Flying into the Future: Key Trends That Will Drive Aviation (and other Industries)

The aviation industry is on the brink of a major transformation, driven by AI integration, sustainability efforts, and record investments in aerospace & defense. As airlines embrace automation beyond customer service, new platforms emerge to meet growing traveler demand for eco-conscious solutions, and defense-driven technologies fuel innovation across sectors, 2025 is set to be a pivotal year.

AI in aviation will go from customer-facing to back-end operations.

When travelers have needed to reschedule flights over the last year, they may have done so through an AI agent rather than a customer service representative. For example, Air India offers a GPT-powered agent through which customers can check in, calculate baggage fees, and cancel flights, among other use cases. These deployments are a highly visible, customer-facing use of AI in aviation.

 

In 2025, airlines will begin to use AI for more complex, back-end operations. One such example comes by way of Odysee, a tech startup that has trained its schedule optimization tool on 700,000 Alaska Airlines’ flight segments. The initial results are impressive: When benchmarked against human schedulers, Odysee was able to predict flight changes with 90% accuracy. These tests suggest that Odysee can streamline revenue optimization of planes, flights, and routes, while saving human schedulers for the hazier problems (the tool did not perform as well for markets with low data or demand).  

 

AI could see increasing use in airline operations across not just scheduling, but also crew management, baggage handling, fuel efficiency monitoring, and customs compliance.

 

Platforms will cater to a growing consumer preference for sustainability in travel.  

Study after study has shown that an increasing majority of consumers prefer doing business with companies that are concerned with their environmental and social impact. This mindset will extend into travel in 2025. Travelers now no longer only care about where they go—they are also prioritizing how they get there.


This trend is already evident in the Hot Travel Startups for 2025 created by PhocusWire. At least three of the companies directly address sustainable travel, and many others espouse it as a company value. For example, Eco.mio encourages business travelers to quantify their carbon footprint through a plug-in that integrates with online booking tools. The plug-in gamifies carbon accounting, so that business travelers are nudged into reducing their carbon footprint.

 

Byway takes a different approach, encouraging travelers to pursue “flight-free” holidays through the use of overland transport that has a lower carbon footprint. It enables users to search for and book destinations, inclusive of travel and accommodations, entirely through their marketplace. Finally, Tripesa is building what PhocusWire bills as a “Shopify for tourism,” so that smaller tour operators, venues, and other travel businesses can get an online presence in minutes. Like Byway, Tripesa will have a net positive for domestic and local travel, pushing vacationers to explore nearby destinations that would have otherwise gone overlooked in favor of less environmentally friendly international destinations.

 

Travelers will flock to these platforms that enable us to go places while minimizing our environmental impact. 

 

Record investing in aerospace & defense will fuel innovations in adjacent spaces. 

PitchBook recently launched its aerospace & defense (A&D) category, which includes defense, commercial aerospace, airline, and aircraft. The timing of the category could not have come at a more appropriate time. Geopolitical tensions and military conflict are at a recent high, including everywhere from Ukraine to Taiwan.

 

Going into the third quarter of 2024, there were already 249 private equity deals, which already surpassed the 2023 total of 220 deals. Top investors by deal count included KKR, Arcadea Group, Enlightenment Capital, Bain Capital, and Veritas Capital. 

 

Unlike some of the other categories that PitchBook covers, A&D is arguably a foundational technological category: It drives innovation in other enterprise and consumer sectors. Some technologies that could trace their origins or evolution to defense include the internet, global positioning system, digital cameras, touchscreens, and LED technology.

 

Funding into A&D will likely reach another record year in 2025. This infusion of venture capital will drive innovation in A&D as well as adjacent industries. The most obvious recent example of a defense-driven technology are drones, which are now used in a diversity of use cases, such as putting on light shows and putting out fires.

 

In keeping with this pattern, A&D investments will accelerate growth in other tech areas in 2025 and beyond. 

 

Let’s navigate 2025 together 

As we look ahead to the rest of 2025, aviation and its adjacent industries are poised for transformative shifts. From AI revolutionizing airline operations to platforms enabling greener travel choices and record funding in aerospace & defense catalyzing breakthroughs, the trends outlined in this issue demonstrate the interconnected nature of technological progress.

At Cockpit Innovation, we are thrilled to explore these developments with you each month. We hope this newsletter becomes a trusted resource for insights and inspiration into the sectors we operate in. Here’s to navigating the future of aviation together!

 

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