Airline careers for Social Scientists

Economists rejoice! In an industry traditionally dominated by Engineering and Ops, the new IATA Director General has dedicated her career to pursuing the dismal science. Saadia Zahidi holds a Bachelors of Economics and an MPhil in International Economics. I look forward to seeing her grappling with the challenges of our industry’s largest trade association. Most of us are unlikely to become the Director General of IATA. So rather than write my wish list of things I think Ms Zahidi should do, I thought I would take the opportunity to cover career opportunities in aviation for Economists and other Social Scientists. I am specifically evaluating cases where Social Scientists can actually use these skills at an airline, rather than say training to be Flight Deck Crew or Cabin Crew. These opportunities go both ways. Specialists in Social Science fields can be inspired to apply for jobs in aviation. But airlines and their stakeholders might also benefit by designing new jobs and career paths for Social Scientists. Advertisement: Airline Revenue Economics is on holiday. During August there will be one article a week rather than the usual three. Returning on Wed-2-Sep. What exactly constitutes a Social Science is up for debate. I took my two degrees in Economics from LSE which, Carlsberg-style, is probably the best Social Science institution in the world. Undergraduate degrees at LSE are offered by 16 departments: Anthropology | Accounting | Economics | Economic History | Finance | Geography & Environment | History | International Relations | Law | Management | Maths | Philosophy | Politics | Psychology | Social Policy | Statistics 16 separate departments is quite a lot to cover in one article. So this will be a two-parter. Eight today and eight next week, in alphabetical order. Aviation careers for Anthropology Anthropologists should fit right in to airline Marketing and Loyalty departments, which have much to gain by focusing on understanding elements of human behaviour. Cognitive Anthropology for example is all about understanding knowledge sharing and cultural innovation. It would be fascinating to apply these ideas to cover frequent flyer communities. Understanding how communities rather than individual travellers respond to airline commercial products is probably an under-covered part of the industry today. That is good news and bad news for job seekers with an Anthropology background and job posters looking for them. The good news is that there is likely to be a large amount of low-hanging fruit which airlines can benefit from. The bad news is that the relevant jobs are unlikely to be around today. So wannabe airline anthropologists might have to be working for an airline already to start or get involved with such projects. Aviation careers for Accounting People who are enthusiastic about the airline business and who actually understand Accounting are the industry’s best friends. They can evaluate new business cases, manage assets effectively and handle a complex web of records and audits. Even accountants who are not enthusiastic about the airline business can be helpful. Skilled in business, they offer a helpful reality check to some of the more bonkers ideas that the bosses can come up with. The successful airline accountant needs to look at cost and revenue together. Unfortunately airlines have spent the last 70 years becoming extremely good at saving money. All the best opportunities were optimised a long time ago. It now costs a lot of money to make savings. The low-hanging fruit is on the revenue side. Young accountants might find themselves in an airline’s Finance department on either cost or revenue side. The key to success is always to look at both together. Accounting specialists can probably forge careers in most of an airline’s Commercial departments as well as Finance, including Revenue Management, Marketing, Sales, e-Commerce and more. Planning, covering Scheduling, Network and Fleet, is also likely to be a good option. Aviation careers for Economics A large number of IATA’s core topics are relevant for Ms Zahidi. Tax, fuel cost, sustainability, profitability and airport access charges are likely to be on her agenda. She may also decide to look at the “institutions” of the airline business that are supported by IATA. For example, is the “working group” model still the best way to run things? I note with interest that Ms Zahidi’s MPhil was in International Economics, which typically covers trade between countries and exchange rates. Trade is a large driver of demand for air travel. Foreign exchange is a large driver of risk. It will be interesting to see the extent to which these topics appear in Ms Zahidi’s list of priorities. For other Economists, career opportunities and pathways may be just as wide-ranging even if individual jobs are not. Economists and accountants have overlapping career opportunities. Both would do well in many Commercial or Planning roles and Analyst positions in any of these departments would be good entry points for young economists. But the match is not perfect. It is easier to see an accountant thriving in Billing and Settlement, which covers payment between airlines and their travel industry partners. It is easier to see an economist thriving in Industry Affairs, handling relationships between airlines, governments, regulators and others. I believe that there is still great opportunity for airlines to expand on economist roles in their organisations. The standard IATA Economics presentation shows the demand for air travel going up, apart from blips due to recessions and a COVID-era trough. Unfortunately they normally leave it there. There is so much more to Economics in aviation than that. Consider for example my article about how economic theory explains why airlines are so safe . Wannabe airline economists are likely to need to get a standard Commercial job in the industry first before moving to a more innovative field. Aviation careers for Economic History Economic History explains how the economies of the world today became the way they are. There are two high-level dimensions to the discipline. First-up is the role of institutions such as the rule of law, the work ethic and the consumer society, which act as the foundations necessary for economies to thrive. Next is the analysis of how events caused things to change over time. Both are highly relevant for airlines today. Aviation has its own set of institutions. I mentioned IATA’s “working groups” in the previous section. My recent paper for Accelya presented Payment Orchestration, Settlement and Order Integrity as the institutions necessary for Modern Airline Retailing. Economic historians can help airlines determine the extent to which they are successfully integrated into the industry’s institutions. If working at industry bodies like IATA or in the supply chain, they might ask whether or not the institutions are working effectively or if they need to be redesigned. Economic History is also highly relevant for Commercial and Planning roles. Revenue Management considers market history as an excellent predictor of what is likely to happen next. Fleet and Network Planning teams use historical data to help decide which aircraft to buy The right role for economic historians will depend on their quantitative background. There are opportunities in aviation for both the analyst and the essay writer. Aviation careers for Finance An airline’s Finance department typically covers accountancy and audit. The Chief Financial Officer is in charge. But there are both established and emerging opportunities for specialists in Finance itself. Airlines need piles of money to operate. Fuel, airport space, overflying, crew, catering and insurance are all hungry for cash. Getting established requires oodles of capital too. Assets such as aircraft, avionics, wheels and brakes, galleys, lavatories, seats and entertainment systems all need to be put in place and then managed once they are there. Getting the Finance in place is not always a breeze. Some airlines, think Emirates and Qatar Airways, can borrow at preferential sovereign rates and have it easy. Others have it harder. Ethiopian Airlines for example is well managed and profitable but struggles with putting capital together for aircraft purchases due to their home country’s risk profile. The industry has developed some ways of dealing with challenges faced by Ethiopian Airlines and other similar carriers. Airbus Bank for example essentially borrows money at the Airbus rate and then lends it one to airlines who can pay for their planes but would otherwise struggle to raise cash. Fuel purchase and trading are other well established areas to consider for the budding Finance specialist. In the words of the Qatar Airways Vice President Capital Markets who was responsible for fuel hedging in 2012: “If the Commercial Department work really hard at being useless for a whole year they can lose a billion Dollars. I can lose a billion Dollars in an hour’s trading”. Today’s world seems less stable than the way things used to be. It is likely that Finance specialists interested in buying, trading and hedging fuel will have opportunities opening soon. But while fuel is the most widespread airline tradable, it is not the only one. In principle airlines could commodify their output and sell it in the futures market. Bundles of Available Seat Kilometres could be sold in advance. Options and derivatives against these could be traded. The advantage for airlines is simple. If such a market existed they could commit to operating flights and be sure of profitability. It is just the same way that farmers sell corn before planting. The technology behind such trading is not new, but it is as yet unproven. My Qatar Airways colleague John Lancaster had a go in the early 2000s but was thwarted by 9/11. Matthew Tringham and Elise Weber tried to launch Airbus Skytra to do a similar thing in 2018 and 19 but COVID got in the way. I am sure that a futures market for air travel can thrive one day. It will need Finance specialists to make it happen. Aviation careers for Geography & Environment The LSE Geography and Environment department is something of a two-sided coin. Both (Human) Geography and Environment are solid skills for founding an airline career. I did two Geography and Environment courses as part of my LSE Economics degree – GY201 Location & Spatial Analysis, which covered the economics of cities and regions, and GY222 Environmental Economics. Both have been helpful in my airline career. On the Environment side, there is much more to airline Sustainability than fuel and emissions alone. My article with Volodymyr Bilotkach outlines the idea & policy frameworks that are shaping the industry. Airlines involved with Emissions Trading Schemes and frameworks like ICAO’s Carbon-offsettng CORSIA programme all need Environment specialists. For human geographers aviation also offers abundant careers. While Economic History covers the events shaping regional development, Human Geography explains how regional development has shaped historical events. Geography degree holders will be familiar with Geographical Information Systems technology, which quantifies events in terms of space and place. Airline Revenue Management Systems produce a related output – they forecast where and when demand is coming from and where and when it is going to. Human Geography and airline Revenue Management are complementary disciplines. Aviation careers for History A university History prospectus often claims that a historian’s skills are transferable but it is not always clear exactly how this works in practice. Aviation is a great place for History graduates, provided they are willing to use data. Airlines have large amounts of information to hand and too few people or tools to analyse it effectively. A quantitative historian’s skill condensing large amounts of information into meaningful insights can be of great use when defining Fleet or Network strategy. A narrative historian might feel most at home in an airline’s Industry Affairs department, covering its regulatory and aero-political context. Modern aviation has a vast technical architecture, but it is also fundamentally based in History. The Chicago Convention, Bermuda agreements, open skies. the European single market and all manner of bilateral agreements all emerged from somewhere for reasons that were important at the time. Airlines need people who can understand the history of treaties, trace policy evolution and explain how today’s constraints emerged. Aviation careers for International Relations We have seen how seven Social Sciences explain the role of place, space, society, incentives, institutions and money for airlines. International Relations adds power to the mix. That means answering questions like: 1. Which airlines get to fly where? 2. What are the rules and who writes them? 3. How does aviation improve prospects for states to meet their objectives? Accordingly International Relations is a natural fit for parts of the business that are most political. There are five main areas. Roles for IR specialists are likely to include negotiating bilateral and multilateral air service agreements and overflight permissions. These are essential for many airlines. Without them, a single-hub carrier cannot fly far (if anywhere). Government and regulatory relations is a second area where IR specialists may find interesting careers. Policy development needs to be monitored and regulatory submissions made. Security may also be relevant, for example does a country consider another nation’s security standards high enough to accept connecting traffic without additional scans. Immigration is the fourth area of interest for IR specialists. In the face of the EU’s questionable Entry and Exit system, should the UK ban EU passport holders from e-gates? The fifth main career path for IR specialists is in conflict and sanctions management. Airlines are unable to overfly war zones. Sanctions regimes influence the ability of carriers to use air space. Understanding how changes in these environments may impact operations or insurance makes IR a critical domain for airlines. Coming next week Aviation careers for students of Law, Management, Maths, Philosophy, Politics, Psychology, Social Policy & Statistics