Coming Through the Clouds

Risk and opportunity for the aviation industry in a post-pandemic world

 During our recent
webinar series,
industry experts and
Aon specialists shared
insights across all
aspects of aviation
business – in this
paper, we capture
their key messages
and look ahead to
new opportunities
on the horizon.
2 Coming Through the Clouds
Contents

Preface. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Coming Through the Clouds . . . . . . . . . . . . . . . . . . . . . . 6

Chapter #1:
Failure to Attract and Retain Talent . . . . . . . . . . . . . 8

Chapter #2:
Business Interruption. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Chapter #3:
Cyber . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Chapter #4:
Increasing Competition. . . . . . . . . . . . . . . . . . . . . . . . . . 20

Chapter #5:
Aging Workforce and Health Issues . . . . . . . . . . . . 24

Looking Forward to 2040:

Opportunity in Ascent . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

The Future of Aviation Will Be Driven

by Several Key Factors. . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Coming Through the Clouds 3

 “Over the past decade, we have evolved our
solutions capabilities to help our clients be
better prepared by making their voice core
to our Aon United Strategy.”
Greg Case,
Chief Executive Officer of Aon

4 Coming Through the Clouds

Preface

The humanitarian and economic crises caused by COVID-19

have impacted almost every aspect of business activity.
Business leaders continue to mobilize strategies and respond
to evolving challenges. However, for many industries,
the future remains uncertain. Aside from intrinsic industry
challenges, businesses are linked by exposure to global
economic and commercial pressures.

It is why we are not only focused on helping clients navigate the risks they are now
facing, but we are also more keenly focused on helping them see around the corner
to help them prepare for what comes next. With that in mind, we recently conducted
a survey of over 800 CEOs and senior executives in the US, UK and EU to better
understand the impacts of COVID-19 on their preparedness levels and how this will
impact their efforts going forward.

The research found that, as traumatic as the COVID-19 pandemic has been, business
leaders told us that it has not been the only disruption they have had to manage.
Many named competitive threats – from both traditional and new sources – as having
a significant impact on their business this year. They also told us that the experience
leading their businesses through the pandemic has awakened them to a wider range of
threats they will face and need to address.

Over the past decade, we have evolved our solutions capabilities to help our clients be
better prepared by making their voice core to our Aon United Strategy. By uniting our
specialist teams, we leverage expertise across commercial risk, reinsurance, retirement,
and health solutions to serve our clients’ rapidly-changing needs and objectives.
Supporting recovery and growth during this period of uncertainty is critical.

During our recent webinar series, industry experts and Aon specialists shared insights
across all aspects of the aviation business – from people to commercial risk – in 2020
and beyond. In this paper, we capture their insights and look ahead to explore how
firms can reassess their vision, rebuild their strategy and pursue new opportunities.

We are committed to serving our clients’ immediate objectives and beyond, to support
recovery and empower growth. By harnessing the full power of our united Aon, we
continue to deliver value by identifying opportunities to transition from the new normal
to the new better.

Greg Case
Chief Executive Officer of Aon

Coming Through the Clouds 5

 Coming Through the Clouds

Risk and Opportunity for the Aviation

Industry in a Post-Pandemic World
As the spread of COVID-19 gathered momentum – endangering millions of lives,
aggravating geopolitical instability and crashing down on the global economy –
aviation firms have been challenged by a rapidly-changing and volatile environment.

97%
of aviation activity ceased entirely in some regions during the pandemic. 1

In some regions, 97% of aviation activity ceased entirely during the pandemic.1
According to experts, there are three distinct stages of an organization’s response
to a crisis: react and respond; recover; and reshape (as detailed in Aon’s paper
Decision Making In Complex & Volatile Times: Keys to Managing COVID-19).
After the initial response to COVID-19, during which many aviation businesses
focused on remaining operational by containing costs and redistributing
resources (the react and respond stage), many have shifted their operating
models to stabilize the business (the recover stage). Leaders are now focusing
on reshaping the business by collaborating with regulators, governments and
other industry players to rebuild their strategy and priorities for the future.

In this paper, experts from Aon’s Coming Through the Clouds webinar series
examine the key risks and opportunities of the new normal for the aviation industry.

6 Coming Through the Clouds

2019: the calm before the storm
In 2019, business leaders identified 10 key risks faced by the aviation
industry. Captured by Aon’s Global Risk Management Survey, the
immediate challenges facing aviation businesses in 2019 were:

1 Business interruption
2 Economic slowdown/slow recovery
3 Increasing competition
4 Damage to reputation/brand
5 Cash flow/liquidity risk
6 Cyber attacks/data breach
7 Accelerated rates of change in market factors
8 Political risk/uncertainty
9 Terrorism
10 Capital availability/credit risk

As businesses prepared for 2020 and beyond, aviation businesses forcasted five
future risks, unaware of the global pandemic looming on the horizon. These were:

1 Failure to attract or retain top talent

2 Business interruption
3 Cyber attacks/data breach
4 Increasing competition
5 Aging workforce and related health issues

Although the outbreak and spread of COVID-19 was unexpected, many of

the forecasted risks remain areas of focus in a post-pandemic world.

2020: turbulence in aviation

As countries closed their borders and the world entered a state of lockdown,
demand for air travel descended rapidly. With little-to-no travelers passing
through the airports, retailers, franchises, car parking and rental facilities
closed their doors. Airlines either grounded their fleets or repurposed their
aircraft to capitalize on the soaring demand for cargo and logistics.

How will the industry’s top five future risks – as forecasted in 2019
– change as the world ventures into the new normal?

Coming Through the Clouds 7

 CHAPTER 1

1
Failure to Attract
and Retain Talent

Initial response strategies focused

primarily on survival – grounded flights,
furloughed staff, redundancies and paused
new hires enabled businesses to manage
their cash flow. But at what cost?
Despite these immediate impacts of the pandemic, there is a shared confidence
that this disruption is a hiatus. Companies will be actively seeking talent to
build sustainable growth for the future of aviation within just a few years.

For the past 10 years, the sector had seen healthy year-on-year growth. The global pilot
shortage and the need to attract strong IT (information technology), engineering and
technical talent will intensify the pressures of operating in a post-pandemic world.

8 Coming Through the Clouds

“During the Aon Aviation Summit in November
2019, approximately 40% of the 120 participants
felt airlines were not equipped to hire,
attract or even compete for digital talent.”2
David Barrett, Chief Commercial Officer, Aon’s Human Capital Solutions

The pilot shortage will not disappear. Experts predict that the sector will need
645,000 pilots over the next two decades.3 Despite raising the pilot retirement
age, there are still too few in post and attracting new pilots – although vital
– is increasingly challenging. A global focus on climate change and social
responsibility is a core driver for career decision-making. Experts have identified
a growing trend. Potential pilots feel that they have a responsibility to pursue
careers in alternative industries with perceived socialist commitments, despite
the benefits aviation brings to global travel, trade and economies.

645,000 Pilots
Experts predict that the sector will need 645,000 pilots over the next two decades. 3

Since pilot training is typically available only to those with the personal funds
to finance the program, the number of applicants with the means as well as the
motivation to complete the qualification is insufficient and unsustainable.

Attracting applicants from diverse backgrounds remains a core challenge for the aviation
sector. Experts report that just 5% of current pilots are women.4 As new generations
enter the workplace amid radically-shifting sociocultural values, the need to address
the limited exposure during early career conversations in schools, the lack of funding
and the mobile lifestyle of a pilot, is critical. There is also a growing need to attract
engineering and technical capability across the sector to compete against the appeal of
innovative software companies with flexible working practices and career opportunities.

Coming Through the Clouds 9

 CHAPTER 1

A shift towards remote working has directly impacted operations by increasing

flexibility and efficiency. In particular, one European airline has recognized
the value that a remote working environment can bring to their workforce
for certain roles, having previously thought this to be impractical.

Expert Insights
Mark Duffy, Deputy Director HR, Head of Talent at Ryanair
“We thought we couldn’t do flexible working from home because we are an airline
and we’re operational 24/7. However we have realized that it works. The new IT office
that we’re opening in Lisbon is going to be made up of remote workers – so we’re
not even going to have a physical office space. This shift is because of COVID-19. We
will have 100 of our people working from home and we trust them to do that.”

At a fundamental level, the sector needs to reassess the attraction, development and
retention of the global workforce. Creativity will be critical in filling the talent pipeline by
generating interest at a young age, designing an employee offering that fits well with talent
expectations and emphasizing the gains from more eco-friendly aircraft technologies.

Recent reports indicate that science, technology, engineering and mathematics

(STEM) talent – with knowledge and skills that are valuable to the aviation
industry – show the most interest in industries that they believe will be most
impacted by new technologies.5 On assessing potential career paths, the aviation
industry is at risk of paling beside the glittering appeal of technology giants.
This perception translates into attraction. Graduates and potential candidates are
increasingly transferring their knowledge and skills to alternative industries.

Expert Insights
Mark Duffy, Deputy Director HR, Head of Talent at Ryanair
“When hiring technology talent, we market ourselves not by saying we
are an airline, but we’re a technology company that happens to have
455 aircraft. We have that much emphasis now on our technology.”

10 Coming Through the Clouds

Coming Through
the Clouds:
A Silver Lining
The pandemic has forced employers to
shift their approach to remote working and
employee engagement. It has provided the
opportunity to review and resolve some of
the issues impacting talent attraction.
While some roles must remain airport-based, there is a newfound realization that
remote working can support operational efficiency and promote workforce well‑being.
This has contributed to clearer and consistent internal communication. A focus on the
health and well-being of employees and customers has found a new emphasis on
compensation packages. Efforts to support workforce well-being are also extending
to longer-term flight schedule planning. This suggests that airlines are actively
exploring ways to bring a greater balance to employees’ work and family lives.

Coming Through the Clouds 11

 CHAPTER 2

2
Business
Interruption

From terrorist incidents to volatile weather

conditions, disruptive events have
directly impacted the aviation industry
throughout history. They have provided
many opportunities for businesses to
learn, develop and grow in response.
With a shared recognition and appreciation for the value of a robust response
strategy, commercial aviation operators have typically invested in internal
business continuity strategies, rather than the insurance market.

12 Coming Through the Clouds

Statistics released by Lloyd’s of London in mid-May 2020 report that the COVID-19 crisis
could result in estimated insurance losses as high as USD 107 billion. This is mainly due
to event cancellation and business interruption claims. On top of that figure, another
USD 96 billion will be from investment losses. While these figures already rival losses
during the 2005 hurricane season, they could rise due to a pandemic resurgence.6

$107 Billion Losses

The COVID-19 crisis could result in estimated insurance losses
as high as USD 107 billion.

As country-wide lockdowns, quarantine regulations and closed borders continue

to restrict travelers returning to the air, this global immobility has left fleets
grounded. Storing and maintaining aircraft has been an additional pressure for
airlines. As thousands of aircraft sit idle worldwide, some sites have experienced
high winds and volatile weather, damaging airframes and engines. This damage
has further contributed to losses and a peak in business interruption (BI) claims.

Although aviation businesses have not purchased BI coverage historically

(it has not been widely available to the industry), the outbreak of COVID-19
has driven rapid reassessment and demand for BI coverage.

Expert Insights
Lambros Lambrou, Chief Executive Officer of Commercial Risk
Solutions at Aon
“Typically, insurance is a solution to reduce volatility and strengthen financial
statements. As we move forward, we need to continue to innovate and
consider how insurance can actually be used to help organizations increase
their business performance. Operating models are changing across the aviation
industry and this will drive evolution in insurance. For example, the expansion
of the definition of business interruption within the insurance community and
the development of non-damage business interruption coverage.”

Coming Through the Clouds 13

 CHAPTER 2

Expert Insights
Joan Vincenz, Managing Director of Corporate Safety
at United Airlines
“Those who responded early are the ones who are in much better shape. Our airline
began daily meetings in early January and activated our Emergency Operations
Center (EOC) on January 22 when the CDC – Centers for Disease Control – posted
a level 3 global COVID-19 pandemic notice, eliminating unnecessary travel …
Airlines have always been strong in emergency response, particularly airplane
accidents. However, in the last 10 years, US passenger airlines have carried five
billion customers without even one fatality until a single passenger was killed
on another US airline two years ago from an uncontained engine failure.

“United has always had a strong emergency response culture. However, over
the past few years, we’ve increased focus on business continuity planning.
During Hurricane Harvey in Houston, the hub team’s business continuity
pre-planning allowed for fast recovery. Despite coming down quickly, we
were able to stand back up about 11 days earlier than we had before having
a business continuity plan in place – that kind of revenue is huge.”

How have you adapted to respond to business interruption?

“United has expanded our cargo capability during the pandemic and it has become
a significant revenue generator to us during these past months. That’s a valuable
and increased revenue stream that would’ve been unavailable to us before. I think
there’s a pent-up demand for leisure. People want to get away after staying at home
for so long. Business travelers have learned to work remotely, and our goal is to
make sure that they understand that that is not their only option to work safely.”

14 Coming Through the Clouds

Coming Through
the Clouds:
A Silver Lining
Figures suggest that, if BI had been
purchased for pandemic coverage across
all industries, there would not have been
enough capital to satisfy all claims.
Experts predict that governments around the world may work collaboratively to
build a pandemic-based co-insurance agreement. By potentially levying a passenger
surcharge per ticket, industry players could establish a pool available to respond
to airline BI cover, alongside a government co-insurance or reinsurance.7

Coming Through the Clouds 15

 CHAPTER 3

3
Cyber

Cyber security is a business necessity. Data

protection, machine functionality, biosecurity
and physical security are all essential to the
safety and operation of the aviation industry.
In a pre-pandemic world, cyber was already
an area of focus for aviation businesses.
Aside from the traditional IT exposures (concerned largely with data
protection), the aviation industry’s broad reliance on operational
technology (digital systems and processes which control and move
equipment) adds new dimensions to a complex risk profile.

16 Coming Through the Clouds

 Expert Insights
Edward Stroz, Co-President at Aon Cyber Solutions
“Tools from a forensics, cyber investigations and security standpoint are
very well developed … but when you move to operational technology,
the complexities are different. The tools for operational technology are less
evolved. Expertise from a cyber level cannot be relied on for operational
technology – they’re related and have similarities, but they’re also different.”

To remain operational during the global lockdown, many businesses invested

in new technology and capabilities, enabling them to rapidly mobilize a
remote working environment. Cyber and data security investments are
estimated to reach USD 130 billion by the end of 2020 and one-quarter of a
trillion by 2026.8 Although the mass migration to remote working has enabled
many businesses to remain operational, the increased reliance on digital
infrastructure has created new challenges across the aviation sector.

$130 Billion Investments

Cyber and data security investments are estimated to
reach USD 130 billion by the end of 2020.8

The geographical distribution and increased mobility of a remote workforce is creating

new cyber vulnerabilities. The number of endpoints and IP addresses connected
across a network has expanded exponentially and will remain on this trajectory into
the near future. More endpoints mean more potential points of exposure to cyber
risks, potentially compromising an entire network. Unable to implement physical safety
measures around a shared workspace, businesses are increasingly focused on protecting
their digital perimeter from failures and attacks. Since many security weaknesses
exist at the intersection of a business and its connection with the outside world,
monitoring and safeguarding the operational perimeter remains security imperative.

Coming Through the Clouds 17

 CHAPTER 3

Expert Insights
Kerry Peirse, General Manager of IT Infrastructure, Operations and
Security at Cathay Pacific Airways
“Our approach to cybersecurity has three steps. The first step is to try and stop
people getting in. It’s about protecting your perimeter, the perimeter of your
network and your environment. The second step concerns slowing people down
should they have managed to get through the perimeter. And the third step, if
you haven’t been successful in the first two, is to make sure whatever they find is
not particularly useful. Your network and your environment are no longer a small
box anymore. It’s all about how your environment connects to the outside world –
which could be anything from a PC in a remote office to a mobile to an application
interface. The audit of where all those things are to start is particularly important
– making sure that you’ve addressed all of those through a cyber program.”

Even small organizations have reported 30,000 new cyber vulnerabilities on a

monthly basis.9 Taking measures to reassess and evolve the cyber strategy to address
new vulnerabilities is a cyclical and critical process for businesses. Implementing
layers of defense is often the most robust strategy to manage cyber risks:

Seek Shield Solve

Understand Protect critical assets by Conduct forensics
your cyber posture and implementing roadblocks and to develop a robust risk
quantify the risk reinforcing security measures management strategy
• Assess your organization’s • Protect your company from the • Respond defensibly to an attack
security posture financial loss of a cyber incident
• Minimize business interruption
through cyber insurance
• Align with proven
• Use cutting-edge forensics
security frameworks • Understand your investments’ risk
• Effectively respond to your
• Proactively test and hunt • Develop tailored security
situation by deploying a team
malicious activity policies and standards
of cyber experts trained in
• Quantify the potential financial • Remediate vulnerabilities regulatory, financial and legal
damage from a cyber incident consequences of a breach
• Provide strategic cyber security
• Provide prioritized action lists to guidance and develop a program • Help maximize coverage
improve your cyber resilience and cost recuperation

18 Coming Through the Clouds

Coming Through
the Clouds:
A Silver Lining
Technology-enabled tracking of body
touchpoints throughout a passenger’s journey
has enabled businesses to understand
where all potential contact points are and
modify their operations accordingly in order
to limit the risk of cross-contamination.
This process has not only addressed the immediate needs to comply
with rapidly-evolving health and safety obligations and contributed to
the restoration of customer confidence, but has also innovated new
processes to improve customer experience moving forward.

In a post-COVID-19 world, experts expect airports and airlines to continue

innovating, particularly with contactless processing of passengers and cargo. This
will require more data and will add new dimensions to businesses’ risk profiles.
However, if managed effectively, it can reduce operating costs and enable industries
reliant on aviation to restore operations in a safe and controlled environment.

Coming Through the Clouds 19

 CHAPTER 4

4
Increasing
Competition

In 2018, independent surveys reported

airline customer satisfaction rose for a
seventh consecutive year. Fares were at
a historic low, record passenger numbers
were being achieved and more people were
choosing air travel than ever before.10
Larger and more traditional airlines with established reputations and business models
have focused primarily on the customer experience by investing in innovating
and refining their service. The emergence and growing popularity of low-cost
carriers has changed the competitive landscape. As low-cost challengers enter the
industry, passengers have benefited from an unprecedented combination of choice,
competition, access and affordability. By the close of 2019, airlines and other aviation
businesses were operating in an increasingly competitive commercial environment.

20 Coming Through the Clouds

Increasing competition has introduced diversity into the industry, driving investments
in new aircraft, technology, services, workforce training and airport development.
Since 2008, airline/airport collaboration has led to more than USD 130 billion of capital
improvement projects being approved, underway or completed at the US’s 30 largest
airports alone.11

$130 Billion
Improvement at the
US’s 30 Largest Airports
Since 2008, airline/airport collaboration has led to more than
USD 130 billion of capital improvement projects being approved,
underway or completed at the US’s 30 largest airports alone. 11

The aviation industry soared into 2020, propelled by a tail wind of increasing
competition, demand and investment. However, the impacts of the COVID-19
pandemic have changed the competitive landscape.

Hotel operators and airlines are actively pursuing opportunities to rescue lost revenue
for the 2020 summer travel season. Some airlines have already received government
funding, enabling these airlines to resume operations at competitive costs before
other competitors. On returning to the air, industry players will face new challenges
and competition.

Coming Through the Clouds 21

 CHAPTER 4

1
Airlines from countries which eased lockdown
restrictions first will resume operations before
competitors from other geographies, potentially
raising ‘fair competition’ questions which will be
monitored with regulatory scrutiny.

2
Airlines operating on thin margins will need
investment to remain airborne. If financial support
is not secured, some industry players may fall away
from the competition.

3
Populations restricted to their homes for several
months have generated a wave of demand for air
travel. However, as countries begin to ease
lockdown restrictions, the future remains
uncertain. The risk of a resurgence of COVID-19,
spikes in cases and government action to close
borders and impose quarantine measures have
restricted the volume of passengers returning to
the air.

To restore volume, experts predict low-cost travel to continue for one or two years,
after which prices are likely to settle. While state aid will enable some airlines to operate,
competition will need to find new ways to remain cost-efficient for the longer term.

22 Coming Through the Clouds

Coming Through
the Clouds:
A Silver Lining
As airlines fly fewer routes, there is a new
opportunity to reduce fleet costs by revising
flight schedules and reducing the number
of aircraft – many of which may remain
grounded for an unknown stretch of time.

Coming Through the Clouds 23

 CHAPTER 5

5
Aging Workforce
and Health Issues

An aging workforce and increased retirement

may create new challenges as digitization
of the aviation workplace continues to
revolutionize practices and processes.
Both in-flight and ground crew must access, assimilate and act on more digital
information than ever before. While digital skills and competence are essential, the
ability and willingness to embrace the rapidly-changing digital world are vital for
sustainable development. The workforce must be agile and flexible in approaching
work, be curious about opportunities and be motivated to learn new skills.

An Indian airline has made significant inroads into hiring new digital talent.
After hiring a senior leader from the digital world, the airline has successfully
built a team. It is now driving digital innovation and talent across the firm.

24 Coming Through the Clouds

While these may not be the attributes typically associated with older
generations in the workplace, research carried out by Aon’s Human Capital
Solutions Practice highlights that age is not a determining factor in the
possession of these future-ready behaviors and competencies.

The role of mentor will expand as older, experienced pilots will need to guide,
coach and teach younger pilots as new generations enter the workplace.

The aging workforce stresses a further shift in the talent market – the acceptance of
career change throughout our working life. Traditionally, loyalty to an employer and
the promise of a strong salary directly translated into high workforce engagement.
However, development and progression opportunities are now increasingly
valued. For companies which invest in training and development, their workforce
is more likely to remain engaged and loyal. For businesses who fail to invest in
progression opportunities for their workforce, employees are more motivated to
pursue opportunities either with competitor firms or alternative industries.

Climbing the ladder is no longer linear. To avoid more senior workers

blocking progression opportunities for younger employees, organizations
are devising new career paths and showcasing new options.

Expert Insights
Raj Raghavan, Senior Vice President and Head of Human
Resources at IndiGo
“Indigo has created its own brand. We were seen as a disruptor
when we first came to market, competing with other airlines flying
today. A migration to digital platforms and remote working has
supported our success. We are probably going to get about 25%
of our non-flight ops workforce working remotely by the end of
this financial year. It is working well and productivity is high.”

Coming Through the Clouds 25

 Coming Through
the Clouds:
A Silver Lining
A more diverse workforce is being
created with multigenerational teams in a
collaborative environment. Older workers
can share their experiences and mentor and
guide the development of future generations
– thereby supporting the industry’s future.
Career paths are being redesigned to become more flexible and more
appreciative of individuals’ skills and interests. There is a shift of career
ownership away from the expectation that the organization will seek out new
opportunities and towards more individual autonomy and responsibility.

26 Coming Through the Clouds

Looking Forward to 2040:
Opportunity in Ascent

Expert Insights
Kashif Khalid, Regional Director of Africa and the Middle East
at International Air Transport Association (IATA)
“The industry has to come together. Whether it’s IATA, whether it’s the
Airport Council International or the International Civil Aviation Organization
(ICAO) as a regulatory body, they need to unite to try and make sense
of this global pandemic. They need to understand how to quickly and
safely restore aviation to a level where people can connect to countries
that were part of normal operations using new health measures, as well
as additional health processes that governments are putting in place.

“Aviation is in the spotlight because we want to ensure that aviation is not a

factor towards the spread of COVID-19. So, with the biosafety or biosecurity
road map that we’ve developed, we are looking at all the normal processes
that an airline, airport, carry-on handler and passenger would face.

“We’ve had to adapt. This is an industry that evolves constantly. If we

have learned one thing from the pandemic, it is that the workforce within
the aviation industry in some shape or form will need to be repurposed
to act as wellness ambassadors as well as service delivery professionals.
As well as flight crew and cabin crew, many airlines are repurposing
their staff to also be health and safety experts, all the while delivering
that service level. Ground-handling personnel have to be trained in
new health and safety protocols to manage the flow of passengers’
bags and ensure that the on-ground time for aircrafts is achieved so
that airlines can continue flying without any degradation to services.

“Our industry is extremely resilient. I have no doubt that the

workforce, whether it’s the ground handlers, airlines or airports will
come together and adapt. It’s an extremely agile industry.”

For the 10 years preceding 2019, aviation businesses were reporting steady
growth. In a post-pandemic world, the future of the aviation industry will depend
on the shift from immediate recovery toward sustainable future growth.12

Sociocultural values and behaviors, regulations, political pressures and new

technologies are driving rapid change and, as a commercial engine critical to
global travel and trade, this innovation will revolutionize the aviation industry.

Coming Through the Clouds 27

 The Future of Aviation Will Be
Driven by Several Key Factors

A. New technology
Steady technological development over the past 20 years – such as the
introduction and integration of navigation systems – has introduced new
processes and refined existing practices. Driven by changing sociocultural
behaviors, political pressures, regulatory obligations and commercial ambitions,
the development of technology has accelerated rapidly in recent years.

Electric alternatives and technologically-capable challengers could radically change

the competitive landscape. Many smaller airfields have been abandoned by larger and
more traditional airlines as the routes have not been financially viable and infrastructure
has been unable to support large aircraft. By repurposing this existing infrastructure,
technologically-capable innovators are poised to create new opportunities for
thousands of airports across the globe and capitalize on this area of the market.

Unburdened by the physical and regulatory constraints experienced in more

developed countries, regions with less-developed aviation infrastructure
benefit from more freedom and scope to innovate. Investment in all-
electric vehicles, air taxis, vertical take-off and landing and logistical drones
are developing rapidly (particularly in regions across Asia). It is enabling
businesses to serve and operate in increasingly remote locations.

The rapid development of new technologies will create new challenges which
need to be addressed. Infrastructure will need to be redesigned to accommodate
new technologies and increase ground space. Training programs will need to
assess technological competencies – among many more evolving challenges.

If managed appropriately, technology has the potential to revolutionize

the aviation industry. Success is already attracting investment. With more
investment, the cycle of innovation will continue beyond 2040.

28 Coming Through the Clouds

On the
Horizon
A European company is currently developing
a fully electric airliner. By replacing the
original power source with a more sustainable
alternative, the original design is not being
reinvented and the new design remains
within existing regulatory parameters.
This enables development to continue on
its trajectory towards a 2025 launch.
This venture is an indicator of the direction of future innovation. Businesses are
increasingly exploring new ways to build long-term sustainability to support their
environmental obligations, but also their operational and financial models.

Coming Through the Clouds 29

 T H E F U T U R E O F AV I AT I O N W I L L B E D R I V E N B Y S E V E R A L K E Y FA C TO R S

B. Talent
Looking ahead to 2040, the rapid development of technology will not only demand
new skills from the global workforce, but the types of roles available are likely to change.
In 20 years from now, sophisticated technology may remove the need for two pilots.
Also biometric and mechanical technologies may change ground crews’ responsibilities.

Despite the critical role that aviation maintains across global trade and travel,
the industry is rarely a primary focus for government spending. The journey
to aligning the autonomous and expensive aviation training schemes with
a systematic government-funded model will involve a number of small
steps to turn the juggernaut without jackknifing the entire industry.

Although there is a current disconnect between applicants with the motivation and
those with the means to become a pilot, the rapid evolution of the industry may create
opportunities for new generations from more diverse backgrounds to join the sector.

Securing state funding for future training initiatives across the aviation sector
may benefit from a ‘ground up’ approach. Building engagement with subjects
such as science, technology and maths in the classroom supports a case for
an injection of funding into STEM (science, technology, engineering and
mathematics) initiatives. Students engaged with STEM subjects will develop
the transferable knowledge and skills valued by the aviation industry.

Although the barrier of funding for more specialized roles remains a

challenge, this initial step will enable new generations to join the industry
across a variety of entry level roles. By positioning the aviation industry as
a vocation abound with professional and developmental opportunities, the
industry may become better understood as a path to a fulfilling career.

30 Coming Through the Clouds

C. Regulation
The future of regulation across the global aviation industry is likely to focus
on alignment. For less-developed countries, regulation will need to be
mobilized rapidly to monitor, manage and guide technological and commercial
development. For more-developed countries, there are new opportunities
to observe this activity and establish a blueprint to reassess and repurpose
existing operations, infrastructure and regulations to facilitate future growth.

Regulation can act as an accelerant to development and change. The COVID-19

pandemic has impacted airlines significantly. Many airlines have responded to
the sharp decrease in demand for travel by reassessing their costs and issuing
redundancies as an immediate survival measure. When demand is revived in
the near future, the lack of qualified pilots in post and current barriers to new
joiners will drive airlines to explore new technologies to remain operational.

Whether reassessing and repurposing existing parameters in developed

countries or introducing new legislation in developing countries, regulation
will be essential for the future of aviation. To ensure workforce safety, the
public and businesses regulations will be critical in maintaining and updating
industry standards amid rapid technological and commercial evolution.

Coming Through the Clouds 31

 T H E F U T U R E O F AV I AT I O N W I L L B E D R I V E N B Y S E V E R A L K E Y FA C TO R S

Opportunity is in ascent
for the aviation industry
Fueled by new talent and technology, many businesses will fly free from the immediate
dangers of the COVID-19 pandemic and accelerate sustainable future growth.

Commercial and people risks will continue to change in response to rapidly-evolving

global economic, political, environmental and business pressures. In a changing
world, aviation will continue to play a critical role in global trade and travel – now
and into the future. With robust risk management and people strategies, aviation
businesses can look to the horizon and pursue opportunities with confidence.

32 Coming Through the Clouds

 “Aviation is not just a business. It’s part
of the fabric and network that holds
our world together. It’s an engine for
job creation. It’s an engine for social
cohesion and a place of innovation.”
Suzanne Courtney,
Director of Global Strategic Growth, Aon’s Assessments Solutions

Coming Through the Clouds 33

 Reference List

1
Kashif Khalid, Session #4 Cyber Safety, Aviation Security and The Human Factor
2
David Barrett, Session #2 Where Next for your Employer Brand and Value Proposition?
3
https://www.flightglobal.com/business-aviation/pilot-shortage-hitting-uk-business-aviation-sector/134721.article
4
Simon Azar, Session #3 Smart Funding of Human Capital and Skills for the Future
5
https://www.fircroft.com/blogs/to-attract-youth-oil-and-gas-companies-
must-adopt-new-technologies-97213113829
6
https://www.ainonline.com/aviation-news/business-aviation/2020-06-02/
aviation-insurance-industry-faces-wrenching-changes

https://www.reinsurancene.ws/lloyds-forecasts-107bn-covid-19-industry-loss-for-2020/
7
https://www.ainonline.com/aviation-news/business-aviation/2020-06-02/
aviation-insurance-industry-faces-wrenching-changes
8
David Barrett, Session #4 Cyber Safety, Aviation Security and The Human Factor
9
Kerry Peirse, Session #4 Cyber Safety, Aviation Security and The Human Factor
10
https://www.nbcnews.com/business/travel/customer-satisfaction-airlines-
rising-long-inflight-entertainment-good-n878626

https://www.businesstraveller.com/business-travel/2019/08/04/a-record-4-4-billion-people-travelled-by-air-in-2018/
11
https://www.aviationpros.com/airlines/article/12419680/driven-by-competition-the-airline-industry-is-taking-off
12
David Barrett, Session #1 Cost Containment, Evolving Revenue Streams and Returning to Profit

34 Coming Through the Clouds

Contact

If you wish to discuss any of the topics raised in

this paper, please contact our specialist team:

Asia Pacific and Middle East

Gary Moran
gary.moran@aon.com

Europe
Chris Bhatt
chris.bhatt@aon.co.uk

North America and Latin America

Gisou Mehrabanzad
gisou.mehrabanzad@aon.com

Marketing inquiries
Daniel Lawlor
daniel.lawlor@aon.com

About Aon

Aon plc (NYSE:AON) is a leading global professional 120 countries empower results for clients by using
services firm providing a broad range of risk, retirement proprietary data and analytics to deliver insights
and health solutions. Our 50,000 colleagues in that reduce volatility and improve performance.

Coming Through the Clouds 35

© Aon plc 2021. All rights reserved.
The information contained herein and the statements expressed are of
a general nature and are not intended to address the circumstances of
any particular individual or entity. Although we endeavor to provide
accurate and timely information and use sources we consider reliable,
there can be no guarantee that such information is accurate as of
the date it is received or that it will continue to be accurate in the
future. No one should act on such information without appropriate
professional advice after a thorough examination of the particular
situation. Aon UK Limited is authorized and regulated by the Financial
Conduct Authority.

C1278US 05.21