What does the future of aviation look like?
The aviation industry continues to grow despite recent bouts of severe turbulence. In 2022, as it was beginning to recover from the ravages of the pandemic – faster in some parts of the world than others – multiple other crises broke out with the war in Ukraine feeding into soaring oil prices, a cost-of-living crises and looming recessions. Away from the frontline, however, there are strong reasons to be hopeful and to be concerned.
Here we summarise the top ten challenges and opportunities impacting the future of aviation – for now.
TOP TEN OPPORTUNITIES
- Pent-up demand. The world is emerging, surprisingly quickly, from two years of little or no travel. As of July 2022, international passenger growth was up 151 percent year-on-year while total global growth was at 74.6 percent of 2019 levels. Still room to grow, but that was fast!
- Growing middle class. The global middle class which tripled to 1.7 billion in the ten years to 2020 could reach 5.3 billion by 2030. That’s a lot of disposable income and a significant influx of potential air travellers.
- Greening Aviation. The need to transition to green is spurring exciting innovation in aviation particularly the development of sustainable fuel alternatives and fuel-efficient aircraft that will in turn be more cost-effective to run. Lower emissions will be better for the industry, for economies and for the world.
- Innovative design. The industry is reimagining aircraft cabin interiors, engines and aircraft design. It is at peak design innovation!
- Fleet upgrades. Orders are up at both Boeing and Airbus are airlines upgrade their fleets with approximately 1,000 retirements predicted between 2025 and 2031.
- Flying Cars. The Urban Air Mobility (UAM) industry is expected to generate up to US$90 billion in revenues by 2050. Eight new start-ups have been launched including two by Boeing and Airbus while 8,700 mobility aircraft have already been ordered.
- Robotics are streamlining the MRO and Supply Chain sectors.
- Digital innovations are reducing costs and increasing efficiencies across the aviation industry.
- The great onshoring. The supply chain crises of 2021-22 revealed global trade’s vulnerabilities. There is a small but growing trend towards decentralization and localization of supply chains and support services.
- New kids on the block. Start-ups are working alongside established aviation industry players to deliver innovations designed not only to make travel cheaper, cleaner, more efficient but also faster and futuristic. Expect to see some new ones joining the roster of industry stalwarts in the near future.
TOP TEN CHALLENGES
- Another pandemic for which the world remains unprepared.
- Wars, financial crises, sanctions and trade disputes.
- Supply chain problems, logistical challenges, shortages of parts.
- Rising fuel prices given fuel accounts for up to 40 percent of an airlines’ costs.
- Imbalance between demand for long-haul vs short haul (international vs domestic) travel feeding through into higher demand for single-aisles aircraft but collapse in orders for twin-aisle planes.
- A permanent reduction in demand for business travel, estimated at as much as 20%.
- Exodus of experienced senior personnel during the pandemic and shortage of new talent which has led to an acute shortage of labour especially among mechanics, technicians and pilots.
- Increasing focus on sustainability and greater public concern that air travel is bad for the earth.
- A slowdown in global growth, potentially down to 2.7 percent during 2023; stubbornly high inflation at or around 6.5 percent.
- And finally, in case of another full-blown crises, the airline industry may not get the full-blown support they got last time.
THE KAMS GLOBAL VIEW
As veterans of the global aviation industry, KAMS Global advisors have close experience of the good times and the tough ones. Our mantra is nothing lasts forever so best to be prepared for change. As a result, we see opportunities for growth and innovation where others see the end of the world – at least as we know it. As for the ‘real’ opportunities, well we’re always one step ahead preparing to make the most of them.
If you are a start-up or business in the aviation or related industry and are interested in defining what the future of aviation looks like in the Middle East, one of the world’s fastest growing aviation markets, get in touch with one of our advisors.