Spotlight on the Aviation Industry
Spotlight on the Aviation Industry
The Covid-19 pandemic was an extraordinary challenge for the aviation industry. The industry suffered 18 months of only being able to carry out a fraction of its normal business activities. However, now the green shoots of recovery are beginning to show, and our colleague Hans Nilsson, Country Manager for Alumni Norway takes a look at the particular challenges that the industry leadership faces as the sector starts to take off again.
Bouncing back
There is good reason to be optimistic about the aviation industry’s prospects in 2024 as airlines show resilience in the face of geopolitical and economic uncertainties. The International Air Transport Association (IATA) recently released data on air travel performance indicating that air travel demand topped 99 percent of 2019 levels, therefore almost back to pre-pandemic levels. Similarly, airline industry net profits are expected to reach $25.7 billion in 2024 - a slight improvement over 2023.
That said, staff shortages, the availability of materials and delivery delays for newly ordered aircraft remain a significant challenge for leadership.
A certain type of Leader
The aviation industry is well established and has traditionally been attractive to leadership candidates for its dynamic and complex environment, and ability to transform the world. Today, aviation is no less fast-paced and rapidly changing but perhaps some of the thrill of being on the bleeding edge has dissipated from the job attractions. Still as a heavily regulated industry where safety is paramount, the leadership expertise with the right technical qualifications and capacity to manage a multitude of parameters can be in short supply.
Adequate succession planning affects aviation in the same way it poses a risk within other sectors.
Country Manager, Alumni Norway and Head of Aviation Practice
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“At Alumni we are lucky enough to have a really well-established network that allows us to provide a wide variety of highly qualified, talented potential candidates to airlines. More generally finding the right calibre of individual can pose a problem particularly at short notice. Being able to talk the correct ‘language’ and not just with familiarity, but with confidence and knowing compliance specifics, is essential when seeking new leaders.”
Sustainable flight
Aviation accounts for a relatively small share of global emissions (just 2.8 percent in 2022) but is often viewed as one of the most challenging sectors to decarbonise. Incremental improvements to engines, materials, aerodynamics and mild hybridisation have led to more sustainable flights but the majority of hopes are pinned on increasing the use of Sustainable Aviation Fuel (SAF)to reduce carbon emissions and advance towards more environmentally friendly operations.
Emirates recently activated its fuel agreement with SAF producer Neste at Amsterdam Schiphol Airport (AMS), while Cathay Pacific set new interim carbon emission reduction targets for 2030 that will see it accelerate SAF usage. IAG airlines are also looking to use one million tonnes of SAF annually by 2030. In the UK The Government’s plans for delivering net zero aviation are set out in the Jet Zero Strategy, published in 2022. In this plan, the Government expects technological measures, like increasing fuel efficiency and the adoption of sustainable aviation fuels, to reduce emissions significantly each year.
Without doubt, leaders in the sector will be faced with implementing multiple measures to bring the currently rising carbon levels below 1 000 Mt CO2 by 2030, in line with the Net Zero Emissions scenario.
Technology Considerations
The aviation industry is adopting new technologies like artificial intelligence (AI) to improve operations, reduce fuel consumption, and stay competitive in the industry. On the ground, airports are implementing features like Mobile Passport Control and facial recognition to streamline traveller experience and reduce wait times. Carriers are also using AI in operations processes, such as managing aircraft fuel consumption through better navigation of weather and traffic conditions. AI and machine learning are also driving the Aircraft Interface Device Market (AID). AIDs help link critical data from aircraft, such as their avionics systems and other external systems, and enable efficient processing of big data.
It's easy to get overwhelmed by AI discussions given its potentially numerous and pervasive use cases, therefore, initiatives will have to be tied directly to business value and prioritised accordingly. Alumni recently conducted a survey within the aviation industry to look at their plans and attitudes to AI (the full survey can be accessed here.) What it highlights most is that Boards need to work closely with executive leadership to define a clear AI strategy, and challenge management to articulate how AI initiatives contribute to long-term business goals.
By approaching AI with strategic foresight and a commitment to learning, leadership can effectively steer their organisations to replace fear and anxiety with creativity and innovation, to harness the wealth of benefits, while managing the associated risks.
Looking forwards
Whilst certainly facing its share of challenges, the aviation industry is an exciting industry to part of in these times. Advancements in technology, sustainability efforts, and evolving consumer behaviours are paving the way for a new era of air travel. With a strong focus on innovation, from electric aircraft to improved operational efficiencies, the sector is poised to offer safer, more eco-friendly, and efficient travel options. Moreover, the industry's resilience and adaptability to changing market dynamics underscore its potential for recovery and growth. A brighter horizon is evident as the sector's commitment to embracing change and driving progress is helping ensure that the future of aviation is as promising as it is exciting.
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