We all know the impact the COVID-19 pandemic had on travel, but it is now official that air traffic has passed pre-pandemic levels as of earlier this year. The IATA (Intl. Air Transport Assn.) recently released data for February 2024 global passenger demand and found the industry is ticking upward.
Total demand was up 21.5% compared to February 2023, with total capacity up 18.7% year-over-year. Additionally, the February load factor was 80.6% compared to February 2023. All this to say, air travel is back—and we will likely see the trend continue.
Julie Shainock, global managing director, travel, transportation, logistics, Microsoft, adds a lot of the people she has had conversations with say travel is actually 20% higher than they had actually planned and anticipated as we moved into 2024.
“Certainly, in a post-pandemic environment, there are a lot of different things that are happening in the marketplace,” she says. “One of the things is we are definitely seeing higher airfares out there.”
Of course, this new era of travel comes with its own set of challenges that must be considered including supply-chain disruptions, labor shortages, and more. Today, there are notable trends that are impacting the industry now and into the future.
Sustainability
Perhaps one of the biggest trends facing nearly every industry—especially travel—is the general rise of sustainability and the need to meet net-zero emissions.
Many in the airline space and IATA have agreed to be carbon neutral by 2050. Shainock tells me to do that we must consider distinct kinds of fuel and alternatives for the airlines themselves.
IATA has also released an aviation net-zero roadmaps comparative review, which compares 14 net zero CO2 transition roadmaps for aviation, ultimately aiming to provide a one-stop-shop for airlines, policymakers, and aviation stakeholders to understand similarities and differences.
The review suggests possible pathways to net zero CO2 emissions by 2050 differ significantly depending on the key assumptions of the authors regarding how decarbonization technologies and solutions may evolve. Still, technology and operational efficiency improvements are expected to have a similar role in the net-zero transition across the roadmaps, together contributing about 30% of the emissions reduction in 2050 in all scenarios.
Further to Shainock’s point, IATA indicates all roadmaps assume sustainable aviation fuels will be responsible for the greatest amount of CO2 reductions by 2050 and the role of these fuels varies from 24%-70% (with a median value of 53%).
Innovation
With the sustainability push, and other rising trends such as the supply-chain constraints and the labor shortage alongside new consumer demands, we must consider how innovation fits into this equation.
Shainock tells me many businesses in this industry are aiming to minimize turbulence by up to 80% and increase operational efficiency by up to 50%. This is no easy fit. This will necessitate the use of new and advanced technologies such as biometrics, total airport solutions, 5G, the IoT (Internet of Things), robotics, AI (artificial intelligence), the digital twin, and even wearables.
Perhaps one of the greatest needs is better collaboration and communication between the airlines, the airports, and even hotels. Technology can certainly help here.
“Airlines, hotels, they have to work together for a traveler’s journey and all the different touchpoints on the journey itself,” says Shainock.
She adds one of the biggest trends to watch is the AI and gen AI space, which will transform call centers and order-offer management, giving way to the rise of hyper-personalization.
“I think the biggest thing I see is how we are going to end up using AI and gen AI going forward,” Shainock says. “In Microsoft, today, dealing with copilots, 30% of the code today that is written is done through copilots.”
Speed to Market
As I always say, the pace of change is only going to pick up, and this is certainly something Shainock highlighted in our conversation. She says companies will need to generate solutions much more quickly, saying companies will need to “fail fast and get up again and start over.”
Still, she adds the opportunities with AI are limitless and there is a light at the end of the tunnel, and it is not a freight train.
“Embracing technology is very key. Things are improving. Not every day is not going to be perfect, but airlines, airports, they are working to improve the processes as we move forward. There will be more new technology coming out that we can’t even think of yet,” she says. “The other thing I would tell you is the fast pace of change with AI is just amazing and that is one of those areas it will continue to affect or disrupt or enhance the things we are doing as we are moving around. And then, mobility as a service is this whole multi-modal aspect that … is also another area that is evolving and enhancing our journey.”
The future is bright for travel. Consumers and businesses must both prepare for what comes next, as airlines and airports become more connected than ever before.
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