Jack Uldrich
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The Future of the Airline Industry

Posted in Automobile/Aerospace

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A few months back, Freakonomics had an interesting post entitled ”What Will U.S. Air Travel Look Like in Ten Years.” The post had some helpful insights from industry experts such as Clifford Winston, Richard Branson and Josh Marks, but few of these insiders looked at the issue through the lens of emerging technologies.

Let me then offer my thoughts on how the industry will change in the decade ahead. For starters, advances in RFID technology will have greatly reduced—if not altogether—eliminated lost bags. Recall that last year, IBM announced it was partnering with Schiphiol Airport in Amsterdam to begin tracking baggage through that airport using RFID technology. By the end of 2009, IBM is hoping to trace all 70 million pieces of luggage that flow through the airport. Given the competitive nature of the airline industry and the high cost of lost baggage, I expect every major airport in the world to have implemented RFID technology by 2017.

Second, while it is impossible to predict how effective labor unions will be in protecting the jobs of thousands of TSA workers, I think there is an excellent chance that consumers will have a much shorter delay when entering the airport of 2017 due to new advances in molecular diagnostics, facial recognition technology, Iris identification and nanosensors. These technologies should allow a limited number of security personnel to efficiently and securely oversee the screening of the millions of passengers that pass through the airport each day by rapidly and accurately detecting the presense of any harmful weapon or dangerous chemical or biological contaminant.

Third, I expect airplanes to become even more crowded as the airlines use improved algorithms to actively sell empty seats to passengers. As America ages, many Baby Boomers will have extra time on their hand and the airlines, by knowing more about each customer (such as knowing that your Uncle Freddy likes to go to Las Vegas) will be able to entice him on short notice to catch the flight for $79.

Directly related to this trend is the fourth trend or what I call hyper-information. Websites such as Farecast are already doing a good job of telling consumers if they should buy a ticket to Paris today or wait until closer to Christmas in order to get a better deal, but as a result of exponential advances in information processing technology, data storage and algorithms these sites are only going to get better. More perfect information will lead to a more efficient allocation of resources and a continuation of razor thin margins for the industry. In short, look for more bankruptcies and mergers as the weak are herded out.

Trend #5: Biofuels will alleviate some of the price and environmental pressures the industry is facing over rising fuel costs. Look for companies such as Imperium Renewables and others to develop environmentally-friendly biofuels for jets. It is even possible that advances in synthetic biology will have lead to companies such as Synthetic Genomics driving the price of jet fuel down signficantly.

Trend #6: This one will still likely be small, but I expect that a number of planes will have only one pilot by 2017. Advances in Unmanned Aerial Vehicles and drones—which will have risen exponentially in military use—will have begun to make their way into the commercial airline industry by this time. Airline companies looking to cut costs will realize that it no longer makes economic sense to have two or three pilots per plane.

Finally, a portion of the regional air traffic (e.g. trips less than 300 miles) will be siphoned off by advances being made in the field of flying cars such as I wrote about here. While the vision of being able to take-off straight from your house likely won’t be possible by 2017, I do believe a limited number of well-to-do consumers will be able to drive to smaller regional airports and fly their cars to other regional airports that are in close proximity to their final destination. (For a video of this technology check out this recent post.)

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