Introduction

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The recent global crises and events such as Covid-19, the war in Ukraine and climate change have had a drastic impact on the economy. These events have been a catalyst for a large number of changes in the aviation industry due to the severity that it has been affected. These events not only have impacted the present aviation industry and the way it functions but also its future and what that might hold. The future of the aviation industry has been influenced and accelerated due to recent events and crises, the impact of these events has highlighted just how fragile the industry is and why it needs to adapt. These events have shown that being reliant and not having a back up for a supplier can be extremely problematic. Being so reliant on one supplier it costed the industry significantly because it put them in a vulnerable position.The industry not only has to be aware of the impact of Covid-19 but the ongoing changes to policy and legislation being implemented because of climate change.All of these factors have an impact on how the industry runs on a day-to-day basis. While this is very important for the industry as it currently stands, it will also be vital to look at how these events may impact the ongoing development of the sector and what other potential challenges could present. themselves in future.  

This involves evaluating many areas within the industry as a whole, such as flight economics, sustainable fuels and new. technology. Analysing these areas in more depth will be the key to figuring out the next evolution of the aviation industry and how it might function within the new parameters it faces. During these unsure times, it will be the airlines that adapt and change that will prosper while others fall short. While things seem bleak it’s not all negative, forced change encourages innovation and hopefully leads to growth within the industry. The Aviation industry is so vast and has so many working parts that there are no simple fixes, everything that is implemented must be analysed and tested thoroughly in order to make progress.

Covid-19 and Russia

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It is evident that the Covid-19 pandemic was extremely hard on the world and its economy. One of the industries that got hit the hardest was the travel and tourism sector, more specifically the aviation industry. 2020 saw the airline industry’s revenue total at $328B, this was only 40% of the previous year’s total,  the sector isn’t expected to return to the same levels as 2019 until 2024 at the earliest (Bouwer 2021). As time goes on more long-term effects are identified, such as safety standards and a lack of digitalisation is coming to light. It is clear that the world was vastly unprepared for the Covid-19 virus and the problems it brought, we didn’t have the technology in place to function without contact as well as a lack of PPE to work in close contact if needed (Madeira2022). Along with these effects, the consumer themselves have changed their behaviour by how they travel and if they intend on going on holiday abroad or having a staycation. This in itself has impacted the industry massively as you can see from the staggering statistics above.

Corporate travel will take awhile to recover, it is expected that by 2024 roughly 80% of the industry will have returned back to pre-pandemic practices (Bouwer 2021). This has been partially caused by remote work and other flexible working arrangements that are in place and might be kept on by some companies, this will mean that overall there will be fewer business trips abroad. It is expected that while the pandemic subsides, the rise in leisure. trips will surpass the recovery of business travel. Due to some Carriers being reliant on business travellers that pay extra for economy seats, it is clear that the carrier’s net profit margin could be minimal if not negative. This important group of profitable passengers has decreased as a result of the pandemic. 

In order for the majority of airlines to stay in business and keep up with high daily cash burn rates, they needed the government to intervene and lend vast sums of money to get through the last few years. Although this was beneficial for the short term, the industry as a whole accumulated more than $180 billion worth of debt in 2020alone (Bouwer 2021). This is more than half the total. annual revenues that year. Though poor credit ratings and high financing costs will make repaying these loans even more difficult. These vast sums of money will need to be repaid and this will likely be seen in ticket prices, which would see a 3% increase with the assumption that there is a 10-year payment window for the additional debt taken on (Bouwer 2021). When the demand for flights returns the likelihood is that it will surpass the supply, and it will take time for the airlines to restore the required capacity. Crew retraining could lead to a demand gap which would result in higher short-term prices. As time goes on it is clear that in the future a great disparity in. performance among airlines will come to light. While some airlines will respond to the pandemic by changing to be more efficient, others will be stagnant and fall behind. Airlines that aren’t adapting risk their company’s long-term structural value. As a result of this, we are seeing airlines such as Ryanair, Qantas and ChinaSouthern increase the gap in success between them and their competitors due to their ability to recover and adapt (Kommenda 2022). 

Another factor that will impact the industry is that after the Covid-19 pandemic the issue of how weak our supply chains were. This was made very clear during the pandemic when we suffered from desperate shortages of medical equipment such as PPE as well as day-to-day essentials such as toilet rolls. This could pose a problem for the aviation industry simply because the question being asked now is how the supply chain can be made more resilient (Coyne 2020). One. of the solutions although complex is to bring manufacturing back onshore, this. would automatically mean that fewer products and supplies are going to be flown or shipped in (Coyne 2020).

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While Covid-19 had a huge impact on the aviation industry in the last few years it hasn’t been its only problem. The price of fuel has been affected due to the war currently being fought in Ukraine. Shortlyafter the global pandemic had started to calm down the industry faced a number of new problems because of Russia invading Ukraine. There is fear that by winter 2022 Europe might be engulfed in an energy crisis (McKie2022). The Russian company Gazprom which is one of the main energy suppliers has extended the shutdown of its gas pipeline that runs into German land. Once the G7 nations had agreed to place a price cap on Gazprom oil, the Russians quickly stopped supply and said that a leak was identified and would not begin again until it was fully fixed. These tactics of Vladimir Putin have left theUK and Europe panicking and in a vulnerable position (McKie2022).  

While we know that ticket prices are going to increase, there is more than one area that is causing this.Alongside the carriers trying to pay back the money that they borrowed from their governments the price of fuel has also played a large role in the overall cost of the tickets (Karadima 2022). This has a huge impact on the aviation sector due to its immense importance to airline companies when it comes down to running costs. The rise in the price of fuel will have a big impact on the airline’s profits which continue to recover from the covid-19 pandemic. This in turn creates a knock-on effect through closed airspaces causing longer flights which then means increased fuel use, more employee hours and then increased ticket prices. By causing this, it could impact demand recovery negatively (Karadima 2022).

One area that has impacted the Aviation industry directly is its dependence on Russian titanium, this is due to Russia holding as much as 30% of the global titanium market. Russia provides almost half of the world with titanium, this includes companies such as Boeing,Airbus and Safran (Walton 2022).  This is a huge problem because titanium is progressively being used more and more in the production of current planes due to it being lightweight and hyper-resistant with a low corrosion rate. Titanium has non-expansion properties that are important for modern planes, it does not expand and contract in the same way as the previous aluminium aircraft would. If conflict and sanctions don’t stop this situation will worsen. While the industry’s lack of suppliers was already a priority to resolve it will be important to oversee the effects of these previously stated externalities, especially within modern technologies and innovation. If neglected this could cause problems for the future of the industry (Walton 2022).

Government policy & legislation

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When faced with difficult choices there is never an easy fix. We are already in a stage where various governments have been forced to step in and push for change through policies and. legislation such as the UK air passenger tax, the renewable fuel standard policy which falls under the clean air act and the domestic flight ban inFrance. By implementing this the UK government has seen a decline in outbound travel from the UK. This is based on the debate that taxing air travel it would reduce environmental pollution (Connell 2020). Another law that was put in place was the Renewable fuel standard policy which is included in the clean air act. This is an extensive federal law that regulates air emissions from kinds of emission producers in the US (Ghatala 2020). These policies were put in place to gain carbon-neutral growth by 2050, but this would require there placement of petroleum-based jet fuel with a sustainable alternative in order to be effective (Ghatala 2020).  

Recently France has banned domestic flights that have alternative forms of travel in an attempt to reduce their carbon emissions. This has been done in order to reduce carbon emissions by 40% by2030, implementing this will bring them back down to the same levels that they were at in 1990 (Tourism 2022). Although to some this might sound over the top, it will only affect 12% of French domestic flights. It can be seen as a vital step towards changing and accepting that the current emissions produced can’t continue and it is essential to drive down these harmful gases (Tourism 2022).  

Albeit, this is the first major economy that has made drastic action in restricting domestic flights to improve their carbon emissions, and it won’t take long for other countries to implement similar environmental incentives (Tourism 2022). In contrast, it would be easily replicated in the UK, routes such as betweenLondon and Manchester which had half a million flights per year prior to the pandemic. If substituted the same journey would take two hours by train and would produce six times fewer carbon emissions (Tourism 2022). While, if we turn our attention to Austria the government attached some conditions to the bailout ofAustrian Airlines.

The condition was that domestic flights should be removed when there are alternative forms of travel under three hours. It will be difficult to find fair ways to implement these limits and lower carbon emissions but nevertheless, these are relevant steps and a good area to start(Tourism 2022).

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Due to covid-19, we have also seen a rise in sanitised travel within the aviation industry. The company Simplifying has analysed the passenger’s journey and more than 70 different areas are expected to change or be altered. These include automation examples such as changes to online check-ins only, contactless payments, UV sanitisation and hygiene health tests (Hudson2020). Covid-19 has caused the airlines to work with the government in order to carry out screenings on customers to make sure they don’t have a fever or other symptoms. Passengers had to present proof of vaccination in order to travel,  this was made possible through the government working with the airlines. It is evident that digital technologies such as the covid-19 passports and automation will play a vital role in the future of the aviation industry (Hudson 2020). Although 2022 is coming to an end and many countries have phased out these Covid-19 passports, the time will come when they will need to be implemented again in order to allow the aviation industry to function in a potential, similar health crisis. Looking at the wider picture vaccine passports and other measures like keeping an emergency stock of PPE, combined with policies and legislation will be reimplemented in order to combat any of these biological threats (Madeira 2022).  

The covid-19 pandemic has presented the perfect chance for governments, the aviation industry and its consumers to rethink the sustainability of air travel. An international data poll was carried out and it found that 67% of respondents felt that the pandemic was a catalyst for the increased concentration and action on environmental, social and governance issues (Tourism 2022). This can be seen as a seriously growing global movement of people that want severe and more specific actions from the private sector and the general public. Another international data survey brought to light that 74% of respondents consider environmental matters ‘extremely’ or ‘quite’ important (Tourism 2022). Greenpeace has supported that short-haul flights where there are alternatives available under six hours should be banned. While there are a number of complex factors the argument has been made that this would eliminate 3.5 million tons of carbon emissions per year. Another international survey found that accessibility and affordability were the two clear front runners that influence travellers when deciding where to go on holiday. In order for this decrease in air travel to be possible upgrades will need to be made to the quality, frequency, cost and accessibility of trains and or any other substitutes (Tourism 2022). 

Europe is starting to implement some upgrades to their trains in order to draw passengers away from air travel where possible. Austrian national railways have revealed their design for night jet trains that are set to be in service next summer (Connolly 2022). These trains have been designed to maximise the passenger's privacy and comfort while travelling across Europe. The routes that these trains are expected to travel on include Vienna, Budapest, Berlin, Milan, Rome and Zurich. One of 33 of these trains will be available next summer and the rest will be introduced by 2025, this is a £700 million investment into the sector (Connolly 2022).

Future of the industry

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In the near future, the aviation industry could be forced to revisit its flight economics. Airlines might need. to rethink the economics of the potential options at their disposal such as different pricing logic which could be necessary to implement (Bouwer2021). One area to highlight is today most carriers price nonstop point-to-point flights at a premium, but passengers who value time over cost book these types of flights. Customers that are travelling for leisure even in premium classes are more sensitive to the price and could choose a connecting flight as an alternative route. This substantial gap between nonstop and connecting prices may need to reduce in size (Bouwer2021).

Lower business traffic could also. be in need of some network alterations. Over the past few years, companies have added a large number of flights between small cities and hubs. Using smaller wide bodies such as Boeing 787 planes, allows these flights to work because they have a high-yielding demand within the business (Bouwer 2021).But due to the business demand being lowered, the economics now support a larger aircraft that flies less often. Airlines could discover that airbuses like the A350s or Boeing 777s, have lower unit costs and could become the standard for long-haul networks (Bouwer 2021).  

There are some potential quick changes that could be made but won’t completely change the structure that’s in place today. These changes could be made through fuel and GPS technology. It is estimated that air travel efficiency could be improved by 15% by simply using GPS technology to fly instead of the main highways in the sky used today (Walla2021). The second area that can be changed is the fuel that is used in the aviation industry. While the likes of hydrogen-powered planes are a while off from being implemented there are more sustainable fuels that are available today (Walla 2021).

More than forty international airlines now have experience with sustainable fuel. An estimated 200 thousand flights have used sustainable aviation fuel since 2011 and a 1.6 billion gallon committed forward purchase agreement was made (Ghatala 2020). Sustainable aviation fuel can be manufactured through industrial waste gases such as carbon monoxide, carbon dioxide and much more. While these new fuels are not noticeably more efficient than fossil fuels they don’t have sulphur and the particulates are significantly less. These components being left out of the fuel is important to people that live close to an airport due to the impact on their health and the environment (Walla 2021).

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One of the long-term improvements that would be a front-runner for the aviation industry is hydrogen power (Aramco2022). One of many reasons for this is that hydrogen is one of the most. abundant elements in the universe, this is why it could not only play a very important role in the aviation industry but all forms of travel. Hydrogen is a. colourless, clean fuel that when burnt only emits water or oxidises (Aramco2022). Currently, an estimate of around half of the world's industrial hydrogen comes from methane, which is currently used for fertilisers, metals and the space industry. Albeit, this is an amazing fuel it currently creates 10tonnes of CO2 from the production of 1 tonne of hydrogen. Clearly, if this is. the future of fuel, we need to find a more sustainable way of manufacturing it(Aramco 2022).

Another technological innovation that could be seen in the future might redefine mobility. State-of-the-art technology, such as ultra-light materials and autonomous devices presents opportunities to evolve the aviation industry from what we know. This could present the optimum chance. to enable new business models. These innovations could include electric aircraft, robotics, biometrics or artificial intelligence (ICAO 2022).  

The next area that will most likely see some changes in the future, is the overall aesthetic design of the plane’s appearance inside and out (Marr 2022). The traditional wing design of commercial planes might be the first area to be changed. The delta wings that are found on the concord and Military jets could be introduced into commercial planes. KLM and Delft University are currently working on a ‘Flying V’ plane design that seats passengers down each side of the aircraft. With this shape, they believe that the plane could offer 20% more fuel efficiency than an A350 (Marr2022).   

One area that airlines are continually trying to maximise is the number of passengers that can fit on each plane without reducing the passenger’s comfort. This is an area that could be improved significantly through larger planes with double-decker economy seats and an increased capacity (Marr 2022). Along with the interior, the entertainment could also be improved. Some options that the future might hold might include more screens, games or maybe e-courses. The Japanese company Panasonic is developing technology that will better the passenger’s wellness, such as lighting that regulates the passenger’s circadian rhythm and noise-dampening technology to reduce noise to improve sleeping conditions on long flights (Marr 2022). AR and VR companies are also very eager to improve the passenger immersive. experience while flying. British airways have been trialling skylight VR headsets on first-class passengers on selected routes, while the metaverse grows in popularity we will likely see more opportunities to enjoy these experiences while flying (Marr 2022).

Conclusion

While the aviation industry struggled during the pandemic, it managed to survive the uncertainty partly due to some much-needed financial support from a number of governments around the world. Although difficult, these last few years weren’t wasted. Companies within the industry spent time analysing and identifying minor and major problems within their business models, such as their reliance on business travel. Unfortunately, the industry didn’t have much time to recover and implement solutions before they were faced with the impacts now faced as a result of the Russian/Ukrainian war. This war is having a terrible effect on the global economy in no small part, due to the rise in the price of fuel, caused by Russia halting gas flow through their Nord Stream pipeline. Other factors include closed airspaces along with a titanium supply halt. This event has caused the industry to adapt and seek other suppliers and solutions.  

There is still the very well-known issue of climate change and the damage the industry is causing to the environment. There have been a number of policies and. legislation implemented by the government in order to make a change for the betterment of the climate. While this is one way of addressing the issue, there are also other means, such as the domestic flight bans that France has put in place on its carriers and the night train investments that have been implemented in Austria. These are huge steps that have been taken in order to improve carbon emissions and the aviation industry will have to find more sustainable ways of operating if wants to evolve and adapt to today’s standards. This will be key to the aviation industry’s future if it intends to keep its current role within domestic and international transport.   

The past few years have been a catalyst for extreme change and acceleration within the sector. In order to secure the industry’s future and ensure success, changes need to be made and implemented at an increasing pace. Changes that can be made now are within flight economics such as pricing logic and better use ofGPS technology. While this will help, the real long-term goal is to produce and improve the manufacturing of sustainable jet fuel. Over the last few years more and more airlines have been exploring the use of sustainable fuels, with the best prospect being Hydrogen. Hydrogen easily has the most potential due to how abundant and clean it is, however, it produces a profound amount of CO2 while being created. Improving this would be an essential goal in ensuring wide spread adoption of the element for the production of aviation fuel. Sustainable fuel is arguably the most important innovation for the industry going forward, but carriers will also need to improve the overall experience of flying for passengers whether that means seating or onboard entertainment in order to keep on top of the travel sector and remain dominant and stay ahead of the competition.