Three Trends Shaping Future Air Travel Patterns

New trends affecting commercial aviation are emerging now that the worst of the pandemic appears to be over. Pent-up demand is triggering a mini-boom in air travel, with airlines embarking on ambitious aircraft ordering to meet the new demand, and to secure coveted manufacturer assembly line slots for future deliveries.

In addition to ongoing efforts toward industry carbon neutrality by 2050 and development of new propulsion technologies, Embraer sees three key trends that will encourage acquisition of more aircraft in the sub 150-seat capacity category. It outlines these points in its recently published Market Outlook 2023 which forecasts demand for turboprops and jets over the next 20 years.

Economic Blocs will Seek for more Autonomy

The pandemic showed the vulnerability of global supply chains to disruptions. Critical belly space was lost when airlines grounded aircraft. The result was product shortages, inventory backlogs, and price increases.

Governments are legislating better supply security through less dependency on foreign supplies. Examples include the Inflation Reduction Act in the USA which incentivizes local production of green products and technology, and the Strategic Autonomy Agenda in Europe.

These types of initiatives serve to relocate and shorten supply chains. The European Central Bank estimates that the number of global companies regionalizing their supply chains almost doubled to 45% in 2022 compared to 2021. More secure lines improve reliability and response time.

The inward-looking strategy will have far-reaching implications for air service as airlines develop greater intra network connectivity within their own blocs. The geographic and demographic diversity of those regions will encourage demand for sub 150-seat aircraft since connectivity will be a competitive economic asset.

A Social Revolution

Zoom and similar communication platforms that emerged during the pandemic have changed the traditional centralized office work culture. Today, companies allow employees to work from home or spend only a few days per week in an office.

The change prompted a portion of the urban population to move to smaller cities. According to the U.S. Census Bureau, 4.9 million people in the USA moved out of big cities in search of a better quality of life and lower housing costs.

Airports in the Bureau’s ten cities which had the highest influx of new citizens registered new air service to 44 markets between 2021 and mid-2023. The growth reflects the need to provide new flights to meet the demand to link these American “Zoom cities” with key business and leisure destinations.

Aircraft in the sub 150-seat category are ideal for the mission. They have the right capacity, ample range, and airlines can add flights in manageable capacity increments as demand grows. In fact, 71% of all flights to/from Zoom cities are operated by up-to-150 aircraft.

A New Pricing Environment

The transition to a decarbonized industry will continue as more airlines adopt the more expensive SAF to meet their zero emissions goals by 2050. Traditional fossil fuels taxation will also increase, and emission trading schemes will add compensation costs to the carriers’ balance sheets.  That inevitable increase in cost will eventually be passed on to consumers in the form of higher ticket prices. Airlines, and specially the low cost ones,  will need to adapt to the new pricing environment.

For more details, click here to read the Embraer Market Outlook 2023.