Fight or flight – it will happen
Author: Paul Canterbury
The airline industry is in the calm eye of an escalating storm of disruption. For 70 years a buffer of artificial constraints has protected it, but that’s about to change. The past decade has seen major disruptions in travel, with the advent of start-ups such as Uber and Airbnb. The retail, music, entertainment and banking industries have all been disrupted and forced to transform. Disruption is booming, with one notable exception: air travel.
Fight or Flight – It Will Happen
The airline industry is in the calm eye of an escalating storm of disruption. A buffer of artificial constraints has protected it, but that’s about to change.
Start-ups with simple, yet sophisticated, IT solutions are unencumbered by the massive capital investment or government restrictions that hamper legacy industries. And while the airline industry has had to accommodate an influx of disruptive low-cost carriers, large legacy operators remain mostly unchanged.
What does the future hold?
The two major areas of impact for airlines will be selling tickets and the regulation of flying.
1. New companies will emerge that will curate the customer journey from doorstep to destination. They will collect data from hundreds of millions of travellers and use it to further customise and adapt to our fickle wants and desires. Airlines will no longer be in control of distribution. As telecommunication companies have been relegated to pipelines for hire, airlines will become the vehicle fleet in external supply chains. These data rich platforms have already emerged in Apps by Google, Facebook, Uber, Airbnb and Amazon.
2. 70-year-old ownership and control rules govern international market access, protect incumbents and prevent rationalisation in the industry. This entrenched system will be overwhelmed by an escalation in cross-border equity ownership plays and joint ventures that will force transformation.
Consumer empowerment, driven by advances in technology, will transform the process of buying and selling tickets. At the same time Asia – particularly China as it expands its global presence – will be the biggest disruptor in the area of ownership and control as its growth fuels innovation.
Read the full insight to find out more.