Celebrating AI Appreciation Day: How AI will impact the low-fare and regional aviation industry over the next 5 years

On AI Appreciation Day 2025, Rob Munro takes a personal look at how the rise of Artificial Intelligence will impact the low fare and regional market over the next five years

The AI aviation market is expected to achieve a compound annual growth rate of 22.6% over the next five years, according to a recent report by MarketsandMarkets.

This phenomenal acceleration is driven by the escalating demand for real-time automation, predictive analytics, and intelligent customer engagement tools across airline and airport operations.

The rise of agentic AI & hyper-personalisation

The next year will see increasing use of Agentic AI to perform autonomous actions. The ability to detect, analyse and take action with minimal or zero human intervention will “fundamentally transform the workplace”, writes Surain Adyanthaya of the airline retailing consultants, PROS in her blog.

AI agents will autonomously adjust seat availability based on demand, repackaging offers with ancillary services, and instantly rebooking passengers or offering compensation during flight disruptions, reducing manual workloads.

The trend towards personalised customer experiences will intensify, with AI analysing individual traveller data—such as purchase history, loyalty status, and click-stream behavior—to create highly relevant ancillary bundles and offers.

AI-driven travel itineraries, dynamic recommendations, and proactive engagement with passengers throughout their journey will be the norm.

Delta’s ambitious goal to have 20% of its fares managed by AI by year-end 2025, aiming to match what each individual customer is willing to pay, is a prime example of this hyper-personalisation trend.

Pricing

AI models will be able to process and simulate millions of pricing scenarios in milliseconds, adapting to new market conditions, continuously learning from each decision and factoring in thousands of variables simultaneously, such as competitive behaviour patterns, global and local economic indicators, consumer sentiment analysis, and market elasticity at a route-by-route level.

Hyper-personalisation will become standard, with AI analysing customer lifetime value, past purchase behaviors, and the real-time context of each booking inquiry to create truly individualised pricing and dynamic bundles of products and services.

Lufthansa is already enabled to dynamically adjust ticket pricing using real-time analysis. Even today, Fetcherr’s GPE can anticipate market changes, not just react to them, and optimise ancillary revenue opportunities in real-time.

Airline and airport operations

Airport ground operations will see a boom in AI-powered solutions. Workforce management systems will further refine task allocation, even for smaller regional airports, leading to smoother operations and faster resolution of disruptions.

The integration of autonomous vehicles and robotics for ramp operations is also on the horizon, significantly reducing human workload and enhancing safety on the tarmac.

Smart Gating technology has already cut daily taxi time for some airlines by an average of 17 hours, saving 1.4 million gallons of fuel annually.

AI will become an integral part of Air Traffic Management (ATM). By processing vast amounts of real-time traffic, weather, and surveillance data, AI systems will enable more precise sequencing and routing of aircraft, leading to reduced congestion and, again, significant fuel savings.

Towards autonomous skies

AI copilots show promise in significantly improving flight safety, particularly in managing non-standard situations. For example, Daedalean is developing vision-based systems that can interpret runway incursions and weather patterns in real time.

Another innovation, MIT’s Computer Science and Artificial Intelligence Laboratory’s Air-Guardian is an AI-enabled copilot designed to monitor a pilot’s gaze and intervene when their attention wavers.

The evolution of these technologies could lead to a reduction in the number of required pilots for aircraft carrying over nine passengers, potentially from two to one, aligning with current FAA regulatory discussions.

While hugely controversial and subject to considerable resistance from pilots’ unions, the transition toward some form of autonomous flying is a real possibility, perhaps starting with cargo and empty leg flights. As public confidence in the technology increases, its adoption for passenger flights could result in significantly lower operational costs and improved efficiency and safety.

AI is a fundamental force that has already profoundly impacted low-fare and regional aviation. From optimising fuel consumption and streamlining maintenance to revolutionising customer interactions and enhancing safety, AI’s contributions are reshaping operational efficiency, reducing costs, and significantly improving the passenger experience.

Now that’s something to appreciate!