Airline Digitalization Growth Opportunities

Transforming Traditional Processes and Realizing Digital Benefits to Drive Future Growth Potential of Global Carriers

The airline digitalization market is a growth market forecast to achieve more than $35 billion in revenue by 2030. It is a highly fragmented market, with the top 15 companies accounting for nearly 26.5% of the market share. This share amount is not expected to change significantly over the forecast period (2021-2030). The market’s top companies by estimated revenue include Amadeus, Sabre, SITA, IBM, Boeing, Airbus, and PROS. The market is estimated to have more than 100 companies and will continue to grow as new start-ups increasingly enter the market with niche solutions based on next-generation technologies targeting specific airline needs.

Major airlines globally have committed to migrating their entire information technology (IT) infrastructure to a cloud infrastructure within the next decade. Traditional full-service carriers with a significant amount of IT workloads on legacy systems and facing stiff digital competition from low-cost carriers are anticipated to lead this market trend. Migrating workloads to the cloud, increasing touchless passenger experiences, optimizing internal processes, improving customer outreach through personalization, and enhancing ancillary revenues are the key growth drivers of the airline digitalization market.

A notable success factor for airlines is creating a team with dedicated budgets for digital initiatives, but training employees and recruiting digitally skilled employees are major challenges. Real-time data analytics with an interactive display/graphical user interface is also a key focus area and expected to have a higher penetration in the medium term (2024-2025). Additionally, blockchain is gaining traction in aviation research and development investment as airlines investigate its potential usage in distribution, loyalty programs, and supply chain management.

Major processes receiving high investments in aviation are disruption management and personalization initiatives. The key components airlines seek in a digital solution include modular capabilities, high interoperability with existing and new systems, and partnerships with digital stakeholders. The growth in interconnected solutions has created a vulnerable data ecosystem, resulting in various data regulations across regions monitoring efforts to increase sensitive data security. These factors, along with a heightened global focus on data privacy, will intensify airlines’ spending on cybersecurity solutions. As such, the adoption of data platforms enhancing operations and commercial activities is expected to rise over the forecast period.

Traditional aircraft and engine manufacturers also play a significant role in this market. These participants can identify and realize new revenue streams as they undergo their own digital transformation. These firms, along with technology firms and start-ups, will potentially shift the dynamics of the market over the forecast period.

The COVID-19 pandemic has negatively affected the global airline digitalization market. While digital solutions have increased to ensure a safe passenger experience, the pandemic has reduced operations, leading to historically low revenues and limiting airlines’ digital and information technology budgets. The market growth depends on how quickly airlines can recover from the pandemic. Despite the pandemic, the airline digitalization market is anticipated to continue growing in the long term.