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Is there turbulence ahead for airlines? A leader’s guide

Leading Off

Ready for takeoff? ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌   ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌   ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌   ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌   ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌   ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌   ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌   ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌   ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ 
Leading Off

Brought to you by Alex Panas, global leader of industries, & Axel Karlsson, global leader of functional practices and growth platforms

Welcome to the latest edition of Leading Off. We hope you find our insights useful. Let us know what you think at Alex_Panas@McKinsey.com and Axel_Karlsson@McKinsey.com.

—Alex and Axel

What’s the next destination for the aviation industry? After a postpandemic upswing in demand for air travel and improvements in the sector’s financial performance, airlines now face a more uncertain trajectory. A new McKinsey report on the state of aviation explores how economic and geopolitical tensions, consumer behavior, aircraft shortages, and other forces may shape the industry’s direction of travel. This week, we examine trends in the aviation sector and how these developments could affect travel planning for organizations—and their leaders—across industries.
An image linking to the web page “Can the global airline industry continue its climb?” on McKinsey.com.

The airline industry has a long record of mixed financial performance but recently saw its largest share of value-creating carriers in nearly 30 years. The airlines that reported detailed financial results recorded a collective $5 billion economic loss in 2024—a “remarkable feat” compared with the industry’s $30 billion collective economic loss in 2019, according to McKinsey’s Steve Saxon and Jaap Bouwer. They observe that recent improvements can largely be traced to better execution in six areas of value creation, among them: balancing capacity and demand, generating ancillary revenue (such as fees for premium seats and extra baggage), earning a reputation for reliability, and creating strong organizational health. In 2025, aviation leaders may need to navigate several developments that could affect economic performance, such as changes in business and consumer sentiments, a potential recession, and tariffs. “Healthier organizations will meet challenges with the cross-functional nimbleness that’s required to rapidly respond to changing external conditions,” the authors say.

That’s McKinsey Senior Partner Vik Krishnan and coauthors on how airlines can modernize their planning to respond to emerging challenges. Airlines’ planning efforts are complicated by numerous factors—many of which are out of their control—including travel demand, weather, IT failures, and global crises. The authors suggest that airlines expand pandemic-era efforts that helped improve coordination between their commercial and operations functions, such as creating cross-functional planning teams, adopting agile processes, and improving tech capabilities. “While there have been green shoots, many airlines continue to plan in much the same way they have for decades,” they say. “Turning a critical eye on the current state of planning could help airlines imagine a more efficient and effective future.”
An image linking to the web page “CEO and chairman Sean Doyle on British Airways’ transformation” on McKinsey.com.

AI and analytics can be important tools to help the airline industry understand and satisfy travelers’ evolving preferences. That’s the view of British Airways (BA) CEO and chairman Sean Doyle, who is leading the largest modernization effort in the company’s history. In an interview with McKinsey Senior Partner Stephanie Hauser, Doyle notes that improving BA’s data infrastructure and employing machine learning will help improve its decision-making in areas ranging from aircraft maintenance to passenger meals. “There are ways the whole industry can use its data more effectively,” he adds. “For example, a customer flying on an airline will create about 58 different touchpoints of data. There are customers on some long-haul flights for nine or ten hours, which means there are many opportunities to give customers a more personalized experience through better use of data.”
An image linking to the web page “Four emerging themes in business travel” on McKinsey.com.

With global uncertainty in the air, some companies are tightening travel budgets while weighing the potential business impact of geopolitical shifts. Still, overall demand for business travel has been rising after a few years of instability. McKinsey Partner Ryan Mann cites a key reason for this upturn: “People have found that there is no substitute for face-to-face engagement with their leaders and colleagues. Employees craving in-person encounters bodes extremely well for business travel.” Corporate travelers’ habits have changed in other ways. Some are extending their stays in certain destinations, alternating leisure days with workdays while they’re on the road. “It's important to remember, obvious as it may be, that business travelers have identities outside of work,” Mann says. “Many of the same elements that can inspire and energize them when engaging in leisure travel might also enhance their business outings.”

Lead by keeping tabs on aviation trends.

— Edited by Eric Quiñones, senior editor, New York

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by "McKinsey Leading Off" <publishing@email.mckinsey.com> - 02:17 - 9 Jun 2025