The promise of travel in the age of AI

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Every generation has its own “golden age” of travel, often defined by the widespread adoption of new technology—from the jet engine of the 1950s that drastically reduced travel times to the dot-com period of the 1990s that allowed customers to build their dream itineraries online. Today, a new era of digitally enabled travel is upon us. Advances in artificial intelligence (AI), including generative AI (gen AI), and machine learning (ML) are equipping the industry to reimagine what it means to plan, book, and experience travel. This surge of innovation sets the stage for travel companies to rethink how they interact with customers, develop products and services, and manage operations.

Advances in technology have also transformed consumers’ expectations. Since 2013, time spent on digital devices has grown by 70 percent, and this trend only accelerated during the COVID-19 pandemic as online interactions increasingly replaced in-person contact. 1 Based on data from U.S. Census Bureau and Statista. See State of travel 2023 , Skift Research, July 21, 2023. However, traditional travel is unique in that it is an inherently human-centric experience. The industry, therefore, has an opportunity—perhaps even a duty—to define what travel will look like in the digital age.

Most travel companies aim to provide exceptional service and deliver the perfect trip. But, instead of ease, excitement, and delight, travel operators too often fall short of meeting baseline expectations of timing and quality. In fact, nearly 80 percent of American travelers experienced at least one travel-related problem in the first half of 2023. 2 Lane Gillespie, “Survey: 77% of travelers plagued by travel problems amid booming season; more than half saw higher prices,” Bankrate, July 10, 2023.

In the 2021 report, Rebooting customer experience to bring back the magic of travel , McKinsey and Skift Research found that leisure travelers were eager to get back to the sky, water, and road—so much so, that they were often willing to overlook customer-service issues and inconveniences. Customer satisfaction ratings at the time were high, even in a period of intense disruption when negative sentiment was on the rise. 3 Rebooting customer experience to bring back the magic of travel , a joint report from McKinsey and Skift Research, September 2021.

Today, that window of acceptance may have passed. Customer expectations are rising, and tolerance is wearing thin. Despite this, people still aspire to travel and, according to McKinsey’s ConsumerWise  Sentiment Survey, nearly a third of consumers intend to “splurge” on travel expenses in the next three months. 4 McKinsey ConsumerWise Global Sentiment Survey, August 2023, n=4,000. Through both established and new technologies, companies have the opportunity to keep the aspiration to travel alive by closing the persistent gap between the promise and reality of travel.

While larger companies may have more resources to develop in-house capabilities, a robust ecosystem of service providers makes new technologies accessible to companies of all sizes. According to McKinsey Digital estimates, companies that holistically address digital and analytics opportunities throughout their organizations have the potential to see a 15 to 25 percent earnings improvement.

A new report , The promise of travel in the age of AI , produced by McKinsey and Skift Research offers use cases and success stories that detail how technologies are being used, drawing from interviews with executives at 17 companies across five types of travel business. It explores how companies apply advanced data science to better understand and serve customers, delves into how digital and analytics tools can improve products and services, and examines how new technologies augment workforce capabilities and unlock operational capacity. This article highlights some key findings.

Know your customers like you know your friends

Over the past two decades, the variety and volume of customer data that travel companies can capture has increased dramatically; new tools and technologies such as AI-powered assistants are only accelerating this trend. However, this data is often difficult to process and does not always paint a full picture of the customer. Companies may turn to third-party sources to complete their understanding—combining and distilling commercial, operational, financial, and behavioral inputs. Robust marketing technologies can then help distinguish the “signal” from the “noise” in the data to better predict customer behavior.

Having gained a clear and comprehensive understanding, companies can create customer segments to guide how they interact with and serve different customers. Depending on the data available and the analytics capabilities at hand, segmentation can range from grouping customers into segments based on a single macro characteristic (e.g., business versus leisure) to individual “segments of one,” known as hyper-segmentation.

Hyper-segmentation drills down to a ‘segment of one.’

Drilling down to segments of one can enable hyper-personalization, which is broadly defined as the ability to uniquely tailor touchpoints to an individual customer’s needs, preferences, and behaviors. At its core, hyper-personalization is not only about increasing conversion rates, but about providing the customer with an end-to-end experience adapted to their specific context. Considering the level of personalization that is becoming the norm in many aspects of daily life, companies are adopting an ongoing test-and-learn approach to ensure their offers and actions resonate with customers’ rising expectations.

Hyper-personalization can also help companies rebuild trust if operations have gone wrong. Personalized communication reassures customers that they are at the forefront of the company’s mind and instills confidence that a thoughtful recovery plan is in place. For example, companies may share real-time status updates in moments of disruption and provide tailored solutions, or even proactive compensation, to ensure customers feel individually taken care of.

Design your products to surprise and delight

Recent advances are pushing the boundaries of what technology can accomplish. Nothing illustrates this better than the meteoric rise of AI platforms like ChatGPT which garnered one million users in only five days. 5 Steve Mollman, “ChatGPT gained 1 million users in under a week. Here’s why the AI chatbot is primed to disrupt search as we know it,” Yahoo News, December 9, 2022. While this pace of adoption may feel unsettling, it provides an impetus for companies to reimagine their product design and delivery using AI and digitization.

Historically, capabilities such as language, creativity, and aesthetic judgment—once considered uniquely human—could not be scaled through technology. AI, particularly gen AI, offers a new way to augment and scale these capabilities with the potential for enormous benefits: according to McKinsey research , generative AI has the potential to unlock between $2 trillion and $4 trillion in annual value across industries. 6 The economic potential of generative AI: The next productivity frontier , McKinsey, June 14, 2023. In the travel context, gen AI could take the form of a digital assistant that interacts with customers throughout the journey. It can provide personalized trip itineraries during discovery and booking, offer tailored recommendations based on preferences and real-time constraints during the trip, and help resolve unexpected disruptions.

However, AI is only part of the answer. Established digital technology also helps companies deliver on commitments made to customers. Many of these digital assets and tools rely on common systems and capabilities, making them widely attainable—freeing up staff to provide better face-to-face services and build relationships through the human touch. Several such applications can boost guest satisfaction and reduce points of friction in hotels, including guest apps, digital check-ins, digital room keys, and in-room tech. The magnitude of these individual tools is amplified when seamlessly integrated together, making it easier for customers to use digital applications throughout their hotel stay.

Empower your workforce to follow through on promises made

An engaged and productive workforce enables the delivery of experiences and products that satisfy customers. However, the travel industry faces structural labor hurdles and high turnover which makes attracting, training, and retaining top talent challenging. Fortunately, the industry can enhance and scale the capacity of its existing workforce by equipping the frontline with the right tools at the right time. This can free up employees to focus on the things they enjoy most and that make the travel industry tick: quality personal interactions with customers, in essence, the human touch.

Two promising opportunities to improve workforce and operational performance through technology stand out across the travel industry: augmenting frontline capacity and upskilling talent.

In the travel industry today, complex decisions still rely on human expertise and outdated technology such as greenscreen or rudimentary interfaces. This leads to a best-guess approach, the risk of negative outcomes, and a steep learning curve. Travel companies are developing new tools  for the frontline to process complex inputs and help guide “day-of” decision making. For example, advanced simulation models such as digital twins allow companies to conduct rapid “what-if” analyses and provide real-time guidance to the frontline.

According to McKinsey research , new technology, including gen AI, is also shortening training times for new hires while rapidly upskilling the existing workforce. For instance, virtual and augmented reality are used to simulate real-life scenarios to prepare frontline employees to hit the ground running, and gen-AI-enabled "teaching assistants” provide personalized coaching based on individual performance. 7 “ The organization of the future: Enabled by gen AI, driven by people ,” McKinsey, September 19, 2023.

Travel is ripe for innovation

Checklist for the age of ai.

Some travel companies are already successfully deploying digital technology, AI, and ML to reshape how they interact with customers, develop and deliver products and services, and manage people and operations. They’ve taken the following actions—are you on track?

General considerations

  • created a digital wish list—as if the company had infinite time and resources
  • prioritized wish list based on potential short- and long-term benefits as well as the company’s strategic vision and available resources
  • assessed the skills and talent necessary to execute against the prioritized wish list
  • built the right team and identified roadmap to fill remaining gaps
  • inventoried existing internal customer data
  • determined which data variables drive customer behavior and predict customer buying decisions
  • identified relevant third-party data and integrated with internal data to build a complete customer picture
  • considered using a robust MarTech stack to continuously learn and evolve with customers
  • defined a dynamic segmentation and personalization approach based on customer personas
  • adopted test-and-learn mindset to continually implement and refine
  • mapped the end-to-end customer journey and identified pain points
  • used analytics to determine which pain points impact customers the most
  • considered new technology (like AI) to enhance and reimagine the customer journey
  • brainstormed improvements to current digital offerings that would minimize pain points (such as more timely communication)
  • built a product roadmap based on timing and importance of features
  • diagnosed top day-to-day employee pain points
  • determined if digital tools can resolve top pain points (for example, automate repetitive tasks)
  • provided workforce with real-time visibility into critical areas of daily operations
  • used simulation models to plan for multiple future-state scenarios
  • built decision-making tools (such as digital twins) to choose optimal solutions for complex problems
  • defined opportunities to improve training (using tools such as simulation training, VR, AR) and provide feedback (using smart-AI tool)

We believe this is a moment of optimism for the industry. Between reclaiming its historical share of GDP, benefiting from the ongoing corporate travel recovery, and catering to consumer demand for unique experiences, the stage is set for travel’s accelerated growth. Looking ahead, travel is forecasted to grow at an average of 5.8 percent a year through 2032—more than double the expected growth rate of the overall economy (at 2.7 percent a year). 8 “Travel & Tourism sector expected to create nearly 126 million new jobs within the next decade,” World Travel & Tourism Council, April 21, 2023.

This does not mean that travel companies can simply sit back and reap the benefits. Existing and new technologies provide an avenue for companies to capture their share of the industry’s anticipated growth by resetting how they interact with customers, deliver products and services, and empower their workforce. Fortunately, there are a growing number of ways—build, buy, or partner—to help companies get started. The only wrong move is no move.

Susann Almasi is an associate partner in McKinsey’s Carolinas office, Alex Cosmas is a partner in the New York office, Sam Cowan is a consultant in the Minneapolis office, and Ben Ellencweig is a senior partner in the Stamford office.

The authors wish to thank Skift’s Pranavi Agarwal, Seth Borko, and Wouter Geerts as well as McKinsey’s Marisa Ancona, Danielle Bozarth, Vik Krishnan, Nina Lind, Elena Patel, Alessandra Powell, Jules Seeley, and Nirva Vassa, for their contributions to this article.

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How the GCC’s travel and tourism industry can get ready for the post-COVID-19 recovery

By Marwan Bejjani, Camil Tahan, Alessandro Borgogna, and Vivek Madan

In recent years, GCC governments have made progress in building the region’s travel and tourism sector lately, as part of broader agendas to grow and diversify national economies. However, the COVID-19 crisis has halted most travel worldwide. That is a significant disruption, but the long-term fate of the industry is still largely within governments’ control. There are specific steps that transportation and tourism ministries can take to create a stronger travel industry when the crisis ends and the recovery starts.

The economic impact from the crisis will be severe. The tourism industry, which accounts for roughly 10% of the world GDP, could have up to 50 million jobs at risk, according to the World Travel and Tourism Council . Within the GCC, we estimate that tourism revenue could decline by $14 billion to $17 billion (excluding airlines), assuming the pandemic lasts for two quarters, a drop of over 30%. In addition, up to 400,000 tourism-related jobs in the GCC region could be lost, at a time when unemployment levels are already high.

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Learn more about industrial manufacturing and automotive capabilities at Strategy& Middle East

To mitigate that damage, adapt to changing consumer preferences, and prepare the industry for the rebound, government authorities and regulators should focus on five measures.

1. Set clear policies

2. prepare marketing and promotional campaigns, 3. make strategic investments, 4. offer financial support to tourism companies, 5. consider structured support for airlines.

Governments should adjust national policies to facilitate travel—for example by digitizing and enhancing the processes to issue travel visas. Authorities can also introduce new health and quality standards for tourism providers. Doing so will rebuild confidence in the industry and can boost demand.

Governments should coordinate with all stakeholders (particularly those within the industry) to build a library-in-waiting of marketing and promotional campaigns that can be launched at the first sign of the crisis ending. As part of this process, authorities should reassess upcoming business and leisure events, and consider how different scenarios for the end of the crisis and the recovery could affect demand. In addition, as the lock-downs are lifted, domestic campaigns could accelerate the support and recovery of tourism establishments by making them more attractive for travelers within the GCC. This is particularly important given that international air travel may take longer to recover.

Governments should consider making investments in travel assets now that valuations might be low. Prices will rise again after the crisis ends as the global travel industry remains structurally sound. Possible acquisitions include travel distribution assets such as travel agencies, both in-person and online, that can direct passengers to target destinations. Authorities could also invest to strengthen the technology capabilities of their destination management companies to enable greater tourism revenues and more efficiency in managing incoming tourist flows. Technology investments should focus on serving all tourism services across the entire value chain (including tours and excursions, accommodations, air travel, and dining) and offers these services to online travel agencies, tour operators, travel agencies, travel consultants, and retail travel outlets.

Given the scope of lost revenue during the crisis, governments need to offer immediate fiscal support, such as suspending taxes and levies on tourism operators. Authorities can also provide debt relief and expand access to credit. Both measures will keep organizations afloat until demand returns. As part of this process, regulators and authorities should engage with all stakeholders to monitor the financial impact of the crisis on the tourism industry, and prioritize the right type of support.

Although all components of the travel industry need help right now, airlines, which have typically limited liquidity, are the most critical economic enablers for a country. According to the International Air Transport Association , most airlines worldwide went into the crisis with about two months of cash on hand. If substantial financial support is required, governments need to focus on the most strategically important assets to ensure the region’s future travel connections. In doing so, governments need to be sure that airline leaders develop and deploy a sustainable restructuring plan.

The travel and tourism industry has felt the impact of the pandemic more than others. Given the importance to GCC economies of developing this industry, governments must intervene. The steps that the authorities take today will have a significant impact on how the industry recovers. Viewed in that light, the current crisis, though daunting, represents an opportunity.

This article originally appeared in April 2020 on Hospitality News.   

About the authors

Marwan Bejjani and Camil Tahan are partners, Alessandro Borgogna is a senior executive advisor, and Vivek Madan is a manager, with Strategy& Middle East (part of the PwC network).

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Seven trends that have defined travel selling in 2023 so far.

Rob Gill

Travel companies are feeling increasingly optimistic about their prospects this year after enjoying a buoyant start to 2023, according to PwC’s latest survey of the travel trade.

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The survey reveals a more positive outlook among tour operators than during the previous survey in October, despite lingering fears about the impact of the cost of living squeeze on consumers’ finances.

Current bookings have already returned to, or exceeded, pre-pandemic figures for 70% of firms – a “notable” improvement from the autumn and the best result since the start of these regular surveys in 2020.

Most operators now expect their sales to at least reach 2019 levels within the next 12 months. “There is definitely more optimism in the sector than a few months ago which is great to see,” said PwC’s David Trunkfield.

TTG has taken a more in-depth look at the survey’s findings, and some of those from PwC’s corresponding consumer survey, and identified seven trends that have characterised travel sales so far this year.

Is the price right?

The survey found that luxury and high-end holidays are seeing the highest demand, while growth is more restrained at the “value end” of the market. “High income groups are more resilient financially due to savings and incomes keeping up with inflation better,” said Trunkfield

However, despite holiday prices rising – often “significantly” – this year, most consumers seem willing to pay more for their breaks than they did last year, with 80% of operators saying clients are accepting higher inflation-driven prices.

Margin calls

Having said that, operators are not necessarily passing on the full impact of higher costs in their prices, with margins not rising as quickly as prices, although most travel firms are expecting to achieve both higher revenue (85%) and profit (73%) in 2023 compared with last year.

“When asked what the biggest barriers are to travel getting back to normal, the key ones are around consumer finances – holiday costs going up and concern over finances,” said PwC’s Rick Jones.

Staff shortages

Staffing pressures also remain a concern for the trade with increasing demand likely to exacerbate this problem, while businesses are looking to tackle inflation by investing in technology to improve efficiency alongside other cost-saving initiatives.

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2023 Aviation Industry Review & Outlook

As uncertainty dominates the economic agenda, what are our predictions for the aviation industry for the coming 12 months?

Last year’s Industry Outlook predictions were generally upbeat, so it is particularly gratifying to report that most of them came to pass. Perhaps the most important prediction was that the world would come to treat COVID as an endemic disease, rather than a pandemic, paving the way to the lifting of travel restrictions and the restoration of other personal freedoms. Until very recently, China was the only major hold-out for a zero-COVID policy (also another prediction), but the reversal of the country’s entire COVID policy, announced in early December, has eventually set China on a path to normality, albeit with some major concerns to overcome along the way.

The big event of 2022 that got missed in the predictions was, of course, Russia’s illegal invasion of Ukraine and the ensuing war, which has thrown the global economy into a recessionary tailspin, with interest rates, inflation and fuel prices rising well beyond anything experienced in recent memory and well above the elevated levels anticipated in the January 2022 predictions.

With most countries now welcoming overseas visitors once again without requiring Covid testing or quarantine, passenger demand has continued to accelerate, providing airlines with the unexpected challenge of having to scramble to return sufficient capacity to service in order to meet the demand. Most, if not all, readers will have noticed how much more expensive air fares have become – 23% higher on average compared to 2021, according to IATA. Whilst providing a financial boost for the airlines at this point in the Covid recovery process, this will have an impact on discretionary travel if sustained through the next peak leisure travel season.

Uncertainty has always made financiers and investors nervous and the continued conflict between Russia and Ukraine (or, as the Russian government chooses to define it, between Russia and the West), plus growing Chinese militarism in the sea and air around Taiwan, suggests that much of 2023 will continue to be overshadowed by uncertainty. As the airline industry looks forward to taking delivery of more than $100 billion of new aircraft this year, lessors, lenders, investors and rating agencies will need to look beyond the near-term to ensure that sufficient and affordable liquidity is available for deployment.

The global economy

Following the strong global recovery in 2021, when GDP rebounded by 6%, the IMF1 expects slower growth of 3.2% in 2022, impacted by the war in Ukraine and its wider ramifications. A number of advanced economies will fall into recession during 2023, which will push global GDP growth lower still, although still maintaining a V-shaped recovery, with a return to stronger growth expected in subsequent years.

Russia’s weaponization of oil, gas and Ukrainian wheat production contributed to a surge in inflation, reaching double digit levels in many countries and averaging 8.75% globally during 2022. Whilst inflation should have now peaked, it will remain at historically high levels for much of 2023, impacting airline input costs, trade flows and disposable incomes.

Faced with rapidly rising inflation, central banks around the world, led by the US Fed and the European Central Bank, have steadily raised interest rates over the course of 2022 to levels not seen since well before the Global Financial Crisis, with further rate increases still to come in 2023 until inflation is tamed. If, as is anticipated, inflation falls back into low single digits during the year, interest rates will be gradually wound back down, although not to the rock bottom levels of the past decade.

Although a strong US dollar is not an unusual phenomenon (the US Dollar’s trade-weighted index has remained above 100 since 2015), it hit a 20-year high in 2022, spurred by the Fed’s determination to tackle inflation. The dollar is also traditionally a refuge in troubled times and also tends to gain strength when energy prices are high. The impact of this is felt most in emerging markets, through higher debt servicing costs and, for airlines reliant on local currency revenues, in higher fuel and asset ownership costs.

March and June 2022 saw the price of Brent crude oil hit the highest levels for more than a decade, spiking at more than $125 per barrel. By September, the price had fallen back below $100 and is currently trading in and around $80 a barrel. However, 2022 also saw step increases in the crack spread (the refining margin between crude oil and Jet-A1 aviation fuel) following Russia’s invasion of Ukraine, averaging 50% across the year. This, rather than the price of crude, has been putting pressure on airline economics and driving some of the fare increases in the market. Crack spreads tend to normalise as refining capacity is adjusted, with an expectation that spreads will subside again in 2023.

The airlines

The relaxation or removal of Covid-related travel restrictions across much of the globe generated a surge of advance bookings and passenger travel throughout 2022, with VFR and leisure travel showing particular strength across Europe and the Americas. Asia’s full potential has yet to be realised in this regard, as countries in the region have generally been slower to remove barriers and, for many, a heavy reliance on Chinese travellers has delayed their overall recovery rate.

Visiting Friends and Relatives was always expected to lead the recovery and this has proved to be the case, along with vacation travel, which has been the main component of intra-European and trans-Atlantic bookings. Long-haul business travel is picking up more slowly, with the return of some elements of that market expected to be down-sized as companies prioritise transaction-related and relationship-building travel over on-site internal meetings, conferences and other non-essential activities. These recovery patterns favour the low-cost business model over full service network operations and this has been evident in the pattern of airline network and fleet rebuilding to date.

Global passenger numbers rebounded in 2022 by more than 55% according to IATA, with RPKs up by almost 70% reflecting the return of international travel. Average passenger load factors came close to 80% over the year, reflecting the persistent capacity constraints that kept ASK expansion below 45%. These constraints were partly due to a lack of fleet capacity, combining continued delivery shortfalls on the part of the OEMs with a shortage of MRO and engine shop capacity to perform fleet re-activation work and deferred maintenance. In addition, labour shortages created problems for airlines and also airport operators, both having laid off large numbers of skilled employees during the pandemic that have proved difficult to replace in short order, resulting in the cancellation of large numbers of planned flights across North America and at some of Europe’s largest airports.

The level of parked or inactive fleets continued to decline in 2022, though perhaps more slowly than expected, with 19% of the passenger fleet inactive at the end of December compared to 22% a year earlier. Within the totals, however, there was considerable variation by aircraft category, ranging from 15% for the narrowbody fleet, to 21% for widebodies and 29% for regional aircraft. And whilst there were only small differences between the most popular narrowbody types, widebody inactivity showed greater variation, from 7% of 787s and 15% of A350s, to 27% of A330s and 45% of A380s.

Although the dedicated air cargo operators enjoyed another strong year in 2022, overall air freight volumes declined by 8% following a 22% rebound in 2021. Most “preighter” operations ended in 2022, with aircraft returning to full passenger service, leaving overall cargo load factors languishing around 50%.

The airline industry reduced its annual net losses below $7 billion in 2022, according to IATA, although North America was the only region where airlines made a net profit ($9.9bn), while Asian carriers lost $10bn, Europe $3.1bn and Latin America $2bn.

Total airline losses over the three years of Covid exceed $186 billion according to IATA, with the industry receiving over $220 billion in financial support from governments over the period. Some of the largest carriers are already paying down these bailout sums to remove restrictions that in many cases were preconditions of support. However, for the majority of the industry, a long period of balance sheet repair lies ahead, including network, fleet and financial restructuring.

Passenger demand is expected to return another very strong year of growth in 2023, with the re- opening of China to inbound and outbound travel creating a travel surge that will substantially offset the economic headwinds faced in other parts of the world. A 21% increase in RPKs this year, followed by 17% in 2024 will take global traffic above the 2019 level, bringing forward the recovery horizon by 12 months compared to earlier expectations.

IATA is therefore predicting a modest industry profit of $4.7bn in 2023, generating a very skinny and fragile margin, with Asia and Latin America remaining unprofitable and Europe barely breaking even, however, airline results in 2024 are likely to be much stronger.

The lessors

Lessors entered 2022 with the majority of their lease restructurings completed. As most airlines’ revenue streams are now back on track, delinquency levels for the revised lease obligations have been low through the year and lessor profitability has been largely restored.

The proportion of lessor AOGs has fallen from 11% at the end of 2021 to 8% currently and lessors have experienced strong demand for younger narrowbody aircraft as airlines respond to the demand surge. Lease rates consequently firmed significantly over the course of the year, supported by a reduced flow of new deliveries into the global fleet.

The lessor share of delivery financing is firmly established above the once-elusive 50% threshold, having averaged 53% throughout Covid, with estimated delivery funding of $70 billion provided in 2022. Lessors have also built a $150 billion backlog of direct orders with the OEMs, with an estimated 750 aircraft available for lease over the next three years when OEMs are essentially sold out.

A round of lessor M&A activity during the year has moved SMBC Aviation Capital up to the #2 ranking by delivered portfolio value, behind a seemingly unassailable Aercap. ALC takes the #3 position, with Avolon at #4. Carlyle’s acquisition of AMCK takes them to #12 in the rankings. The ten largest lessors account for 54% of total leased fleet value. Chinese lessors, nine of which are ranked in the top 20, are understood to be pivoting to increasingly use their platforms and balance sheets to support domestic airlines and OEMs, with several portfolios being offered for sale in recent months.

Nine months have passed since Russia’s unlawful appropriation of around 500 western airliners operated by Russian airlines on lease from foreign lessors, with over 200 of these having now been illegally re-registered in Russia. There has been minimal recovery of assets to date and a growing number of affected lessors have initiated legal actions against their insurers, suggesting an unsurprising dragging of feet and reluctance to pay out on claims that total at least $10 billion. The passage of time makes it increasingly likely that few, if any, of these aircraft, or indeed any of Russia’s owned Western aircraft, will be able to return to commercial operations with non-Russian carriers or operate in non-Russian airspace.

A recent proposal by the Russian authorities that their airlines should submit proposals to the legal owners of their aircraft to purchase them outright further complicates the situation.

Notwithstanding the inability of Western lessors to engage in any such agreements without obtaining a sanctions waiver, the offer prices are likely to fall well below book or market values and therefore unattractive to the majority of lessors and owners. However, insurers may argue that lack of engagement on the part of the lessors could be construed as a failure to take steps to mitigate their losses, thereby jeopardising their claims. This story still has a long way to run, but the Russian component of global airline and lessor was never large and, whilst remaining an unwelcome distraction, will not have a material impact on the industry outside of Russia.

Orders and deliveries both saw material increases over 2021, up by 40% and 20% respectively. However, only one part of last year’s split prediction was realised, with orders at their highest level since 2014. Deliveries remained well below pre-Covid levels, with OEMs stymied by supply chain issues and, in the case on Boeing, wider delivery issues for 737MAXs and 787s.

Airbus delivered 661 aircraft in 2022, short of its revised target of 700 and almost 100 shy of its original 750 number. 653 deliveries were commercial airliners, including over 500 A320neo family variants, and 87 widebody deliveries represent a 40% increase over 2021.

Boeing delivered 480 aircraft during the year, of which 451 were commercial airlines. These included 360 737MAX aircraft, of which approximately 160 were delivered from the accumulated backlog of previously built aircraft, plus some 200 new builds from a gradually ramping production line. 787 deliveries remained frozen by the FAA until August, when approval to re-start was given. An estimated 10 new build and 21 pre-built aircraft had been delivered by year-end.

The remaining backlog of almost 100 787s is expected to take two years to clear as Boeing has advised that the technical input required for prepare each aircraft for delivery exceeds the time required to build a new aircraft. The 787 delays meant that almost all of Boeing’s 2022 widebody deliveries were freighters, including the last 747 to be built, ending more than half a century of production for the type.

Other OEMs delivered around 130 commercial airliners during the year, leaving Airbus and Boeing with 90% of the market. Notable amongst the other OEMs was COMAC’s first C919 delivery, to China Eastern in December, following CAAC certification in September. Market penetration is predicted to remain low and mostly confined to Chinese operators and lessors, with COMAC guiding that they expect to reach only 25 deliveries per year by 2030, according to a Reuters report.

Over 2,400 firm orders were booked in 2022 in a convincing return to pre-Covid levels. Boeing booked over 900 orders during the year, of which 75% were for MAX variants, while the 787 received a welcome late boost through a 100 aircraft order from United, taking the year’s tally to

139. Boeing’s other widebody orders were all freighters, including 33 for the newly launched 777-8F.

Airbus reported 1,078 commercial orders, of which more than 80% were for the A320neo family, including 500 A321neos. A321s now account for 60% of the A320 family backlog, testifying to the capabilities of the largest and most efficient family member. With the A321XLR in flight test and scheduled to enter service in 2024, the historical 50/50 single aisle split between Airbus and Boeing has been consigned to history, with 60/40 in Airbus’s favour a likely outcome over the remaining product runs for these families.

Airbus widebody orders were thin on the ground, but an additional 24 A350F orders helped to confirm the value of that addition to the Airbus product offering.

Elsewhere, Embraer took 67 additional E-Jet orders, most of them for the E195-E2 which, absent a 175-E2 is set to become the jewel in their crown. COMAC booked 300 additional C919 orders, all from Chinese lessors in blocks of 50, taking the proportion of the backlog held by lessors with no identified lessee to 90%. It remains to be seen how firm these orders turn out to be.

Last year’s industry book-to-bill ratio of 1.6 is artificially high but when adjusted for delivery logjams is still comfortably above 1.3, indicating a strong post-Covid recovery trend. The industry backlog of almost 14,000 aircraft represents around ten years’ production, with little availability until the latter part of the decade. However, supply chain dislocation will remain an issue for much of 2023, creating delivery shortfalls that will require further granular customer management but provide pop- up opportunities for lessors.

The E-VTOL market has received a good deal of attention over the past year, with further investments and initiatives announced by airlines, lessors and OEMs. The total number of commitments (orders, options and LOIs) is in excess of 8,000 across 20 manufacturers of small commercial electric aircraft and UAM (Urban Air Mobility) vehicles. Whilst it remains hard to identify clear winners amongst the range of contenders in the market, the scale of the backlog is an indication of the level of interest in the segment. Customers include 29 airlines and 7 lessors and include DHL with an LOI for 12 for cargo operation. The level of interest sharply accelerated in 2022, with 3,400 new commitments, including a landmark LOI to order 600 Heart ES-30s for United to add to the 350 Archer Midnights LOI’s signed in 2021. United have also announced their initial EV route, between Newark and downtown Manhattan

Traditional aviation bank lenders continued to scale up their commitments during 2022 as confidence in the recovery increased and the need to deploy balance sheets broadened the previously conservative list of bankable counterparties. The level of non-traditional lending activity also continued to expand, with so-called Alternative Lenders becoming an increasingly relevant part of the market and new equity providers entering the space. The Alt Lenders have gained ground through their willingness to take on older and less liquid assets as well as lower tier lessee credits. Debt pricing also continues to improve (from the borrowers’ perspective) although the rising interest rate environment has added perhaps 50 -75 bps to borrowing costs.

As noted, the lessors’ contribution to delivery financing remains well above the 50% threshold and looks set to remain there as airlines remain motivated to take delivery of new technology aircraft in spite of frequently broken or stressed balance sheets. For the major lessors, continued access to well-priced liquidity has not been a problem and many still hold significant levels of liquidity, built up as a protective cushion to weather Covid.

Other parts of the financing mix moved in the other direction. The strong performance of the ABS market in 2021 did not survive the challenges of 2022, which saw widespread downgrades due to concentrations of Russian aircraft, the overhang of Covid-related fleet inactivity and the rapid rise in interest rates. Only a handful of ABS transactions closed during 2022, amounting to less than $1bn of volume, featuring enhanced structures and limited to A tranches. The JOL and JOLCO markets also remained quiet as Japanese tax sheltering requirements have yet to return to pre-Covid levels.

Airline and lessor bond issuance also both declined in 2022, with airline volumes 20% lower and lessor activity down by a massive 85%, reflecting the impact of geo-political and economic uncertainty on the public markets.

A number of leasing platforms, both existing and pre-launch, were in the market for equity during 2022, with several new entrants able to launch, however investor appetite was generally muted, citing market uncertainty and rising interest rates as reasons to hold back. Early indications are that 2023 will see a revival of interest as market conditions begin to stabilise. In the lessor space, M&A, platform re-financing and new entrants will all provide investment opportunities in the months ahead.

With more lenders taking ESG considerations into their funding decisions, it is perhaps surprising that the number of green financing transactions closing in 2022 remained in single digits. They encompassed a broad scope of transactions, however, included Green Bonds, sustainability-linked loans, an EETC, JOLCOs, a PDP facility and a revolver. Popular ESG metrics for these deals include SAF usage and fleet renewal.

The environment

As predicted last year, sustainability and ESG issues continued to raise their profile during 2022, with a number of industry initiatives designed to tackle the challenges and tasks that lie ahead for lessors, lenders and investors in aircraft. Amongst these, Aircraft Leasing Ireland (ALI) and Impact stand out for their level of engagement with industry stakeholders, but it is clear that many lessors and lenders are at the start of their sustainability journey, with a lower level of cross-party agreement on priorities and action plans that is needed to stay ahead of the game and ensure that aviation does not become a bigger target for governments and action groups, or indeed a victim of over-arching corporate investment or lending policies that could cause collateral damage for aviation.

At the heart of a successful sustainability strategy is the collection and analysis of robust data and the dissemination of performance tracking up and down the chain of business relationships that define the industry. For lessors, this means communicating with their airline customers to find stress-free ways of tracking and verifying emissions from their assets and any offsetting or carbon trading mitigants, as well as with debt and equity providers to identify and meet their ESG reporting needs.

The road map to a net-zero emissions industry by 2050, which is the commitment made by IATA on behalf of its members, is extremely challenging and perhaps not well enough understood, either inside or outside the industry. For example, the ability of new forms of energy for propulsion (electric, hydrogen, etc) to move the dial on global airline emissions will not become meaningful until 2040 at the earliest, with widebody operations likely to remain dependent on fossil fuels right through to 2050 and beyond (“net” is the key word here, as not all aircraft operations necessarily need to be at zero emissions).

Given the technology timescales, the importance of sustainable aviation fuel (SAF) immediately becomes apparent, yet the ability to scale up production and make SAF an affordable alternative is far from realisation. There have been numerous proving flights to demonstrate the ability to operate commercial airliners on 100% SAF, but the ability to blend any SAF product with kerosene close to the 50% maximum currently mandated for safety reasons is unlikely to be met for at least a decade unless there is a step change in production capability. And because SAF is a “drop in” fuel, designed to have identical properties to Jet A-1, the level of emissions from burning SAF is identical to that of the existing fossil fuels. The anticipated 80% reduction in net emissions can only be achieved through environmentally friendly sourcing and processing the ingredients for SAF. At the 80% reduction level, SAF will deliver the largest benefit of the four elements (technology, SAF, offsets, operational measures) that will all be required to achieve the net-zero ambition over the next 27 years.

China’s sudden reversal of its zero-Covid policy seems set to underpin a further year of very strong passenger recovery in 2023, with an early surge of domestic and overseas travel bookings already evident ahead of the re-start of passport issuance by the Chinese authorities on 8th January.

However, the risk of re-igniting a global wave of new Covid infections will see many countries re- impose testing and vaccination requirements for Chinese arrivals, potentially slowing the Asian recovery. Global passenger numbers should still return to near-2019 levels within the next 24 months, although the loss of some categories of business travel seems inevitable.

Airlines will continue to return parked fleets to service to meet the demand, but in 2023 will still face bottlenecks for MRO and engine shop capacity, replicating many of the problems encountered during 2022. However, the acute shortage of personnel needed to provide essential infrastructure support (pilots, airport security, handling services, etc) will be substantially alleviated during 2023, although pilot shortages remain a longer-term concern.

OEM supply chain challenges will add to the near-term capacity shortages, as the war in Ukraine, Russia’s ability to weaponise and disrupt fuel and food supplies and China’s intentions for Taiwan and their wider role in the region will remain significant factors during the coming year. Airbus is unlikely to meet the delivery rates it believes are needed to meet customer demand, whilst Boeing has a body of work to do before 737MAX and 787 production and deliveries are back on track.

From 2024, a return to relative political, economic and air transport equilibrium is anticipated, with demand growth settling back into historical, cycle-influenced patterns. Many airlines will need considerably longer to repair their post-Covid balance sheets, but will continue to need new generation aircraft deliveries, both to meet their growth plans and to improve their ESG metrics, which will become increasingly important in the eyes of both travellers and financiers.

Dedicated cargo operators have been positively affected by COVID, thanks to the grounding of large parts of the widebody passenger fleet but in the coming years will return to their long-term growth trends and their pre-Covid 50% share of the air freight market.

Whilst elevated inflation and interest rates act as headwinds to economic activity, higher inflation will help to support aircraft values and the impact of increased interest rates on lessors is mitigated by their linkage to lease rates, with floating rates becoming more prevalent.

The surge in lessor delivery financing experienced during the Covid years has moderated slightly, but a new market share plateau has been established above the previously elusive 50% threshold. This will require more than $350 billion of liquidity over the next five years and, with over 75% of new build models categorised as liquid investible assets, the opportunities for investing have never been greater.

As usual, to close here are some predictions for the coming 12 months:

  • China’s domestic passenger traffic will surge in 2023, starting from Lunar New Year, with Chinese international traffic recovering up to 65% of pre-Covid volume
  • Covid testing for passengers arriving from China will be widely imposed, without materially impacting demand
  • China’s passenger recovery will offset the impact of recessionary headwinds on travel in Europe and North America
  • Inflation will gradually abate during the year, but interest rates will remain elevated until 2024
  • OEM supply chain issues will improve only slowly, resulting in further delivery shortfalls
  • Orders will remain buoyant, supported by Asian growth and fleet efficiency needs
  • Boeing will achieve certification of the MAX7, but the MAX10 will slip into 2024
  • More aviation lenders and investors will include ESG performance metrics in their transaction analysis and business strategies.

Author: Dick Forsberg, Senior Consultant to PwC's Aviation Finance Advisory Services.

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Buses and minibuses in a parking lot. The sky is dark blue, and a few stars are visible.

Aurora Tourism in Iceland: You Can Seek, but You May Not Find

The country markets itself as a destination to see the northern lights — especially this year, which is a peak time for solar activity. But they can be elusive, as one writer recently found.

In Reykjavík, Iceland, aurora borealis tourism is a booming business. Hopeful tourists board buses to head out into the night in search of the northern lights. Credit... Sigga Ella for The New York Times

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Amelia Nierenberg

By Amelia Nierenberg

Amelia Nierenberg spent four nights searching for the northern lights in Iceland.

  • March 25, 2024 Updated 5:48 p.m. ET

From the outside, it may seem like the northern lights dance across Iceland’s skies each night. On Icelandair ads, planes fly across shimmering curtains in the sky. On social media, travelers gaze at the green bands above them . The lights are even on some recycling bins in Reykjavík, the capital: “Keep Iceland Clean.”

In the past decade or so, an aurora borealis industrial complex has boomed in Iceland. Many rent a car and go out on their own, but there are northern lights big bus tours and northern lights minibus tours and northern lights Super Jeep tours . There are private guides and boat cruises . There’s an observatory base camp . There’s even a museum .

Tourists line up outside a red minibus in the twilight. Behind them, there is a light green statue that is illuminated.

But the lights can be elusive.

“Tourists sometimes expect, like, ‘At what time do you turn them on?’” said Björn Saevar Einarsson, a forecaster at Iceland’s meteorological office , chuckling. “Like we have a switch in the back room.”

This year, the letdowns are especially intense.

The northern lights, which are also called the aurora borealis, are most visible when there are solar flares, which are big eruptions on the sun that send charged particles toward Earth. This year, the sun is approaching the peak of its 11-year cycle of activity , which some assume means that the displays could peak, too.

But the enhanced solar activity doesn’t necessarily mean the northern lights will be brighter or more frequent, scientists wearily explain. Instead, they mostly mean that the lights can be seen farther south than usual: In recent months, they have been visible in Arizona , Missouri and southern England .

That doesn’t mean much for Iceland.

In fact, Icelanders and scientists said, this winter is nothing special. Sometimes, the lights are there. Sometimes, they aren’t. Just like always.

Hunting the lights

But nothing special, with the northern lights, is still very special. And so tourists keep coming .

Last month, I joined the fray. For four nights, I looked for telltale sky shimmers in and around Reykjavík.

I booked my tickets riding high — this was the best year yet, right? But as I learned more, and as my flight neared, my hopes ebbed. Scientists and tour leaders gently told me that the skies were cloudy and the solar activity seemed quiet.

“Just to let you know the forecast doesn’t look too good” Inga Dís Richter, the chief commercial officer at Icelandia , a tourism agency, wrote in an email two days before I planned to take a minibus trip with Reykjavik Excursions , one of its tour operators.

“But,” she added, “this can change.”

To find the lights, guides and travelers often rely on aurora forecasts, which overlay cloud cover and solar activity. They check them constantly, like a bride with an outdoor wedding in mid-April.

Some of the forecasts are free, like the aurora forecast run by Iceland’s meteorological office or Iceland at Night , which includes space weather. (Some are not — Aurora Forecast , which costs $12.99 a year, sends alerts.) Many people also turn to Facebook pages , where enthusiasts hungrily swap sightings.

Luck, though, is everything.

“There’s only one thing less predictable with the northern lights, and that’s the Arctic weather,” said John Mason, a global expert on the northern lights. “An aurora forecast is barely worth the paper that it’s written on.”

The guides work hard to explain the science, and set expectations. Most companies offer a free rebooking option if the lights do not show.

On my first night of aurora stalking, despite Ms. Richter’s warnings, I joined an expectant group on the Reykjavík Excursions minibus. For $88, I got a seat on the 19-person bus, which left the city’s central bus station at 9:30 p.m.

Over the next three to four hours, we would drive through the Icelandic night together. I’d either see something astonishing with these strangers — the sky, banded with light — or shiver with them shoulder-to-shoulder, awkward in the cold.

As we pulled onto the road, Gudjon Gunnarsson, the guide, set the mood early. “We are going hunting for the lights,” he said, emphasizing the word “hunting,” “similar to going out fishing in a lake.”

He drove for about 45 minutes, letting Reykjavík’s glow fade behind us. The city has about 140,000 people, and no real skyscrapers, so there’s limited light pollution. Although the northern lights can appear over the city, it’s best to see them in total darkness.

Then he paused and consulted with another guide.

“It is too cloudy here,” he told his flock. “So we will keep driving.”

But as we kept driving, clouds turned to a dense fog, so thick that the moon all but disappeared.

Mr. Gunnarsson turned off the main highway about an hour after we left Reykjavík. He parked in a parking lot. Or maybe it was a side street? The darkness was so deep that I could only make out the moonlight on the ocean, and only then after my eyes adjusted.

We disembarked and stood dutifully beside him, staring up at the sky. Then, one woman pointed toward Reykjavík. Were those the lights? (No. That was light pollution.)

Christof Reinhard, 65, who owns a medical laser company and was visiting with his family from Paris, mused that our search was a little bit like a safari. Sure, the desert is amazing, but it’s much better with lions. Or, maybe, was this more like a whale watch?

“Instead of a boat,” he said, “you have a bus.”

Mr. Gunnarsson watched the group stomp their feet and bend into the wind. Fifteen minutes. Then, half an hour. The clouds hung thick above. “There’s nothing happening here, as you can see,” he finally said to relieved chuckles. “It’s one of those nights where you just have to give up.”

Tourists can get mad, Mr. Gunnarsson and other guides said. It’s rare, but it does happen.

“It’s the trip that has our worst reviews,” said Eric Larimer, the digital marketing manager for Gray Line Iceland , a day tour and airport transport company.

A wake-up call for the aurora

For some, the joy is in the search, even if there is no find. A few focus on astronomy, often opting to stay at Hotel Rangá , which is just off the main ring road (Route 1) near Iceland’s south coast.

The hotel looks unassuming — low-slung and wooden — but it’s one of the most famous in Iceland. (The Kardashians stayed there . So did the Real Housewives of Orange County .) A standard room costs more than $300, depending on the season.

But Rangá doesn’t just cater to celebrities. It also draws astronomy buffs, enticed by its “aurora wake-up call” service and its observatory, which has state-of-the-art telescopes.

“One thing is to sell them,” said Fridrik Pálsson, the hotel’s owner, speaking of the northern lights. “Another thing is to deliver them.”

About 20 years ago, before the northern lights industry took off, he delegated the night security guard to monitor the sky. The guard pokes his head out every few minutes to look for the telltale flicker. If he sees the lights, he alerts the guests.

The service aims to address one of the main issues with hunting for the northern lights: They are usually only visible on winter nights, when it is very cold, very windy and very late.

“To be a good northern lights observer, you need the constitution of an insomniac polar bear,” Dr. Mason said.

My room phone, alas, stayed silent. But I did dream about the lights — great Wonka colors swirling, strangely, behind the Chrysler Building.

Mr. Pálsson built the observatory, too. Even if the lights didn’t show up, he figured, the stars are still magnificent — and, for city dwellers, also rare. The hotel contracts astronomers to work the telescopes and explain the stars to guests.On my second night in Iceland, as twilight slipped below happy-hour skies, I crunched across the snow to the observatory with Saevar Helgi Bragason, an Icelandic science communicator who leads the astronomy program.

He bent into a toddler-size telescope, focusing it on the moon’s craters. They looked clearer than the hotel, just a short walk away. It was too early for the lights, he said. And that evening seemed too cloudy (on Earth) and too quiet (on the sun).

Mr. Bragason joked that the lights can get in his way — they create a mist over the stars he really wants to see. But tourists often come specifically to see them. And sometimes, he said, as they wait impatiently, they can miss the real wonder.

“You’re left with these beautiful skies above you,” he said. “Basically, literally, another universe opens up.”

Creating a lights season

Hotel Rangá was a pioneer in Iceland’s northern lights tourism industry: About two decades ago, people came to Iceland for the long summer days, and left as daylight slipped farther south.

“I found it rather stupid in the beginning,” admitted Mr. Pálsson, the owner of Rangá, speaking of northern lights tourism.

But spreading tourism throughout the year made sense. Partly, that was an environmental concern. The tourists would crowd the country’s extraordinary natural sites over just a few months. It was also economic. When the visitors left Iceland, tourism jobs would ebb with the sunlight.

So the northern lights, which are reliably visible from September to March, became the backbone of the country’s winter branding, said Sveinn Birkir Björnsson, the marketing and communications director at Business Iceland , which promotes the country.

“To be able to sell this product of cold and darkness, you have to have something to offer,” he said.

Now, even though June, July and August are the busiest months, tourism has evened out over the seasons. In 2023, there were about 1.1 million international visitors to Iceland during the aurora months, based on departures from Keflavík Airport, according to data from Iceland’s tourist board . From April to August, there were about 1.1 million, too.

About a decade earlier , when tourism overall to Iceland was lower, there were about 336,000 departures from the main airport in colder months, and about 446,000 in the spring and summer.

The winter travelers are drawn by the lights — and the hot springs, glaciers and icy waterfalls. It’s also cheaper than the summer season.

Some try to visit volcanoes , but the country recently warned tourists to avoid the lava flows — Iceland is living in an unusually active period of seismic activity . In January, lava flowed into a small town and last week a volcano erupted with just 40 minutes’ notice near the Blue Lagoon thermal springs, one of the country’s biggest attractions.

The final attempts

Near midnight on my last night, a Sunday, I drove to the Grótta Lighthouse , a popular spot on the outskirts of Reykjavík.

A few die-hard experts had warned me off — many tourists go there because it’s darker than most of Reykjavík, but then don’t think to turn off their headlights. It was also raining, greatly diminishing my chances of seeing the lights.

But I only had three hours before I had to leave to make my predawn flight. I felt a little desperate, a little dazed. I parked, and approached two people who were sitting in the rain on a wet wall, looking at the water in the darkness. I climbed over seaweed, and introduced myself. What would it mean to them, I asked, if the lights suddenly appeared?

“It’d be a little bit like the cherry on top,” said Catherine Norburn, 29, who was visiting from England.

She and her husband were set to fly out the next morning. They had not yet seen the lights.

“We don’t have high hopes,” said her husband, Reece Norburn, 29, “but it’s now or never.”

We didn’t see the lights. And I didn’t see them later, even after pulling off the highway halfway between Reykjavík and the airport at 3:30 a.m., half convinced by a shimmery cloud.

But I did spend more time looking up at the sky. And it’s a marvel.

In New York City, where I live, the night sky blooms orange-mauve. In Iceland, the nighttime darkness is just that — darkness. Clouds roll, breaking the deep blue. Stars actually shine. Northern lights or no northern lights, it was still cosmically beautiful.

Amelia Nierenberg writes the Asia Pacific Morning Briefing , a global newsletter. More about Amelia Nierenberg

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Transportation Ministry optimises three terminal functions

  • 07 Feb 2024

This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.

Investor Daily - Kemenhub maksimalkan tiga fungsi terminal

7 February 2024

Manado, ID – The Transportation Ministry emphasised that there were three terminal functions expected to make passengers more secure and comfortable, ultimately encouraging them to travel through terminals.

“Our terminals currently have three functions, social, economic, and transportation,” Land Transportation Directorate General Secretary of the Transportation Ministry Amirulloh said during a media briefing titled “Press-Land Transportation Directorate General Synergy in Strengthening the Strategic Role of Land Transportation” held in Manado, North Sulawesi on Tuesday (6/2/2024).

During the occasion, Amirulloh mentioned that the Tangkoko type A terminal in Bitung, North Sulawesi has been successfully revitalised, noting that it now resembles an airport.

The terminal is fitted with an air-conditioned waiting room and a room for micro, small, and medium enterprises (MSMEs).

There are also a medical room, a lactation room, facilities for disabled individuals, an ATM gallery, queuing machines, customer satisfaction machines, and health protocol facilities. “I think it is great. The terminal fells like an airport, where passengers are assigned queue numbers and wait accordingly. This organised system allows them to board the vehicle in alignment with their queue number, fostering a sense of discipline among people using public transportation,” he said as quoted by Antara.

According to him, the first function of the terminal is the social function. For example, Amirulloh mentioned that there was a designated space for karate classes at Tangkoko Terminal. “At specific times, various activities take place here, including karate classes. Additionally, on occasions like Isra Mi’raj and Chinese New Year, live music performances are arranged. The hope is that people can enjoy music as they wait,” he said.

Next, the economic function. Amirulloh said that there were designated spaces for MSMEs at Tangkoko Terminal. “We have prepared designated spaces for MSMEs within the terminal,” he stated.

Then, there is the transportation function as a place for passengers to get on and off. Based on the data from January 2024, he noted that 1,186 people used Tangkoko Terminal during the month. “The transportation function is a place for passengers to get on and off. The number of passengers is quite high, reaching 1,186 people per day. Most people use intercity and interprovince transportation in the morning and in the evening. Most of the 1,186 people travel in the morning and in the evening,” Amirulloh said.

Meanwhile, the revitalised Leuwipanjang Terminal in Bandung, West Java was inaugurated by President Joko Widodo on Saturday (3/2).

Similar to the revitalisations at other terminals, Leuwipanjang Terminal adopts the mixed-use concept, serving as a multipurpose modern terminal with three primary functions: a boarding and alighting point for buses, a regional economic catalyst, and a hub for social, art, and cultural activities.

Leuwipanjang Terminal provides a digital integrated vehicle document registration centre (Samsat), which is the only one of its kind in Indonesia. This service is the result of the collaboration between West Java Land Transportation Centre (BPTD) and the Indonesian National Police.

In addition, Leuwipanjang Terminal also hosts electric buses operating in collaboration with West Java Provincial Government.

Next article:  Transportation sector puts pedal to the metal

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Director, PwC Indonesia

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‘map of nope’ meme: why you’re in or out for the total solar eclipse.

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The "Map of Nope" from eclipse cartographer Michael Zeiler at GreatAmericanEclipse.com.

The total solar eclipse “Map of Nope” teaches America about the true meaning of April 8’s rare celestial event—and how to best plan a trip to experience it. The brainchild of expert eclipse cartographer Michael Zeiler on GreatAmericanEclipse.com has recently become an online phenomenon. There are lots of useful maps for this eclipse amid plenty of helpful eclipse websites , but it's this one alone that instantly shows the importance of being within the narrow, 115-mile-wide path of totality. On April 8, that path will pass through parts of Mexico, 15 U.S. states and Canada.

The “Map of Nope” addresses a big problem: too few people know what a total solar eclipse is, how it works, and, most importantly, where they need to be on April 8. An even bigger problem is that primarily well-meaning public relations and marketing folk promote events, hotels, and cities that will not see the total solar eclipse (the poster child being San Antonio, Texas ). This is partly due to event organizers not wanting to miss out. However, it’s also due to ignorance about the difference between a 99% partial eclipse and totality. The result is that people who want to experience the total solar eclipse are being misled.

Precision Is Everything

The difference between experiencing totality and seeing a partial solar eclipse is night and day. For a total solar eclipse, precision is everything—and so is understanding what the word “total” means: complete; absolute. There are many ways of trying to get across the importance of being within the path of totality, but this—to my mind—is the best:

“Totality is like pregnancy,” said Dr. Rick Fienberg, Project Manager of the AAS Solar Eclipse Taskforce , in an interview. “You can’t be 99.9% pregnant—you either experience totality or you don’t.”

Cities that will see a tragically near-yet-so-far 99% partial solar eclipse—not that most of the residents would realize—include San Antonio, Fort Smith, Cincinnati, Columbus, Canton and Youngstown.

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Ukraine has developed 15 kinds of long range strike drone and has sortied them against russia s oil industry, the walking dead the ones who live episode 5 review another massively disappointing episode, total versus partial solar eclipse.

Only inside the path of totality will the sun be entirely obscured by the moon for up to four and a half minutes. It will get dark, the temperature will drop, and you’ll need to take off your solar eclipse glasses and see, with your naked eyes, the sun’s beautiful, wispy white corona around the moon. It’s the sight of your life. Outside the path of totality—even just a mile beyond the edge—you’ll see a partial solar eclipse only through solar eclipse glasses. It will not get dark. It will not get cold. You will not see the sun’s corona.

For those miles away from the path and unable to travel, there’s no issue here—just grab some solar eclipse glasses and go outside to have a look at the partial eclipse. You probably weren't ever going to travel a long distance to experience the total solar eclipse, so be happy with the partial.

But for those just outside the path of totality, it’s critical to understand how close you are to something extraordinary. You must move slightly north or south into the path.

America needs the “Map of Nope.”

For the very latest on the total solar eclipse—including travel and lodging options— check my main feed for new articles each day.

Wishing you clear skies and wide eyes.

Jamie Carter

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TikTok Shop joins the social commerce boom but Meta is still on top

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The merging of shopping and social media is more than a trend; it’s a response to evolving consumer behavior. Social commerce is fueled by the significant amount of time that consumers spend on social media —US adults will spend 11.4% of their total daily media time and 17.9% of their digital media time with social platforms in 2024, per EMARKETER’s June 2023 forecast. 

With social commerce, every interaction on social platforms like TikTok, Facebook, and Instagram is a revenue-driving opportunity without the friction of leaving that digital environment. 

In this guide, we’ll explore the state of social commerce , examining the most popular platforms so retailers and advertisers can make the most of this dynamic digital shopping journey.

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Overview of social commerce

Social commerce fuses social media with ecommerce, allowing purchases to be made directly within a social platform. Social commerce enables consumers to not only discover products and engage with a brand’s greater community, but also to shop from brands without switching platforms and disrupting the customer experience. 

For marketers, the ability to advertise and sell in the same space streamlines the buying journey and gives them access to a host of benefits, including direct access to customers, more transparent return on ad spend, and new opportunities to take advantage of peer recommendations and the creator economy .

Social commerce thrives on inspiration, trends, and generating demand for products users may not have considered. Unlike ecommerce, where people often shop with specific products in mind, social commerce excels in promoting discretionary items like fashion and beauty products.

Who engages in social commerce?

Although early social commerce adopters have included younger generations who are more comfortable with navigating digital spaces, older generations are also embracing it as social media platforms become more user-friendly. 

  • Nearly a quarter (23.1%) of US social buyers are between the ages of 25 and 34, per a September 2023 EMARKETER forecast, and more than two-thirds (66.5%) are under 44.
  • US digital buyers ages 18 to 34 have made purchases on Instagram (28%), Facebook (26%), and TikTok (22%), per an October 2023 EMARKETER survey conducted by Bizrate Insights. 
  • More than half (53%) of US shoppers ages 18 to 29 planned to use TikTok for holiday shopping in 2023, compared with just 36% of adults overall, according to September 2023 ESW data. 

Swayed by endorsements, peer reviews, and social connections, shoppers who follow influencers also make up a large social commerce audience. 

  • A third (33%) of Gen Zers have purchased a product from an influencer-founded brand in the last year, per a November 2023 Morning Consult survey. 
  • Gen Z is more likely than any other generation to purchase a product after watching a review from an influencer they follow, per November 2022 data from Deloitte. 

US social buyer share by age

Top social commerce platforms

Major social media platforms have evolved, seamlessly integrating commerce into their core experience. These platforms have not only redefined manners of social interaction—they’ve also established themselves as modern digital storefronts. 

social networks where us adults likely to make a purchase

Facebook Marketplace

Facebook leads with the largest number of social commerce buyers, expected to reach 64.6 million in 2024, according to a September 2023 EMARKETER forecast. Its massive user base allows brands to reach a diverse, global audience, while extensive storefront features and insights-collecting capabilities add to a competitive ecosystem for online shopping. 

Facebook Marketplace is a dedicated platform for buying and selling secondhand items. Although the platform allows businesses to sell products and place ads, its roots are in local, community-based listings. Marketplace is a major reason why Facebook has such a strong lead in social commerce. In fact, Instagram would take the top spot with the biggest social buyer audience among platforms if Marketplace was excluded from social commerce data, according to third-party research cited in EMARKETER’s Social Commerce Forecast 2023 report. 

Facebook Shops

Unlike the peer-to-peer nature of Facebook Marketplace, Facebook Shops enables businesses to set up digital storefronts, where customers can explore and purchase products without leaving the platform. 

The storefront functionality allows richer product catalogs, visuals, and descriptions. For immersive, customizable experiences, businesses can also showcase featured products, seasonal collections and launches, promotions, and bundles.

Instagram Shopping

In 2024, Instagram will see 46.8 million US social buyers, per EMARKETER’s September 2023 forecast.

At its core is Instagram Shopping, which allows businesses to tag products in their posts and stories. When users click on a tagged item, they can view product details, prices, and a direct link to make a purchase.

Instagram and Facebook parent Meta is mandating all Meta Shops in the US to use Checkout on Facebook and Instagram in 2024. While frustrations have arisen regarding the in-app checkout tool’s effectiveness among both sellers and buyers, Meta is pushing forward as a way to compensate for the losses incurred due to iOS 14.5 changes, which reduced access to tracking data for advertisers and publishers. By making Checkout mandatory, Meta aims to boost adoption, particularly on Instagram, which plays a vital role in social commerce strategies. This move will also limit consumers’ options, as they won’t have the choice to complete their purchases on a retailer’s website.

TikTok Shop

With its Gen Z stronghold, the TikTok user base alone—which passed 100 million in the US in 2023 (102.3 million), according to EMARKETER’s May 2023 forecast—is enough to make it a competitive social commerce platform. We predict TikTok will reach 107.8 million users in 2024. In 2023, 35.3 million of those users were social buyers; during that time, TikTok gained more shoppers (11.6 million) than the net increase of Facebook, Instagram, and Pinterest combined (6.4 million), per a September 2023 EMARKETER forecast. We predict TikTok will continue adding social buyers in 2024, reaching 40.7 million. 

However, uncertainty looms over the viability of the platform’s integrated commerce solution, TikTok Shop , given the slow adoption by US merchants, lukewarm reception to live shopping, and a potential nationwide ban.

TikTok Shop enables brands and creators to offer products directly to their viewers. Starting from short videos or livestreams, TikTok Shop aims to own the full buyer journey. A standout feature is the ability for users to consolidate products from various brands into a single cart and finalize their purchase without navigating away from the app.

The shopping service’s US journey seems to have encountered early turbulence:

  • TikTok Shop was projected to lose more than $500 million in the US in 2023, per The Information, due to major investments—in its staff, building out a fulfillment network, and seller incentivizations—that hadn’t paid off. 
  • In the summer of 2023, US consumers were spending around $3 million to $4 million per day on TikTok. The platform expected that figure to exceed $10 million by the end of 2023.

Social commerce stats and growth 

Continued growth for social shopping is on the horizon, with sales growing well into the double digits through the end of EMARKETER’s forecast period in 2027. Although converting non-buyer social media users into buyers is becoming more challenging, the overall landscape remains robust. One significant trend is the increasing spending per buyer, which is expected to nearly double between 2023 and 2027, per an October 2023 EMARKETER forecast. This is expected to drive most of the sales growth, rather than the acquisition of new buyers.

Shoppers worldwide select channels vs buying

Consumers aren’t sold yet on social commerce.

  • Almost 4 in 10 shoppers hold back from shopping on social media over concerns about how platforms manage personal data, per a May 2023 PYMNTS.com survey.
  • Younger consumers don’t want to use a social platform’s in-app checkout tools. In fact, about three-quarters of US social shoppers ages 16 to 24 prefer purchasing through established retailers that handle transactions, shipping, and delivery, per an October 2022 SimplicityDX survey.
  • UK shoppers have reported counterfeit goods and poor shipping experiences on TikTok Shop, according to the Financial Times, which could trigger more apprehension in other markets. 

social commerce sales

Still, social commerce is on an upward trajectory. 

  • US retail social commerce sales will pass the $100 billion milestone in 2025, representing a 22.4% growth from the year prior, per EMARKETER’s September 2023 forecast. 
  • In 2024, there will be 110.4 million US social buyers, accounting for 42.0% of all internet users and nearly half (50.3%) of all social media users.  
  • US social commerce sales will claim 6.6% of total ecommerce sales in 2024.
  • For now, most social commerce transactions take place off platform, by clicking links to retailer product pages. 

The rise in new buyers is only marginally ahead of the growth in the total social media user population, resulting in a relatively consistent percentage of users engaging in purchasing activities, holding steady at around 50% through 2027, per a September 2023 forecast.

Marketing strategies for social commerce 

User-generated content (UGC) and influencer marketing are two effective strategies that brands can harness to connect with consumers authentically.

UGC is generally created by consumers, showcasing their experiences without direct brand involvement, whereas influencer marketing involves brand collaboration and incentives to ensure the content aligns with the correct messaging and goals.  

User-generated content 

UGC is a powerful tool that taps into authenticity and trust. Forty-six percent of US consumers are more likely to trust a brand if an online content creator they trust has reviewed it, according to a November 2022 Deloitte survey. Encouraging users to create and share content featuring their experiences with products or services cultivates a sense of community and credibility. 

Brands can initiate UGC campaigns, prompting customers to share testimonials, unboxing videos, or creative uses of their purchases. By showcasing real-life experiences, UGC bolsters brand authenticity, fosters engagement, and influences potential buyers’ perceptions positively. Additionally, reposting and engaging with UGC amplifies brand reach while nurturing a loyal and involved customer base.

Influencer marketing

From large, well-known influencers with massive followings to micro-influencers with niche communities, choosing the right person to vouch for your brand can bolster your social commerce investments. 

Collaborating with influencers allows brands to tap into their audience and leverage their credibility. Influencers create engaging content, seamlessly integrating product endorsements or reviews into their posts, stories, or videos. These endorsements often resonate deeply with their audience, establishing trust and driving purchasing decisions. 

Social commerce trends in 2024 and beyond 

Tech innovations, immersive experiences, and retailer collaborations will present new opportunities in the social commerce space.

AI integration 

Social platforms are taking advantage of AI to enhance the user experience and streamline product discovery. TikTok’s product identification feature, now in its testing phase, uses AI to suggest similar or relevant items available on its ecommerce marketplace. This new shoppable feature to non-shopping content is TikTok’s attempt at fully embedding commerce into the in-app experience.

In-person events 

Events help bridge the gap between the real world and social media, and can help drive user engagement and sales. The Pinterest Predicts pop-up event held in New York City in December 2023 brought to life its anticipated trends, allowing users to draw inspiration for the year ahead and, more importantly, shop. 

Retailer partnerships 

Retailers are also getting behind social commerce, partnering with streaming platforms to have their products in front of new audiences. Walmart’s holiday-themed romantic comedy “Add to Heart” is its first shoppable video series. Available on Roku, TikTok, and YouTube, the 23-part series integrates 330 shoppable products throughout its plot, creating a new avenue for Walmart to connect with consumers through content. 

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