Skip to content
Home » Profits Ain’t Peanuts (Part Five: The Seeds of Tomorrow)

Profits Ain’t Peanuts (Part Five: The Seeds of Tomorrow)

    Tomorrow, and Tomorrow, and Tomorrow

    Harry&Dumbledore LEGO

    Image of LEGO Dumbledore and Harry staring at Crystal Ball by Pascal used under Creative Commons License

    If I could accurately predict the future, I would not be writing this.

    I would be sunning myself on the beach of the private island which I would have bought with the massive fortune made playing the markets.

    I can’t predict the future, but I can find out what other people have to say about it and apply my industry experience to reach my own conclusions. This implies certain assumptions, or accepting other people’s assumptions, and is prone to error.

    That said, there are people make very educated assumptions to predict trends. Those are the people I follow closely.

    Reputable analysts and economists predict growth for our industry.  IATA released a report indicating that airlines expect a rise of 31% in passenger demand by 2017.  The FAA Aerospace Forecast looks beyond 2017 through to 2032, and predicts passenger baseline growth at an average annual rate of 2.3% domestically US and 4.1% Internationally.

    There will be growth both regionally and internationally and both Traditional and Low-Cost Carriers will benefit from this demand.

    The times they are a changing, in ways we can hardly imagine.

    Time and tide wait for no man, no woman, no airline either.  There are changes coming which will affect everything we know about travel in dramatic ways.  These are not just changes in the preferences of passengers, they are significant changes in the makeup of passengers.  Tomorrow’s passenger may differ only slightly different from today’s, but it’s the passenger of the day after tomorrow we should focus on.  The airline industry has already considered this.

    Many of the changes see today to aircraft equipment and configurations, and even more of the changes we do not yet see, but which are on the drawing board, are intended to suit the needs of the next generation of flyers.

    Right now, a lot of the conversation on travel trends focuses on the needs of Millenials.  Understandably so, as they have the wallets.  But when you consider some of the timelines I’ve shared with you for cabin interiors developments, and you extend that timeline for many of the changes the aviation industry is planning right now, it is Post-Millennials (GenZ) we need to consider.

    While I can only hope that flying remains exciting for many years to come, the reality is that it has been around for many generations now.  Because of the democratisation of the service, spurred on by the innovative Low-Cost Carriers, market expectations may change as Post-Millenials become the mainstream travelling public.

    This is a topic I’m studying in-depth, and articles I will write will analyse those topics.

    I will say that we should not expect that our grandchildren will view air travel the way we do today.  Not in the least.  Their definition of comfort, their comfort demands may change dramatically.  What they feel they are entitled to from aviation may prove very different from what we feel we’re entitled to today.

    Don’t Trip on Tomorrow

    Post-Millenials will find it quaint that we got excited about WiFi in the aircraft cabin.  They may not be bothered if the person in the seat next to them talks to a friend on their telephony enabled Google Glass.  Their expectations will be different.

    They may not even fall under the Entitlement Theory I mentioned in Nutty Seating 4.1 and Nutty Seating 4.2.  It would be unwise to make assumptions on the applicability many of the things I’ve written about in these posts over such timelines.  With the exception of safety as the utmost priority, and profits as the key to survival, everything else is up for grabs.

    In keeping with the spirit of CES in Las Vegas this week, and just to take a short departure into the future, watch this brief and comical video from the Mashable YouTube Channel:

    I read and thoroughly enjoyed the provocatively-entitled post by Mat Honan of Wired on his experience wearing Google Glass for a year.  It made me think.  GenXers (me) might find this tech bizarre.  Millennials may find it annoying.  Post-Millenials..well that’s a whole different story.

    I’m not saying it’s all going to be about Google Glass.  I have no idea what it’s all going to be about. I don’t think it’s going to be about iPhones (sorry, Apple, I love you; I really, really do.).  Apple has probably already come to the same conclusion.

    Whatever it will be, it will surprise us. And it will have a significant impact on our social habits and norms. The paradigms of public behaviour have already changed, and will continue to change. How we behave in groups too will change. That will directly affect the aircraft cabin.

    Connectivity, IFE, the proximity of fellow passengers, what is considered good or adequate service, what will constitute a competitive fare, what everyone’s favourite colour will be—all of that is likely to change.

    I believe that forward-thinking airlines have already considered this soon-to-be reality.  Further splintering of the business models in our industry will support these social changes.

    As I referenced in the post which started it all, Profits Ain’t Peanuts: The Peanut Uprising Peter Knapp of Landor predicted in Landor’s 2014 Trends Forecast for Airlines that the theme of Low-Cost Carriers for 2014 will be Evolution.

    As Peter Knapp points out the Low-Cost Carriers have grown up. The model has evolved already, and over this year it will continue to evolve. The year after that too; it will never stop evolving.

    If I had to define the prime differentiator between Low-Cost Carriers and Traditional Carriers, it has been swift adaptability.

    Low-Cost Carriers, from the beginning, have been lively and quick. They’ve been keen to think differently about the aviation business model, to redefine it. What we perceive as change from them now is consistency. They have always been profoundly committed to change. It is their raison d’être.

    For decades, Traditional Carriers have followed the game which the Low-Cost Carriers moved onto an untrimmed pitch.

    Traditional Carriers have been playing catch-up, reconsidering their collective identity.  Some of the Traditional Carriers have succeeded in catching up because they’ve figured out who they are.

    As the years progress, and as some Low-Cost Carriers evolve to provide the very same services as Traditional Airlines, the lines between the Peanuts and the Flagships will get very blurred.

    The reorganisation of our industry will off-set this somewhat. Perhaps today’s LCCs will be closer to Traditional Airlines and World-Class Carriers, but today’s Ultra-Low Cost Carriers will be tomorrow’s LCCs.  With the passenger growth figures projected new Ultra-Low Cost Carriers will likely pop-up to fill the gap.

    There are two caveats:

    All of this will hinge on profits.  

    That’s the whole point of Profits Ain’t Peanuts. In the past, airlines have relied on government support to get them out of difficulties, but it has not always been available, and it may not be available tomorrow.

    And it will depend on the political landscape; whether Open Skies policies are adopted or protectionism resurfaces.

    The rise of mega-mergers like that of the New American may have some significant impact on our future, but that’s a whole different post.

    That said:

    Super-consolidation of Traditional Carriers may drive how the Low-Cost Carriers adapt to changing market conditions in the next twenty years.

    Low-Cost Carriers have taken the lead and driven change for the over 30 years. There’s no reason to think they’re just going to give that up.

    That’s the end of the Profits Ain’t Peanuts Series.  Maybe it will pop up again in future, but I’m working on many other things for you.  I hope you enjoyed it.  Your feedback is welcome and would be appreciated.  What series would you most like to read next?  Post your suggestions below.  

    Leave a Reply

    %d bloggers like this: