The University of Notre Dame

Mendoza College of Business

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The Future of US Air Travel

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Trey Andrews
John Bilello
Pat Brown
Matthew Duffey
Nicole Velasquez

12 November 2020
MGTO 30110 - 03
Foresight in Business and Society - Fall 2020

 
 

Table of Contents
I. Abstract…………………………...……………………...……………………………..1

II. Executive Summary………...……………………...……………………...……………3

III. Introduction………...……………………...……………………...…………………….6

IV. Topic in Context………...……………………...……………………...………………..9

A. Background and History…....………...………………...………………...……….9

B. Stakeholder Analysis……....……...………………….……………...…………..13

C. Forces of Change………....…...…………..…...………………...……………....20

V. Trend Analysis……...……………………...……………………...…………………....28

A. Forces of Change and Uncertainties…….....……………………...……………..28

B. Outline of Variables……...…………..…………...……………………...……....29

C. Baseline Forecasts….....…………...…………...……………………...………...31

VI. Future Scenarios……...……………………...……………………...………………….47

A. Kitty Hawk (Growth)……...……..………………...……………………...……..50

B. Parking Lot (Constraint)……….……………………...………………………....52

C. Connecticut (Transformation)………..……………………...…………………...54

D. Monuriki Island (Collapse)……......……………………...……………………...56

VII. Business Implications……...……………………...……………………...……………60

VIII. Conclusion……...……………………...……………………...……………………….69

WORKS CITED……...……………………...……………………...………………….70

EXPERT CONTRIBUTIONS……...……..……...………………....………………….76

 
  

I. Abstract
Over the course of the last century, commercial air travel has become an integral part of
American life. Through the transport of personal travelers and business individuals, it has
facilitated economic growth and development through enhanced trade, tourism, and employment.
Both recent and long term changes in economic and social trends, however, may alter the
direction of air travel in the future. While the COVID-19 pandemic in recent months has surely
affected air travel due to its impact on the economy and public health, growing environmental
consciousness about the negative effects of air travel from consumers has steadily become a
persisting concern within the aviation sector and is expected to be for many years to come. The
purpose of this report is to project the future of US-based commercial air travel through 2030
with the use of quantitative and qualitative research concerning a variety of forces of change in
order to understand the past and develop a flexible approach to the future. Through this future
thinking analysis, this report seeks to answer the question:

What is the future of United States-based commercial air travel as it relates to trends and
changes in economic development, environmental sustainability, public health and regulation,
and aviation technology?

Our team would like to thank a number of people for their contributions to this project:
- Dr. John Michel, our instructor, who was extremely helpful through his insights and
guidance throughout the duration of the project.
- Our mentors at The Boeing Company, Robert Niehaus, Jeff Gonzales, and Benjamin
Yao, who contributed both technical and high-level expert analysis into the aviation
sector
- Mr. John Mowry, who used his professional experience at the Alton Aviation
Consultancy to help us develop our post-COVID-19 recovery analysis

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II. Executive Summary

Central Question
Since the early 20th Century, air travel has become an integral component of
globalization and economic development as it has led to increased human and business
interactions over long distances. It has also taken a variety of forms including commercial air
travel, air freight, and aviation defense. Despite its continued importance, air travel has
undergone many evolutions, and these changes have been most pronounced in the market for
commercial air travel in the US. Before the COVID-19 pandemic, the aviation sector had already
been sensitive to changing conditions with the economy, government, environment, and social
trends. The pandemic, however, has proven to be an additional driver of change on the future of
the aviation sector and in fact has worked to accelerate the effects of these persisting factors of
change. As a result of the variety of factors at play, the future of US-based air travel remains
highly uncertain. Despite this uncertainty, this foresight report is intended to help businesses and
individuals navigate this uncertain landscape, and therefore, explores the following question:
What is the future of US-based commercial air travel as it relates to economic development,
environmental sustainability, public health and regulation, and aviation technology?​ Economic
development refers to the wealth and wellbeing of the US, its communities, and its individuals.
Environmental Sustainability refers to the idea that humanity must exercise practices that will
not compromise the Earth’s environment for future generations. Public health and regulation
refers to the US government’s influence on the protection of the public from serious health
threats following the pandemic and its more general monitoring of the aviation sector. And
finally, aviation technology refers to the expected advancements in air travel technology that will
make flying more fuel efficient. All of these trends will simultaneously influence the direction of
the aviation sector over the course of the next decade.

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Topic in Context
In order to project the future of US-based commercial air travel, this report acknowledges
the importance of having a broad understanding of the aviation sector’s past and the context that
it is presently inhabiting. It also specifically notes the macroeconomic environment, operating
environment, and focal boundaries of the area of investigation it concerns. Despite the specific
focal boundary of the report, however, there are a multitude of stakeholders (airlines, aircraft
manufacturers, US government, environmental activists, etc.) that have varying levels of interest
and influence. Moreover, the major forces of change that the central question introduces have a
significant impact on the aviation sector’s past and will likely influence the future too. The
analysis of the historical context for the relevant forces of change and stakeholders is especially
important for the following types of businesses: airlines (Delta, United, American, etc.),
providers of inputs for air travel (aircraft manufacturers, jet engine manufacturers, jet fuel
suppliers), businesses that utilize air travel, and travel related businesses (hotels, car rental
companies, etc.).
Baseline Forecast
After gaining an understanding of the historical interplay between the relevant
stakeholders, factors of change, and the direction that this interplay has taken, it is appropriate to
create a baseline forecast for the future of commercial air travel in terms of demand. This
demand is represented graphically by Revenue Passenger Miles (RPM), which is the dependent
variable. Additionally, the report projects the future of a variety of independent variables that
each influence the dependent variable. Due to the economy’s historical role as the dominant
influencer on air travel demand, the report projects that demand for air travel will follow a
similar path to the gradual economic recovery that is expected over the course of the next
decade. In addition, this report forecasts that increased governmental support advancements in
fuel efficiency will contribute to the growth in air travel demand. This report’s projected
influence of the growing environmental consciousness regarding the negative effects of air travel
on the environment, however, is much more ambiguous. With the assumption that technological

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advances in fuel efficiency are made quickly, however, the report projects that growing
environmental concern will also contribute to the growth in air travel demand. Finally, it is
projected that changing demographics in terms of the aging population and increasing spending
power of millennials, who are more hesitant to fly due to environmental concerns, will
counteract and neutralize each other in their influence on air travel demand.
Alternative Scenarios
While the baseline forecast is the expected future scenario, it is not necessarily the most
likely outcome due to the variety of uncertainties and potential disruptions that may arise.
Therefore, this report utilizes the “Alternative Scenarios Method,” and offers narratives of four
different scenarios that may arise and some signposts that business should look out for to
determine which scenario that they are in. The four different scenarios that are offered are the
Growth Scenario (Expected Future Scenario), Constraint Scenario, Transformation Scenario, and
Collapse Scenario. The report’s practice of narrating the potential events of scenarios on both
ends of the spectrum of preferability is important because it enables business to react to anything
that comes its way.
Business Implications
Each alternative scenario that is discussed in the Alternative Scenarios section creates its
own implications for businesses, and these implications consequently create second tier
implications. All of these implications yield a variety of both opportunities for businesses to
capture and threats to avoid. Therefore, it is important for the four different business groups
mentioned in the Topic in Context section above to understand the implications of these
alternative scenarios so that they can develop strategic solutions to the different playing fields.
Simultaneously, they must also consider that different scenarios yield different ethical
considerations, and that businesses must weigh their strategies against these considerations.

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III. Introduction
2020 has undoubtedly been a year marked by great uncertainty. The COVID-19
pandemic has affected many individuals, institutions, and economies in a variety of
unpredictable ways. While all of these groups are unsure about their future, the commercial
aviation sector may be facing the greatest degree of uncertainty. This is the case for two reasons.
First, the COVID-19 pandemic led to immediate changes to air travel in a variety of ways (i.e.
increased concern for public health, lower traveler purchasing power). Second, the future of air
travel was already subject to many drivers of change even before the pandemic began. While the
pandemic is a recent driver of change, it is apparent that it is accelerating the changes already
brought on by these pre-pandemic factors. Issues such as the growing concern over sustainable
development and climate change, the increased impact of public health practices and regulation,
and the development of a variety of aviation technologies have proven to be key drivers of
change for air travel in recent years and will surely continue to be in the future. Pertaining to
these factors, the question is how impactful will each one be and in which direction will these
trends take.
Our project will focus on the future of air travel in terms of demand, and it will do so
with a forward looking time frame of 10 years. The macroenvironment boundary for this project
includes overall transportation. Moreover, the operating environment boundary will be composed
of long-distance and intercity travel. Finally, the focal boundary will be US-based commercial
air travel (​Figure 1​). While transportation takes a variety of forms, this report is concerned with
transportation between US cities and over long distances. Moreover, while long distance travel
can utilize many different vehicles to transport people (i.e. airplanes, trains, and cars), this report
will exclusively focus on how people will utilize air travel as a mode of US-based intercity
transportation.

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(Figure 1)​
The future of air travel will have implications for a variety of businesses. The four
business groups that should be most concerned with trends in air travel are US airlines, providers
of inputs to air travel (e.g. jet fuel suppliers, aircraft manufacturers, and jet engine
manufacturers), businesses that utilize air travel themselves, and travel-dependent businesses.
First, US airlines should be concerned because these factors of change pose a threat to the
demand for airline services in the future. The most recent estimate in 2019 for the demand of air
transportation predicted that demand would increase by an annual 4.3% over the next 20 years.
This would equate to 15.5 million new jobs and $1.5 trillion of additional GDP to the world
economy (ICAO, 2019). In light of several factors of change (which will be discussed in great
detail below), especially the events of the global pandemic, this estimate is likely to be
overinflated. Second, jet fuel suppliers, aircraft manufacturers, and jet engine manufacturers
should be concerned because the demand for their goods and services are directly correlated with
the demand for airline services. Moreover, growing concern over environmental sustainability
may lead to advances in aviation technology that may render traditional fuels, aircrafts, and

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engines obsolete. Third, businesses that utilize air travel should be concerned because air travel
has become a fundamental part of conducting nationwide businesses and its future will greatly
affect the way these companies conduct their operations. Finally, travel-dependent industries (i.e.
hotels, cruises, car rentals, and travel agencies) should be concerned because of their demand’s
interdependence on the demand for air travel.

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IV. Topic In Context 

A. Background and History
Looking at key dates and moments in the aviation sector to map out the changes it has
already gone through is a very helpful way to gain insights into how current trends will shape its
future. Below the description of key terminology is an outline of the relevant history of US-based
commercial air travel from the dawn of commercial flights to the present day. Throughout this
record, it is essential to note the influence of government aid and regulation on the sector’s
operations, as well as the growing trend of environmental awareness in the decision-making
processes of consumers.

i. Key Terminology

(Table 1) 
Commercial Commercial air travel is a distinction made to separate civilian air travel for business or
personal purposes from military-related air travel.
Air Travel

The Environmental Protection Agency is an independent agency of the US Government

whose research and recommendations have the potential to inspire federal regulation of
EPA
issues such as carbon emissions, which could have a significant impact on air travel.

The Federal Aviation Administration is a body of the United States Government with the
powers to regulate every aspect of civil aviation within the US as well as over surrounding
FAA
international waters

Health and In the Context of this paper, health and safety will refer to the protection of passengers
against non-malicious threats such as the spread of disease, especially with regard to
Safety
precautions taken in light of COVID-19

In contrast to health and safety, security refers specifically to the protection of airlines and
their passengers from attacks. Security will most often refer to the role of government
Security
regulation for the sake of security (establishment of TSA, etc.)

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ii. Key Events and Their Impact

The Advent of Commercial Jets (1945-1960)

The post-war period saw a rapid development in the production of commercial jets. In
1952, the British Overseas Aircraft Corporation unveiled the first commercial jet service with the
introduction of the Comet, a 36-seat jet that could fly at speeds of up to 480 miles per hour,
which was nearly a tripling of the fastest existing commercial aircraft at the time (FAA, 2017).
The introduction of this aircraft yielded tremendous success and ignited the spread of
commercial air travel to other countries. More specifically, Britain’s success in commercial jet
production led to a frantic push by United States-based airlines to build jet airliners of their own.
While competition and excitement surrounding the emergence of these massive commercial
flights was high, regulation and safety standards were not. As a consequence, flying was still an
unsafe experience, as seen in the crash of two commercial aircrafts over the Grand Canyon in the
summer of 1956. Moreover, the Comet, which was largely responsible for the scaling of
commercial flying, was also involved in three crashes following its introduction in 1952
(Glancey, 2014).

The Establishment of the FAA (1958)

After several high profile crashes in the 1930s, including the death of Notre Dame coach
Knute Rockne, the nation realized the need for regulatory oversight into the aviation industry.
This led to the establishment of the Civil Aeronautics Authority (CAA) in 1938, which would be
responsible for conducting “accident investigations and recommending ways of preventing
accidents” (FAA, 2017). As seen by the 1956 Grand Canyon crash, however, the CAA was not
effective in preventing air-based tragedies. As a result, the Federal Aviation Administration
(FAA) was established in 1958 as an independent regulatory agency to allow for the “safe and
efficient use of national airspace” (FAA, 2017). Chief among the FAA’s steps to achieve this
safety was the federalization of Air Traffic Control responsibilities as a means of standardizing

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points of contacts between airports and pilots to ensure two planes were not in the same airspace
as they were in the Grand Canyon crash.

The Establishment of the EPA (1970)

After the 1962 release of Rachel Carson’s ​Silent Spring​, which was a book that criticized
the adverse environmental effects of pesticide utilization, public scrutiny over environmental
issues like pollution and disasters such as oil spills began to emerge for the first time. The
American people began to understand that the amount of “natural areas littered with debris,
deteriorating city air, and urban water supplies contaminated with dangerous impurities” was
setting the stage for the country to be uninhabitable for future generations (ICAO, 2019). As a
result of this so-called “environmental awakening,” President Nixon presented congress with a
37-point plan to help preserve the environment, one of which was the establishment of the
Environmental Protection Agency (EPA). Since its establishment, the EPA has been active in
setting standards and baselines for corporations - especially in high-emission industries such as
the automotive and aviation sectors - to improve air quality and limit pollution.

Airline Deregulation Act (1978)

From the 1930s until the late 1970s, the federal government through the Civil
Aeronautics Board (CAB) and the FAA produced a regulatory environment to ensure the overall
profitability of the aviation industry. The CAB stated which airlines could fly which routes, how
much they could charge to consumers for those flights, and provided subsidies in the form of fuel
tax write-offs and pension guarantees in an attempt to avoid ruinous competition. As chairman of
the CAB, economist Alfred Kahn recognized that airlines had prospered despite operating less
efficiently than they were capable. When Jimmy Carter signed the Airline Deregulation Act in
1978, domestic airline fares were reduced, operational efficiency increased, and the
Hub-and-spoke system became the standard used by many airlines today (Smith & Cox, n.d.).
Additionally, this legislation made federal law and regulations the guidelines for airlines

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removing some of the ability for passengers to hold airlines accountable. Analysts at the Federal
Reserve Bank of St. Louis point to the passage of the Act in 1978 as the onset of the oligopolistic
competition that currently exists in the industry, especially since the merger-heavy period
between 2005 and 2015 (Wolla & Backus, 2018). Without the benefits of government regulation
listed above that were intended to avoid ruinous competition, however, it became extremely
difficult for the airline industry to be profitable and make money in the future. Consequently, this
cash crunch led to multiple airline bankruptcies over the course of the next several decades.

Air Traffic Controllers Strike (1981)

In addition to the deregulation that came under Carter’s presidency, the competitive
landscape was further impacted by President Ronald Reagan’s administration. The PATCO
union air traffic controllers strike began on August 3rd, 1981, and it ended on the 5th when
President Reagan fired almost 12,000 individuals participating in the strike (Murphy, 2017). The
air traffic controllers had started the strike due to harsh working conditions and lack of
recognition of their rigor in the form of benefits and compensation, but the President did not look
upon the event as worthy. The breakup of the strike and the aggressive manner in which Reagan
executed it demarcated the value that the Federal government gave to airlines over passenger
interests. The strikers had noted how their roles supported passenger safety, but leaders did not
care. This event marks a sharp distinction from the creation of the FAA and CAB.

Introduction of the TSA (2001)

Following the terrorist attacks of September 11th, 2001, the federal government
implemented sweeping security initiatives in the airline industry. The Transportation Security
Administration (TSA) was introduced in November 2001, and it was given responsibility for the
security airlines, airports, and the FAA. The TSA, while increasing the overall security of air
travel throughout the United States, decreased the operational efficiency and harmed consumer
satisfaction with this form of transportation as the changes altered the flying experience. Despite

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the implementation of TSA, people were still afraid to fly following the attacks for a
considerable period of time. The airline industry lost about $10 billion directly due to the 9/11
attacks and another billion due to new procedures used by TSA (Blalock, 2017).

Boeing 737 MAX crisis (2019)

In the March of 2019, a Boeing 737 Max airplane crashed in Addis Ababa, Ethiopia,
marking the second jet crash due to faulty design by manufacturers at Boeing. These crashes had
rippling effects, causing significant losses for all four major airlines in the United States and
inciting investigations into the FAA and Boeing. Reports released following those incidents,
such as “The Whistle-Blowers at Boeing,” amplified public concern. Among the most
concerning aspects of these reports was the claim that the malfunctions with the Boeing 737 Max
airplanes were noticeable according to workers involved in the manufacturing process, but the
FAA approved the planes anyway (Barbaro, 2019). As a result of this crisis, public concern over
the safety of flying had increased even before the pandemic.

B. Stakeholder Analysis
There are many stakeholders who will influence and be affected by the evolution and
future of air travel. These stakeholders have varying levels of interest in and influence over the
trajectory of air travel (​Figure 2​). Because these stakeholders are the primary players in the
factors of change introduced earlier, it is important to discuss the ones that have the highest
influence because they affect which factors of change will yield the greatest impact. The below
stakeholder plane and subsequent discussion outlines what our team determined to be the
relevant stakeholders, ordered by their levels of interest in -and influence over- the future of air
travel in the United States.

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(Figure 2)

i. High Interest & High Influence

U.S. Airlines
The most prevalent stakeholders in the future of air travel are the airlines themselves. As
the air travel industry is effectively an oligopoly, with 68% of market share belonging to four
corporations, airlines are both highly influential and highly interested in the evolution of the
industry (Prijs, 2017). Whether the primary sources of change will be environmental
advancements or regulation, government regulation for the purpose of public health and safety,
or the rapid decay of business travel in favor of virtual meetings and remote work, there is no
doubt that airlines will be as (or more) deeply affected than any other industry or interest group.

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While the potential impact on the airlines from the industry’s evolution makes their interest
apparent, it is important to note that their influence cannot be matched by any other group
besides the government. Because of the concentration of power between a select group of
airlines, they have the ability to push back against changes that could hurt their bottom line like
particularly stringent regulations. The concentration of market share would also make it difficult
for a major airline to fail because a government bailout would likely occur to keep the remainder
of industry afloat, meaning airlines would be able to exert their influence with a pseudo - ”too
big to fail” mentality.

Advocates for Environmental Sustainability

Other major stakeholders in the future of air travel are the leaders of the movement
advocating for increased environmental sustainability. These environmentalists have high
interest and high influence on the future of air travel. The aviation industry has been put under
increasing pressure to reduce its impact on pollution and climate change. It has been found that if
aviation were a country it would be the seventh largest carbon emitter in the world (National
Geographic, 2017). Consequently, the industry has been shown to be a large contributor to
climate change. As a result of these negative effects of the current state of air travel,
environmentalists have advocated for reform within this industry. These sustainability groups,
which have recently promoted “flight shaming” (E&E News, 2019), have high impact because
they have great influence over demand for air travel and the evolution of aviation technology.
They are highly influential on the demand for flights because it is becoming increasingly popular
for both individuals and corporations to support environmental initiatives. Additionally,
advocates will have an impact on the evolution of aviation technology because as environmental
initiatives continue to be at the forefront of regulatory and political policies, providers of inputs
to air travel will be forced to introduce more fuel efficient engines, aircrafts, and sources of
energy. For example, one developing innovation in aircrafts, known as the blended wing-body, is

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already in the process of being introduced and is expected to reduce fuel consumption by 27%
(National Geographic, 2017).

Airplane Manufacturers
Airline manufacturers like Boeing and Airbus are key players in the direction the aviation
industry will take in the next decade. The movement for the industry to become more sustainable
has led to demands for more fuel-efficient sources of energy and aviation technology that have
less of an impact on climate change. The advancement of this technology is where the airplane
manufacturers come into play. These manufacturers are highly interested in the trajectory of
these trends because the financial livelihood of their businesses depends on their ability to meet
the technology demands of the airlines, who are under increased pressure to reduce their carbon
emissions. If they cannot provide these technological advances, then they will struggle to be
profitable. Moreover, they are highly influential in the future of commercial air travel because
while they are motivated by the challenges of the sustainability movement, the actual progression
of aviation technology towards these demands rests on their shoulders. In fact, manufacturers
have already begun to make innovations to meet these demands. For example, they are designing
planes that are compatible with more fuel efficient engines, use lighter materials, and are capable
of staying in the upper atmosphere for longer portions of trips (National Geographic, 2017).

Pilot Unions
Pilot unions are both highly interested in and highly influential to air travel. They are
highly interested in the condition of air travel because the professional and economic livelihood
of pilots is directly related to demand for air travel. If people do not want to fly, then society
does not need any pilots. Additionally, they are highly influential due to their strong negotiating
power. Without pilots, the planes cannot fly in the sky (for now) and the aircrafts, jet engines,
and jet fuel that the airlines pay for become useless. Moreover, they are highly influential

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because they contribute to the slim margins of the airlines due to their rights to nearly all of the
airlines’ profits.

ii. High Interest & Low Influence

Jet Fuel Suppliers

Oil/jet fuel suppliers, such as Shell and Exxon Mobil, are significant stakeholders in the
future of air travel because jet fuel revenue is at risk due to growing environmental concerns and
trends towards more fuel-efficient sources of energy. These jet fuel suppliers are highly
interested in the future of air travel because jet fuel is “one of the largest line items in airline
budgets” and because it makes up a large portion of income for oil providers (National
Geographic, 2017). If the demand for jet fuel among airlines were to decline, then the bottom
line for oil suppliers would be hurt. While this group is certainly highly interested in the future of
air travel, it actually has a pretty low influence on the direction the aviation industry takes. As
mentioned in the previous section, growing concern over air travel’s contributions to climate
change are driving change in the industry to more fuel-efficient alternatives of fuel that may
make traditional jet fuel obsolete. As airlines are searching for ways to be more profitable into
the future, it is logical that they will look for ways to cut costs, and jet fuel may be one such area
where they will do so with the development of more sustainable technology. Therefore, because
of the strength of the sustainability movement and the eagerness of the airlines to cut costs, there
is little that these suppliers can do to prevent the evolution to more fuel-efficient alternatives.

Personal Travelers
Personal travelers are somehow simultaneously very interested in as well as completely
bankrupt of any influence. As it stands, personal travelers’ decisions to fly or not to fly have only
the slightest marginal effects on airlines. However, if the concept of ​flygskam ​-a Scandanavian
term for “flight-shaming” others for air travel’s environmental impact- gains traction in the
United States, like-minded consumers could begin to have a tangible effect on airline’s bottom

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lines as well as their decisions to pursue more sustainable practices. Certainly, environmentalism
is quickly gaining traction among consumers and investors, especially in younger demographics.
Compared to 2017, the number of mentions of “climate-related issues have increased seven-fold”
(McKinsey, 2020). While personal travelers may seem like an unimportant group simply
expected to bear the weight of price increases resulting from limited flight options, they may
soon be influential drivers of change in an industry that is certainly primed for it.

Travel-Related Businesses
Stakeholders that may be the bearers of negative externalities from a decline in air travel
are businesses that offer travel-related services such as hotel chains and rental car companies.
Whether a future decline in air travel stems from decreased business travel, personal travel, or
both, these companies stand to lose a significant portion of their business. While these businesses
are highly interested in the future of the airline industry because it is a central aspect of their
business models, they do not carry a significant amount of weight in terms of influencing change
in one direction or another. Similar to airlines, travel-related companies are highly reliant on both
the bookings and alternative revenue streams (room service, premium wifi, rental car upgrades,
etc.) of business travelers. In 2019, business travelers accounted for 41% of all hotel stays, so a
decline in business travel would be especially detrimental to these businesses (Lake, 2020).

Airports
Airports, which are almost always locally owned and operated, are interested in the future
of air travel because their money making activities are purely dependent on the demand for air
travel and the presence of airlines at the airport. In light of the pandemic, they are struggling
right now and are in high hopes for air travel to see an uptick in demand. While their influence as
a stakeholder historically stems from the imposed difficulty for airlines to attain landing spots,
their responsibility has presently increased as a result of their responsibility to enforce public

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health standards in response to the pandemic. By creating a safe environment for individuals to
travel, they may be able to contribute to the recovery in demand for air travel.

iii. Low Interest & High Influence

Businesses Utilizing Air Travel

Any business that has utilized air travel in the process of its functions are big
stakeholders in the future of air travel. They are not highly interested in the future success of air
travel because advances in technology for visual interface tools and the potential lack of
technological advancement when it comes to more sustainable flying may lead to decreased
demand for flights from these businesses. Visual interface tools, as proven by Zoom in during
the global pandemic, have proven to be very efficient alternatives to travel when it comes to
business communication. If flights still continue to be as price and time inefficient as these
interface tools, these businesses will see this as an indication that they should utilize airline
services less. Finally, businesses that utilize air travel are highly influential because of their
immense impact on the profitability of airlines. Due to premiums that are paid for last minute
flights, business travelers presently account for 75% of airline profits, while only representing
12% of total airline passengers (Investopedia, 2020). Therefore, if airlines start to lose their
business travelers, they may struggle to survive financially.

United States Government

The United States Government and its federal regulatory agencies have just as much
influence over the future of the airline industry as any other stakeholder. While they are not as
interested in the type of change that occurs, any decisions they make will lead to rapid
development because of the power they hold over airlines in the United States. As was seen with
the almost immediate creation of TSA after the September 11 attacks in 2001, the government
has the ability to respond with prompt solutions to pressing issues. Whether the issues of the

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future center around sustainability, broader economic access to air travel, or public health in
wake of the COVID-19 pandemic, the government will likely be at the forefront of change.

Producers of Autonomous Electric Vehicles

According to some business leaders and engineers at Boeing, autonomous electric
vehicles are also a major stakeholder in the future of US air travel. While they are not highly
interested in its future due to their mostly functional independence from the success of the
aviation sector, they are highly influential to its future. This is so for two reasons. First, their use
of electricity to power transportation serves as a more environmentally sustainable alternative to
air travel that uses jet fuel. Second, the autonomy of these vehicles are likely to experience more
rapid advancement than the autonomy of aircrafts due to the greater difficulty to write code that
will react to the multitude of stimuli that planes encounter in the air. Therefore, it is possible that
travellers could become attracted to sitting and sleeping in a car that drives them around the
country in a sustainable way rather than sitting on a plane.

C. Forces of Change

With an understanding of who the players are, what their motivations are, and how
influential they are, it is now important to understand the factors that are driving change into the
future for the aviation sector. While not all of these forces of change are addressed directly in the
central question, they all play a part in the future of air travel and are worthy of attention.

i. Economic

COVID-19 - GDP and Disposable Income

As a result of COVID-19, the global economy is hurting. The overwhelming majority of
countries, specifically developed ones, are expected to post annual GDP losses of over 5% at the
minimum. In fact, the cumulative loss to the world’s GDP could be over 9 trillion dollars, more
than the economies of Germany and Japan combined (IMF, 2020). In the U.S. alone, the 2nd

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quarter of 2020 posted a GDP loss of 31.7% (BEA, 2020). Many industries, such as concerts or
sporting events, have been completely shut down, and lockdown orders have drastically cut both
business and leisure travel. While many individuals right now may not be flying because of
health concerns, this drastic downturn in the economy affects the airline industry through
disposable income as well. Because GDP is expected to drop so harshly, U.S. disposable income
is expected to drop 20% by the end of Q3 of 2020 (Trading Economics, 2020). Because more
individuals will not have the extra disposable income to spend on vacations or leisure travel, the
airline industry may experience a continuation of decreased demand and volume.

ii. Environmental

Sustainable Development
Aviation is responsible for approximately 5% of anthropogenic climate change, mostly
due to carbon emissions (IPCC, 2018). This creates both vulnerabilities and opportunities within
the airline industry as it attempts to adapt to both social and legislative pressure through the
exploration of possible alternative fuel sources and reduction in the use of plastics as outlined in
the International Civil Aviation Organization (ICAO) 2019 ​Environmental Report​. For example,
government-led air traffic control is developing logistical ways to keep flights at higher, more
fuel-efficient altitudes for a larger portion of flights (London, 2020). In addition, ICAO is
heavily investing in research for energy-efficient engines and biofuels as an alternative to
petroleum based oil.

Climate Change
Extreme weather events are growing in both frequency and severity due to climate
change (IPCC, 2018). A 2019 report from CAPA Centre for Aviation identifies the five most
important disruptions to aviation to be “changes in temperature, precipitation, storm patterns, sea
level, and wind patterns.” These events have a direct impact on the airline industry through flight

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delays and cancellations, public perceptions of safety, damage to infrastructure, and aircraft
performance and durability.

iii. Governmental

COVID-19 and Government Assistance

Because of the nation-wide lockdown and concerns over the pandemic, the U.S. airline
industry is in a precarious position. With projected revenues being cut by 50% by the end of
2020, many airlines are facing threats of bankruptcy. Given the size and importance of the
industry to the economy, the U.S. Government provided $25 billion in aid to the airline industry
in early April. This aid was given on the condition that no employees be laid-off or furloughed.
This relief has allowed most airline companies to get by for the time being, but with the
expiration of aid in October 2020, many airlines sought to extend the aid another 6 months.
However, after failing in securing an extension, the airline industry as a whole is expected to
lay-off or furlough over 50,000 employees and massively reduce carrier fleets. In order for
commercial airlines to return to pre-COVID numbers, presence, and size, extensive financial
help from the government will be needed. Without this aid, airlines will be forced to restructure
and pivot their approaches moving into 2021.

Tightening Regulations - Sustainability, Public Health, and Safety

Even before COVID-19, government regulations of the airline industry were rather strict.
The US Department of Transportation and the FAA are responsible for regulating the airline
industry, but specific divisions committed to the safety of the airplanes, consumer protection, and
environmental protection all exist. Given all these regulations, the airline industry must deal with
high levels of bureaucratic friction. Pilots and other crew members must be trained, certified, and
licensed; planes must undergo annual and daily inspections; new designs, layouts, and

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procedures must be approved under the consideration of safety and security regulations; and
airlines must contract with the airports that they fly in and out of.
The future of international agreements on climate change may also increase existing
environmental restrictions and regulations. Though the U.S. has officially pulled out of the Paris
Agreement (PA), global emissions and temperature targets continue to be set at the annual IPCC
Conference of Parties. The next iteration of the PA along with the ensuing targets will depend on
a number of political forces, especially the recent presidential election of Joe Biden. Whether
these targets are mandatory or voluntary will also greatly impact domestic regulations. In
addition, global political instability may lead to increased TSA restrictions to counter potential
threats of international aggression.
Finally, health restrictions implemented during COVID-19 may have changed the
industry for good. Future Travel Experience - a travel-oriented think tank - notes the potential
longevity of significant additions to airports and aircrafts, such as thermal scanners to check for
illnesses, as well as how government health organizations may bring about an international
health passport which would limit the access to flying. As regulations continue to tighten,
airlines may experience increased delays and inefficiencies as well as increased costs of
operations.

iv. Technology
Technological Advancements in Aviation and Fuel Efficiency
As a result of the growing impact of concern regarding the influence of carbon emissions’
degradation of the environment, environmental sustainability may become a driving force of
demand for consumers contemplating air travel. As mentioned earlier, air travel contributes to a
significant portion of the world’s carbon emissions, and therefore it must find ways to become
more fuel efficient if it hopes to sustain its pre-pandemic levels of demand in the long term.
Therefore, the ability of aircraft manufacturers, jet fuel suppliers, and jet engine manufacturers to
enhance their funding into fuel efficiency R&D and engender innovative solutions to the

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demands of a environmentally conscious consumer base will become imperative.

Alternatives to Air Travel

Currently, air travel is the preferred mode of transportation for people looking to travel
long distance. However, future alternatives to air travel, such as Hyperloop and autonomous
electric vehicles, are beginning to appear as a threat to the airline industry, as these alternatives
to travel will likely be cheaper, faster, and more eco-friendly for a customer. Growing popularity
of visual interface tools such as Zoom may also serve as an alternative to the communication that
is provided by business travel.

Other Advancements (Artificial Intelligence, Machine Learning, Quantum Computing, and

Biometric Technologies)
Artificial intelligence (AI) and Machine Learning (ML) are being used to create a
personalized traveling experience to maximize customer satisfaction. With further advancement,
AI and ML will be used to create a personalized traveling experience to maximize customer
satisfaction, giving the airlines insight on how they should cater their services to the needs and
wants of their customers. Furthermore, as the digital age continues to make developments in the
autonomous vehicle sector, pilotless planes may soon emerge into consumer travel as a result of
advancements in AI and ML. Today, we already see autonomous features, such as autopilot,
being used in commercial flights, but this is different from an entirely autonomous flight capable
of landing and maneuvering capabilities. However, it is likely that these autonomous planes will
still fly with pilots on board in the event of an emergency situation. This vision would be
impossible without addressing the current gap existence in the present workforce. The need for
employees, from pilots to air-traffic controllers and safety inspectors, are diminishing as
automation takes over many of these occupations. Additionally, quantum computing is another

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area that is being heavily invested in by companies like Boeing who understand that it offers
opportunities to advance autonomous flight technology (Boyle, 2018).
Implementations of biometric technologies already exist today, such as Apple's Face-ID
to unlock the iPhone. Biometric technologies such as fingerprint authentication, facial
recognition, and retinal scanning may become the default way of verification for checking into
border control, airport check-ins, on-boarding, and migration formalities. These technologies
have many applications such as streamlining the verification process and giving passengers the
ability to track their luggage in real time. Being able to browse the internet, send emails, and
other in-flight connected activities are currently presented as a luxury, something most airlines
charge their customers to use. However, in-flight connectivity will soon be offered to all
passengers, as connectivity is becoming more popular as a business necessity.

v. Demographic and Sociocultural

An Aging Society
Advances in medicine and technology as well as the aging of the Baby Boomer
population has led to a drastic growth in the over 65 age group. This may have many
implications to explore including increased leisure travel, accessibility requirements both in
flight and at airport facilities, and a potentially aging workforce. Because this demographic shift
is relatively easy to quantify, the industry has already begun addressing it. The Airport
Cooperative Research Program sponsored by the FAA published a report recognizing some
pertinent issues - including wayfinding, hearing and vision disabilities, fatigue, and technology
aptitude - as well as potential solutions (ACRP, 2018) .

The Growing Power of Millennials

Millennials are now in their early to mid careers and will continue to grow in importance
to business travel. Increased immigration may further contribute to the growth of this age group

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(Mothersbaugh, 2020). In addition, Millennials are increasing their savings for the sole purpose
of air travel and are making more leisure trips than any other age group (Leonhardt, 2019). This
trend compounded with cheaper air fares (IATA, 2020) the fact that this generation is choosing
to both have less children and have them later in life (Mothersbaugh, 2020) means Millennials
may be increasingly important to leisure air travel. However, the needs of this segment differ
greatly from the needs of aging travellers as choice and convenience tend to lie at the forefront of
Millennial decision making. The dichotomy between these varying needs and the potential
implications on aviation will be interesting to explore.

Public Perceptions of Flying

These are some of the most consequential and uncertain forces that may affect the airline
industry. Changing attitudes towards sustainability have led to an overseas social movement
against the airline industry. As introduced earlier, “flygskam” has had an immense impact in
recent years on the demand for air travel in Europe. In fact, intercity travel in Germany decreased
by 12% in the year following global sustainability protests led by climate activist Greta
Thunberg (Pesce, 2019). Another relevant trend is the expectation of an increase in global
terrorism wich may contribute to consumer perceptions of air travel safety. According to a
Director of National Intelligence report entitled ​Paradox of Progress​, access to destructive
high-precision technology, ethnic and religious tension, and decreased access to vital resources
due to climate change are destabilizing the international system and opening the door for
increased terrorism. As terrorism is already associated with air travel due to 9/11, this may have
major implications on both public fear of flying and international regulations.
Finally, perceptions of public health, such as the effects of air and noise pollution, have
gained increased public and legislative scrutiny in recent years. For example, noise pollution can
interfere with heart monitors and has also been linked to decreased academic performance in
children living near airports. In addition, COVID-19 may permanently affect public expectations
of health standards on aircrafts and in airports. In fact, evidence suggests that decreased

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biodiversity due to climate change compounded with globalization may increase the risk and
frequency of pandemics (Keesing et al., 2010). These new procedures could also raise costs and
decrease diversity of flyers.

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V. Trend Analysis
Introduction to Trend Analysis
While COVID-19 and the challenges it has presented to air travel over the past eight
months makes it difficult to know how the industry will recover in the coming years, a study of
current events and trends may prove to be as valuable a resource as any to understanding how the
aviation sector will weather this storm. Today’s events and trends will enable us to gain an
understanding of how the players within the sector will respond looking ahead to the next ten
years. By identifying the trends and events that defined the sector in the past as well as those that
define it today, one can develop key insights to address our central question and ​understand the
future of US-based commercial air travel as it relates to changes in economic development,
environmental sustainability, public health and regulation, and aviation technology
A. Forces of Change and Uncertainties
When searching for relevant forces of change, it is helpful to think with the DEGEST
categories in mind as a structural guide. Below are five broad categories that envelop the relevant
forces of change.

Category Subsequent Force(s)

Economic How the overall health of the economy will bolster or hinder the aviation sector

Environmental How issues of sustainability and climate change will affect the consumer’s appetite
for travel

Governmental How regulations regarding environmental issues, bailout possibilities, national

security concerns, and public health guidelines will affect the sector

Technological How 1) developments in aircraft, engine, and sustainable fuels, and 2) integrations
of AI, ML, and QC into flight will affect the sector

Demographic How an aging US population will counterbalance with younger generations who
are more environmentally conscious affect the sector

(Table 2)

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B. Outline of Variables
As noted in Topic in Context, the forces of change will have varying effects on the future
of the aviation sector. When determining the future of air travel demand, it is best to measure the
demand for airlines because they are the closest point of contact for consumers in the aviation
sector’s value chain. To quantify how these forces will affect the airline industry, Revenue
Passenger Miles (RPM) will be used as the dependent variable because it is a fair proxy for
demand in the industry and because it encompasses the airlines’ ability to monetize their flights.
RPMs are defined as “the number of miles traveled by paying passengers” (Kenton, 2020).
Moreover, there are six forces of change within the DEGEST categories that are the most potent
and will be used as independent variables. Below are two tables listing all of these variables,
their descriptions, and the sources for where the relevant data was collected.

Dependent Variable Description Data Source

Revenue Passenger Miles Variable of ​Air Travel Demand​.

The number of miles travelled by Link: ​Bureau of Transportation Statistics
(RPM)
paying customers. Value is
calculated by the product of miles
travelled and the number of paying
travellers

(Table 3)

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Independent Variable Description Data Source

Variable of ​Economic Influence​. Measure

of domestic economic development and is Link: ​Fred Economic Data
US Gross Domestic
leading indicator of RPM
Product (GDP)

Variable of ​Environmental Influence​.

Indicator of environmental sustainability Link: ​Bureau of Transportation Statistics
US Airline Fuel
through tracking of millions of gallons of
Consumption
petroleum jet fuel consumed per year

Variable of ​Governmental Influence​.

Indicator of governmental intervention in Link: ​Bureau of Transportation Statistics
US Airline
airline industry through tracking of number
Employment
of individuals employed within the industry

Variable of ​Technological Influence​.

Indicator of advancements in aviation Link: ​Bureau of Transportation Statistics
BTU/Passenger
technology regarding fuel efficiency

Another variable of ​Technological

Influence​. Indicator of rate at which Link: ​Statista
Zoom Revenue
businesses and individuals substitute visual
interface platforms for air travel

Median Age of the US Variable of ​Demographic Influence​.

Indicator of consumer behavior based on Link: ​US Census Bureau
Population
age populace

(Table 4)

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C. Baseline Forecasts
The five trends that we will project will be supported by both quantitative and qualitative
data. Over the course of the next few sections, we will provide graphical forecasts for these
trends to predict how they will impact our final dependent variable, Revenue Passenger Miles,
through 2030.

i. Economic Development
(Figure 3)

Source: FRED Economic Data

U.S. GDP is an important factor to pay attention to because it captures the heavy
influence that the economy has on the future of US air travel. As seen in the graph above, the
economy has experienced steady growth over the past 20 years with the notable exceptions of the
2008 Financial Crisis and the present economic recession in light of COVID-19. Due to
COVID-19, U.S. GDP dropped 31.7% in Q2 2020, and is expecting a 20% reduction in US

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disposable income (FRED, 2020). A consistent finding in the aviation industry is that one of the
best indicators for demand is simply economic growth in the relevant region, and that it is
positively correlated with air travel demand (Teyssier, 2012).
Economic indicators reveal a generally positive outlook for the aviation sector. While
they do reveal a short pitfall in this era of the pandemic, the data indicates that air travel will
rebound. In the near future, this economic data is important for air travel because the purchasing
power of both individuals and businesses is a leading driver of air travel demand. While fears of
contracting and spreading COVID-19 is surely important in people’s decisions to cut back on
flying at the present moment, it is not the best long-term metric. Instead, we should track GDP
because it encompasses the spending behavior of both individuals and businesses, who are both
looking to cut costs in the face of the pandemic.
As a result of the progression of recent events with the economy, it is projected that GDP
will see gradual growth moving forward as a vaccine is administered and the pandemic slowly
ends. Unemployment is still far away from declining to its pre-pandemic levels, and companies
across the country are continuing to go out of business. Therefore, it is expected that the damage
of the pandemic will have lasting effects on GDP, and will cause it to not instantaneously reach
pre-pandemic levels once a vaccine is produced and disseminated to the masses. Still, as more
businesses open up and more people gradually return to work, it can be forecasted that the
economy will experience a steady rise over the course of the next decade (​Figure 3​), similar to
the way it rose steadily in the decade following the 2008 Financial Crisis.

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ii. Growing Concern Regarding Climate Change and Environmental Sustainability

Fuel consumption is the measure of consumption of petroleum based jet fuel in the
aviation sector. Overtime, the consumption of jet fuel has received significant social criticism
from activists for its negative impacts on the environment and its links to climate change. At the
present moment, it is responsible for 5% of anthropogenic climate change (IPCC, 2018) and
2.5% of total CO2 emissions (National Geographic, 2020). Because of its negative impact on the
environment, the amount of fuel consumed each year has become a popular metric to pay
attention to as advocates for environmental sustainability seek to reduce aviation’s negative
impact on the Earth. Moreover, it is important to note that while the number of gallons consumed
has historically been correlated with the number of flights taken and miles travelled by aircracts,
this positive correlation may not exist forever.
(Figure 4)

Source: Bureau of Transportation Statistics

Figure 4 highlights the number of gallons of jet fuel consumed in millions of gallons over
the past 20 years, and conveys a forecast for the consumption of fuel through 2030. The rise in

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fuel consumption since 2008 plummeted in 2020 due to the COVID-19 crisis. Because of the
threat that air travel posed to the spread of the virus, demand for flights halted and the number of
gallons of jet fuel consumed decreased by 40% YTD as of August 2020. This drop in jet fuel
consumption, however, is not forecasted to be permanent. It is projected that jet fuel
consumption will experience a brief period of dramatic increases throughout 2021 because a
COVID-19 vaccine is expected to be administered and because the number of flights utilizing
this type of fuel would thus increase at a similar rate.
While this consumption will experience a rapid uptick, it is also forecasted that it may
experience slower growth rates in the following years, and maybe even negative growth
eventually. This is expected for two main reasons. First, according to Alexandre de Juniac, head
of the IATA, “Unchallenged, ‘flygskam’ will grow and spread,'” and will likely affect US
consumer preference for flying (Pesce, 2019). Second, it is projected that towards the end of the
next decade, a period of steady decline in jet fuel consumption could begin as technological
advancements in fuel efficiency (jet engines, aircraft designs, biofuels, etc.) and more
eco-friendly alternative forms of ground transportation (Railways, autonomous electric vehicles,
etc.) emerge to catch up with the “flygskam” movement.

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iii. Governmental Impact

(Figure 5)

Source: Bureau of Transportation Statistics

The trend of employment at US passenger airlines is an important metric to pay attention

to because it documents the government’s influence on the airline industry. Because the airline
industry possesses low margins, it has a history of requiring government intervention to support
its vitality. Moreover, the government has an incentive to provide support to the airlines because
this industry is a large employer of American workers and is influential on the nation’s GDP .
This has been seen throughout the pandemic, as the government has continuously sought to
bailout the airlines in order to mitigate the number of airline workers that are laid off.

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At the present moment and over the course of the next decade, it is forecasted, as shown
in Figure 5, that the government will play a significant role in the employment of airline workers
in two ways. First, as the economic effects of the pandemic continue to linger as described in the
economic trend section above, the government will offer economic stimulus packages to these
airlines in order to “bail them out” of their current situation. Second, the government, and in
particular the Center for Disease Control (CDC), will continue to provide guidance for the
enhancement of health standards within airports and aircrafts. In light of the pandemic, the CDC
has already offered clear guidelines to air carriers and crews on how to mitigate the spread of the
virus (FAA, 2020), and promoted the development of certain technologies (e.g. touchless
lavatories and facial recognition) that will reduce the exchange of bodily fluids. Consequently, it
is projected that the capacity of the airline workforce will steadily increase as demand rises due
to financial assistance and public health guidelines offered by the government.
In addition to the effects of bailouts and government regulation related to public health,
governmental intervention towards global sustainability goals will also impact airline revenue.
Governmental influence on sustainability will be primarily informed by events rather than
quantitative data as the impact of this trend is dependent on the expected actions of the current
administration or a potential incoming administration, and also on the trajectory of international
agreements. Through the 2015 Paris Agreement (PA), 197 countries committed targets for the
reduction of greenhouse gas (GHG) emissions. Though the US announced its plan to withdraw
from the PA in 2017 under Donald Trump’s presidency (Trump, 2017) and officially withdrew
in November 2020, the US is expected to reenter the agreement when Joe Biden begins his
presidency in January 2021.

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iv. Advancements in Aviation Technology

(Figure 6)

Source: Bureau of Transportation Statistics

As environmental awareness increases the pressure for aviation technology to evolve and
become more sustainable, air travel may become more energy efficient. This concept is
documented in Figure 6 above which tracks BTU/passenger mile, a metric that represents the
amount of energy consumed per output of miles travelled by individuals. As seen in the graph,
BTU/passenger mile has steadily decreased, representing historical advancements in fuel
efficiency, and it is foreseen that this trend will continue over the course of the next decade due
to advancements in jet engine technology, energy efficient fuels, data-driven optimization of fuel
usage, and aircraft design.
First, advancements in jet engine technology will save commercial airlines money by
making their engines function more efficiently. In the past, jet engines were very heavy and
required more fuel to produce enough lift to carry the heavy aircraft into the sky. Therefore, the
future of jet engines lies in high fuel efficiency and low weight, and can be accomplished with
the replacement of traditional metal alloy materials with lighter and more heat resistant ceramic

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composite materials. For an average aircraft traveling average distances, this strategy alone
would decrease fuel consumption by 15% (Singh, 2014).
Second, as biofuels that are renewable, reduce carbon emissions, and do not burn fossil
fuels are developed, BTU/passenger mile will continue to go down and air travel will be able to
reduce its negative impact on the environment. Third, advances in AI and ML will mitigate
inefficiencies in fuel consumption through their ability to offer airlines a total-fleet view of
operational fuel consumption (Boeing, 2020). Finally, designs in the aircrafts themselves and the
software that is included will increase energy efficiency by reducing the weight of the planes and
increasing the amount of time these planes can fly at high altitudes, which requires less fuel.

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v. Adoption of Visual Interface Tools

(Figure 7)

Source: Statista

In addition to potential technological advancements in aviation technology, the societal

reaction to recent developments in visual interface tools such as Zoom, Citrix, and Microsoft
Office will influence future demand for commercial air travel. The pandemic has forced
individuals and businesses to communicate with one another over video rather than in person. As
seen in the Figure 7 above, this resulted in the increased demand for and widespread
downloading and usage of Zoom in March 2020. Revenue is the metric for demand for Zoom in
the figure because it accounts for the acts of both downloading and using the application. Since
March, Zoom’s revenue has sustained itself and has steadily grown since then.
This steady growth in revenue for Zoom is projected to continue over the course of the
next decade as a result of the lasting effects the pandemic will have on how business and
interpersonal communication is conducted. The pandemic has taught businesses that many air
trips are not necessary, and that using Zoom can lead to reduced costs and more environmentally

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sustainable practices, which is important for companies to publicize to its consumers as

illustrated earlier. As discussed in the baseline forecast of the dependent variable, however, this
increase in demand for Zoom will be negatively correlated with air travel demand.

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vi. Demographic Shifts

(Figure 8)

Source: US Census Bureau

With regards to trends in demographics affecting the future of air travel, there are two
particular issues to keep in mind. The first is the aging population in the United States, with
Baby Boomers (defined as those born between 1946 and 1964) making up the second largest
consumer generation (Fry, 2020). The second is the increased buying power and influence of the
Millennial (defined as those born between 1981 and 1996) and Gen Z (born between 1996 and
2015) generations, who have already proven to be - and are expected to continue to be - more
concerned with issues of corporate social and environmental responsibility than previous
generations.
Figure 8 highlights the median age of the US population over the past ten years and
forecasts its growth until 2030 as shown in Figure 5 below. This measure can account for both
demographic trends because it shows that Americans are living longer due to medical
advancements and public health, while the younger adult generations are putting off marriage

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and child-rearing until later in life, which gives them more disposable income to spend as they
choose.
Millennials and members of Gen Z have been widely noted for their support of and
preference for companies that support sustainable practices, and it is believed that this is affected
by their increased exposure to technology and higher levels of education (Cheng, 2019). With
Millennials overtaking Baby Boomers as the largest consumer generation in 2019 (Fry, 2019),
airlines and businesses that utilize air travel will face rising consumer pressure to develop
sustainable products and services. Of course, airlines in the United States are certainly at a lower
level of risk of consumers opting out because of the lack of inter-city transportation options
compared to those seen in European nations (high-speed railways, etc). Nonetheless, airlines are
going to have to find ways to appease the wishes of environmentally-conscious consumers.
American millennials’ environmental concerns don’t seem to be strong enough to deter them
from flying altogether, but they would likely pay premiums and abandon brand allegiances to fly
with a company that is widely regarded as being more sustainable. This could inspire a ripple
effect causing more airlines, engine producers, and aircraft manufacturers to develop more
sustainable practices. However, the environmental prudence of Millennials are likely to be
stabilized by the Boomers’ willingness to spend their time and money on material goods and by
their comparatively low levels of environmental concern. Consequently, we expect these two
demographic trends to largely cancel each other out and that air travel demand should be
relatively unaffected.

D. Synthesized Baseline Forecast

In order to integrate all the trends that will affect the future of air travel when it comes to
revenue passenger miles, we must rank each trend’s influence on the dependent variable of
revenue-passenger miles (RPM) and outline the direction that each trend will force this variable
to go in. Table 5 below is our ranking of each trend and the direction RPM will take in response.

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Rank Classification Trend Impact

Increasing U.S. economic

1 Economic growth, following pandemic
downtick

Gallons of Jet Fuel

2 Environmental Consumed

Increased regulation for

Public Health, Government
3 Governmental Bailout of Airlines,
Continued Deregulation of
Environment

Advancements in Aviation
4 Technological (Aviation) Technology

Increased Adoption of Visual

5 Technological (Visual Interface Tools
Interface Tools)

Aging Society vs. Increased

Levels of Social
6 Demographic Consciousness of Millennials
and Gen Z

(Table 5)

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Additionally, Figure 9 on the next page is a graphical representation of the forecast for
the dependent variable, RPM. RPM is a measure of airline traffic that is more vital to
understanding operations than simple security throughput quantities and airline traffic volumes
because it excludes the non-revenue earning passengers. This measure additionally simplifies the
complex nature in which airlines earn revenue, focusing on demand rather than operations of
distinct airlines, which is important considering the focus on non-price competition, selling base
fare flights and using other methods to earn profit, between the airlines. In the years leading up
to 2020, RPM had been steadily increasing. Due to the economic and public health threats that
the pandemic poses, RPM plummeted this year, as individuals and businesses alike do not have
as much capital to spend on flying and are worried about contracting the disease while
participating in air travel. Upon the administration of a vaccine, which is expected to occur in the
near future, it is forecasted that RPM will see a sudden uptick followed by gradual growth. This
forecast would come as a result of the accumulation of the trend forecasts described above.
​(Figure 9)

Source: Bureau of Transportation Statistics T-100 Segment data

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Impact of Independent Variables

As described in the trend forecast of GDP, economic data is the most important data to
assess and forecast when attempting to study and forecast RPM. Because of the importance of
GDP towards the performance of the aviation sector, it is not surprising that both US GDP and
US RPM saw similar growth over the last decade and the same crash following the COVID-19
outbreak in the US. Moving forward, these two variables will likely continue their positive
correlation with one another, and therefore, RPM can be largely forecasted based on GDP.
Following growth in GDP, it is estimated that RPM will adjust in response to the
changing levels of jet fuel consumption. The relationship between these two variables, however,
is not as clear as it is between RPM and GDP. If technological advancements in aviation are not
made in the near future, then it is logical that jet fuel consumption and RPM would remain
positively correlated and that RPM would go down due to consumer’s avoidance of forms of
transportation that have high carbon emissions. As described earlier, however, aviation
technological advancements in fuel efficiency are expected and will create a newly negative
correlation between RPM and jet fuel consumption. In other words, the emergence of such
technology would springboard environmentalists to utilize air travel more now that they are less
reliant on petroleum based jet fuel. Therefore, air travel demand is only positively correlated
with jet fuel consumption insofar as petroleum jet fuel is the most available and price efficient
source of energy.
Behind environmental consciousness, it is forecasted that RPM will react positively to
governmental influence on the aviation industry. More specifically, as the government extends
bailout packages to maintain and build employment for the airline industry, RPM will also
increase as the industry’s capacity to meet demand has been stifled by the present recession and
its likely lasting effects. Before the pandemic, employment at the airlines experienced growth in
conjunction with that of US RPM, and that relationship is expected to continue further as the
government continues to support the industry in its efforts to meet future high levels of demand.

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Following governmental influence, aviation technology, particularly when it comes to

fuel efficiency, will lead to increased RPM. As the more environmentally conscious populace
continues to increase the pressure on the aviation industry to be more sustainable, they will be
forced to invest in technology that will increase their fuel efficiency and decrease their
BTU/passenger miles. By formulating and implementing this technology, the industry will be
able to experience increased RPM because it will gain the demand of people who may have
formerly avoided flying due to its enormous contributions to carbon emissions.
On the other hand, the increased usage of Zoom and other visual interface tools is
expected to lead to decreased RPM, and this factor’s trend exhibits a negative correlation with
RPM. As consumers, particularly businesses look to cut costs in the coming years, they will
recognize their ability to conduct long distance communication effectively over Zoom and will
use this service as an alternative to business travel. This trend, however, does not carry as much
weight as the others listed above because these tools are not perfect substitutes for the in-person
communication that air travel provides.
Finally, it is forecasted that demographic shifts in the populace within the US will have a
stabilizing effect on US RPM for aviation. The main demographic shift that could have an
impact on the future of air travel is the increasing purchasing power of millennials. While Baby
Boomers are an enormous populace, they have always been known to expend money on
experiences necessitating air travel and we expect this trend to continue in its historical fashion.
With the increasing purchasing power of millennials, however, their increased environmental
consciousness may not outweigh their desire to travel. On the other hand, there may be a fairly
even tug of war between their desire to travel and their condemnation of the air industry for its
negative impact on the environment.

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VI. Future Scenarios

Expected and Alternative Future Narratives

In the following sections, the report will contribute the expected scenario narrative for the
future of air travel, and will offer three alternative scenarios that should be considered in order to
gain the flexibility to adapt to the unknown terrain of the future.
Uncertainties and Potential Disruptions
Relating to the trends discussed above, there are 4 key uncertainties and potential
disruptions that drive the alternative future scenarios. First, the success and timing of a
COVID-19 vaccine greatly affects the expected scenario. In the baseline forecast, it is projected
that a vaccine will be administered to the masses within the next year, and that this will result in
a sudden uptick in RPM. If either it takes longer than a year for our vaccine to be administered or
the vaccine is not successful, then the expected uptick could be delayed significantly. In a similar
vein, another uncertainty will be the rate at which the economy grows following this recession.
While many people project a V-shaped recovery characterized by rapid growth in the near future,
others expect to see a K-shaped recovery characterized by slow growth due to the lasting
negative effects of the pandemic on the economy. Third, the weight that people and business
travelers give environmental consciousness on their decision to fly is uncertain. With the present
state of technology when it comes to fuel efficiency and environmental sustainability, this weight
can have great ramifications on people’s spending behavior, and consequently, the RPM for US
air travel. Finally, it is uncertain how fast aviation technology will become more fuel efficient in
order to meet the demands of activists for environmental sustainability. The speed at which some
of these technologies are developed and implemented could have great ramifications on people’s
decision to fly.

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Uncertainty Potential Disruption

Administration of COVID-19 Vaccine If administration takes more than one year,

then an uptick in RPM will be delayed
significantly

Rate of Economic Recovery (V-shaped vs. K-shaped economic recovery will lead to slow
K-shaped) RPM growth

Importance of Environmental Enhanced weight to sustainability may

Sustainability to Consumer Preferences dampen RPM growth if aviation technology is
still not fuel efficient

Rate of Advancement in Fuel Efficiency The rate at which aircrafts and its inputs
become more fuel efficient will affect
consumer comfort with flying

(Table 6)
Scenario Method
In the development of the possible future scenarios, the alternative futures method was
used. This method was utilized because it is the best option when the environment in which a
particular trend is operating in is likely to experience great technological and societal transitions.
Because the future of air travel is subject to the strength of the economy in the wake of the
pandemic and to environmental sustainability initiatives, and because major aircraft
manufacturers plan to develop technological advancements that will give airlines the opportunity
to cut fuel costs and enable the success of these environmental initiatives, major technological
and societal transitions can be expected. In the narratives below, we developed four scenarios:
growth scenario, constraint scenario, transformation scenario, and collapse scenario. The steady
growth scenario is both a surprise free and preferred scenario. It is a surprise free scenario

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because it is the future that logically follows what would happen if a vaccine is developed in the
near future and if the economy begins to recover at a steady rate. It is also the preferred scenario
because it balances the economic desire for growth within the aviation sector with the
environmental desire for sustainable practices. The constraint scenario would occur if the
economy experiences slow growth despite the development of a vaccine and the number of
people who are environmentally conscious steadily increases. The rapid decline scenario occurs
on the other side of the spectrum where the economy stays in its present recession due to the lack
of a vaccine and environmental sustainability becomes the number one determinant for the
individual’s choice to fly. Finally, the constraint scenario would occur if the economy
experiences slow growth despite the development of a vaccine and the number of people who are
environmentally conscious steadily increases.
All four scenarios will be written in scenario-as-history form. The titles for each scenario
will be places characterized by flight related locations that are characterized by growth,
constraint, transformation, and collapse. Kitty Hawk represents growth because it is the place
where the Wright Brothers first took flight. A Parking Lot represents constraint because a
powerful image conveying the struggles of air travel this year was the image of air planes
grounded on large parking lots. Connecticut represents transformation because it was the place
where the helicopter was invented and offered a totally new form of aviation. Finally, Monuriki
(the island that Tom Hanks lives at in the film, Cast Away), represents collapse because it is
where the FEDEX cargo plane Hanks travels in fails and leaves him stranded on the island.

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i. Four Scenarios
Kitty Hawk - Growth (Expected Future Scenario)
Summary
This scenario is titled “Kitty Hawk” because the growth that it embodies is signified by
the action of “taking flight” that occurred at Kitty Hawk, North Carolina when the Wright
Brothers first successfully flew an airplane. The scenario of steady growth is the surprise free
and preferred scenario. It is a surprise free scenario because it is the future that logically follows
what would happen if a vaccine is developed in the near future and if the economy begins to
recover at a steady rate. It is also the preferred scenario because it balances the economic desire
for growth within the aviation sector with the environmental desire for sustainable practices, and
involves advances in fuel efficiency and supportive government intervention.
Narrative
Despite the setbacks of the global pandemic, the decade of the 2020s for US air travel
was characterized by a return to utilization and continued growth. Mark, a pilot for Delta
Airlines, was very pleased with how events panned out by the time 2030 rolled around. After an
early round of the vaccine was administered in early 2021 by Pfizer Pharmaceuticals, he was
second in line behind medical professionals to receive a COVID-19 vaccine, and was pleased to
see the rest of the population receive a vaccine shortly afterward. Because of this facilitation of
the vaccine, people were able to interact with others in public more normally, causing businesses
to reopen, people to regain jobs, and GDP to increase. As a result of the increased economic
activity and public consumption, consumers had more disposable income and began to use their
regained purchasing power to fly all across the country and enjoy the freedom that they missed
during quarantine. This increased flying activity was very pleasing to Mark because it increased
the number of flights he was able to make, thus increasing his salary.
Moreover, Mark was highly satisfied with the progress Delta made to become more
environmentally sustainable. During his career before the pandemic, he received a great amount
of criticism from his close college friends who were environmental engineers and who could not

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understand how he could actively contribute to the degradation of the planet. Due to continuous
technological advancements in fuel efficiency of aircrafts, jet engines, and biofuels, air travel
gradually gained the approval of environmentally conscious individuals. Therefore, Mark found
great pleasure in knowing that he had both a successful career and the respect of his college
friends.
Finally, and on the topic of college friends, Mark was happy that his roommate in
college, who was a Political Science major and then a lobbyist in Washington D.C., advocated
for governmental support for the airline industry during the course of the 2020s. His lobbying
efforts were successful and led to a twofold plan from the government to ensure the survival of
the aviation sector through its relationship with the airlines. First, he was successful in proposing
that the government support the airlines with financial aid to allow them to maintain their high
capacity and not lay off many people. Second, he was successful in requesting guidance from the
CDC on how to institute processes within the airports and aircrafts that are more conducive to
ensuring public health from diseases and that would reinvigorate consumer comfort with air
travel. As seen above, the factors that worried Mark during the beginning of the pandemic all
seemed to work out for the best and he was very happy about it.

Signposts - Kitty Hawk (Growth)

Quick COVID-19 vaccine administration during early 2021

GDP growth to pre-pandemic levels

Steady increase in employment at US airlines

Increased fuel efficiency; Decreased BTU/passenger mile

(Table 7)

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Parking Lot - Constraint

Summary
The constraint scenario is titled “Parking Lot” based on the powerful images during the
early days of the pandemic that illustrated the struggles of air travel through the pictures of large
commercial aircrafts parked in parking lots. While it is certainly not the worst case scenario, it is
also not the preferred one because it is one that encounters an uphill battle to overcome the
effects of the pandemic. It is the scenario in which a vaccine is administered, but the economy
struggles greatly to bounce back, the government grows tired of supporting the airlines, and
environmental consciousness drives consumer demand away from air travel.
Narrative
Matthew, who is the Head of Sales for Biscoff Cookies, was a little disappointed with
how the decade following the pandemic panned out for his business. Although selling cookies is
not a business within the aviation sector itself, Biscoff is a unique travel related business because
it receives a large portion of its sales through Delta Airlines’ complimentary snacks to its
passengers. Although a vaccine was administered during 2021, the economy struggled to rebuild
momentum and Biscoff’s overall sales took a hit as a result. Even though its in-store sales
improved to pre-pandemic levels, it was unable to recover the pre-pandemic sales from Delta
flights due to the decreased disposable income available to historical consumers of air travel.
Biscoff’s airline cookie sales also decreased as a result of the combination of increased
environmental consciousness from consumers and the lack of advancements in aviation fuel
efficiency. After months in quarantine, Matthew noticed that his neighborhood began to
accelerate eco-friendly initiatives in his township outside of Washington D.C. as a result of their
recognition that the slowed economy and decreased transportation within the US had made
tangible improvements towards saving the environment. Due to his pettiness that this social
movement and aviation’s inability to meet their demands was resulting in a decline in sales at
Bischoff, Matthew showed very little enthusiasm for these green initiatives.

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Matthew’s lack of enthusiasm for the green initiatives of his township turned out to hurt
him even further. His neighbor, who was a leading Congressman on Capitol Hill recognized
Matthew’s sour attitude and decided to do everything that he could to hurt Bischoff's sales even
further. He managed to accomplish this by petitioning for an end to government bailouts for the
airlines, who were subsequently forced to decrease their capacity and further reduce their selling
of Biscoff cookies. Overall, Matthew was thankful that he still had his job and that his cookies
were still available in grocery stores. However, he still wished that overall sales had returned to
pre-pandemic levels.

Signposts - Parking Lot (Constraint)

Inability for GDP to return to pre-pandemic levels

Stagnant fuel efficiency; stagnant BTU/passenger mile

Reduced Governmental Support

(Table 8)

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Connecticut - Transformation
​Summary
This scenario is titled “Connecticut” because it will be a period of unprecedented change,
and Connecticut is where the helicopter was created, resulting in a monumental change in
aviation technology. While this scenario does involve some truly groundbreaking changes that
may seem positive, it does come at a cost that is not considered preferable to many people. More
specifically, this scenario will include advancements in aviation technology that improve RPM
but results in a significant loss of employment within the aviation sector.
Narrative
Luke is a management consultant from Chicago who travels a lot and utilizes air travel
frequently with his job. Following 2020, a vaccine was eventually administered and the economy
exhibited modest improvements over the course of the decade. Because of this lack of V-shaped
recovery and the rapidly growing public concern about the environmental impact of air travel,
Luke was worried that the aviation sector would struggle to bounce back and that it would be
forced to reduce the number of flights offered in an attempt to reduce capacity. This worry,
however, did not manifest itself as a result of some surprising advancements in aviation
technology. Across the board, aircraft manufacturers, jet engine suppliers, and jet fuel suppliers
were able to make advancements that made air travel environmentally sustainable and profitable.
The introduction of lighter aircrafts, more efficient engines, and biofuels resulted in flying
becoming significantly more fuel efficient than it was during the beginning of the decade.
Additionally, air travel became profitable for the airlines as a result of the large elimination of
labor costs. Because unforeseen advancements in AI, ML, QC, and automation allowed planes to
no longer require pilots and airports to no longer need human representatives to serve traveller
needs, the airlines no longer needed to employ so many people and was no longer such a
significant contributor to US employment.
While Luke was thrilled about the multitude of flight options available for business
travel, he was personally disappointed in the changes because many members of his family were

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formerly employed within the industry. His older brother was a pilot for Delta Airlines and his
sister worked for TSA at O’Hare. When AI was introduced that could fly aircrafts without pilots
and automation technologies eliminated the need for human TSA agents, both of these siblings
were left without jobs. Luke, who is also an avid investor, was displeased because his
investments in the market indices such as the S&P 500 were hurt by these trends because the
massive layoffs within the aviation sector led to increased unemployment across the country.

Signposts - Connecticut (Transformation)

Emergence of aviation technologies in AI, ML, Automation, and QC

Increased fuel efficiency; Decreased BTU/passenger mile

Increased US unemployment

(Table 9)

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Monuriki Island - Collapse

Summary
Finally, this scenario of collapse is called “Monuriki Island” because this is the island off
of the shore where Tom Hanks lives after his FEDEX aircraft crashes in Cast Away, and where
he is forced to survive in a scenario where seemingly nothing is going his way. With this
scenario, a vaccine is not administered successfully following 2020, the economy remains in its
present recession, consumers mostly eliminate their demand for air travel out of environmental
consciousness, and very little advancements in fuel efficiency are made within the aviation
sector. As a result, this is definitely not the preferred scenario and would be considered the worst
case scenario by many.
Narrative
John is an individual who manages a hotel near O’Hare International Airport that is
ironically called the “Hotel California” because his guests will voluntarily “never want to leave”
once they check in. After the offset of the pandemic, John’s business, along with hotels across
the country, struggled greatly over the course of 2020. While he had followed the news closely
and had hoped that the vaccine being developed by Pfizer would be successful, it proved to be
unfruitful and the nation was forced to continue life with the COVID-19 virus for the duration of
the decade. Consequently, the recession persisted. People would not travel due to the health
issues surrounding travelling in public spaces. Moreover, they were not in any financial position
to afford travel and the travel related services, like hotels, that come along with it. The poor
economy greatly hurt John’s business and he was forced to drop his rates in order to incentivize
demand.
Another thing that John paid great attention to in the news was the potential for
governmental support for the airlines in terms of financial aid. Similar to the news about a
vaccine, however, this good news never came. Because of its unprofitability as an industry, the
government grew tired of bailing the airlines out of its cash crunches and decided to simply give
up on the industry completely. As the airlines were left to fend for themselves, they were forced

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to scale back their capacity, which consequently hurt travel related businesses like the Hotel
California even more.
Finally, John, who was a Finance major at Notre Dame, grew to regret that he didn’t
make enough engineering friends whom he could convince to develop advancements in the fuel
efficiency of aviation. He understood that the consumers who travelled via aircraft and stayed in
his hotel were becoming more environmentally conscious and would grow to factor
sustainability into their spending behavior. As little technological advancement was made, John
began to run out of ideas to keep his business afloat; and in a truly desperate move, he decided to
go a little too far and take inspiration from the song that he based his hotel off of. He hired a
supposed conjuror to summon supernatural spirits that would force his guests to stay at his hotel
for eternity with the hopes that he would eventually reach levels of no vacancy. Due to the
obvious lack of supernatural influences on the hotel industry, this plan did not work and the
Hotel California went under.

Signposts - Kitty Hawk (Growth)

No COVID-19 vaccine administration in the 2020s

GDP stagnation and persisting economic recession

Stagnant fuel efficiency; stagnant BTU/passenger mile

(Table 10)

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Kitty Hawk – Growth: ​The expected and preferred scenario, where the economy recovers
post-pandemic and demand for flights slowly increases. The government continues to support the
airlines, people continue to become more environmentally conscious, and some aviation
technological advancements are made.

Parking Lot – Constraint: ​A vaccine is developed, but the economy struggles with the lasting
effects of the pandemic. The government grows tired of supporting the airlines, environmental
concerns continue to gain power, and little investments are made into the development of
sustainable aviation technology.

Connecticut – Transformation: ​The economy also struggles to bounce back from the recession.
The government continues to support the airlines with capital. However, rapid technological
advancements are made in the aviation sector, allowing air travel to become sustainable for the
environment and profitable for the airlines.

Monuriki Island – Collapse: ​The economy stays in the present recession, which decreases
consumption further and leads to more lost jobs. People are ultra-environmentally conscious and
eliminate their use of air travel altogether. No technological advancements are made towards air
travel becoming sustainable.

(Table 11)

Conclusion
The success or failure of the airline industry is largely dependent on the resolution of
uncertainties in the timing and success of a COVID-19 vaccine, the speed of economic recovery,
societal attitudes towards sustainability, and advancements in aviation technology capable of
offsetting the impacts of these trends. In order to achieve a resilient business strategy, businesses
should be prepared for a Monuriki Island Scenario, but also make investments that increase the
likelihood of a Kitty Hawk Scenario. Through this framework, opportunities arise for airlines
positioning themselves as environmentally conscious, especially those already investing in

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sustainable aviation technology. This is especially important as extreme attitudes and regulation
toward sustainability could prove the most detrimental to the industry. In addition, airlines may
have to shift their strategies to mitigate the consequences of a potential long-term economic
downturn. For these reasons, advancement in technology - which has the potential to both reduce
costs and offset carbon emissions - may be the key factor for airlines to consider, as well as
upstream businesses, when developing a resilient business model.

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VII. Business Implications

As businesses ponder the trends of the variables discussed above as well as the alternate
narratives that may develop, it is important to outline potential strategies for these different
environments. Overall, there are three primary types of businesses that should plan for these
alternate narratives: businesses within the aviation sector, businesses that utilize air travel, and
travel-related businesses (i.e. hotels, car rental companies, etc).

Kitty Hawk - Growth

(Figure 10)
As described earlier, the Kitty Hawk scenario results in gradual growth in both economic
conditions and RPMs over the course of the next decade. While the drivers of this change and its
consequences have already been articulated, it is also important to discuss the implications of
these consequences for business. As a result of the fact that the aviation sector is struggling at the
moment due to the pandemic, this scenario involving growth will surely have implications for
businesses as they steadily recover in the expected progression of events.
The first implication of this scenario --which includes the recovery and steady growth of
the aviation sector-- is that this growth will ignite the future growth of the sector. With improved
financial and operational performance, these companies will be able to resurrect the jobs that
were lost in the pandemic to once again increase capacity. A second-tier implication of this is
that as these aviation companies (e.g. airlines) recover from the pandemic, their improved

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financial performance will contribute to the continued growth of the economy as a result of its
great influence on its success. Furthermore, the improved economy will result in people having
higher disposable incomes, and consequently a higher demand for air travel. This continued
cycle of the aviation sector building the economy and the improved economy contributing to the
growth of this sector would continue until another cataclysmic event like the pandemic or a
major recession occurs.
The second major implication is that the projected increase in concern for environmental
sustainability will result in changing consumer behavior which would cause them to reduce their
utilization of air travel. Due to their growing unwillingness to fly as a result of its negative
impact on the environment, a second-tier implication could be the eagerness to innovate and
create mechanisms for the enhanced fuel efficiency of air travel.
These two sets of implications present a variety of opportunities and threats to business.
This scenario offers the opportunities for the airlines, aircraft manufacturers, energy suppliers,
and travel related businesses to capitalize on the boom in demand and increase their capacity
moving into the future. On the other hand, this scenario includes two big threats. First, a failure
of these businesses to evolve with the implication of changing consumer behavior could result in
long term failure to meet customer needs and in obsolescence. Second, the increased concern
regarding public health in light of the pandemic may linger for many years and could drive away
interest in flying.
In order to take advantage of the potential opportunities and mitigate the risks of these
threats, businesses should respond to this scenario with the following strategies. In order to
alleviate consumer worries about public health safety, the airlines should continue to implement
safety protocols to ensure that consumers can lower the risk that they contract a virus from other
individuals. Second, the providers of inputs for the airline industry (i.e. aircraft manufacturers
and fuel providers) should reallocate their R&D funds to projects concerning fuel efficiency in
order to ensure future levels of demand from environmentally conscious consumers. Third,
businesses that utilize air travel should take advantage of the growing concern for the

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environment by publicizing their successes with eco-friendly behavior in order to capitalize on a

consumer market whose spending behavior is becoming increasingly influenced by the
sustainable practices of the companies they are buying from. Finally, travel related businesses
should continue the course despite their recent struggles because they would receive growth in
demand similar to that of the aviation sector.
Finally, businesses should consider the moral and ethical considerations that are at play in
this scenario. First, business should ask itself if air travel should actually return to the levels of
demand that it achieved before the pandemic. It is already known that flying with existing
technology is not good for the environment, and now that flying is not as necessary for business
as it was perceived before the pandemic. Therefore, it is important for businesses to ask
themselves what is most important to them and if the recovery of air travel is in fact a good
thing. Second, businesses who are investing in enhanced technology should contemplate if this is
the best use of their funds. With the thousands of individuals within the aviation sector who lost
their jobs due to the pandemic, they may need to ask themselves if supporting these people
financially should be prioritized over increased innovation.

Parking Lot - Constraint

(Figure 11)
For the Parking Lot scenario in which the economy and RPM experience slow growth
despite the administration of a vaccine, there are three implications that business should be

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concerned with. First, the slow recovery of the aviation sector will result in the worsened
condition of the economy as a result of the industry’s significant influence on GDP. This circular
relationship of influence between the aviation sector and the wider economy would be in a
similar way as it did in the growth scenario, and in this case would involve a second tier
implication where this worsened economy would further decrease the demand for air travel and
the overall capacity of the sector.
A second implication is that the stagnant demand would likely make it more difficult to
invest money and innovate. This reality is problematic in conjunction with the growth of public
concern over the environment and air travel’s negative impact on it. Therefore, tighter budgets of
businesses in the aviation sector coupled with growing environmental concerns may lead to
further reduction in demand as the sector is unable to invest and meet the needs of its changing
consumer base.
Third, the slowed growth of the sector may lead to pessimism from the view of the
government about its future. The airline industry in particular has always had very slim margins
and the government has continuously bailed them out of emergencies. With the growing
pessimism that the government may acquire in light of the sector’s struggles since the beginning
of the pandemic, they may begin to extend less support in the future. This could potentially lead
to a second tier implication that the aviation sector may be left without a lifeline to bail it out if
another crisis were to occur.
With these implications in mind, one opportunity that arises is the chance to develop the
perspective that this scenario is in fact a catalyst for necessary change. As we described before,
the airline industry already has slim margins and is out of touch with a growing portion of its
consumer base when it comes to environmental sustainability. In this scenario, however, the
aviation sector as a whole is placed at a crossroads where it gets to decide which direction it
wants to take into the future and this recognition of agency that comes along with this
opportunity is a significant opportunity. In a similar vein to the Kitty Hawk scenario, this
scenario offers businesses utilizing air travel the opportunity to portray themselves as more

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eco-friendly through their reduction of air travel due to tighter budgets. One significant threat,
however, is that this slowed growth could lead to obsolescence, lower capacity, and diminished
demand due to the stifling of the economy, growing environmental concerns, and reduced
government aid.
In order to best position themselves for success within this scenario, the aviation sector
should seek to scale back their operations and use their available assets to invest for the future.
The airlines should cut back on the number of flights they offer so that they can increase the seat
utilization per flight and decrease large sums of fuel and labor costs, which would consequently
lead to enhanced profitability. The aircraft manufacturers and jet fuel providers should sell their
non-essential assets and reallocate funds from existing projects (e.g. Boeing investments in
software) to ones focused on fuel efficiency, so that they can align the aviation sector’s
capabilities with changing consumer demand. Additionally, businesses that utilize air travel
should embrace the changes in business communication that they were forced to take on during
the pandemic and implement a more lean business model that is less dependent on air travel.
They can do this by simply using visual interface platforms for more low priority meetings and
using alternative forms of transportation, that are cheaper and more eco-friendly, for high
priority meetings. Finally, travel related businesses should also attempt to scale back their
operations and number of locations in an attempt to lower their widespread fixed costs and
improve profitability.
Finally, business should be concerned with two different moral considerations when
making decisions in this scenario. First, businesses within the aviation sector should be
concerned with the fact that scaling back would be a massive blow to the financial livelihood of
millions of Americans whose jobs are driven by the aviation sector and to the economy as a
whole. Additionally, businesses who would be considering reducing their utilization of air travel
would have to weigh the fact that business interactions are often less authentic over the internet,
and that they may have to live with this lessened authenticity if they seek to cut costs and portray
themselves as environmentally sustainable.

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Connecticut - Transformation

(Figure 12)
In the Connecticut scenario where the aviation sector undergoes significant changes, the
major theme includes the need for the industry to be flexible and move along with the changing
dynamics of the playing field. One big implication is this scenario will be the need for increased
capital to fund some of the necessary changes the sector will need to take. The slow growth of
the economy and poor financial performance of this sector, however, leads to the second tier
implication that it will need to be very creative in its approach to funding its projects and
re-access what parts of their business are truly essential and what parts are worth scrapping. In
addition, a second implication of this scenario is that environmental concerns will become the
driving factor at the forefront of people’s minds in the long term. This shift in focus would affect
the way consumers make decisions about air travel and could hurt the industry if it does not
become more sustainable.
A significant opportunity that arises from this scenario is to 1) regain the customers it lost
during the pandemic and 2) gain the demand of customers who would not fly in the future due to
air travel’s negative impact on the environment. With this massive opportunity to increase
demand comes a couple threats in light of the stagnant economy. First, the public awareness that
the aviation sector needs to undergo serious changes could lead to a competitive atmosphere to

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become a leader in sustainability in which the first providers of air travel inputs (i.e. jet fuel,
engines, and aircrafts) would gain a significant competitive advantage leading into the future. In
addition to the competitive nature, the negative effects of the pandemic on the economy could
cripple the budgets of companies within the aviation sector to the extent that their money crunch
is too great an obstacle to overcome.
In order to survive the inflection point that occurs within this scenario, businesses can
implement a few strategies to align themselves with long term success. First, the airlines should
petition for continued government support, citing the exciting potential for future success and
more sustainable processes. Although they would be struggling in the short term due to the
pandemic, they should emphasize that there are exciting prospects for the future and that they
simply need aid to weather the present storm. Similarly to the Parking Lot scenario, the providers
of aircrafts, jet fuel, and jet engines should reallocate their R&D funds and divest unprofitable
parts of their businesses to raise sufficient capital for R&D in fuel efficiency. Doing this would
put them in the best position to align their capabilities with consumer demand for environmental
sustainability. Third, as particular airlines begin to acquire and utilize aircrafts and energy
sources that are fuel efficient, businesses that utilize air travel should choose to fly with these
relatively sustainable airlines. Finally, travel related businesses should monitor the
transformation of the aviation sector closely and scale back their footprint, in a similar manner to
the Parking Lot scenario, if significant developments are not being made.
Lastly, this scenario brings to mind two glaring ethical considerations. First, and similarly
to the Kitty Hawk scenario, business should consider how the adjustment of products and
services within the aviation sector may lead to a lot of lost jobs in the short term, and that the
creation of new jobs in the long term is not guaranteed due to the uncertainty of future success.
Moreover, the granting of government aid to a continuously failing sector of the economy could
be problematic as it prevents other areas of the economy who are more deserving of assistance
from getting the aid that they need.

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Monuriki Island - Collapse

(Figure 13)
With the Monuriki Island scenario, business would have to react to the possibly worst
case scenario implications that they can imagine for the aviation sector. An obvious and most
significant implication of this scenario would be that air travel companies would experience
extreme financial distress due to the persisting negative effects of the pandemic, eliminated
government aid, lack of fuel efficiency innovation, and the rising importance of environmental
consciousness in regards to consumer demand for air travel. A consequent implication of this
financial distress is that many aviation businesses would fail, thousands of people would lose
their jobs, and people would have to change their behavior when it comes to traveling around the
US.
In the worst case scenario environment of this scenario, there are a few mild
opportunities and many significant threats. One opportunity stems from the knowledge that
recognizing the signposts articulated earlier would allow aviation companies to exit and liquidate
their assets before they become worthless. Additionally, there is opportunity in the qualitative
peace of mind that the industry would attain knowledge that its liquidation would contribute to a
more environmentally sustainable planet. The obvious threats involve the crippled demand for
flying due to both economic and environmental forces and the lack of capacity of the sector to
even meet demand if it was there at all.

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Considering the implications of this scenario, businesses should react by calling it quits
with their historic line of thinking and by cutting their losses. The airlines should liquidate their
assets and give whatever capital is left to their debtholders, shareholders, and employees.
Additionally, any majority owners of these airlines should use their retained capital to invest in
more futuristic forms of air travel such as autonomous electric vehicles and Hyperloop that are
efficient and more sustainable. Moreover, aircraft manufacturers, jet engine providers, and jet
fuel suppliers should realign their businesses to support tangential forms of transportation that
are more suited for future success. Some examples of this include jet fuel suppliers focusing on
providing biofuels for automobiles and engine manufacturers providing more sustainable engines
for non-aircraft forms of transportation. Also, in a similar fashion to the Parking Lot scenario,
businesses that utilize travel should rely more heavily on visual interface tools and increase their
usage of ground transportation. Finally, travel related businesses should consider reallocating
their presence to locations where more popular hubs of transportation are located. Instead of
being located near large airports, hotels should consider moving to locations near railway
stations and industrial centers where individuals with the autonomous electric vehicles of the
future will be travelling to.
With the implications of this scenario and strategies expressed above, there are some
high-level ethical considerations that society needs to contemplate. First, it is important to be
aware that the proposed liquidation of the aviation sector would lead to the loss of millions of
jobs and would hurt the economic wellbeing of many people during a time in which it is very
difficult to be out of a job. While contemplating the great economic cost that this strategy would
incur, it is also important to contemplate the truth that this strategy would help preserve the
earth’s resources for future generations of humanity. Therefore, businesses need to determine if
economic livelihood or environmental sustainability is more important to achieve if this worst
case scenario does come into play.

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VIII. Conclusion
Although the introduction of COVID-19 into the air travel market has muddled what was
already an unclear future for the industry, there are certainly still tangible forces of change to
spur development that would impact a large number of major stakeholders. Historically, the
biggest effect on demand for air travel in the United States has been GDP growth, and this is not
likely to change in the next ten years. If the US can pull out of the present economic downturn,
the future of commercial air travel would certainly look much brighter. Furthermore, the industry
will face significant pressure from environmental advocates regarding the implementation of
more sustainable technologies and practices. These challenges could impart severe damage on
the industry if not adequately addressed as alternatives to air travel emerge, especially within
business travel as companies have to choose between travel and visual interfaces such as Zoom.
The fate of the aviation sector relies heavily on the ability of leaders within the sector to
adequately anticipe and plan for a number of different scenarios. They must realize that these
decisions have not only lasting financial implications, but moral and ethical ones as well. As
important as committing to a sustainable future is, airlines and other related firms must also take
into consideration the livelihoods of their employees that could be seriously altered if a
capital-intensive project ends up failing. Similarly, in the event of a further economic downturn,
the government must be able to recognize that there may be more worthy causes and
beneficiaries of government funding than bailout-reliant airlines. These decisions --and so many
more-- have the potential to define the aviation sector for the next ten years and beyond.

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Expert Contributions
Bobby Niehaus | Capability Manager with Product Cybersecurity at Boeing

After graduating from the University of Notre Dame in 2012 with a Bachelor of Science in
Aerospace Engineering, Thermal and Fluid Sciences, Bobby Niehaus began his career at Boeing
where he has since taken on numerous leadership roles within the company’s Defense business
segment. To supplement his educational experience at Notre Dame and professional experience
at Boeing, he obtained a Masters Degree in Mechanical Engineering from Columbia University
and is currently obtaining a MBA from University of Chicago Booth School of Business.

Benjamin Yao | Flight Test Engineer at Boeing

After obtaining a Bachelor of Science in Aerospace Engineering from the University of Notre
Dame in 2016, Benjamin Yao began his career as a Mechanical Systems Design and Analysis
Engineer at Boeing, which is where he had previously completed a summer program as a
Systems Engineering Intern. Since 2016, he has simultaneously progressed as an engineer at
Boeing and obtained a Master of Science in Astronautical Engineering from the University of
Southern California.

Jeffrey M. Gonzales | Account Director at Boeing Global Services

Following graduation from the University of Notre Dame with a Bachelor of Arts in History,
Jeffrey Gonzales served in the US Navy for nearly eleven years. During his military service, he
entered the pilot training program, which eventually led to him becoming a Helicopter Pilot and
Division Officer. He also took on additional leadership roles as an Action Officer in International
Engagement, Tactical Action Officer, and Commander Navy Region Mid-Atlantic. Towards the

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tail end of his military service, he obtained his MBA from the Arizona State University W.P.
Carey School of Business, and has since began his current full-time leadership role at Boeing.

John Mowry | Managing Director at Alton Aviation Consultancy

After graduating from the University of Notre Dame in 2001 with a Bachelor of Science degree
in Chemical Engineering, he began his career as a design engineer with GE Aviation. During his
time at GE Aviation, he was also able to obtain a Master of Science in Mechanical Engineering
at The Ohio State University in 2004. For the twelve years following his graduate studies, he
worked at ICF SH&E and became a Global Managing Director, a role in which he led the global
aviation finance and technical services practice. Since 2017, he made the transition to his current
role as a Managing Director at Alton Aviation Consultancy, which is a global aviation and
aerospace advisory firm.

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