global economy is a key theme. mankind on climate change
Continued crises and volatility in grows every year, and there is
economic growth will have direct growing awareness and concern
impacts on fuel costs and the beyond CO2 emission levels. With
availability of funding and invest- increased pressure on water,
ment. Will economies of the future food and resources, how will
be oil-dependent? (The price of oil attitudes and regulation change?
was voted as the driver with the How should airlines engage with
highest impact and uncertainty.) this issue in the short, medium
Innovation and adoption of and long term? What alternative
alternative fuels by the aviation modes of energy or new technolo-
industry could be limited over the gies are relevant to aviation?
twenty-year time frame, especially
if a low oil price translates into
little incentive to innovate; on
the other hand, instability in oil
producing countries may (by
increasing the price of oil) result in
greater innovation. Disruption may
also come from new technology,
e.g. a breakthrough in nuclear.

13
Section 4 – Scenario Development

An exercise was conducted with CRITICAL UNCERTAINTIES (AXES) SCENARIOS


industry representatives in March
Geopolitics (Turbulent --- Calm) A summary of the scenarios is
2016 to start to explore the
This axis includes aspects of geo- overleaf and individual scenarios
themes set out in Section 3 and to
politics, future levels of terrorism, are presented over the next 12
imagine possible worlds that the
cyber warfare and security, trade, pages with a table summarizing
industry may face in 2035.
open or closed borders and the the main themes and character-
Four alternative scenarios were strength of governance. istics. Please see Annex C for a
developed for the airline industry comparison table of the themes
Data (Open and connected
in 2035, building on workshop across the four scenarios.
--- Closed) This axis takes into
outputs.
account the impact of develop-
A ‘two axes’ approach was ments in the generation and use
used that is particularly suited of data. At one extreme, a con-
to generating scenarios that nected world, with open access
are accessible and compelling. to information and harmonized
Each axis represents a critical standards. At the other, asymme-
uncertainty for the industry, a high tries between those who own or
impact, high uncertainty theme. control data and those who just
generate it, whether governments,
The two axes chosen (high
businesses or the rest of society.
impact, high uncertainty issues)
were Geopolitics and Data.
These uncertainties were used
to generate four distinct and
contrasting scenario spaces from
a range of possible futures in
which outcomes associated with
each of the additional 9 themes
were explored. We considered
how each theme might develop by
2035, based on how the drivers of
change influencing these themes
could interact to shape the future.

Future of the airline industry 14


New frontiers Sustainable Future

A world which has seen a shift of power to the East A peaceful, multipolar world in which strong interna-
associated with the creation of alternative institutions. tional governance has allowed infrastructure decisions
Competition for economic and military power has to be prioritized. Open access to information and
shifted to new frontiers, including space. China has advances in big data, predictive analytics and artificial
become a champion of sustainability. Access to intelligence (AI) have had a positive impact on society.
information is open and democratized, empowering Rapid innovation helps people meet sustainability
people, companies and organizations. However, targets, while new trade routes have opened up within
cybercrime, state surveillance and other challenges and between the Global South and Asia-Pacific.
persist.

Resource wars Platforms

A turbulent world in which an aggressive, nationalistic A peaceful world in which China and the US have
China threatens a US distracted by continued conflict. cooperated to open up international trade. Corpora-
The Middle East and Asia have seen a wave of tions play an increasing role in the economy, and a
territorial disputes and land grabs, and the world has dominant elite controls data and data platforms. Africa
realigned into resource trading blocs. Inequalities has failed to enter the global stage with a collapse in
between resource rich and poor regions have limited commodity prices. In many countries, a disempowered
movements between regions. Data asymmetries exist public is increasingly dissatisfied with the political elite.
between countries, and governments increasingly use
data to monitor and control their citizens.

Figure 4: Scenario Framework

15
Scenario 1: New Frontiers
(Turbulent World / Connected and Open Data)

The world is fractious, with invest in clean renewable energy Oceans and sea-beds have
global governance increasingly and recycling. also become military-controlled
dominated by competing Western assets – with countries competing
A new wave of Chinese entre-
and Asian institutions. The US and for control of lucrative mineral
preneurs took note of Silicon
China are dominant on account deposits.
Valley’s grand challenge mentality
of their economic and military
and used a similar approach to Most other sectors, including
weight, but the world has become
address societal issues. energy, transportation and
more multipolar, with strong
communications have been dereg-
regional alliances around strategic The Western world has been
ulated to encourage innovation.
interests. Europe has played a slower to adapt, hampered by
stabilizing role; its diplomatic complex bureaucracies and People have increasingly ‘shifted
initiatives are highly valued, and inflexible trade agreements. to passive’ – in the 2020s this
its companies have been at the was exemplified by the shift from
Conflicts still break out regularly
origin of many of the technological smart cars to semi-autonomous
in Africa, where organizations
breakthroughs of the past 25 cars to full automation, with
compete for resources.
years. people finally letting go of safety
Oil continues to dominate energy concerns.
In the late 2010s China used
though most countries will be
its “Belt and Road” foreign Today, this philosophy is part
getting more than 80% of their
policy to consolidate leadership of our lives, pervading health
energy from renewables and
of the Asia-Pacific region, seeking provision with automated health
nuclear by 2050. Supply routes
support from Japan, Indonesia, scans and bio-screening in our
for oil and water have been the
Vietnam, India, Kazakhstan and showers, and revolutionizing
principal causes of recent conflict.
Australia. Initially re-basing its personal finances –no need to
China and the US have fought
economy away from the dollar, file a tax return or worry about
over strategic dominance of the
a new Yen-Rouble-Renminbi missing a payment deadline
Arctic as China seeks to reduce its
standard was created competing any more. Governments have
reliance on shipping via the Strait
with the dollar as the dominant almost total visibility of financial
of Malacca. Meanwhile China’s
reserve currency. The Asian flows –citizens having given up
strategic partnerships with Iran
Infrastructure Investment Bank control in return for convenience,
have helped establish the latter as
(AIIB) continued to provide a economic support and security.
a regional power.
platform for developing countries In many countries, mega-cities
to access Chinese investment (as The race to space in the late – the economic and resource
well as knowledge and R&D) in 2010s continued with Japan, US powerhouses – have taken on the
return for water and resources. and China establishing moon role of the state, offering shelter
bases from which to protect their to climate and political refugees –
A turning point was the People’s
assets – surveillance systems including those displaced by rising
Republic of China’s move away
and geo-engineering platforms. sea levels.
from censorship, tearing down
Large-scale structures are now
the great firewall in 2019 to allow
manufactured in space and
full access for citizens. This drove
lowered into earth orbit. National
open innovation, reinvigorating
security priorities trump consumer
the economy. For the first time the
interests – for instance, the global
global community had full trans-
powers took an aggressive stance
parency on China’s demographic,
towards consumer microsatellites,
economic and social situation. In
requiring mandatory registration
line with a global push towards
and shooting down any that
sustainability, China introduced
strayed too close to military
legislation forcing companies to
assets.

Future of the airline industry 16


For businesses, 3-D manufactur- Sharing economy companies are Global instability makes people
ing, scanning and design software increasingly responsible for vetting nervous travelers – especially
have eliminated traditional supply both their employees and users, given recent bio-bombs targeting
chains, with goods increasingly following a wave of law suits. specific genotypes and the grow-
produced and recycled close to ing trend towards ‘homemade’
The world is increasingly multi-
the point of consumption. Most security threats. We have also
cultural but the rapid growth of
houses now have home-phar- seen an increase in transnational
middle classes around the world
macies, with remote doctors crime as virtual communities of
has put pressure on overcrowded
sending prescriptions direct. For interest coordinate cyber-attacks
infrastructure. New technologies
businesses, it’s been a struggle to across borders.
and data have helped improve the
protect innovative designs and IP.
running of major cities, and while People are willing to pay more for
The creation of a centralized 3D-IP
severe gridlock is unusual it’s still low-risk flights. And airlines are
platform has helped minimize
a challenge to keep transportation keen to reduce risks too – every
theft, though open-source replicas
moving individual now has a risk rating,
are increasingly available for most
those who agree to be ‘bio-
goods. The ability to print one-of- Healthcare has struggled to
chipped’ and regularly monitored
a-kind and short runs of objects keep pace with a rapidly aging
can travel more freely and AAA+
has reduced retail costs while population and a proliferation
travelers get prioritized access.
driving demand for customized of non-communicable diseases.
Since 2032 everyone in Europe
products. More and more people are
has been chipped at birth.
traveling with robo-healthcare
In healthcare and manufacturing,
assistants and exoskeletons.
3D-scanning and printing technol-
Rich nations with access to skills,
ogies mean custom heart valves
labor and advanced engineering
and prostheses, and replacement
increasingly take advantage of per-
parts for machines can be made
sonalized medicine and ‘precision
to specification, reducing the need
lifestyles’; surgery today is often
to stockpile spare parts. The 3D
performed by specialists around
printing of organs has revolution-
the world in health-hubs – robotic
ized healthcare.
advanced treatment units. Great
Customer service has had to if there’s one near you, but some
innovate to meet the needs of an countries failed to invest in the
increasingly demanding public necessary infrastructure or made
with short attention spans. Suc- the wrong technology choices.
cessful companies have mastered
Policy changes in advanced
the art of prediction, resolving
economies encourage aging
or offering solutions before
workers to stay in the workforce
consumers realize problems exist.
longer, while making it easier for
Artificial Intelligence dominates
women and part-time workers to
front-line service, but people still
stay employed.
value the personal touch, such
as the opportunity to meet real
people in virtual reality spaces.
Humarithms1 – algorithms with a
human touch – are the holy grail.

1
Gerd Leonhard: http://www.futuristgerd.com/category/humarithms

17
Theme Description

Geopolitics Rise of alternative institutions as shift of power to East and as challenge to US.
China becomes a champion for sustainability, sharing expertise and helping
developing countries improve their infrastructure in return for influence. Space,
the Arctic and the oceans are the new conflict zones.

Data General shift towards democratization of data, empowering people, companies


and organizations. Increased risks of transnational cybercrime. Police state/
surveillance. New technologies and data help to reduce gridlock and address
challenges in major cities.

Africa and Asia-Pacific China prioritizes relationships within Asia-Pacific, offering investment in return
for resources. Iran comes back into the fold as a regional power in the Middle
East.

Government Data-driven government and political experimentation. In most countries people


give up control of data in return for convenience – a new ‘social contract’ based
on data.

Security and borders New forms of terrorism with greater access and ‘homemade’ security threats.
Increased restrictions on movement across borders except for ‘biometric’
citizens. Military needs take precedence over civilian needs.

Privacy and trust People increasingly ‘shift to passive’, giving up control of data in return for
convenience, economic benefits and security. Virtual and physical boundaries
blur. States increasingly sense and control all aspects of society.

Business models Elimination of traditional supply chains. Shipping of materials rather than
finished products, with production at or near the point of use. Businesses focus
on customer service.

Economy Series of financial crises and austerity. Cities are the unit of power. Oil prices are
high. Policy changes in advanced economies encourage older workers to stay in
the workforce longer, while making it easier for women and part-time workers to
stay employed.

Values and Communities Strong national cohesion and increased multiculturalism. Growing population
with more people traveling (and demanding to travel). New challenges and
stresses on healthcare and infrastructure.

Environment Large numbers of displaced communities due to sea-level increases. Oil contin-
ues to dominate the energy mix – though many countries are on course to be
more than 80% reliant on renewables and nuclear by 2050.

Technology Sharing economy models are dominant; 3D printing has disrupted manufactur-
ing.

Future of the airline industry 18


Scenario 2: Sustainable future
(Calm World / Connected and Open Data)

The world has gone thirty years There were two drivers of this Today in 2035, the lot of the global
without a major international change. First, the rise of citizen citizen has on the whole improved.
conflict, though borders have movements in the early part of The world is richer, and per capita
been redrawn as countries trade the century, connected globally income is higher. Life expectancy
land and resources on a perma- through the internet and social has increased worldwide, and
nent or long-term basis. media, challenged governments economic indicators are positive.
and the global institutions on the Some regions have benefited
Relative economic stability has
effectiveness of their policies. more than others but inequalities
allowed governments to take
within and between regions are
advantage of new technologies, Second, MNCs, NGOs and
lower than 25 years ago.
while cooperating internationally networks for citizens have been
to deliver on the 2015 Sustainable quicker to respond to the dis- International trade and invest-
Development Goals (SDG) and ruption caused by global flows of ment is increasingly dominated by
COP21 agendas. Global warming people, information and data than the global South and Asia-Pacific.
has been limited and we’re on territorial states.
Open data played a crucial role
track to meet the 2 degrees target.
These pressures were particularly in enabling this transition. With
We’ve come a long way towards
acute in Africa and certain parts of rapid global population growth
addressing the challenges of
the Asia-Pacific, which faced a per- (reaching 9bn in 2035) and many
poverty, inequality and education.
fect storm of climate change, food countries in India and Africa
In the 2020s there was concern shortages and a rapidly growing experiencing greater than 80 per
that the G27 was on track to population – rapid innovation cent urbanization, governments’
become the G200. Following was needed to meet challenges primary objective was to address
the Chinese debt crisis, the G20 around water, environment and challenges around energy, food
expanded to include the next education. and poverty.
biggest economies, Egypt, Iran,
Governments in these regions They took advantage of new
Nigeria, Pakistan and South Korea,
had seen it as their role to lead opportunities to unlock existing
and to consolidate economic
their populations on the path to assets, both financial and natural
policies around new sources of
economic growth and prosperity. – by optimizing public service
growth. A new rules-based system,
But the big industrial visions they delivery, connecting users and
based on the Global Governance
came up with didn’t make sense suppliers, and opening up data (or
Guidelines helped unlock political
to a restless, educated generation. selling it to the highest bidder).
stalemate by abolishing veto rights
Instead many people found
and establishing an independent Communities and companies
alternative routes to realize their
Committee for the Global Future, rushed to take up the challenge,
ambitions, gaining experience
with a mandate to address as governments privatized and
abroad in new economy hubs and
environmental and social market deregulated industries including
campaigning NGOs, then coming
failures. transportation, communications
back to change their countries.
and energy. Governments took
At a regional level, multi-national
Gradually governments realized advantage of the global drive to
corporations (MNCs) and interna-
that effective change could not open up data to harmonize and
tional non-governmental orga-
be achieved without communities build a shared digital infrastruc-
nizations (INGOs) have focused
and businesses being empowered ture around global platforms
investment strategies on Asia and
–encouraging emergent commu- – vital for combating cyber-crime.
Africa, playing an important role
nities and business to participate
in delivering public services for
in policy creation – preferring to
countries, while slowly accruing
nudge, sense and monitor their
political and economic influence.
public.

19
However, some governments But most expertise still lies in the Today people prefer point-to-
became over-reliant on the corporations – who compete for point travel, although high-speed
sharing-economy, basing access to talent and skills. rapid transit through networks of
infrastructure and urban-planning hyperloops is still more affordable
Blockchain and its derivatives have
decisions around companies who than many ‘personal drone’ clubs.
had a positive impact, democra-
then held them to now re-nation-
tizing access to financial and legal Air travel still dominates the
alized key infrastructure assets,
support, reducing friction in the international transportation of
others are developing rival apps
economy and bypassing tradition- goods and people, but a lack of
and businesses.
al financial organizations. investment in alternative energy
Increasingly suppliers are held and storage has made it increas-
Digitization and big data analytics
accountable, and contracts ingly conspicuous in an ener-
improve regulators’ ability to track
remunerated based on asset per- gy-constrained world. Air travel is
performance and outcomes,
formance over time, for instance, affordable but as a result of the
enabling them to shift from a
through the real-time monitoring Climate Resettlement Initiative
concentration on process to the
of performance of manufacturing some countries have started to
achievement of specific goals,
parts. introduce visas and travel restric-
including sustainability targets.
tions for their nationals to help
Jobs are part-time and expertise This allows those regulated
meet sustainability targets.
outsourced: advanced algorithms to modify and adapt their ap-
match skills to jobs – freeing proaches without falling on the More people in Africa and Asia
people to work where and when wrong side of the law, while giving are traveling for the first time –
they want –though benefits and regulators a clear view of the leading to increased pressures on
remuneration are more complicat- ultimate outcomes. infrastructures.
ed, with many companies treating
Recently companies have started
workers as they do their physical
paying people for access to
assets, monitoring their perfor-
their data – offering bonuses for
mance, health and emotional
exclusivity.
wellbeing both during and outside
of work. Traditional forms of trust are
increasingly transient, with
Robotics and automation have
organizations required to publish
also transformed the nature
data on all aspects of performance
of work. Robots increasingly
from staff mental health to energy
work alongside people, taking
trades.
on physical and repetitive tasks,
with humans adding value in the Communities are increasingly em-
spaces where AIs have not yet powered to influence politics and
become dominant. development. These communities
transcend traditional geographies,
often driven by the diaspora
communities established by the
Climate Resettlement Initiative.

Future of the airline industry 20


Theme Description

Geopolitics Thirty years of peace, although borders have been redrawn. A more multipolar
in which Egypt, Iran, Nigeria, Pakistan and South Korea join the G20 in the wake
of a Chinese Debt crisis. Strong international governance enables long-term and
cooperative infrastructure decisions.

Data Open access to information, with shared platforms. Big data, predictive analytics
and Artificial Intelligence (AI) enable rapid forecasting of intentions and behavior.
People are paid for their data. Supervision and surveillance at work. Drive to
harmonize international standards. Entrepreneurship and non-traditional
careers.

Africa and Asia-Pacific Africa and Asia-Pacific experience rapid growth, using new technologies to
address key challenges around water, environment and education.

Government Governments leverage opportunities associated with open data and open
democracy. Authorities oversee implementation of solutions at a local level, but
deliver through outsourced provision to companies and communities.

Security and borders Open skies and borders with increased demand for travel from Asia-Pacific
and Africa. New visas and travel restrictions limit travel as part of the Climate
Resettlement Initiative.

Privacy and trust Trust is transient with organizations required to publish data on all aspects of
performance from staff mental health to energy trades.

Business models Business and governments are data-driven. Holding and sharing more and more
data, combined with predictive analytics and AI to forecast customer behavior.
Grand challenges have evolved into precision challenges.

Economy Calm world and a stable economy allows increased trade – new trade routes
between South-South and East. Blockchain and other new technologies have
reformed financial and legal sector, reducing friction in economy and bypassing
traditional banks.

Values and Communities Communities are empowered to influence politics and development. These
communities increasingly transcend traditional geographies, driven by the
diaspora communities established by the Climate Resettlement Initiative.

Environment Rapid innovation helps people meet sustainability targets. Global approach to
addressing climate change combining new technologies with new data platforms
to solve societal challenges and combat cyber-crime.

Technology People and goods increasingly move point-to-point over short distances using
drones. Blockchain technologies have reformed access to finance and legal
support. Real-time monitoring of physical and human performance.

21
Scenario 3: Platforms
(Calm World / Closed Data)

The world is fractious, with global In this G2 world, corporations Prior to the crash, emerging
The world enjoys a good degree are increasingly influential in market companies had rushed to
of order, having addressed the national and local politics. With go global. Having dominated their
structural issues of the early many companies in the Global home markets, they made rapid
2000s – the economic dominance Stock Exchange 10 (GSE10) having moves into new geographies and
of the financial sector and com- cash reserves exceeding national sectors.
panies prioritizing next quarter’s GDP, they play an important
Competition has driven down
profits over longer-term growth. role financing infrastructure and
global profit margins. Companies
But tensions persist in many development, in return for soft
compete for a limited pool
places. diplomacy and influence.
of users, either undercutting
The US and China are the super- Post-oil, energy and data are the incumbents on price, or leveraging
powers, dominating the global main currencies. While many profits in industries such as tech,
governance landscape. countries suffered from the finance and pharmaceuticals to
collapse in commodity prices, capture users in other sectors.
China successfully avoided the
many Middle Eastern economies Margins are particularly squeezed
middle income gap many thought
successfully diversified – investing in capital-intensive industries,
would destabilize its economy
to raise productivity and privatiz- where operational efficiency has
in the late 2020s. Today it is the
ing health systems and infrastruc- become critical.
top world trade hub, with Latin
ture such as transportation.
America, India and the Middle East A key driver for this has been
also increasing in influence. This Alaska and Canada took a the rapid pace of innovation.
success is down to three factors: different path, capitalizing on their In a move to stay on top of
leveraging new manufacturing real estate to install massive pink new technology developments
technologies to stay competitive farms (low-energy, high-efficiency without stifling innovation, the
with low-income economies; vertical farms) and desalination US-China Global Council agreed
driving through legislation to plants powered by vast arrays an open framework for licensing
promote public and private sector of renewable energy, providing IP and harmonizing regulation,
investment in high-value indus- cheap food and freshwater that adopting a light-touch approach to
tries – aviation, power and tele- they sell around the world. legislation.
coms; and new trade agreements
Other oil-based economies were Nowadays it’s tougher than ever
to facilitate the global expansion
less forward-looking: the collapse for new companies to break into
of now partially-privatized Chinese
of commodity prices in 2030 hit markets. The ‘old unicorns’ have
State Owned Enterprises (SOEs).
many African and Latin American taken advantage of new frame-
The US meanwhile has maintained countries hard. Countries became works to control the key platform
its military superiority by investing overly reliant on foreign aid of data, constantly adapting to
heavily in new technology, and infrastructure investments, stay ahead of regulation, buying
cybersecurity and surveillance, but exporting to the highest bidder up people and datasets and
also helped by the fact that China (frequently China or the US) rather exploiting IP licenses.
turned out to be more interested than pursuing regional integration.
A small number of conglomerates
in economic and trade supremacy In Africa, the Continental Free
battle to be the platform of choice
within a stable world system than Trade Agreement was never
– they control everything from
in projecting military power. concluded (always 2-5 years off).
access to virtual communities to
When commodities were no
blockchain-based legal platforms,
longer a priority they were left
from healthcare to your alarm-
short.
clock.
The commodities crash was
compounded by space-harvesting
programmes, which unlocked vast
new resources from asteroids.

Future of the airline industry 22


Expertise in AI and automated basic minimum. The only decision Societies have become more
tech help them spot and snap left is which of the mega-platforms community-centric, organizing into
up promising companies. These to buy in to. In reaction, the self-contained city units – sprawl-
respond by keeping their best ‘Live fast die young’ movement ing metropoles that function as
employees and innovative has gained popularity – many trade and barter hubs.
products hidden – no more people choose to ignore financial
Borders are open, though a wave
beta-testing – while also deploying pressures and live for the now in
of near-pandemics have made
layered data firewalls within their self-contained communities
travelers increasingly cautious – to
organizations to protect their data
For the environment, it’s a matter avoid quarantine, travelers must
from their staff.
of too little, too late. Lack of global consent to continuous monitoring
Economic gains have dispro- vision and poor governance have during travel. People move fast,
portionately benefited the resulted in failure to meet global limiting exposure to unknown
elite – those who inherit data and sustainability targets. Despite people or places.
good education inherit the earth. breakthroughs in energy tech-
The elite seek out increasingly
Widespread inequality exists both nology, healthcare and robotics,
authentic and personalized expe-
within and between countries. these have been implemented
riences. Those who can afford it
fitfully, on the whim of individuals
Despite rapid economic growth, are living longer and better, while
and companies. The idea that
the middle class is as squeezed as pandemics and poverty are rife in
we would disrupt our way out of
ever and a disempowered public hive cities and other high-density,
problems… well it didn’t happen.
is increasingly dissatisfied with low income areas.
Decisions were made on the basis
the political elite. Authorities have
of incomplete data – no one could There is growing corporal inequal-
exploited public health and other
see the full picture. Companies ity – the cosmetically enhanced
data, trading it for intrusive surveil-
and governments defended their enjoy cybernetic implants, access
lance tools that they can use to
competitive advantage, and in to personalized healthcare,
monitor and control society.
the case of the 2023 “SDG-gate” life-saving treatments and
People are warier of sharing their falsified poverty and sanitation replacement organs. Those who
data following a series of high data at an unprecedented level. can’t afford such body-work plans
profile data breaches and cyber receive only basic state healthcare,
The World Cabinet has failed to
attacks. although some companies now
legislate any meaningful targets
offer health upgrades in return for
While trust is low, few can afford for post-national businesses,
the right to use your brainpower
to opt out of sharing, as access to but consumers face stricter
while you sleep.
full healthcare and benefits de- and stricter carbon and water
pends on it – states provide only a restrictions.

23
Theme Description

Geopolitics China takes leadership role on global stage, cooperating with US. G2 world
with corporations increasingly influential on global stage. China is the strongest
world-trade hub with Latin America, India and Middle East playing an increasing
role.

Data Data is siloed with a few big corporations controlling data platforms/access to
technology, while the public are wary of sharing information with other compa-
nies. Advances have disproportionately benefited the elite; there is widespread
inequality.

Africa and Asia-Pacific Africa and Latin America prioritized international trade over regional integration
and were hit hard when commodity prices collapsed. Middle East economies
realign based on new interests in post-oil economy.

Government Disempowered public are increasingly dissatisfied with political elite. New sensor
and surveillance tools used to monitor and limit society.

Security and borders Borders open, although disease concerns require all travelers to be continu-
ously monitored during travel. People move fast, limiting exposure to unknown
people or places.

Privacy and trust People are wary of sharing their data following a series of high profile data
breaches and cyber attacks. Trust is low, but increasingly people are locked in to
data platforms.

Business models Companies seek to control data as the platform of choice, acting to preempt
external challengers and seek a first-mover advantage over existing competitors.

Economy Strong GDP growth, having addressed structural issues of 2000s. Economy no
longer dominated by oil – data is the new if inequitable currency.

Values and Communities Society is community-centric. Elites desire authentic and personalized experi-
ences. Those who can afford it live longer, faster, better, while pandemics are
poverty are rife in hive cities and slums.

Environment Too little too late. Poor decisions led to failure to meet global sustainability
targets. Many nations introduced personal market-based incentives, but the
World Cabinet fails to legislate meaningful targets for businesses.

Technology Advances in neuro and biotechnology and healthcare. But inequality in access.

Future of the airline industry 24


Scenario 4: Resource Wars
(Turbulent World / Closed Data)

An aggressive, nationalistic recession than that caused by the zero-carbon and zero-waste cities,
China emerged in the early 2020s, 2008 financial crisis, and public and taking advantage of rapid
threatening a US distracted by and private sector investment improvements in sensor technol-
the aftermath of the 2025 “Water in infrastructure looks like it will ogies, energy and automation.
wars” with Mexico. Meanwhile the fall further. Companies already These mega-cities are the new
Middle East and Asia have seen a have limited access to capital, and economic powerhouses.
wave of border disputes and land community and crowd-funding
Other cities failed to manage the
grabs. has dried up.
transition, either by under-in-
Monetary and trade protectionism Economies are increasingly vesting in infrastructure or being
dominate foreign policies. The inward-looking. Inequality between held back by corruption. In these
world has splintered into resource resource-rich and poor regions is failed cities, the proliferation of
trading blocs, with nations growing, and increasingly security slums and a lack of accessible
striking deals in the hope of and border checks are used to work has encouraged trade in
achieving some kind of stability limit movement. illicit goods, human beings and
in a zero-sum world. Russia has bootleg robots – and increased
If the 21st century is the
consolidated its own bloc, playing violence and organized crime. It
century of the city – then India
off demand for its resources was easier and more attractive
has emerged as the real winner.
from East and West. Intensifying ri- for people to work on the black
India realized that virtual and
valries have resulted in the failure market, using micro-payments and
physical connectivity was the key
of global governance mechanisms blockchain technologies to bid for
to realizing the economic benefits
and nations prioritize policies that jobs, contract and settle payments
of its demographic dividend. It
protect and advance their narrow quickly and off the record.
prioritized the roll-out of free hi-
national interest – resulting in a
speed mobile internet and in 2028 Public authorities are losing the
patchwork of regulation.
the Indian VR Skills Academy was fight for transparency, over-
The growth of the middle classes launched, connecting rural and whelmed by the ever-increasing
in emerging economies has urban communities throughout quantity of data. The lack of
not helped. Companies and the sub-continent and with its standards has not helped, and
governments alike rushed to diaspora. it’s harder and harder to see the
satisfy a new world of consumers forest for the trees.
Having reaped the dividend
who wanted more and better
from its technology and R&D Finally, some countries have
food, faster devices, and to see
investments in the 2020s, India seen a proliferation of small and
the world – but they ignored
also became the first post-road medium-sized cities, growing in
long-term investment decisions
economy, leveraging cheap energy a haphazard and unregulated
and frequently promised what
from its micro-nuclear-reactors fashion, often in rural and peri-ur-
they could not deliver. As the cost
and advances in drone technology ban areas. These cities exist in an
of commodities and water drove
to bypass traditional development unstable equilibrium – swelling
prices up, they were increasingly
pathways. when seasonal and resource jobs
held accountable.
are available, but with limited
In Africa it has not been so simple.
With the global economy now in infrastructure and finite resources
Many resource-rich countries
a tailspin following the meltdown life gets increasingly difficult when
successfully replicated the smart
of the global financial system in they grow too big. Water and food
city model – championed by
2030 who knows what will happen shortages are common.
countries such as Singapore
next. It promises to be a worse
in the 2020s –building dense

25
The Internet of Everything con- Younger generations – the Alphas Streets are safer – AI are constant-
cepts pioneered in the early part – are less bought into these ‘smart ly on the lookout for infractions,
of the century were never realized. lifestyles’ than their parents. They dispatching police and enforce-
Despite efforts to standardize and are increasingly willing to embrace ment drones where needed, and
open up platforms, countries and a less materialistic life and com- routing people away from danger.
companies competed to promote panies have had to adapt to meet People spend more time out of
their own standard and gain a demands from a multicultural, hospital, convalescing at home
competitive edge. Increased cyber multi-generational and ethnically with the help of robot carers, and
security and espionage (across the diverse global marketplace. Diver- new jobs have been created. The
public and private sector) resulted sity has also resulted in tension skills gap has been well managed,
in distrust between both countries between travelers unwilling to with companies and governments
and corporations – as well as compromise on religious and striving to democratize education
having a financial cost. social values. With limited access and skills.
to capital and resources, small
Remember the headlines in 2028 At the same time there is tension
nimble companies have fared
when four of the major biometric between consumers and their
best, with companies ‘innovating
wallets were hacked? Those who states, with the public fearful of
to zero’ – optimizing supply chains
were unlucky enough to have their surveillance by their governments
and removing middlemen.
genome, iris patterns and finger- and cities.
prints stolen are still struggling to Sensor technologies and predic-
There is growing realism about
protect their identity today – and tive analytics have helped track,
climate change’s existential threat
companies had a hard time quantify and predict the move-
to humanity. Environmental
confirming their users’ identities ment of people, materials and
activism is on the rise, reacting
for fifteen years – though peer energy – providing opportunities
to water stress and extreme
validation is starting to restore to recombine resources in inno-
weather. Countries have tried
some level of trust. vative ways. This circular economy
to innovate around the issues –
also pervades people’s lives
Nowadays, it’s not as simple as geo-engineering is increasingly
– hardly anything goes to waste
buying a smart bulb and expecting used to counter extreme weather,
as communities pool unused
it to talk to your smart lamp. Sure, but realism is setting in.
capacity, automate redistribution
you can go open-source but then
and match supply with demand
you wait months for a bug to be
in real-time. Whether for leftover
patched – and, of course, security
food, energy or brainpower.
is a concern.
Robotics and AI has been a
The alternative is to buy into a
double-edged sword. In fast-grow-
single provider, basing your life
ing markets and developing
around their brand. But then
regions with labor-intensive goods
you’re locked in – and if you move
and services, automation has
cities you may find your new city
devastated the economy. In many
doesn’t have an agreement with
sectors though there have been
your preferred provider.
positive developments.

Future of the airline industry 26


Theme Description

Geopolitics An aggressive, nationalistic China emerges and threatens a US distracted by con-


flict. Meanwhile the Middle East and Asia have seen a wave of territorial disputes
and land grabs. The world has realigned into resource trading blocs.

Data Cyber security and espionage have resulted in distrust between both countries
and corporations. The Internet of Everything has not been realized. Countries
and companies compete for access to skilled and technical expertise.

Africa and Asia-Pacific India emerges as the fastest-growing economy in 2035, having successfully
managed its demographic transition and invested in infrastructure and water
technologies.

Government Increased authoritarianism as governments enforce restrictive policies. Growing


shadow economy as governments fail to capitalize on promise of new surveil-
lance and big data technologies.

Security and borders Gaps widen between resource-rich and poor regions, and security and border
checks are used to limit movement between regions. Physical security is increas-
ingly important due to virtual identity theft.

Privacy and trust Regional instability and conflict, coupled with failure to sort out slums has
encouraged trade in illicit goods, human beings, robots (and increased violence
and organized crime). Public increasingly distrustful of institutions due to fear
and corruption.

Business models Small, nimble companies fight to occupy niches – organizations are stripped
back to bare bones as they look to become zero-waste to reduce reliance on
foreign nations. Rise of the circular economy.

Economy Economic growth stalls. Companies have limited access to capital, and both
private and public sectors fail to invest in infrastructure and innovation. Econo-
mies turn inward.

Values and Communities Growing diversity is an increased source of tension among communities, who
are unwilling to compromise on values as consumers. In many countries Gener-
ation Alpha are ready to embrace a less materialistic life. Multiculturalism.

Environment The environment has not been prioritized, but there is growing realism about
climate change’s existential threat to humanity. Limited resources have led to
the rise of the ‘circular economy.

Technology Robotics and Artificial Intelligence have altered the nature of work. Service
robotics, health robotics and policing are ubiquitous.

27
Section 5 – Implications and Recommendations for the Sector

The implications of changes in the During this workshop, we used We focus here on implications
global macro-environment that a ‘wind-tunneling’ method to and recommendations for policy
will affect the airline industry over identify and assess actions that that we consider robust across
the next 20 years and beyond airlines might take that would the four scenarios, even if some
are based on our analysis of have a positive result in different are more relevant in certain
material from different sources. scenarios, and to identify plans outcomes. For example, a resilient
This includes workshops held with and policies that could be supply chain is critical in the
over 50 airline industry represen- expected to succeed in more than ‘Resource Wars’ scenario where
tatives, interviews with experts one (ideally all) scenarios. The there is increased conflict; while
from academia, industry and scenarios are not predictions of investment in alternative fuels
government, and our construction what will happen, but between is particularly important for the
of potential interactions of 11 them contain our best assessment ‘Sustainable Future’ scenario in a
themes drawn from this research of developments and events that low-carbon world.
across four hypothetical future might be expected to happen. As
Within each of the categories
scenarios (see section 5). such, they are a useful test-frame
we have identified a selection
for policies and actions.
A second industry workshop recommendations for IATA and
was held in June 2016 (at the its members (blue boxes). These
IATA AGM) to review the full set recommendations take into
of scenarios and consider what account deliberations with IATA’s
their implications might be for the Industry Affairs Committee.
airline industry.
A list of the recommendations is
provided in Annex D.

Future of the airline industry 28


1. Geopolitics

1.1 GEOPOLITICAL TRANSITIONS AND REALIGNMENT

We are already seeing tensions EU may continue to fragment after Implications


geopolitical arena as we experi- Brexit and with the rise of right-
To ensure global standards, the
ence a long-term shift of wealth wing protectionist groups, thus
sector will need to support the
and economic power from West presenting opportunities for the
role of existing international insti-
to East. other regional powers to increase
tutions. It will also be necessary
their influence.
Existing international institutions to work with new institutions to
such as ICAO, UNWTO, U2, and As this transition takes place, extend and reform legislation and
the G20 will be increasingly competing standards may arise, test new approaches in a push
challenged. China is already not only for regulation, but also for towards greater harmonization.
asserting its influence through security and consumer protection.
As new countries and regions
bodies such as the New There could be a split between an
become more dominant, effort
Development Bank (NDB) and Eastern and Western approach to
should be made to understand
the Conference on Interaction aviation governance.
the role of new institutions at both
and Confidence-building in Asia
a national and regional level, and
(CICA).The US may step back from
to ensure balanced representa-
international commitments, China
tion in global discussions.
may undergo a debt crisis, or the

Recommendation 1: IATA should continue to support global standards bodies such as ICAO, and think strategi-
cally about how the relationship between IATA and these institutions will evolve. It will be important to maintain
global standards for a global industry, especially in futures that are increasingly multipolar or where there are
shifts in the balance of power.

Recommendation 2: IATA should engage early with new institutions (such as the New Development Bank) in
order to play a more significant role in enacting or influencing aviation policy in the top markets in 2035 (China,
US, India, UK, EU and Indonesia) .

29
1.2 PEACE AND SECURITY

Over the past 30 years there especially where states have Implications
has been dramatic growth in a monopoly on particular raw
Could safety and security become
international trade, driven by rapid materials.
important differentiators for
globalization and accompanied
Even without conflict, perceptions airlines?
by a shift towards democracy.
of terrorism risk will have a
Over the coming 30 years there is Airlines will need to maintain
significant influence. For example,
uncertainty as to whether this will robust, redundant supply chains
up to what point will the insurance
continue. to protect themselves from
market continue to cover airline
global wide-scale disruptions.
If the current political volatility risk?
They should look at the possibility
continues, new conflicts may
While some of these risks will be of introducing new technology to
disrupt the movement of both
outside the control of the airline limit increases in insurance premi-
people and goods. War would
industry, insurance premiums ums and explore the possibility of
have both an immediate and
may be kept down by introducing global airline insurance.
long-term impact on tourism,
technology to limit human error
infrastructure and people’s ability
(e.g. automated planes) and to
and willingness to travel.
counter cyber risks.
Conflict involving major states
may damage global supply chains,

Recommendation 3: IATA should advocate for greater flexibility in routing and scheduling that might allow
airlines to deal wiht implications of capacity issues caused by conflicts and other major disruptions.

Recommendation 4: IATA should develop an “emergency response” set of guidelines and procedures that could
be implemented rapidly by airlines if the security situation becomes more turbulent. These may include passen-
ger screening, data sharing and security procedures.

1.3 NEW FRONTIERS

Future conflict (or cooperation) China has recently launched its Implications
may originate in many areas as first quantum telecommunications
The industry will need to build
nations seek to appropriate or satellite.
relationships with private actors
colonize new territories, from
Private actors may play a role as as well as governments, particu-
outer space to the oceans, for
companies such as Deep Space larly since governmental focus on
access to natural resources and
Technologies and Space X take on airlines’ needs may be diverted
land, or technological or military
roles traditionally the domain of towards new entrants such as
superiority.
governments. space technologies.

Future of the airline industry 30


2. Africa and Asia-Pacific

2.1 NEW MARKETS

The global population is expected As new markets come online it will Implications
to reach 8.5 billion by 2030 and be important to understand not
The industry should build market
9.7 billion in 2050 with half the only where the customers are, but
intelligence to understand the
growth to 2050 coming from India, how they will consume, including
potential of new origins and
Nigeria, Pakistan, Democratic their travel preferences, price
destinations. The IATA passenger
Republic of the Congo, Ethiopia, sensitivity and the role of diaspora
survey is one mechanism for
Tanzania, the United States, communities; also the potential of
understanding customers’ pro-
Indonesia and Uganda. these new markets as a source of
pensity for travel and preferences
labor and capital.
Out to 2030 there is optimism for different services. However
over the impact Africa will have as One risk for airlines is that uneven further work may be necessary
a new global political and eco- and volatile economic growth may to explore how the industry can
nomic force, and growth of middle result in funds being “trapped” meet customers’ needs.
classes in China and Asia-Pacific, in countries unable to repatriate
with impressive spending power. them on account of foreign
currency export restrictions.

Recommendation 5: IATA should increase its engagement with stakeholders from Africa and Asia-Pacfic (govern-
ments, think-tanks and other bodies that influence government policy) to deepen the industry’s knowledge of
how decisions are made and how those decision-making processes will evolve. This will ensure that regulations
introduced do not limit the potential of these markets.

2.2 INWARD OR OUTWARD

Growth in air travel is likely to be Urbanization is a strong trend Implication


driven by domestic and regional in many developing countries,
Advocacy on infrastructure
flights in fast-developing markets but not all cities will be created
development could be focused on
in Africa and Asia rather than equally. While the vision of urban
particular countries (for example,
existing international routes. powerhouses and smart cities
encouraging China to invest in
Where connectivity has been may be realized in some places,
certain African states), however
limited for decades, the pace of elsewhere there could be failed
strategies should consider the
change is likely to increase even cities, slums and a lack of infra-
potential distorting effect on
more dramatically. structure. Other places may not
regional traffic flows.
choose to prioritize air travel.
Against this, geopolitical, environ-
International airline groups should
mental and other challenges may In Africa, political and social
consider investments in emerging
slow the development of these tensions may limit the growth
as well as traditional markets, and
markets, and some countries may of intracontinental hubs, and
should communicate the value
choose to build preferential trad- poverty, corruption and bad
of aviation to emerging markets,
ing relationships with states that governance may hold things back.
highlighting the social as well as
offer infrastructure investment
economic benefits.
in return for resources, rather
than using market-based criteria.
This may limit the potential for
intra-regional growth.

31
2.3 HUBS AND SMALLER AIRPORTS

High-speed trains are likely to As this happens, the role of Implications


take business from airlines over airlines may shift to long-haul
The sector should take a more
shorter distances. Some new tech- international flights, making
holistic approach to infrastructure
nologies, if they prove viable, may relationships with other transport
development and establish
also compete on performance by providers more important.
closer relationships with providers
providing faster connections over
At the same time, there may be a that are not just focused on air
longer distance (e.g. hyperloop,
shift towards more point-to-point transport infrastructure (e.g.
drone companies, unmanned
travel. Secondary and tertiary urban planners).
aircraft companies, and private
airports may benefit from efforts
actors such as Space X). IATA could help develop relation-
to combat increasing congestion
ships with ‘new’ forms of trans-
at hubs.
port. Options include partnerships
and development of shared
infrastructure to boost passenger
flows, as well as improving
connections between different
modes of transport. This would
improve access to airports in large
population centers, and direct
connections with such locations
will enable faster and more
efficient growth in connectivity.

Recommendation 6: IATA should foster relationships with secondary and tertiary airports. These may offer
additional capacity in situations where hubs become overcrowded, or where new technologies, automation
and business models allow airlines to bypass hubs and establish new intermodal connections (e.g. Uber-type
business models).

3. Security and borders

3.1 BORDERS OR CONDUITS

Open borders and movement are Global instability, however, may Implications
positive for the airline industry, lead to nations building higher
Airlines should campaign for
and as the process of moving walls. For example, restrictions
greater connectivity, making the
people and goods becomes more may be imposed on travelers
case for supporting tourism and
seamless and automated, the through tougher visa rules or
trade by reducing costs, easing
industry can increasingly position travel restrictions.
visa rules and offering incentives
itself as the conduit of choice for
If countries do impose more to appeal to growing markets.
people and goods.
border controls, airport borders
At the same time, the industry
still maintain the advantage of
should continue to innovate
being relatively easy to police
and invest in security to ensure
compared to land or sea borders.
that aviation continues to be the
conduit of choice.

Future of the airline industry 32


3.2 INFECTIOUS DISEASES

There is likely to be increased As technology drives down the Implications


risk from infectious diseases, cost of detecting, diagnosing and
Airlines may be asked to take on
particularly given the rapid pace of treating infections, airports and
more responsibility for monitoring
urbanization. airlines may increasingly become
and mitigating the spread of
assets in managing infectious
The traditional view is that airports pandemics, despite the fact that
disease, rather than being
can be a hotbed of contagion. In responsibility usually lies with
perceived as a risk.
a world where restrictions are governments. The industry may
in force, however, the airport benefit from working with WHO to
becomes a strategic asset for ensure governments are aware of
countries to control flow and their role in pandemic response.
spread.
The role of airlines as a strategic
asset supporting governments’
public health objectives for both
detection and containment of
diseases could also be highlighted.

Recommendation 7: With the increasing risk of pandemics, a global approach to managing infectious diseases
becomes ever more important. While airlines need to be vigilant and prepared, IATA should also stress the
increasingly important role that all stakeholders, particularly governments, need to play to ensure that responses
are in line with WHO guidance and international health regulations.

3.3 BIOHACKING

As the cost of technology contin- As use of home-made technology Implications


ues to fall, connectivity increases becomes more widespread, it
Additional screening regulations
worldwide and knowledge creates challenges for security and
are likely: the industry should
becomes more accessible, we will monitoring.
advocate for such regulation to be
see the growth of home-made
Without regulation and monitor- harmonized globally and ‘smart’.
technology and biohacking.
ing, it will be hard for security to
For example, ‘DIY’ open source More changes may need to be
stay on top of a proliferation of
diabetes equipment is increasingly made to improve the processing
devices and technologies.
being used by Type 1 diabetics, of passengers, such as standard-
while neuro implants are being izing screening, introducing new
used to treat paralysis. technologies, ensuring passenger
data is available and streamlining
security.

Recommendation 8: IATA should work with appropriate organizations to drive the establishment of globally
harmonized standards to address biohacking.

33
4. Environment

4.1 SUSTAINABILITY LEADERSHIP

The increasingly visible impact The Sustainable Development Implications


of climate change, from habitat Goals (SDGs) were ratified in
In addition to building ties with
loss to resource scarcity, is likely 2016, setting out ambitious global
national governments and
to harden public attitudes, and targets for the next 15 years. As
regulators, there is an opportunity
increased attention will be paid to nations adopt these targets, both
for airlines to strengthen their
these issues on the global stage. governments and consumers may
global public reputation as the
become increasingly demanding
“provider of essential connecting
of the aviation industry.
infrastructure that serves people,
rich and poor, around the world.”

Recommendation 9: IATA should continue to support the industry’s efforts on environmental sustainability
and re-evaluate, on an ongoing basis, its activities in this area. Environmental performance is one of the key
elements of society’s changing expectations of aviation and an element which becomes increasingly critical in a
resource-constrained world. But sustainability isn’t environmental alone, and countries’ expectations of airlines
will move beyond the environmental sphere. In that vein, IATA should explore other ways in which the industry
has or can have a positive influence in the world, potentially linking these to the UN Sustainable Development
Goals 2030.

Recommendation 10: IATA should establish an industry-wide corporate responsibility programme, with a focus
on transparency, safety and the environment that could help IATA to drive global standards and ensure the
sector remains competitive in a world where there is increasing competition from other transport modalities.

4.2 CONSPICUOUS CONSUMPTION OF ENERGY

Demand for jet fuel may be Airlines that invest in alternative Implications
reduced by the use of biofuels or fuel technologies or radical
The sector should continue
the introduction of new engine designs may be perceived pos-
to support efforts to improve
and aircraft designs. Meanwhile itively by travelers and increase
environmental sustainability.
alternative energy sources will their share of the market.
come into use outside of aviation. To accelerate industry investment
in this area, government support
If adoption of new technologies
will be needed to develop a
by the industry is slow, airlines
sustainable market for alternative
increasingly run the risk of being
fuels, for example by investing
seen as “conspicuous consumers”
in biofuel development and
and face increasing pressure in a
infrastructure.
low-carbon, renewables world.
The approval of the ICAO Carbon
Offsetting and Reduction Scheme
for International Aviation in Octo-
ber 2016 provides momentum for
further industry efforts reaching
beyond traditional market-based
measures (operations, infrastruc-
ture and renewables). The sector
should continue to promote
research into, and production and
commercialization of alternative
fuels.

Future of the airline industry 34


5. Economy

5.1 GLOBAL ECONOMY

Over the past ten years there The industry already has robust Implications
has been growing awareness of economic modeling, but new
It is important to continue to
the interconnectedness of the approaches such as crowd-sourc-
identify, monitor and share
global economy, and its volatility ing may help airlines better
information on sources of dis-
is unlikely to decrease during the monitor and anticipate changes to
ruption from outside the aviation
next 30 years. behavior and sentiment.
industry, and may be useful to
To address this volatility, the There may also be a case for track changing social attitudes as
industry would benefit from an developing an industry safety well as economic metrics.
‘early warning system’ to identify net, or new models for sharing
potential disruptions and systemic exposure to infrastructure
risks, as well as changes in social investments, taking into account
attitudes. boh the airlines’ economic and
wider social value.

Recommendation 11: IATA should create an internal early warning group with the task of ensuring that the
industry is prepared for possible threats. This group could distill a set of early warning indicators from this
scenario report and similar publications, create a timeline of expected developments, and update it regularly.

5.2 POST-OIL ECONOMY

Contingency plans are already in A sudden surplus of energy would Implications


place for sustained high oil prices have a destabilizing effect on the
The industry should plan for
(or scarcity) and the expectation is price of oil. It could also reshape
radical disruptions to the energy
that fuel efficiency and a drive to the debate about fair competition
market, beyond oil price fluctua-
reduce greenhouse gas emissions and liberalization, while a more
tions.
will be the key determinants over gradual diversification may over
the next ten years. time have the same affect. In developing a plan for post-oil
economies, there is an opportu-
However, while a post-oil aviation
nity to position the aviation sector
industry may be unlikely in the
as a means of facilitating econom-
next twenty years, it is possible
ic growth, economic openness
that an energy breakthrough
and global trade.
may occur in other areas, such as
nuclear.

35
5.3 WORKFORCE AND SKILLS

Aviation depends on high-skilled New technologies including AI and Implications


employees, whether pilots, automation will fundamentally
In the short-term the industry
engineers, air traffic controllers, change what work is perceived to
will need to invest in skills and
or safety inspectors. In the be.
structures to keep pace with a
medium term there may be skill
While some jobs in the aviation changing workforce, and position
supply issues due to the increased
industry will be shielded, it is aviation as a sought-after industry
demand from emerging markets.
likely that others will evolve e.g. for young job-seekers. It may also
In the longer term we may see customer service will focus on the need to use new technology to
more fundamental changes to the tricky rather than the routine, and ‘fast-track’ the gaining of ‘experi-
nature of work. Already there are accounting and legal work could ence’, specifically for pilots.
shifts towards on-demand work, be disrupted by blockchain-type
In the medium to long-term it
taking advantage of new technolo- technologies.
will be necessary to manage the
gies to allow people to work when
And as the nature of work transition to automation, which
and where they want.
changes globally, expectations may require a smaller workforce.
of remuneration and incentive This transition will need to be
structures will also shift. The managed with the unions and
work ‘contract’ – moral as well as regulators.
legal – will change. This is likely to
be accompanied by unrest in the
workforce.

Recommendation 12: IATA should develop a plan for educating and influencing the next generation of airline
industry employees and users (e.g. 15-25 year olds). As new technologies and value shifts change how and why
people work, the industry will need to invest in skills for future aviation leaders and workers, and communicate
the benefits of working in the sector.

Future of the airline industry 36


6. Data

6.1 DEATH OR REBIRTH

Airlines may struggle to defend These corporations could take Implications


their position as a distinct, auton- over customers, steer airline
Airlines should prioritize
omous industry, faced on the one demand and network shapes,
developing a data strategy. They
hand with substitute transport frequencies and schedules.
can argue that their systems for
options, and on the other with a
A parallel from a different field handling data – including passen-
fundamental challenge to their
– and where a data strategy was ger information – are generally
business model from data inter-
initiated too late – is the attempt robust and respect privacy. They
mediaries that increasingly ‘own’
by journalism to wrest back should explore (before it’s too
the customer and view airlines as
control over news content and late) opportunities for partnering
a commodity supplier of space on
data from organizations such as with consumer-facing software
aircraft.
Google and Facebook. and data companies who wish to
“Big data” companies represent connect with the data owned by
Or do airlines overestimate the
an immense threat and also an airlines and who commit to re-
market power they have? Does it
opportunity to airlines. Google, specting the integrity of that data.
reside in more than their ability to
Amazon, booking.com are ex- An alternative may be to acquire
give customers a great deal?
amples of companies that take a companies that can hold their own
forward-thinking approach to their against the data companies, but
handling and analysis of data, but airlines may lack the capital as well
also in their commercial thinking. as the will to do this.

At an industry level, airlines


need to make the case for their
ownership of data, including
efforts to standardize data
(where appropriate), mechanisms
for gathering and sharing data
safely for both commercial and
operational purposes (including
disruption management and
passenger communications). This
will require investment in both
systems and skills.

At an industry level, airlines


should try to ensure that any new
government regulation of data
is proportionate by developing
voluntary initiatives and standards,
including principles for protecting
customers’ data.

Recommendation 13: IATA should consider measures that support airline ownership of data (e.g. safeguarding
privacy, commitment to common data protection procedures), and look to establish a global industry-wide
position on data protection. A more open approach to data and interoperability at a global and industry level
may be more positive for the industry and for consumers.

37
6.2 FREQUENT FLYERS AND PERSONALIZATION

Airlines cannot build brand loyalty Frequent flyer programs will Implications
without having access to passen- become less effective as customer
To protect against the weak-
ger data. They also need this data loyalty shifts to big data corpora-
ening of the airline-customer
to understand customers’ needs. tions and their incentive systems.
relationship as data companies
With an incomplete understanding
encroach on their market, the
of spending and decision-making
industry should explore strategic
habits airlines must rely on
partnerships with data companies
correlation rather than hard data.
now, while in a position of relative
strength, and while their brands
are still strong.

6.3 SUPPLY AND FLOW

Advances in data processing, In maintenance, repair and over- Implications


sensor networks and geographic haul – but also flight operations
Airlines could use advances in
information systems are already – a combination of new sensor
sensor networks and materials
shaping aspects of the air technology and smart materials
to look for new ways to negotiate
industry, from purchasing and will allow real-time analysis of
contracts with their suppliers.
decision-making to supply-chain components in airplanes, poten-
flows, aircraft routing, financial tially redefining how the contracts Technologies such as blockchain
relationships with partners, and they enter into, for example by have the potential to change how
movement of people through specifying performance, not parts. financial and other transactions
airports. are recorded, agreed and settled.

As more information becomes


available, the industry will
increasingly be able to recognize,
anticipate and apply advances.

Recommendation 14: IATA is already in the process of exploring how to take advantage (and manage risks) of
new technologies such as blockchain. We suggest also looking at the effect this and other new technologies can
have on the business relationships on its member airlines. Can blockchain play a role, for example, in rebalanc-
ing the value chain?

Future of the airline industry 38


7. Privacy and Trust

7.1 TERRORISM

Will the industry keep pace with Will passengers have to get used Implications
(or be able to anticipate) new to intrusive security procedures,
Airports can claim to be relatively
forms of terrorism enabled by the as already applied in some
safe places compared to many
democratization of technology, airports ?
other public spaces such as rail
including the risk of hacking and
At the same time, airports are in stations, and also benefit from
malicious use of drone technolo-
many ways easier to secure than strong experience in security
gy?
train stations, buses and metros, provision.
while rigorous security measures
At the same time, a significant
further enhance passenger safety.
challenge remains to secure land-
side access to airports, particularly
as these land-side infrastructures
increase in scale.

Recommendation 15: The industry should monitor proposals to extend or evolve the security cordon around
airports to ensure that governments continue to be ultimately responsible for the safety of their citizens.

7.2 CYBERSECURITY

There is growing awareness While the industry can take steps Implications
and concern about threats from to develop robust, secure systems
It will be important for the industry
cybersecurity. and minimize risks within the
to take an active approach to
supply chain, the proliferation of
As systems and planes become cybersecurity, harmonizing
standards and devices will make it
increasingly automated, the risk standards, and developing preven-
harder to secure its own assets.
and potential impact of an attack tion and detection strategies that
or breach will continue to grow. Meanwhile, technology-laden move beyond their own systems
passengers and cargo present to deal with risks associated with
additional targets outside of the passengers and cargo.
industries’ control.

Recommendation 16: IATA should consider establishing an information exchange mechanism for airlines to
share information on cybersecurity threats (as part of a cybersecurity strategy). Cybersecurity is likely to be
a major issue that will require the industry to work with companies across the entire supply chain, as well as
governments to manage risk.

7.3 PERSONAL PRIVACY

Expectations of personal privacy Will people be willing to give up Implications


will be tested and the issue will data in return for other benefits,
There is an opportunity for airlines
become an area of attention for and how will they be incentivized
if they are able to develop the
regulators, who will have trouble to do so?
range and quality of their services
keeping up with the pace of
to customers using the data they
change.
hold, while demonstrating that
they are secure guardians of pas-
sengers’ confidential information.
An industry-wide commitment
to privacy may avoid the need
for regulators to intervene in this
area.

39
8. Technology

8.1 SHARING AND POST-SHARING

Startups are likely at some point Meanwhile, competition for tradi- Implications
to seek to develop alternatives to tional parts of the freight supply
Airlines need to identify these
the airport hub model by flying chain may come from new places,
challenges ahead of time and act
planes from even smaller airports for example Deliveroo in the UK is
on this research, by inviting new
than those favoured by today’s pitching itself as a next-generation
operators to link to established
new model airlines. logistics company.
hubs and airlines, and potentially
‘Passenger drones’ or variants on by taking ownership stakes in likely
personalized aircraft (for example challengers.
with rooftop take-off) may have
The industry could highlight the
some impact, but a more sub-
opportunities for startups to
stantial threat may come from the
provide services that complement
extension of an Uber-type algo-
those offered by airlines in
rithm-based integrated transport
transport, MRO and other sectors.
system that links up small aircraft
capacity at local airfields (possibly
upgraded with ‘remote tower’
technology) to provide medium to
long distance ground-air-ground
travel options.

Recommendation 17: IATA should engage with novel transport providers (hyperloop, drones, unmanned
aircraft, space travel companies) to explore potential cooperation as well as shared needs. In a future where
passengers want to travel faster and prioritize convenience, seamless travel and connections between providers
will become increasingly important. One option may be to widen IATA membership to include air transport
operators who are not airlines.

8.2 AUTOMATION OF PLANES

Technology in self-driving cars may Safety checks, loading and Implications


pave the way for more relaxed transport of freight could be
The industry should work with
attitudes to automation. At the automated progressively, bringing
other industries to ensure that
same time, there will be risks efficiencies for freight forwarders
aviation benefits from standards
around the co-existence of piloted and reducing costs for airlines.
and regulation developed in other
and pilotless flights in the same
domains.
airspace (a risk already present
with drones). Regulators need to understand
that the rules for the aviation
Technology already enables
industry will require a separate
pilotless flights. Freight shipment
elaboration process from that
represents an opportunity for
followed for driverless cars.
airlines to develop cutting-edge
technology without watering down
their commitment to passenger
safety.

Recommendation 18: Automation is expected to have a significant impact on transportation and logistics. To
ensure that the airline industry benefits, IATA should establish a working group including both manned and
unmanned aircraft operators to facilitate standard-setting and information sharing.

Future of the airline industry 40


8.3 SUBSTITUTION

The ultimate substitution As social attitudes change and Implications


challenge for airlines comes a new generation of travelers
There is a need to explore oppor-
from people deciding not to brought up on these technologies
tunities for virtual and augmented
travel. Although claims for remote comes online, it is likely there will
reality to supplement rather than
working and videoconferencing be increased demands on airlines
replace travel experiences. This
systems have not been realized so and airports to integrate VR and
would include the passenger
far, as prices fall and the technol- AR into their entertainment and
experience when choosing
ogy becomes mainstream, the operational offerings.
destinations, or entertainment
next generation of virtual (VR) and
in-flight and in transit.
augmented reality (AR) systems
may make travel an expensive
luxury for many business purpos-
es, and could also make inroads
into the consumer market.

8.4 AIRPORTS OF THE FUTURE

Will airports expand to become This will be determined in part Implications


“aerotropoles”2 – developing their by the demand for and cost
It is also possible that rather
own hinterland and ecosystem of of human resources in the
than being eliminated, human
services – or shrink as ground-air airline industry. Technology
resources could be redeployed
interconnections become more improvements mean that both
to improve the flight and airport
seamless? in-flight and airport services may
experience and capitalize on
increasingly be automated in the
passenger flows, extending the
name of efficiency, and possibly
current airport shopping and
safety.
hotel experience to a range of
other facilities.

There is a risk that airports, at an


individual or global level, may seek
to secure revenue by introducing
initiatives such as commitment
charges for unused slots, new
mechanisms for trading or
auctioning slots, or new contractu-
al terms.

The way airlines are factored into


planning processes for airports
may also evolve, and the sector
may want to take action to ensure
airlines are fully integrated into
the planning process.

Recommendation 19: IATA should build relationships with those responsible for urban planning (not just air
infrastructure authorities) to ensure industry needs are linked into infrastructure planning, particularly when
there are major plans for developments around airports.

Recommendation 20: IATA should use the strategic review of the Worldwide Slots Guidance as one mechanism
to improve the efficienct use of capacity and guard against revenue commitment and market allocation of slots.

2
John Kasarda, Director of the Center for Air Commerce, Kenan-Flagler Business School;
University of North Carolina; CEO Aerotropolis Business Concept

41
9. Values and Communities

9.1 CONSUMER EXPECTATIONS

Will the traveling public be Affluent travelers will demand Implications


ready to accept lower levels of special (including segregated)
There is a big prize for airlines that
comfort to enjoy lower costs? treatment at all stages of the
demonstrate the ability to take
Or will flying become (more so journey, which could result in an
care of all passengers, whatever
than it is already) a destination, increasing divide between classes.
their needs.
hobby, experience? Or might both
Consumers may organize using
happen? Although the cost of doing this
new technology to challenge the
is significant, the automation of
Parties and weddings on airplanes pricing power of airline systems
some roles currently filled by
could become commonplace. (“Groupon effect” versus yield
airline staff may allow the retrain-
Children already want 5-star management systems).
ing and reallocation of personnel
hotels and expect an ‘always on,
to make this happen.
always connected’ data world.

9.2 DIVERSITY

An increasingly diverse customer More multilingual staff will be Implications


base (nationality, ethnicity, religion, needed. As a result of the growth
Where possible, airlines should
language) will have significant of China’s middle class there are
use their influence with partners
consequences, from dietary already more than 100m Chinese
and suppliers to speed up,
requirements to religion and passengers who don’t speak
simplify and make more agreeable
prayer times. English. This will increasingly place
the full, door-to-door passenger
new demands on cabin crews.
Organizations representing the journey. The new generation of
needs of different groups will ‘Simplifying my life’ will be of travelers, raised on smartphones
demand new processes, proce- increasing importance to a large and journey planners accurate
dures, and regulation. number of busy people. Some to the minute, have less patience
may want the shopping and with unnecessary time spent
restaurant experience; others in airports, and particularly in
would prefer a direct path to the queues. Passengers may be willing
boarding gate. to share the information neces-
sary to smooth their journeys.

Future of the airline industry 42


9.3 PASSENGER CARE

The aging demographic of many Healthcare may need to be Implications


(particularly developed) countries provided in airports and in planes,
The physical infrastructure of
means there will be more old and and robotics may be an efficient
planes and airports may need to
infirm people wanting to travel by and safe way to cater to some
be radically redesigned to facilitate
air. Airlines will benefit from efforts needs.
accessibility.
to make their experience safe
As demand for travel increases,
and comfortable, both on board In the short-term planes may need
it may be increasingly difficult to
and in the airport. Also, many to carry more medical devices,
turn planes around rapidly, for
new passengers traveling long supplies and staff. It may be
instance as the percentage of
distance will not have a good level possible to use ‘traveling health-
people needing wheelchairs or
of English or another commonly care professionals’ and advances
assistance increases. Will planes
used language at their destination, in healthcare robotics, as well as
need doctors or other medical
and will require support from therapeutic devices.
staff on board3?
ground staff on arrival as well as in
the air.

Recommendation 21: IATA should establish core principles on facilitating the travel of older passengers and
those with reduced mobility. An increasingly active aging population and changing attitudes to disability are likely
to result in a greater need for the industry to support passengers with special requirements, for example on
account of age, medical need or disability.

2
John Kasarda, Director of the Center for Air Commerce, Kenan-Flagler Business School; University of North Carolina; CEO Aerotropolis
Business Concept

43
10. Government

10.1 INFRASTRUCTURE

The multi-decade time frame for Investment will clearly be needed Implications
investment in infrastructure is a to meet changing expectations
The sector should encourage
challenge, especially coupled with and demand for travel. However,
governments to take a joined-up
political indecision. Who will fund differences in the level of com-
approach to transport, to enable
infrastructure of the future? mitment of governments to the
multi-modal strategies to flourish
aviation industry, or lack of finance
and reinforce the need for global
means that some cities or regions
coordination.
will get left behind.
This should be part of the
Countries with longer planning
argument for the wider value of
timeframes (including some
aviation as the ‘internet of trans-
authoritarian governments) are
portation’, with seamless switching
likely to gain the upper hand in the
at the national and global level.
timely provision of infrastructure.

Recommendation 22: IATA should keep an eye out for aviation funds being diverted to ‘new frontiers’ (such as
space travel). It could also prepare a list of infrastructure issues on which the sector may need to advocate in the
future. Where regions have insufficient state finance or commitment to the sector, it may be necessary to look at
alternative funding models.

10.2 FINANCIAL AND SAFETY REGULATION

Advances in data and analytics will The industry may benefit from Implications
offer new ways for governments taking the initiative in opening
The industry could choose to put
to monitor, understand and up data, thereby demonstrating
in place measures to monitor
intervene in the lives of both their openness, as well as their
performance and share this
citizens and businesses. safety record and environmental
information with governments and
performance.
Governments are likely to demand the public.
more information to help them Such a shift would also help
monitor the impact of market the industry address consumer
interventions, environmental concerns in these areas.
standards, efficiency and safety
regulations.

10.3 MILITARY AND GOVERNMENT OWNERSHIP

Having a flag-carrier could turn ‘insurance’ premium to airlines in Implications


out to be an act of foresight if the exchange for the right to com-
Medium-term capacity choices are
world becomes more threatening mandeer aircraft in emergency?
affected by government owner-
and more protectionist. (Power stations are paid a premi-
ship of airlines in some markets.
um to have extra power available
Fleets and other equipment may
in case there is a surge in demand At times and in some countries
be requisitioned by the military. In
for energy.) there may be increased political
other circumstances, international
pressure to serve specific under-
connections may be required to This would be at odds with recent
served destinations.
be kept open when not commer- moves towards “open skies”
cially justifiable. relaxing of ownership and control Flight routes should be seen as
rules. strategic infrastructure that needs
Should governments pay an
protection and investment.

Future of the airline industry 44


11. Business Models

11.1 NEED TO INNOVATE

The airline industry has seen Customer service, social values, Implications
few fundamental challenges to and simplicity will become increas-
The industry will need to focus on
business models over the past ingly important as consumers
customer service and interaction
30 years, except for the arrival of expect more personalized solu-
with passengers.
Low Cost Carriers (LCCs) and the tions.
introduction of alliances. It will be important to leverage
Companies that control data will
existing strengths, including
Airlines struggle to differentiate have an advantage over existing
reputation as a trusted, safe and
themselves, competing on competitors in developing new
mature industry .
network availability and to some niches.
extent on pricing and service.
It is important for airlines to
Profitability remains low.
consider whether they should
There is the potential for airlines compete with newer, asset-light
to take advantage of advances in data companies or instead build
automation, new transport modes, relationships.
and consumer attitudes.

11.2 CATERING FOR NEW CUSTOMERS

Who are going to be the custom- It is also clear that the average Implications
ers of the future and what will they age of customers is increasing,
Further research is needed to
want? and therefore airlines need to be
understand who the new custom-
equipped to cater to the needs of
The global population continues ers are, their needs and what they
older passengers or passengers
to grow at a significant pace, which will expect from airlines.
with reduced mobility – not just in
will mean more passengers from
the air, but at every stage of their
both existing and new markets.
journey.
One fairly well predictable and
powerful theme is the growth of
the middle class in emerging mar-
kets, particularly India and China.
IATA should make every effort to
understand these customers and
their preferences though targeted
surveys.

Recommendation 23: IATA should make every effort to understand consumer attitudes in emerging markets,
as well as how government and business in these countries view the role of the airline industry, in order to get
ahead of potential future regulation.

45
Conclusion

To consider the future of a major With the help of IATA and in We therefore encourage you to do
economic sector – one important particular members of the your own thinking. Use the drivers
in its own right and which in Industry Affairs Commiittee, we of change and scenarios to con-
addition provides vital connecting have identified an initial set of sider the future of your business
infrastructure for the lives and implications of these drivers of or institution, as the case may be.
livelihoods of a large share of the change and scenarios for the How well would your organization
world’s population – is an exciting airline sector as a whole, and be doing in each of the scenarios?
but also daunting task. based on these, have set out What changes could it make to
some recommendations. be better prepared? How can
This study identifies the many
you incorporate findings in future
factors and forces ( ‘drivers of You may or may not agree with
plans or strategies?
change’) that we need to keep an the implications and recommen-
eye on when taking decisions that dations. What is unlikely though Consider getting people from
shape the future of the airline is that these lists are complete as different parts of your organisa-
industry and, directly or indirectly, far as your business is concerned. tion involved in this thinking, even
the lives of the millions of people As an industry-level organisation, your suppliers and customers.
that depend on it. IATA’s role is not to look at the Build these perspectives into your
ways individual organizations strategic planning process.
It also sets out some scenarios
are exposed to or can benefit
that the industry may face in We hope that the material in this
from changes in their external
2035. In order to create these, report will provide some guidance
environment. Some factors will
we have had to construct – using over the months ahead, but more
be important for a particular
the drivers of change and many importantly that it will spur new
airline but not for another; some
hypotheses – how the world may thoughts and catalyze new ideas.
changes will be positive for one
have changed between now and We look forward to updating it
part of the industry supply chain
then. We hope the scenarios are when new drivers of change enter
and negative for another; or good
helpful in providing a sense of the scene, or ones that we have
for one region and less good for
the scale of the changes that will underestimated surprise us (as
another.
occur. One thing we know for sure they will) – there is no last word on
is that 2035 will be very different the future!
from today.

Future of the airline industry 46


Annex A – List of Interviewees

Interviewees

IATA and SOIF would like to thank the following for generous contributions of their time and expertise during
Phase 1 of the project.

• Carlos Grau Tanner, Director General, Global Express Association

• Ian Pearson, Futurizon

• Luc Tytgat, Director, Strategy and Safety Management Directorate, EASA

• Robin Hayes, CEO of JetBlue

• Roger Dennis, Director, Innovation Matters

• Rosemarie Forsythe, Former Director, International Political Strategy at ExxonMobil

• Sheila Remes, Vice-President of Strategy, Boeing

• Ben Page, CEO, Ipsos MORI

• Harry Woodroof, Head of Personnel Research, UK Royal Navy

• John Kasarda, Director of the Center for Air Commerce, Kenan-Flagler Business School; University of North
Carolina; CEO Aerotropolis Business Concept

• Tony Tyler, former CEO of IATA

• Margaret Tan, Director of Air Transport, Singapore Civil Aviation Authority

• Peter Gerber, CEO, Lufthansa Cargo

Additional contributions

• Conrad Clifford, RVP for Asia Pacific, IATA

• Carole Gates, Industry Risk Management & Insurance, IATA

47
Annex B – Driver Prioritization

During the online assessment exercise, participants The high impact, but relatively certain drivers (Set 2)
were asked to assess the 50 drivers of change to included Middle class growth in Asia-Pacific, Global
identify those that (a) were likely to have a high impact population growth, Internet(s) of Things, and New
on the sector out to 2035 and (b) where there was a aircraft designs, and International regulation of emis-
high level of uncertainty as to what that impact would sions and noise pollution. Meanwhile, high uncertainty,
be (see Figure X). lower impact drivers (Set 3) included three additional
environmental drivers – and it was interesting that
A set of thirteen drivers (Set 1) was identified as having
environmental drivers were generally ranked more
greater than average impact and uncertainty. These
uncertain that other STEEP categories.
drivers indicated ‘critical uncertainties’ that we would
reflect in the scenario development. Finally, we looked for drivers that had a greater
variation in voting by participants i.e. those drivers
Four additional sets of drivers were considered
where there was less consensus on the level of impact
important when developing the scenarios: the top
(Set 4) or uncertainty (Set 5). These drivers represent
ranked drivers based on a single criteria, (impact – Set
issues that while of concern to some, may not be at
2) or uncertainty (Set 3) and those where the industry
dominant in today’s industry agenda (weak signals), or
showed less consensus on the scale of the impact (Set
for which there is less industry consensus.
4) or uncertainty (Set 5) out to 2035. Each of these
sets contains additional drivers that were considered
during development of the scenario themes and
individual scenario narratives.

Figure 5: Prioritization of the Drivers of Change by their Impact and Uncertainty

Future of the airline industry 48


Set 1. Prioritized drivers Set 2. Highest rated drivers based Set 3. Highest rated drivers based
(Greater than average impact and on impact on the sector on the uncertainty of the impact
uncertainty)

• Alternative fuels and energy • Middle class growth in China and • Price of oil
sources the Asia-Pacific region • Terrorism
• Cybersecurity • Strength and volatility of global • Infectious disease and pandemics
• Environmental activism economy
• Personal carbon quotas
• Extreme weather events • Price of oil
• Strength and volatility of global
• Geopolitical (in)stability • Global population growth fueled economy
by Asia and Africa
• Infectious disease and pandemics • Extreme weather events
• Cybersecurity
• International regulation of emis- • Human-controlled weather
sions and noise pollution • Terrorism
• Geopolitical (in)stability
• Level of Integration along air-in- • Internet(s) of Things
• Resource nationalism
dustry supply chain • New aircraft designs
• Geospatial technology
• New modes of consumption • International regulation of emis-
• Anti-competitive decisions
• Price of oil sions and noise pollution

• Strength and volatility of the global • Geopolitical (in)stability


economy
• Tensions between data privacy and
surveillance
• Terrorism

Set 4. Greatest variance in impact Set 5. Greatest variance in


uncertainty

• Price of oil • Alternative modes of rapid transit


• Terrorism • Extreme weather events
• Infectious disease and pandemics • Human-controlled weather
• Personal carbon quotas • Internet(s) of Things
• Strength and volatility of global • Global population growth fueled
economy by Asia and Africa
• Extreme weather events • Rising sea levels and reclaimed
• Human-controlled weather habitats

• Geopolitical (in)stability • International regulation of emis-


sions and noise pollution
• Resource nationalism
• Infectious disease and pandemics
• Geospatial technology
• Geospatial technology
• Anti-competitive decisions
• Alternative fuels and energy
sources

49
Annex C – Scenario Characteristics

NEW FRONTIERS Sustainable Future Platforms Resource Wars

(Turbulent world (Calm world / (Calm World / (Turbulent world /


/ Connected and Connected and open Closed data) Closed data)
Theme open data) data)

Geopolitics Rise of alternative Thirty years of peace, China takes leader- An aggressive, nation-
institutions as shift although borders ship role on global alistic China emerges
of power to East have been redrawn. stage, cooperating and threatens a US
and challenge to A more multipolar with US. G2 world distracted by conflict.
US. China becomes world in which with corporations Meanwhile the
a champion for Egypt, Iran, Nigeria, increasingly influen- Middle East and Asia
sustainability, sharing Pakistan and South tial on global stage. have seen a wave of
expertise and helping Korea join the G20 China is the strongest territorial disputes
developing countries in the wake of a world-trade hub and land grabs. The
develop their infra- Chinese Debt crisis. with Latin America, world has realigned
structure in return Strong international India and Middle East into resource trading
for influence. Space, governance enables playing an increasing blocs.
the Arctic and oceans long-term and coop- role.
are the new conflict erative infrastructure
zones. decisions.

Data General shift towards Open access to Data is siloed with a Cyber security and
democratization of information, with few big corporations espionage have
data, empowering shared platforms. controlling data resulted in distrust
people, companies Big data, predictive platforms/access to both between
and organizations. analytics and AI allow technology – while countries and
Increased risks rapid forecasting public are wary of corporations. The
of transnational of intentions and sharing information Internet of Everything
cybercrime. Police behavior. People with other compa- has not been real-
state/surveillance. are paid for their nies. Advances have ized. Countries and
New technologies data. Supervision disproportionately companies increas-
and data help reduce and surveillance benefited the elite, ingly compete for
gridlock and address at work. Drive to widespread inequal- access to skilled and
challenges in major harmonize interna- ity. technical expertise.
cities. tional standards.
Entrepreneurship
and non-traditional
careers.

Africa and China prioritizes Africa and Asia-Pacific Africa and Latin India emerges as
Asia-Pacific relationships within experience rapid America prioritized the fastest-growing
Asia-Pacific, offering growth, using new international trade economy in 2035,
investment in return technologies to over regional integra- having successfully
for resources. Iran address key chal- tion and are hit hard managed its demo-
comes back into the lenges around water, when commodity graphic transition
fold as a regional environment and prices collapse. Mid- and invested in
power in the Middle education. dle East economies infrastructure and
East. realign based on new water technologies.
interests in a post-oil
economy.

Future of the airline industry 50


NEW FRONTIERS Sustainable Future Platforms Resource Wars

(Turbulent world (Calm world / (Calm World / (Turbulent world /


/ Connected and Connected and open Closed data) Closed data)
Theme open data) data)

Government Data-driven govern- Governments Disempowered public Increased


ment and political leverage opportu- are increasingly dis- authoritarianism
experimentation. In nities associated satisfied with political as governments
most countries peo- with open data and elite. New sensor and enforce restrictive
ple give up control open democracy. surveillance tools policies. Growing
of data in return for Authorities oversee used to monitor and shadow economy as
convenience – a new implementation limit governments fail to
‘social contract’ based of solutions at a capitalize on promise
on data. local level, but deliver of new surveillance
through outsourced and big data technol-
provision to ogies.
companies and
communities.

Security and New forms of Open skies and bor- Borders open, Gaps widen between
borders terrorism with ders with increased although disease resource-rich and
greater access and demand for travel concerns require poor regions, and
‘homemade’ security from Asia-Pacific and all travelers to be security and border
threats. Increased Africa. New visas and continuously moni- checks are used
restrictions on travel restrictions tored during travel. to limit movement
movement across limit travel as part of People move fast, between regions.
borders except for the Climate Resettle- limiting exposure to Physical security is
‘biometric’ citizens. ment Initiative unknown people or increasingly import-
Military needs take places. ant due to virtual
precedence over identity theft.
those of civilians.

Privacy and trust People ‘shift to Trust is transient People are wary of Regional instability
passive’, giving up with organizations sharing their data and conflict, coupled
control of data in required to publish following a series with a failure to
return for conve- data on all aspects of high profile data sort out slums has
nience, economic of performance from breaches and cyber encouraged trade in
benefit and security. staff mental health to attacks. Trust is low, illicit goods, human
Virtual and physical energy trades. but people are locked beings, robots, and
boundaries blur. in to data platforms. increased violence
States sense and and organized crime.
control all aspects of Public distrustful of
society. institutions due to
fear and corruption.

51
NEW FRONTIERS Sustainable Future Platforms Resource Wars

(Turbulent world (Calm world / (Calm World / (Turbulent world /


/ Connected and Connected and open Closed data) Closed data)
Theme open data) data)

Business models Elimination of Businesses and Companies seek to Small, nimble compa-
traditional supply governments are control data as the nies fight to occupy
chains. Shipping of data-driven. Holding platform of choice, niches –organizations
materials rather than and sharing more acting to preempt are stripped back
finished products, and more data, external challengers to bare bones as
with production at or combined with and seek a first-mov- they look to become
near the point of use. predictive analytics er advantage over zero-waste to reduce
Businesses focus on and AI to forecast competitors. reliance on foreign
customer service. customer behavior. nations. Rise of the
Grand challenges circular economy.
have evolved into
precision challenges.

Economy Series of financial Calm world and a Strong GDP growth, Economic growth
crises and austerity. stable economy al- having addressed stalls. Companies
Cities are the unit of lows increased trade structural issues of have limited access
power. Oil prices are – new trade routes 2000s. Economy no to capital, and both
high. Policy changes between South-South longer dominated by private and public
in advanced econo- and East. Blockchain oil – data is the new if sectors fail to invest
mies encourage older and other new inequitable currency. in infrastructure and
workers to stay in technologies have innovation. Econo-
the workforce longer, reformed financial mies increasingly turn
while making it easier and legal sector, inward.
for women and part- reducing friction
time workers to stay in economy and
employed. bypassing traditional
banks.

Values and Strong national Communities are Society is commu- Growing diversity is
Communities cohesion and empowered to nity-centric. Elites an increased source
increased multicul- influence politics desire authentic and of tension among
turalism. Growing and development. personalized expe- communities – who
population with more These communities riences. Those who are unwilling to
people traveling (and increasingly can afford it are living compromise on
demanding to travel). transcend traditional longer, faster, better, values as consumers.
New challenges geographies, often while pandemics and In many countries
and stresses on driven by the dias- poverty are rife in Generation Alpha are
healthcare and pora communities hive cities and slums. ready to embrace a
infrastructure. established by the less materialistic life.
Climate Resettlement Multiculturalism.
Initiative.

Future of the airline industry 52


NEW FRONTIERS Sustainable Future Platforms Resource Wars

(Turbulent world (Calm world / (Calm World / (Turbulent world /


/ Connected and Connected and open Closed data) Closed data)
Theme open data) data)

Environment Large numbers of Rapid innovation Too little too late. The environment has
displaced communi- helps people meet Poor decisions led not been prioritized,
ties due to sea-level sustainability targets. to failure to meet but there is growing
increases. Oil contin- Global approach to global sustainability realism about climate
ues to predominate addressing climate targets. Many nations change’s existential
energy mix – though change combines introduce personal threat to humanity.
many countries will new technologies market-based Limited resources
be more than 80% with new data incentives, but the have led to the
reliant on renewables platforms to solve World Cabinet fails to rise of the ‘circular
and nuclear by 2050. social challenges and legislate meaningful economy’.
combat cyber-crime. targets for business-
es.

Technology Sharing economy People and goods Advances in neuro Robotics and Artificial
models are increasingly move and biotechnology Intelligence have
dominant, while 3D point-to-point over and healthcare. But altered the nature
printing has disrupt- short distances using inequality in access. of work. Service
ed manufacturing. drones. Blockchain robotics, health
technologies have robotics and policing
reformed access to are ubiquitous.
finance and legal
support. Real-time
monitoring of
physical and human
performance.

53
Annex D – List of Recommendations

1. Geopolitics

1.1 GEOPOLITICAL TRANSITIONS AND REALIGNMENT


Recommendation 1: IATA should continue to support global standards bodies such as ICAO, and think strategi-
cally about how the relationship between IATA and these institutions will evolve. It will be important to maintain
global standards for a global industry, especially in futures that are increasingly multipolar or where there are
shifts in the balance of power.
Recommendation 2: IATA should engage early with new institutions (such as the New Development Bank) in
order to play a more significant role in enacting or influencing aviation policy in the top markets in 2035 (China,
US, India, UK, EU and Indonesia).

1.2 PEACE AND SECURITY


Recommendation 3: IATA should advocate for greater flexibility in routing and scheduling that might allow
airlines to deal wiht implications of capacity issues caused by conflicts and other major disruptions.
Recommendation 4: IATA should develop an “emergency response” set of guidelines and procedures that could
be implemented rapidly by airlines if the security situation becomes more turbulent. These may include passenger
screening, data sharing and security procedures.
2. Africa and Asia-Pacific

2.1 NEW MARKETS


Recommendation 5: I IATA should increase its engagement with stakeholders from Africa and Asia-Pacfic
(governments, think-tanks and other bodies that influence government policy) to deepen the industry’s knowledge
of how decisions are made and how those decision-making processes will evolve. This will ensure that regulations
introduced do not limit the potential of these markets. .

2.3 HUBS AND SMALLER AIRPORTS


Recommendation 6: IATA should foster relationships with secondary and tertiary airports. These may offer
additional capacity in situations where hubs become overcrowded, or where new technologies, automation
and business models allow airlines to bypass hubs and establish new intermodal connections (e.g. Uber-type
business models).
3. 3. Security and borders

3.2 INFECTIOUS DISEASES


Recommendation 7: With the increasing risk of pandemics, a global approach to managing infectious diseases
becomes ever more important. While airlines need to be vigilant and prepared, IATA should also stress the
increasingly important role that all stakeholders, particularly governments, need to play to ensure that responses
are in line with WHO guidance and international health regulations.

3.4 BIOHACKING
Recommendation 8: IATA should work with appropriate organizations to drive the establishment of globally
harmonized standards to address biohacking.

Future of the airline industry 54


4. Environment

4.1 SUSTAINABILITY LEADERSHIP


Recommendation 9: IATA should continue to support the industry’s efforts on environmental sustainability
and re-evaluate, on an ongoing basis, its activities in this area. Environmental performance is one of the key
elements of society’s changing expectations of aviation and an element which becomes increasingly critical in a
resource-constrained world. But sustainability isn’t environmental alone, and countries’ expectations of airlines
will move beyond the environmental sphere. In that vein, IATA should explore other ways in which the industry
has or can have a positive influence in the world, potentially linking these to the UN Sustainable Development
Goals 2030.
Recommendation 10: IATA should establish an industry-wide corporate responsibility programme, with a focus
on transparency, safety and the environment that could help IATA to drive global standards and ensure the
sector remains competitive in a world where there is increasing competition from other transport modalities.
5. Economy

5.1 GLOBAL ECONOMY


Recommendation 11: IATA should create an internal early warning group with the task of ensuring that the
industry is prepared for possible threats. This group could distill a set of early warning indicators from this
scenario report and similar publications, create a timeline of expected developments, and update it regularly.

5.3 WORKFORCE AND SKILLS


Recommendation 12: IATA should develop a plan for educating and influencing the next generation of airline
industry employees and users (e.g. 15-25 year olds). As new technologies and value shifts change how and why
people work, the industry will need to invest in skills for future aviation leaders and workers, and communicate
the benefits of working in the sector.
6. Data

6.1 DEATH OR REBIRTH


Recommendation 13: IATA should consider measures that support airline ownership of data (e.g. safeguarding
privacy, commitment to common data protection procedures), and look to establish a global industry-wide
position on data protection. A more open approach to data and interoperability at a global and industry level
may be more positive for the industry and for consumers.

6.3 SUPPLY AND FLOW


Recommendation 14: IATA is already in the process of exploring how to take advantage (and manage risks) of
new technologies such as blockchain. We suggest also looking at the effect this and other new technologies can
have on the business relationships on its member airlines. Can blockchain play a role, for example, in rebalancing
the value chain?
7. Privacy and trust

7.1 TERRORISM
Recommendation 15: The industry should monitor proposals to extend or evolve the security cordon around
airports to ensure that governments continue to be ultimately responsible for the safety of their citizens.

55
7.2 CYBERSECURITY

Recommendation 16: IATA should consider establishing an information exchange mechanism for airlines to
share information on cybersecurity threats (as part of a cybersecurity strategy). Cybersecurity is likely to be a major
issue that will require the industry to work with companies across the entire supply chain, as well as governments
to manage risk.
8. Technology

8.1 SHARING AND POST-SHARING


Recommendation 17: IATA should engage with novel transport providers (hyperloop, drones, unmanned aircraft,
space travel companies) to explore potential cooperation as well as shared needs. In a future where passengers
want to travel faster and prioritize convenience, seamless travel and connections between providers will become
increasingly important. One option may be to widen IATA membership to include air transport operators who are
not airlines.

8.2 AUTOMATION OF PLANES


Recommendation 18: Automation is expected to have a significant impact on transportation and logistics. To
ensure that the airline industry benefits, IATA should establish a working group including both manned and
unmanned aircraft operators to facilitate standard-setting and information sharing.

8.4 AIRPORTS OF THE FUTURE


Recommendation 19: IATA should build relationships with those responsible for urban planning (not just air
infrastructure authorities) to ensure industry needs are linked into infrastructure planning, particularly when there
are major plans for developments around airports.
Recommendation 20: IATA should use the strategic review of the Worldwide Slots Guidance as one mechanism
to improve the efficienct use of capacity and guard against revenue commitment and market allocation of slots.
9. Values and Communities

9.3 PASSENGER CARE


Recommendation 21: IATA should establish core principles on facilitating the travel of older passengers and
those with reduced mobility. An increasingly active aging population and changing attitudes to disability are likely
to result in a greater need for the industry to support passengers with special requirements, for example on
account of age, medical need or disability.
10. Government

10.1 INFRASTRUCTURE
Recommendation 22: IATA should keep an eye out for aviation funds being diverted to ‘new frontiers’ (such as
space travel). It could also prepare a list of infrastructure issues on which the sector may need to advocate in the
future. Where regions have insufficient state finance or commitment to the sector, it may be necessary to look at
alternative funding models.
11. Business models

11.2 CATERING FOR NEW CUSTOMERS


Recommendation 23: IATA should make every effort to understand consumer attitudes in emerging markets, as
well as how government and business in these countries view the role of the airline industry, in order to get ahead
of potential future regulation.

Future of the airline industry 56


57
Image Credits
Cover Image: Flickr/Scott Stevens

Drivers cards:
Cover: Flickr/Scott Stevens Circular Economy: Flickr/Lisa Risager
Terrorism: Flickr/Georgie Pauwell Infectious disease and pandemics: Flickr/
Passenger Identity & Fraud: Flickr/Natasha Mayers sari_denisse
Global Aging: Flickr/Ulrica Törning Income inequality: Flickr/William Warby
Middle Class Growth in China and the Asia-Pacific: Strength and volatility of global economy: Flickr/
Flickr/d’n’c Kristin Kokkersvold
New modes of consumption: Flickr/Andrii Zymohl- Price of oil: Flickr/Sergio Russo
iad Level of integration along air industry supply chain:
Tensions between data privacy and surveillance: Flickr/Christopher Dombres
Flickr/Keoni Cabral Shift to knowledge-based economy: Flickr/Neil
Global population growth driven by Asia and Conway
Africa: Flickr/NASA Goddard Space Flight Center Privatization of infrastructure: Flickr/Pavel P.
Shifting ethnic, political and religious identity: Concentration of wealth into a Barbell Economy:
Flickr/Matthew Fearnley Flickr/Tim Bartell
Disability, fitness and health: Flickr/Simon Davis/ Unionization of labor and regional independence:
DFID Flickr/Jonathan Kos-Read
Cybersecurity: Flickr/Anonymous9000 Open data and radical transparency: Flickr/Carlos
Expanding Human Potential: Flickr/cea + Andrés Reyes
Robotics and Automation: Flickr/Nicolas Nova Changing nature of work and competition for
3D Printing and New Manufacturing: Flickr/Keith talent
Kissel Bribery and corruption: Flickr/nist6dh
Virtual and Augmented reality: Flickr/snrdv Geopolitical (in)stability: Flickr/Giacommo Ficola
Internet(s) of things: Flickr/Trans-Media-Akademie Government ownership of airspace and critical
Hellerau infrastructure: Flickr/Masakazu Matsumoto
Alternative Fuels and Energy Sources: Flickr/Mikael Strength of governance: Flickr/Open Grid Schedul-
Tigerström er / Grid Engine
New aircraft designs: Flickr/Sms_S Anti-competitive decisions Flickr/dhendrix73
Alternative modes of rapid transit: Flickr/Ian Sane Defense priorities dominate civilian needs: Flickr/
Geospatial technology (for people and airplanes): Naval surface Warriors
Flickr/Cory Doctorow Shifting borders, boundaries, and sovereignty:
International regulation of emissions and noise Flickr/Kim Love
pollution: 500px/Thakur Dalip Singh 500px Influence of alternative regional and global institu-
Resource nationalism: Flickr/Phil Roder tions: Flickr/Martin Fisch
Personal carbon quotas: 500px/Hasan Hagi 500px Trade protection and open borders: Flickr/Sankara
Subramanian
Water and Food Security: Flickr/Tim J Keegan
Rise of populist movements: Flickr/James Cridland
Environmental Activism: Flickr/Davidlohr Bueso
Extreme weather events: Flickr/marine_corps
Rising sea levels and reclaimed habitats: Flickr/
baldeaglebluff
Human controlled-weather: Flickr/pglenday

Future of the airline industry 58


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