The airline industry
The airline industry has experienced immense changes in the structure since the passing of the Civil Aeronautics Act in 1938. Additionally, the Deregulation Act in 1978, saw a massive transformation in the operation of airlines. The act led to the emergence of new routes, low prices, and increased competition. Research has shed light on the expected structural changes in the airline industry as well as the anticipated variations in market share, routes, and the number of carriers.
Technology is anticipated to affect the airline industry. Artificial Intelligence is transforming the industry with technologies such as SITA’s innovative automated check-in kiosk, which senses busy areas in the airport and lessens check-in ques. In the future, biometric technologies are expected to be incorporated in electronic ticketing to improve the check-in process. X-ray scanners are expected to be replaced by molecular scanners. They detect hazardous items 10 million times quicker, hence enhancing security in the airport.
In the next ten years, several airports will be opened in the world to serve the forecasted growth in passengers and cargo. The airports will have a tremendous effect on travel patterns and shape the future of the airlines that will be helping them. For example, the Beijing Daxing International Airport is expected to attend to the Chinese capital. The acceptance of privately owned airports is estimated to rise and even see airports in Canada and the US emulate airports in Japan and Saudi Arabia in advocating for privatization.
In the future, airline consolidation is estimated to be slow. It has become challenging to achieve effective multinational mergers due to the restrictions from airlines to operate in other countries. Additionally, the future of the new entrants is dim. Since 1979 and 2012, 194 airplanes became bankrupt. Barriers to entry such as high taxes, bureaucracy in certification processes, airport fees, and challenges in accessing investment capital chase investors away.
The significant segments of the airline industry include the majors, the nationals, and the regionals classified by the amount of revenue they generate. In the future, the three sectors might change in regards to routes, market share, and the number of carriers. Given that the industry is oligopolistic, the three segments are interdependent. Their strategies to win market share and increase the number of carriers will depend on the policies established by each of them. The focus of majors is on fixed routes, and nationals focus on connecting flights. The regionals concentrate on particular areas. In the future, however, the destinations might change depending on demand forecasting, hub connectivity, and aircraft availability.
The airline industry is anticipated to reach tremendous heights of growth as a result of opportunities presented by technology, forecasted increase in cargo and passengers, as well as continued research. Industry players should, therefore, prepare for the opportunities and challenges that the industry might present in the future.