2025 is proving to be a show of force for the airline industry. In June, the International Air Transport Association (IATA) adjusted its 2025 airline industry financial outlook to reflect stronger airline profitability in 2025 than previously projected, with net profit margin to reach 3.7 percent, up from the 3.4 percent achieved in 2024 and the 2.6 percent previously forecasted for 2025. In July, U.S. airline stocks gained ground after one posted quarterly earnings that exceeded estimates. While evolving geopolitics and international economic dynamics may still impact the airline industry globally, the sector’s commitment to innovation and enhanced experiences remains.
Innovation for Safety, Efficiency
Airlines and airports are turning to technology to keep their employees safer and more productive. June marked the rollout of three runway robots at New Jersey’s Atlantic City International Airport as part of a $2.24 million federally-sponsored pilot program. One cuts grass, while another gathers potentially unsafe items off the runway, and the third assesses potential threats. Munich Airport’s Terminal 2, Europe’s first five-star airport, began testing AI-powered robots in April. The robotics pilot program allows passengers to conveniently check certain flight information and access airport details.
AI Enhances Operations, Customer Experience
Because artificial intelligence (AI) can analyze sums of data that are too large for human evaluation, AI is an optimal tool for streamlining many of the aviation industry’s complexities. AI can be integrated into pilot training for more personalized learning experiences. Pilots can also benefit from AI assistance in-flight. In 2023, the MIT Computer Science and Artificial Intelligence Laboratory (CSAIL) launched Air-Guardian, an AI-powered co-pilot that proactively monitors the plane’s systems in conjunction with the human pilot.
AI is also improving the airline industry’s approach to customer service. Like other sectors, including retail, airlines have already deployed AI technologies to streamline their call center operations. AI-powered chatbots answer routine queries such as baggage allowances. But the airline industry is taking AI technologies a step further, with some using the technology to provide passengers with flight status updates, rebooking assistance, and identify passengers with tight connections.
Transforming In-Flight Entertainment
Yet, it isn’t technological advances alone that are changing how airlines serve their passengers. Consumer behaviors are also evolving and demand is having an even more immediate effect on the traveler experience. The aforementioned BCG article forecasts air travel growing at a Compounded Annual Growth Rate (CAGR) of about 5.6 percent in 2025 while IATA’s June 2025 Global Outlook projects a 5.8 percent increase in passenger demand this year while a record high of 84 percent is anticipated for the industry passenger load factor. In other words, high demand rates are forcing airlines to keep pace with competitors and to re-evaluate their in-flight offerings.
Seatback touchscreens and in-flight Wi-Fi have long been standard In-Flight Entertainment (IFE) offerings on most flights, especially those that are international. But the Bring Your Own Device (BYOD) trend is transforming IFE to make Wi-Fi connectivity more accessible as well as access to streaming services. In response, some airlines have opted to eliminate seatback touchscreens entirely while others are opting to expand their touchscreen offerings, recognizing some passengers may prefer IFE systems to conserve their devices’ battery power. OAG’s 2024 report “Elevating the In-Flight Experience through Innovation” cites this as one reason why Google Flights is now listing the availability of in-seat power outlets and USB ports on certain flights.
F&B Goes Premium
The competition among airlines is a major motivational factor in airlines continuously stepping up their food and beverage (F&B) options. Travelers may decide which carrier to fly based on price, but leisure and business travelers alike expect an experience in exchange for the cost. Airlines are responding by offering more F&B customization, more options, and better quality than ever. Along with branded partnerships and the ever-increasing demand for luxury travel, these are some of the tools that airlines are deploying to differentiate themselves from their competitors.
Expect to see more partnerships with celebrity chefs and sommeliers, catering to passengers in the front of the plane. Economy travelers can plan on more branded offerings, including regionally or nationally recognizable names in the retail food and alcohol sectors in addition to on-demand meal and snack boxes available for purchase.