<img height="1" width="1" style="display:none;" alt="" src="https://px.ads.linkedin.com/collect/?pid=4958233&amp;fmt=gif">
15 min read
Dejan Cusic

By 2019, the aviation industry was acquiring a reputation as a digital transformation laggard. While sectors like retail and finance eagerly dug new revenue streams with digital implements, airlines took a more conservative approach. This hesitance was not the result of any inherent timidness among airline executives. Instead, it was a logical response to their immediate context.


The industry’s preponderance of complicated legacy systems imposed a double premium on upgrade projects, both through excessive costs and daunting safety risks. Hemmed in by practicalities, airlines tended towards occasional, tactical investments in digitalisation.

Then a novel pathogen shut down the skies.


Their business model temporarily shredded, airlines had to adjust to a new set of realities. As the world shifted online, customer experiences became more digitally focused in every respect. Suddenly, a passenger experience little changed from the early 2010s wasn’t going to cut it anymore.


The industry also had to make up for the closing of its revenue taps by making cost-savings. Investments that might turn data into operational insights rocketed up executives’ list of priorities as they searched for efficiencies.


Almost four years later, the aviation sector is much further along its digital transformation flight path. But there’s still much work to be done.


We can use cloud migration – a bedrock of digital transformation efforts – as a useful proxy for the state of this wider transition. While 94% of travel and hospitality executives surveyed in 2023 agreed that digital transformation was important to their business strategy, only 22% of the same group reported that they’d moved most or all of their operations to the cloud.


The upside of this earlier stage of digital transformation is that a lot of innovation is yet to come. We expect to see the rate of change rocket up throughout the next decade.


At this pivotal period, it’s helpful to take stock of what’s already been achieved across each of aviation’s core business functions, and what’s still to come.


1. Operational efficiency


Digital investments are already making the most important operational aspects of flying run smoother, with further improvements still to come.


Scheduling flights


Planning out which planes depart at what times, from which origin and to which destination, is a fiendishly complicated task.


In the past, network planners would perform difficult, risk-laden calculations to assign routes. These would calculate both the profitability and practical viability of routes by taking into account historical flight data, market demand, future growth projections and many more variables.


Once the routes were picked, planners would have to dig further into their calculations to assign the frequency and timing of the flights along them. This would involve assessing the likely availability of aircraft and personnel.


The task would then descend another rung, allocating slots at airport gates in collaboration with aviation authorities.


If disruptions occurred - as they inevitably do – these calculations would have to be redone at speed.


Today, digital technologies can automate swaths of these onerous exercises. Data analytics algorithms can crunch the numbers on all these variables to produce accurate forecasts of profitability, viability and risk of disruption.


This helps airlines reduce delays, cut their fuel consumption and improve on-time performance.




Safety trumps all in aviation, and nothing is more critical than aircraft maintenance. Keeping planes in good condition has long been more of a reactive than a proactive process. Upkeep is performed after problems have emerged, or simply at scheduled intervals dictated by both the manufacturer and the relevant aviation authorities.


This is not an efficient model. Costly checks might be performed unnecessarily, while relying on the judgment of maintenance personnel introduces a risk of human error.


But predictive maintenance is making maintenance a much more precise art.


Data analysis and machine learning techniques can now anticipate potential faults before they arise. Sensors take readings on aircraft temperature, engine performance and a whole host of crucial metrics.


Such proactive, data-led approaches minimise downtime while also enhancing safety protocols.


Digital twins are a particularly impressive manifestation of the shift to predictive maintenance. These virtual replicas of physical systems are created by engineers to craft exact models of aircraft engines. They can then use these to simulate various conditions, all without putting real equipment at risk.


In this virtual sandbox environment, teams can wargame and stress-test potential adverse scenarios, empowering engineers to refine designs and optimise maintenance procedures.


Logistics and ground operations


Digital transformation is perhaps most acutely needed on airport ramps.


As demand for aviation rises again post-pandemic, ground handling staff are coming under mounting pressure. With resources stretched and manual processes still rampant in this area, it’s high time that digital tools took more of the strain.


Labour is both the largest cost and the most urgent shortage in airport ground handling. Workforce management software tools should be used to do the work of scheduling and assigning shifts.


Sensors, cameras, IoT (Internet of Things) devices and other hardware are also starting to become more used on aprons. A steady flow of real-time data will enable faster detection of issues. This data can then be fed to digital twins and other predictive analytics applications, allowing detailed scenario testing.


Read more about why digital transformation is so crucial for ground operations in our article here.


The most customer-facing aspect of aviation logistics is also the most expensive. Baggage-handling mishaps cost the industry approximately $2.2 billion in 2022 alone. To reduce the rate of incidents, airlines and airports are installing radio frequency identification (RFID) tracking throughout the baggage system.


As we see more self-service functionalities at bag drop, and increased investment in robotic process automation further down the line, the impacts of human error will gradually fade away.


The combined effects of digital transformation in all these areas should improve on-time performance.


2. Customer experience (CX)


Even as we speed closer towards the mid-2020s, paper boarding passes and one-size-fits-all customer service remain common features of flying. But things are changing fast.


Digital transformation is enabling an aviation experience that is:




Passengers’ devices are increasingly becoming the foundation of the passenger experience. Airlines are incentivising passengers to book, check in, find out their gate information and board the plane all through their proprietary apps.


Customer service functions are also being gradually shifted onto mobile apps, with digital chatbots enabling round-the-clock, instantaneous responses to inquiries.




Airlines have always had vast amounts of customer information at their disposal. But they’ve only recently started to leverage all this data in the name of the passenger experience.


This focus on personalisation starts at the booking stage. Airlines are taking the lead here from the precedent set by online travel agencies (OTAs) like Booking.com. These sites have long used information like previous travel records, IP addresses and time of booking to serve tailored offers to both new and returning users. Airlines are now using their own booking funnels in the same way.


This extends further than just booking flights. Airlines can now harness new IATA frameworks to sell a personalised range of ancillary services and accompanying experiences. More on this shortly.


Airports are also doing their bit to craft more tailored journeys. London Heathrow has invested millions in centralising its data platforms in order to make passing through the terminal seamlessly responsive. Detroit Airport has even trialled Delta Airline’s hugely ambitious Parallel Reality screen, which can display personalised flight information to hundreds of people at a time.


These personalised flying experiences will be particularly important for airlines’ strategies to attract the business of younger passengers.




Whether they’re having trouble arranging a last-minute hotel at their destination or they’ve got lost on the way to the gate, travellers often need some assistance throughout the course of their journeys. This is why generative AI is set to have such a profound impact across every stage of the travel experience.


Let’s imagine an ideal journey flow in the near future made by a 27-year-old passenger, Giselle, who is leaving the United States for the first time. She is travelling from her home in Atlanta, Georgia on holiday to London, and then onwards to the rest of the continent.


Giselle starts planning her journey via a generative-AI-enabled app, or a ChatGPT plug-in or extension on her booking portal of choice. She asks this tool to put together an itinerary of the best places to go in the UK and Europe, based on her age, interests and travel history.


As this is her first time in Europe, the most famous landmarks feature heavily. The app then picks the best outbound and return flights according to her preferred carrier and flight duration.


At Hartsfield-Jackson International Airport, she is guided to the gate by real-time, AI-enabled chatbots. These live assistants are able to tell her how long the line for security will take, whether her gate has changed, and even what restaurants are putting on promotions that afternoon.


During the flight, she’ll enjoy in-flight entertainment curated to her tastes. When she touches down in London, her app will switch to providing guidance on local navigation, attractions and events. As she continues through Europe, her app continues performing the functions of a personal tour operator, this time with language assistance thrown in.


On her way back to Atlanta, her app will do all the same helpful little tasks as on her outbound journey. It’ll even welcome her home and compile a list of highlights.


Competition is already underway to build this kind of integrated, one-stop super app for the whole travel. At present, it is unclear who will triumph, but we’re certainly watching closely.




An underappreciated but utterly crucial component of any customer experience is the way it can be paid for.


Customers are 63% more likely to shop with merchants who offer their preferred methods of paying. In the specific context of aviation, McKinsey has identified $14 billion worth of potential revenues from payments.


Offering as broad as possible a range of payment channels is simply good, customer-centric business. But airlines trying to implement these changes have been hampered by their dependence on legacy systems. Many of the passenger service systems (PSSs) that underpin airlines’ customer-facing operations date from the late 20th century and are simply not compatible with wallets like PayPal or Apple Pay without a lot of costly engineering work to build bolt-ons. This keeps many airlines offering an analogue experience to a generation of digitally native passengers who expect to pay how they want, wherever they want.


Avation’s CX drive depends on airlines squaring the circle of serving up a modern menu of payment options without gutting their operational infrastructures.


In the video below, you can find out how Aer Lingus successfully built a payments hub on top of their legacy system.



Want a more extensive look at why payment technology is so central to aviation’s fortunes? Download our whitepaper - Simplifying Airline Payments to Unlock Hidden Revenue.


3. Business model


Digitalisation is expanding the parameters of the aviation industry’s business model. This is being actively hastened by the International Air Transport Association (IATA) through three new frameworks for change: the New Distribution Capability (NDC), ONE Order and Dynamic Offers.


Taken together, these schemes enhance the profitability of selling ancillary services and third-party experiences for airlines, urging a reconsideration of these revenue streams as core components of the airline business model.


Understanding NDC, ONE Order and Dynamic Offers


New Distribution Capability (NDC): NDC is an IATA-led initiative that introduces a new, XML-based data transmission standard. This enhances communication between airlines, travel agents and other providers so that airlines can sell a full, differentiated range of product offerings. Airlines can sell the usual array of ancillaries, like seat upgrades, extra baggage and lounge access. But they can also simultaneously serve offers for hotels, activities, events and consumer goods straight to customers.


This benefits all kinds of airlines, from full-service behemoths ferrying business executives across the Atlantic to low-cost, short-haul carriers jostling for leisure travellers.


ONE Order programme: ONE Order is a complementary IATA initiative that aims to simplify the airline booking and delivery process. This framework consolidates the traditional passenger name record (PNR), electronic ticket (ET) and electronic miscellaneous document (EMD) into a single customer order record. This ensures a far simpler customer experience at a lower cost to the airline.


Dynamic Offers: This programme represents the final stage in IATA’s efforts to induce a great leap forward in the aviation industry. It outlines the criteria for a more responsive mode of retail offer.


Airlines will leverage NDC and ONE Order, plus their own customer data platforms, to automatically generate bespoke offers of ancillary services and other products. These offers are:


  • Dynamically priced: they are priced according to contextual information available at the time of booking.
  • Continuously priced: they can be served at indefinite price points, rather than a maximum of 26 booking classes.
  • Dynamically bundled: they are generated in real time to meet the needs of the customer.


Revenue, reimagined


The airline retailing experience was once characterised by in-flight shopping magazines left largely ignored in cabin seat pouches. IATA’s three frameworks enable a customer journey that could not be more different.


Each traveller can now be instantly presented with offers bundled around their needs, at that moment, and calibrated to an attractive price point.


How quickly this becomes the norm depends on airlines’ enthusiasm to press ahead with embracing these initiatives. But with a projected $40 billion worth of new value, each year, up for grabs as soon as 2030, early adopters should be well rewarded.


These projects also complement existing revenue-raising routes. Airlines have seen a lot of success in cultivating loyalty programmes. Delta’s SkyMiles programme alone is estimated to be worth $27.93 billion, and orbiting initiatives will bolster these retention schemes by better leveraging all the data they generate. The NDC and Dynamic Offers will enable airlines to create offers for loyal flyers that are more personalised and relevant than ever before. In the background, improved order management thanks to ONE Order will make it much easier to identify, access, change and service bookings.


Read more about how IATA’s schemes could (and should) change the industry’s business model.


The marketplace opportunity


These frameworks are empowering airlines to turn their booking funnels into dynamic marketplaces.


Marketplace e-commerce models are nothing new in the travel business. OTAs have been linking customers with ecosystems of merchants, from airlines to hoteliers to tour operators, for over 20 years. But airlines have turned up late to the party because, prior to the IATA schemes, they just haven’t had the data infrastructure in place to make it happen.


IATA’s initiatives now open the door for instant exchanges between airlines and their retail partners. Rather than sending passengers through Expedia’s funnel and ceding all the valuable data on their on-page behaviour, airlines can host and monitor their own customers’ journeys. This opens up a treasure trove of data on customers’ habits and conduct that carriers can use to iterate and optimise their CX strategies.


4. Disruption management


It’s clear that aviation executives are taking customer experience design more seriously than ever before. But the biggest CX pitfall has little to do with retail funnels or personalised chatbot assistance. It comes down to the sad fact that disruption - and even cancellation - are now the norm in aviation.


The statistics speak for themselves. In the first half of 2023, customer complaints about airlines were up 68% on the same period in 2022. But a year-on-year comparison masks the full extent of the trend. 2023’s complaints were a whole 584% above the equivalent figure for 2019.


The pandemic drove a wave of layoffs, resulting in shortages of skilled staff like pilots, air traffic controllers and maintenance staff when the skies reopened. Demand for flights is ratcheting up at the same time as people come into ever shorter supply.


This is where the productivity benefits of technology modernisation will have the most impact.




Any digital transformation programme should place a special focus on leveraging as many datasets as possible to prevent disruptions before they arise.


We’ve already touched on how IoT hardware, predictive data analytics and digital twin technologies are enabling proactive responses to many different sources of disruption, from aircraft faults to staff shift scheduling.


But there’s an elephant in the room here, whose effects on operational efficiency will become more and more pronounced in the years to come. We’re talking, of course, about climate change.


Per Accenture’s recent report, a full 40% of airlines are not sufficiently prepared ‘to predict climatic or external disruptions in advance at an ecosystem level’. Yet the same research also found that 98% have experienced a rise in such occurrences.


To make informed predictions on vast, definitionally tempestuous variables like weather, airlines must ramp up their big data infrastructures. By pulling information from satellites and ground-based radars, plus live atmospheric data from in-flight sensors, and combining it with historical flight data, executives can evolve sophisticated models that foresee severe weather events. This will enable timely rerouting and resourcing.




Not all disasters can be foretold. When disruption strikes - as it always will - communication is the most important factor in crisis management. This is where generative AI really comes into its own.


American Express’ Global Business Travel service now offers a virtual assistant built into its app. This automated tool gives users an interface for delayed travellers to supply as much useful information and context as possible before they are connected to a human travel agent.


As the chatbot technology develops further, these tools will be able to proactively solve disruption by, for instance, automatically rebooking customers on alternative planes.


As a stopgap, airlines must use their proprietary apps to serve live push notifications straight to delayed passengers as soon as new information becomes available. A responsive customer experience can make the difference between a forgiving customer and one lost forever.




While customer-facing communications will leave the most acute impression, a lot of the most important conversations in disruption management will happen out of sight.


Getting things back up and running involves a lot of different parties sharing up-to-date information: ground handlers, different airlines, air traffic control, cabin crew, passengers, airport staff; the list goes on. Software tools can now centralise and harmonise many of these processes.


These collaboration platforms should integrate all operational data into a single dashboard. This will allow for information to be exchanged in real time, forming a strong basis for effective, proactive decision-making.


5. Sustainability


IATA, whose member airlines carry 83% of the world’s air traffic, has pledged to achieve net zero carbon emissions by 2050. Neutralising, in under 30 years, the carbon output of a capital-intensive industry that accounts for 3.5% of global warming will be a monumental undertaking. But sustainability can be built into the DNA of digital transformation programmes.


The operational efficiency technologies we have already touched on can also open the door to less polluting flights. More advanced capacities for predicting demand will allow more efficient capacity utilisation, cutting the emissions per passenger kilometre.


Digital twins are also enabling the transition to alternative fuel sources. This shift is critical for aviation to meet its obligations but will require fundamental modifications to aircraft designs.


Digital twins let engineers model these changes without compromising existing hardware. This has the potential to hugely accelerate the time it takes to bring biofuel-powered – or even battery-powered - aircraft to the skies.


While hardware will determine the prospects of aviation’s net zero ambitions, predictive analytics software is now playing a major supporting role. Cloud data platforms like Airbus’ Skywise can pull together many different datasets from planes, ramps, airports, air traffic control centres and beyond. All this information is then crunched to produce recommendations for optimising routes to solve for sustainability. Delta Airlines has already used this technology to reduce carbon emissions by 2.5 million metric tonnes per year.


Find the insight to fly higher


The next decade may well bring about a holistic reimagining of the aviation industry.


Flying, from the customer experience to the construction of the aircraft, will feel qualitatively different - and function quantitatively differently - to everything we’re used to. The way we pay for it, the check-in experience, even the shape of the aircraft, will all be redefined as the industry becomes greener and more customer-focused.


Most airlines have already started their digital transformation journeys in some shape or form. The major task for the next few years is to accelerate these programmes, both to hit pre-existing objectives and to accommodate emerging priorities.


By its nature, aviation cannot be quite as nimble as other sectors. Commercial airliners are built with life cycles to match their high production costs. This extended reliance on ageing equipment imposes compatibility gaps when new technology turns up. But while planes will take a long time to be replaced, there are many other widespread legacy systems letting down the industry that are ready to go away.


Decisions on what technologies to keep and which to jettison should never be taken lightly.


Our whitepaper – How to Improve IT Modernisation Decisions in Aviation – provides a workable blueprint for working out what is and isn’t working for you.


We hope our resources will help steer you through the next stage of your digital transformation flight path.


No video selected

Select a video type in the sidebar.