Future of Aviation Industry 2035

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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 [email protected].

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 bring. As an aviation community, • Prioritization of drivers of be sudden and overwhelming, or armed with an analysis of future change and theme develop- gradual and unnoticed; in either trends and acting with a common ment (Section 3) 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 source of disruption. But drivers the main purpose of the report exploring the question: of change can also be political and is to get you to think about what 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 challenges over the next 20 years?

1 PROJECT OVERVIEW

01 02 03 04

HORIZON SCAN AND INTERVIEWS TO PRIORTIZATION OF DRIVERS OF SCENARIO DEVELOPMENT IDENTIFICATION OF IMPLICATIONS AND IDENTIFY DRIVERS OF CHANGE CHANGE AND THEMES Four contrasting scenarios were RECOMMENDATIONS A series of interviews was held with global An online assessment was conducted developed for the industry out to 2035. A set of implications was generated from trend specialists and experts in other IATA Industry Affairs Committee and See Section 5 for how this was done, and a wind-tunnelling exercise, additional fields, as well as aviation experts. Material approximately 500 industry the resulting scenario narratives. exploration of the scenarios, and inputs from the interviews was taken together professionals* to gather industry views from the horizon scan and interviews. A 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 selection of recommendations are (for information see Section 2 for the full were then grouped into 11 themes – presented in Section 6, issues that are driver list see Annex E) important issues to explore during important for IATA and its members to scenario development (for information engage with and steps that they can start see Section 4). taking now to prepare for change. 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 SCENARIOS IMPLICATION CATEGORIES RECOMMENDATIONS Geopolitical instability Trade protection and open borders Resource nationalism

Water and food security Geopolitical transitions and realignment Global income inequality Recommendation 1 GeopGeopoliticsolitics Peace and security Geopolitics | Geopolitical Transitions Terrorism and Alignments) Human-controlled weather NEW FRONTIERS IATA should continue to support global Turbulent world / Connected and Open Urbanisation and the growth of megacities standards bodies such as ICAO, and think Middle class growth in China and the Asia-Pacific region Africa,Africa Asia-Pac andific an dAsia India-Pacific New frontiers strategically about how the relationship Cybersecurity New markets between IATA and these institutions will Security and borders Inward or outward Security and Borders Unionisation of labour and regional independence Hubs and smaller airports evolve. It will be important to maintain Global population growth fuelled by Asia and Africa Borders or conduits global standards for a global industry, Infectious diseases Passenger identity and fraud EnvirEnvironmentonment especially in futures that are increasingly Biohacking multipolar or where there are shifts in Global aging Sustainability leadership SUSTAINABLE FUTURE Conspicuous consumption of energy the balance of power (see page 29) Increasing influence of alternative regional and global institutions Calm world / Connected and Open Global economy Economy Extreme weather Economy Post-oil economy Bribery and corruption Workforce and skills Circular economy PrivaPrivacycy and Tru andst Trust Terrorism RECOMMENDATION 13: Cyber security Environmental activism Data | Death or rebirth Personal privacy Strength and volatility of global economy IATA should consider measures that

Rise of populist movements support airline ownership of data (e.g. Privatisation of infrastructure safeguarding privacy, commitment to RESOURCE WARS Consumer expectations Price of oil Diversity common data protection procedures), and Turbulent world / Closed Data Alternative modes of rapid transport VaValueslues and C andomm uCommunitiesnities Passenger care look to establish a global industry-wide Robotics and automation position on data protection. A more open Sharing and post-sharing Open data and radical transparency TechnTechnologyology approach to data and interoperability at a Automation of planes New aircraft designs Substitution global and industry level may be more Expanding human potential Data Data Airports of the future positive for the industry and for Concentration of wealth into a ‘Barbell’ economy consumers (see page 37) Government Shifting ethnic, political and religious identity Government Death or rebirth Frequent flyers and personalization New modes of consumption PLATFORMS Supply and flow Government ownership of airspace and critical infrastructure Business models Business models Calm world / Closed Data 3D printing and new manufacturing techniques RECOMMENDATION 19: Personal carbon quotas Technology | Airports of the Futures Strength of governance IATA should build relationships with those Infrastructure International regulation of emissions and noise pollution Financial safety and regulation responsible for urban planning (not just air Tensions between data privacy and surveillance Military and government ownership infrastructure authorities) to ensure Internet(s) of Things Need to innovate industry needs are linked into Catering for new customers Virtual and augmented reality infrastructure planning, particularly when Geospatial technology there are major plans for developments Level of integration across supply chain around airports (see page 41) Disability, health and fitness Changing nature of work and competition for talent Anti-competitive decisions

*Solid lines represent drivers prioritised in the online exercise PROJECT OVERVIEW

01 02 03 04

Shifting borders, boundaries and sovereignty Infectious disease and pandemics

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 are not the only drivers of change A series of interviews was held more turbulent, as a new wave that airlines need to look out for. with global trend specialists and 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 What are the key drivers of change together with a literature review industry before Uber arrived, the that IATA and airlines should be and horizon scan to identify a music industry before internet thinking about to prepare for future list of 50 drivers of change (see downloads, and the printing opportunities and challenges over Section 3). 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 pollution • Strength and volatility of • Geopolitical (in)stability growth of megacities potential global economy • Resource nationalism • Government ownership • 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 techniques • Environmental activism • Anti-competitive China and the Asia- • Shift to knowledge- decisions Pacific region • Virtual and augmented • Extreme weather events based economy reality • Defense priorities • New modes of • Rising sea levels and • Privatization of dominate civilian needs consumption • Internet(s) of Things reclaimed habitats infrastructure • Shifting borders, • Tensions between data • Alternative fuels and • Human-controlled • Concentration of wealth boundaries, and privacy and surveillance energy sources weather into a "Barbell economy" sovereignty • Global population • New aircraft designs • Circular economy • Unionization of • Increasing influence of growth driven by Asia • Infectious disease and labor and regional alternative regional and and Africa • Alternative modes of independence global institutions rapid transit pandemics • Shifting ethnic, political • Open data and radical • Trade protection and and religious identity • Geospatial technology 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, operational 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 To bring in the potential impacts • Data 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 GeopGeopoliticsolitics Terrorism

Human-controlled weather

Urbanisation and the growth of megacities

Middle class growth in China and the Asia-Pacific region Africa,Africa Asia-Pac andific an dAsia India-Pacific 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 EnvirEnvironmentonment

Global aging

Increasing influence of alternative regional and global institutions Extreme weather EconoEconomymy Bribery and corruption Circular economy PrivaPrivacycy and Tru andst Trust Environmental activism Strength and volatility of global economy

Rise of populist movements Privatisation of infrastructure Price of oil Alternative modes of rapid transport VaValueslues and C andomm uCommunitiesnities Robotics and automation

Open data and radical transparency TechnTechnologyology 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 continues 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 manufacturing.

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 companies. 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 continuously 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 experiences. 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 conflict. 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 surveillance 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 increasingly 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 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 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.

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 (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.

2.2 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 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, infrastructure 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 passengers’ 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 purposes, 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 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 necessary 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 markets, 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 economy • Environmental activism • Personal carbon quotas • Price of oil • Extreme weather events • 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 • Terrorism sions and noise pollution • Geopolitical (in)stability • Internet(s) of Things • Level of Integration along air-in- • 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 emissions 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 businesses.

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 strategically 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

3.2 INFECTIOUS DISEASES

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

5.3 WORKFORCE AND SKILLS

6.1 DEATH OR REBIRTH

6.3 SUPPLY AND FLOW

7.1 TERRORISM

55 7.2 CYBERSECURITY

8.1 SHARING AND POST-SHARING

8.2 AUTOMATION OF PLANES

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

10.1 INFRASTRUCTURE

11.2 CATERING FOR NEW CUSTOMERS

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 59 60