Introduction
Rather than simply responding to the current operational context, airline management teams must look ahead and put themselves in the best possible position for success. Five macro-environmental causes and developments have been pinpointed in the paper, which will transform the sector over the next two decades. Institutional abilities, capacities, and methods of operation are changing dramatically, customer-centricity mandate, innovation, growing concerns about environmental impact, and the emergence of strategic partnerships and collaborations. None of these developments seems manageable; thus, it is time for managers to require proactive agendas to accommodate and take advantage of the changes for their benefit. For airports, this means foreseeing possible threats to their company framework and possibly becoming insurgents themselves in the aviation and other sectors they serve.
Impacts of Macro-environmental Trends on Airports
Technology
Many airports will be able to use complex algorithms in the next twenty years. Even while advanced analytics have been used in the sector for many years, it is likely to intensify. Despite the importance of pricing, capacity, connectivity, and merchandise for airline companies, experts believe that airports will benefit from the expanded use of bioinformatics and predictive analysis to achieve significant effectiveness gains. At the commercial end of airport operations, Artificial Intelligence (AI) and machine learning will be expected to provide brilliant offers that mix seat and ancillary services to meet the individual needs of each consumer for a specific trip. Consequently, the usage of AI affects airports in the following ways, as outlined herein. First, it is predicted that fee ladders will be phased out in favor of continuous and dynamic pricing models (Miskolczi et al., 2021). Secondly, in the airport industry, analytics will let airlines customize messaging to targeted consumers’ innate characteristics like travel history, situational variables, and consumer expectations.
Data technologies will be used for more than just business purposes. The use of big data and AI in air transport is expected to impact on-time productivity substantially and substantially decrease the cost of inconvenience (Miskolczi et al., 2021). Additionally, as KLM Royal Dutch Airlines has done in this domain, other airports will likely make comparable advancements to strengthen real-time decision-making (Miskolczi et al., 2021). Lastly, as airports automate their essential services, they will encounter difficulty coping with older technology, which is not exclusive to airlines, as they modernize their operations.
The leading companies in areas like retail and banking services, which have created technological infrastructure notwithstanding their outdated technology architecture, can serve as inspiration for carriers in this regard. New digital functionalities are typically developed independently of the existing system, which fades over time (Miskolczi et al., 2021). There are several options that airports must consider while developing these modern electronic abilities. Conventional technology providers are expected to be less critical and more likely to be replaced by specialist computer firms that focus on specific areas of expertise.
Rising Sustainability Concerns
Over the next two decades, airports will be under increasing obligation to address environmental sustainability. Over the past few months, climate change and conservation have acquired a lot of traction, and several airports have recently established lofty goals for reducing their carbon footprint (Greer et al., 2020). The only issue is that, when not if, the burden will develop to a breaking point. Numerous stakeholders, including those mentioned and presented herein, will exert pressure on airports. First, European and Asian governments are expected to follow suit, with France proposing a levy of €1.50 on economy-class bookings for travels to other EU nations (Greer et al., 2020). Greer et al. (2020) enumerate that four of India’s five airports are carbon neutral. Another example of environmental control is China’s restriction on importing plastic recycling in 2017 (Greer et al., 2020). The US is expected to be cautious in its regulatory approach, on the other hand.
Second, consumers are also anticipating a rise in the popularity of “flight shaming,” especially among younger, more eco-conscious passengers. Some members of this group may begin to use alternative modes of transportation, such as high-speed rail for metropolitan travel, and possibly forgo air travel altogether. The short-term impact of environmental concerns, particularly in Europe, is projected to be limited. Lastly, third-party mediators that keep tabs on airport cleanliness will nudge customers toward less polluting flying options. Millions of clients were impacted in this way by Sky scanner as of 2019 (Greer et al., 2020). Intermediaries will begin to inform users about various carbon offset options to make better decisions, and airline companies will also share that data with other users. Airports are expected to reduce unnecessary travel and invest in research so that many in-person meetings can be replaced by phone calls or videoconferences (Greer et al., 2020). Carriers’ bottom line would be impacted if business travel, which is a significant part of their business, decreased.
The Imperative of Customer Centricity
Compared to top digital-native enterprises in sectors such as retail and communications, where consumer experiences are more optimized and individualized, most airports fall short. Airlines have typically relied on date codes that carry vital flight details but little about the passenger regarding booking. Some airports, like Manchester, have already begun implementing 5G networks, demonstrating how airports respond to current passenger necessities in a less-futuristic manner. Airlines and airports are shifting their focus from focusing on products to concentrating on passengers’ decision-making mechanisms.
Passenger tastes and connectivity are influencing the development of new products and procedures. Automated check-ins, luggage checking, customs checks, and security checks are becoming more common at airports. For airports and their partners, the excellent flight experience results in a rise in non-aeronautical incomes. A significant shift in the customization and client focus provided by airlines over the next 20 years is expected as they strive to create a single, integrated customer view across all platforms and touchpoints. Operators will be able to use their customers’ inclinations and travel occasions to create customized offers.
Strategic Allies and Collaborations
While global partnerships have been called into doubt in recent years, it is anticipated they will continue to exist in the possible future. Affiliation is likely to fluctuate when airlines exit and establish new coalitions due to mergers, strategic collaborations, and other considerations (Dodgson, 2018). Global agreements will aim to improve service to their consumers, such as delivering a smooth user experience for consumers who embark on schedules that include more than one partner operator (Dodgson, 2018). Meanwhile, airports anticipate additional bilateral or multilateral partnerships, maybe incorporating equity holdings, in addition to the current worldwide alliances. These arrangements can assist airports in strengthening their positions in strategically valuable markets or areas, allowing them to influence their competitive positions rather than just reacting to demands introduced to them.
Progressive Development in Corporate Competencies and Operational Processes
Forecasting and the increasing automation of essential airline processes will significantly impact how airline companies handle skills in the future. Airports anticipate reducing the number of people employed in specific job categories and mechanisms, such as service centers, airport functions, and conventional stock and cost structure roles in managerial accounting. Moreover, an upsurge for other capabilities, particularly database administrators, architects, and software developers, are expected to fall. As airlines seek fresh, innovative talent, they anticipate reconsidering their recruiting techniques, personnel service offerings, and even workplace settings to become more appealing workplaces.
Additionally, airports anticipate continued rivalry for core expertise, as pilot constraints are likely to persist. The greatest need for pilots will be in Asia, where consumption and capacity will expand rapidly. This scarcity will increase airline competitiveness, increased pay for incumbent pilots, captain poaching from opponents, and sponsored personnel instruction to replenish the talented workforce. Internally, airline sector clients frequently note a lack of coordination across segmented operations as a problem. Airports foresee that more carriers will engage with agile methodologies and cross-functional groups to accelerate time to market and improve consumer and staff satisfaction.
Strategies to Capitalize on or Minimize Impacts
As discussed herein, some of the tactics airports may opt for to take advantage of the trends or mitigate the effects of the modifications on their operations management. Global warming is a cross-industry concern, and managers expect to see airlines interact more in the future to effect substantial change while several initiatives have previously been made (Becken & Mackey, 2017). One such partnership is the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) (Becken & Mackey, 2017). By 2040, CORSIA intends to mitigate climate change from commercial aviation by 590 million to 800 million tons of carbon dioxide (Becken & Mackey, 2017). Already, 78 jurisdictions have expressed an interest in participating in a consensual test initiative, while several significant absences, including Russia and India, have occurred (Becken & Mackey, 2017). There is much doubt over how airlines will accomplish CORSIA’s objectives.
Additionally, proactively seek out joint venture prospects to establish or strengthen your presence in new areas; obtaining time and perspectives is one of the instant benefits. By distributing the burden among collaborators, both parties may devote more time to implementing the freshly simplified strategy and streamlining expenses and resources (Baum & Auerbach, 2017). Therefore, this could take the form of technological integration or white label cooperation in the travel industry (Baum & Auerbach, 2017). Rather than offering an end-to-end offering, many airports are wise to outsource the deployment of new technology that falls outside their core competencies.
Conclusion
In conclusion, the macro-environmental concerns and trends will revolutionize the airline sector over the next two decades. The application of big data and artificial intelligence in air transport is projected to significantly improve on-time performance and considerably reduce the cost of annoyance. Global warming and sustainability have gained significant popularity, and numerous airports have initially brought lofty ambitions for carbon reduction. Furthermore, while global alliances have been questioned in recent years, it is projected that they will continue to exist in the future. Allegiance is likely to change when airline companies leave and form new coalitions due to expansions, strategic agreements, and other factors. As described in the article, airports have formed relationships to combat global warming, which is a cross-industry challenge, through CORSIA. Additionally, by spreading the cost among partners, both stakeholders will have more time to execute the newly streamlined approach and cut expenditures.
References
Baum, H., & Auerbach, S. (2017). Strategic management in the aviation industry. Taylor & Francis.
Becken, S., & Mackey, B. (2017). What role for offsetting aviation greenhouse gas emissions in a deep-cut carbon world? Journal of Air Transport Management, 63, 71-83.
Dodgson, M. (2018). Technological collaboration in industry: Strategy, policy and internationalization in innovation. Routledge.
Greer, F., Rakas, J., & Horvath, A. (2020). Airports and environmental sustainability: A comprehensive review. Environmental Research Letters, 15(10), 1-25.
Miskolczi, M., Jászberényi, M., & Tóth, D. (2021). Technology-enhanced airport services: Attractiveness from the travelers’ perspective. Sustainability, 13(2), 1-18.