Copyright © 2025 McKinsey & Company. All rights reserved. Cover image © Jonathan Kitchen/Getty Images. All interior images © Getty Images. Can the aviation industry soar to new heights, or will headwinds slow its progress? Contents Chapter 1: Can the global airline industry continue its climb? 4 Travel Practice The State of Aviation 2025 May 2025 The airline sector had a decent year in 2024. Is it finally cracking the value creation formula? Chapter 2: Are low-cost airlines losing altitude? 14 Low- and ultr ...

Investment Rating - The global micromobility market is projected to reach approximately $340 billion by 2030, indicating a strong growth trajectory [4][21]. Core Insights - Micromobility encompasses lightweight vehicles such as bicycles, e-bikes, e-scooters, and electric mopeds, providing sustainable urban transportation alternatives [3][4]. - The market is experiencing rapid growth, with significant increases expected in regions like Europe, South Asia, and Greater China [4][11]. - A notable trend is the increasing consumer willingness to replace private vehicles with micromobility options, with 46% of global respondents open to this shift [10]. Market Overview - The global micromobility market was valued at approximately $160 billion in 2022 and is expected to grow to $340 billion by 2030 [4]. - Specific regional forecasts include Europe reaching $140 billion, South Asia at $45 billion, and Greater China doubling to $80 billion by 2030 [4]. - North America is also projected to grow from $20 billion in 2022 to $35 billion [4]. Challenges and Opportunities - Organizations in the micromobility sector face challenges such as adapting to local transportation habits, managing diverse fleets, and ensuring adequate infrastructure [21][23]. - Successful strategies include conducting detailed market research, leveraging data analytics for fleet management, and forming public-private partnerships for infrastructure development [23]. Consumer Sentiment - In regions with established micromobility solutions, such as Italy and China, around 70% of respondents express a willingness to use these vehicles [19]. - Bicycles remain the most popular mode of micromobility due to their accessibility and cost-effectiveness [19].

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - Organizations are beginning to create structures and processes to capture value from generative AI (gen AI), with larger companies leading the way [2] - The use of AI, including both generative and analytical AI, is gaining momentum, with over 75% of organizations reporting AI usage in at least one business function [2] - CEO oversight of AI governance is correlated with higher reported bottom-line impact from gen AI use, particularly in larger organizations [3][5] - The redesign of workflows is identified as the most impactful attribute for organizations to see EBIT impact from gen AI [4][7] - Organizations are increasingly addressing gen-AI-related risks, with a focus on inaccuracy, cybersecurity, and intellectual property infringement [20][23] Summary by Sections Organizational Changes and AI Deployment - Companies are redesigning workflows and elevating governance to drive bottom-line impact from gen AI [2] - 21% of organizations using gen AI have fundamentally redesigned some workflows [7] - CEO oversight is crucial, with 28% of organizations reporting their CEO oversees AI governance [5] AI Governance and Management Practices - Effective AI implementation requires a top-down approach, with C-suite commitment essential for transformation [9][10] - Organizations are selectively centralizing elements of AI deployment, particularly in risk and compliance [12] - Less than one-third of organizations follow most best practices for gen AI adoption and scaling [28][31] Workforce Impact and Hiring Trends - There is a growing need for AI-related roles, with 50% of respondents indicating a need for more data scientists in the next year [40] - Organizations are reskilling employees due to AI use, with expectations for increased reskilling in the next three years [45] - A plurality of respondents expect no immediate change in workforce size due to gen AI, although some functions may see reductions [51][56] AI Usage and Functionality - 78% of organizations report using AI in at least one business function, up from 72% in early 2024 [58] - The most common functions for AI use include IT, marketing and sales, and service operations [66] - Organizations are increasingly using gen AI across multiple functions, with an average of three business functions reported [59] Risk Management and Compliance - Organizations are ramping up efforts to mitigate risks associated with gen AI, particularly inaccuracy and cybersecurity [20][23] - Larger organizations are more likely to manage potential risks effectively compared to smaller ones [23] Future Outlook - The report suggests that organizations that think big and pursue transformative change will gain a competitive advantage from their AI efforts [25][26] - As organizations become more fluent with AI, it is expected to be embedded in all functions, allowing leadership to focus on higher-level tasks [11]

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The Chinese consumer market has entered a "new normal" characterized by single-digit growth, with consumers beginning to adapt to this new reality after a period of low confidence and consumption downgrade [4] - Despite challenges, the actual situation is more optimistic than some observers suggest, with consumer confidence stabilizing and a shift towards prioritizing personal achievement in purchasing decisions [4][26] Summary by Sections Introduction - Since the second quarter of 2025, the Chinese consumer market has shown signs of single-digit growth, with consumers starting to accept and adapt to the new normal [4] - A nationwide survey conducted by McKinsey in late 2024 included over 17,000 Chinese consumers, segmented into 108 groups based on various factors [4] Trend 1: Acceptance of the New Normal - GDP growth in China is expected to remain around 5% in 2024 and early 2025, with resilient performance in sectors like tourism, dining, and health [6] - Consumer expectations for 2025 indicate a consumption growth rate of 2.3%, slightly down from 2.4% in 2024, driven by urbanization and stable consumer spending as a percentage of income [6][8] Trend 2: Stabilization of Consumer Confidence - Since September 2024, the People's Bank of China has implemented policies to boost consumer confidence, with 81% of informed respondents expressing greater confidence in the macroeconomic outlook [12][18] - Overall consumer confidence has stabilized, with 76% of respondents optimistic about the economic future, although variations exist among different demographic groups [18][20] Trend 3: Focus on Personal Achievement - Consumers are increasingly making purchasing decisions based on tangible factors like personal asset value rather than confidence levels [26] - Wealthy urban consumers plan to increase daily spending by 2.6% in 2025, focusing on both tangible goods and intangible services that enhance personal fulfillment [26][27] Conclusion - The complexity and differentiation of the Chinese consumer market are increasing, with spending intentions influenced more by actual income and assets than by confidence levels [32] - Companies in the consumer goods sector must adapt to these market changes to seize opportunities for growth in the coming years [32]

Investment Rating - The report does not explicitly provide an investment rating for the industry analyzed Core Insights - A small number of firms, referred to as "Standouts," are responsible for a significant portion of productivity growth, with fewer than 100 Standouts accounting for two-thirds of productivity gains in a sample of 8,300 large firms across Germany, the UK, and the US [10][30] - Productivity growth is characterized by powerful bursts rather than gradual improvements, driven by strategic moves and top-line growth rather than mere efficiency gains [18][55] - The research emphasizes the importance of reallocating resources to leading businesses to enhance productivity growth [14][71] Summary by Sections Executive Summary - The report highlights the critical need for robust productivity growth to address global challenges such as inflated balance sheets and demographic transitions [16] - It identifies firms as the fundamental unit of productivity growth, asserting that without improvements at the firm level, overall economic productivity cannot increase [17] Productivity Dynamics - Standouts are defined as firms that contribute positively to national productivity growth, while Stragglers are those that negatively impact it [30][33] - In the US, 44 Standouts accounted for 78% of positive productivity growth, while only 14 Stragglers were responsible for 57% of negative growth [38][40] Sector Analysis - The report indicates that high-growth sectors tend to have more Standouts making larger contributions, while low-growth sectors are characterized by a higher presence of Stragglers [46] - The relationship between Standouts and sector growth is symbiotic, with Standouts driving growth and benefiting from favorable market dynamics [44] Strategic Moves - Standouts employ a combination of strategies to drive productivity, including scaling productive business models, shifting product portfolios, reshaping customer value propositions, and building scale [56] - The report notes that these strategic moves often trigger chain reactions leading to bursts of productivity growth [57] Employment Reallocation - The analysis reveals that employment reallocation from less productive to more productive firms significantly contributes to overall productivity growth, particularly in the US [68][69] - The US sample exhibited a dynamic reallocation pattern, with Standouts growing faster and underperforming firms restructuring or exiting the market [68] Conclusion - The report advocates for a micro-to-macro approach to productivity growth, emphasizing that firms should focus on enhancing productivity to benefit all stakeholders [71][72]

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The gender pay gap is estimated to be 27 percent for both the sample and the broader US workforce, indicating significant disparities in earnings between men and women [19] - The analysis focuses on how career choices and time impact the gender pay gap, emphasizing the importance of occupational trajectories and advancements [19][52] - The study utilizes a comprehensive dataset of over 100 million individuals and job postings to analyze career pathways and wage mobility [2][4] Sample Selection - The study uses a random sample of one million men and one million women from over 60 million gender-identified profiles, focusing on US-based profiles [3][4] - The final sample consists of 35,235 women and 50,529 men, totaling 85,764 individuals, with approximately 36,000 unique job titles [4][5] - The sample skews towards higher-educated workers in higher-paying occupations, reflecting women's lower representation in these roles [9][12] Skill Distance - Skill distance is estimated by analyzing job posting data from 20.9 million aggregated job postings, focusing on the skills required for each role [10][14] - The calculation of skill distance per role move considers the weighted number of new skills compared to the total skills required for the new role [13] Wage Mobility - The report examines wage mobility over a ten-year period, categorizing occupations into quintiles based on average wages [15][16] - It tracks the movements of men and women between occupational wage quintiles, disregarding the gender pay gap within occupations for this analysis [16] Decomposition of the Gender Pay Gap - The gender pay gap is decomposed into differences in starting points, occupational trajectories, within-occupation advancements, and hours worked [19][24] - Women's non-gendered overall average wage at year ten was approximately $82,000, with an 8 percent gap due to differences in occupational trajectories [25] Historical Trajectory Patterns - The report projects labor demand by occupation through 2030, estimating the number of workers transitioning into growing and shrinking occupations [32][34] Types of Companies - The analysis identifies 12,476 unique workers from various company types, comparing human capital outcomes for men and women across these categories [35][37] - The study categorizes companies into four types based on their performance in human capital development and financial results [47]

Core Insights - The report highlights the significant impact of AI and automation on labor markets in Europe and the United States, predicting a shift in demand towards high-skill professions while reducing demand for lower-skill jobs [12][13][24] - By 2030, it is estimated that up to 30% of current work hours could be automated, necessitating around 12 million occupational transitions in both Europe and the United States [12][66][77] - The need for a major skills upgrade is emphasized, with a rising demand for technological, social, and emotional skills, while traditional manual and cognitive skills stabilize [14][15][66] Labor Market Context - Labor shortages and a slowdown in productivity growth are pressing issues in both regions, exacerbated by an aging workforce and the impacts of the COVID-19 pandemic [12][24][26] - The pandemic has accelerated shifts in labor demand, with a notable increase in hybrid work and e-commerce, which are expected to persist [25][41] Occupational Transitions - Europe may require up to 12 million occupational transitions by 2030, which is double the pre-pandemic pace, while the U.S. transitions could align with historical norms [13][66][68] - The pace of occupational change is expected to be uneven, with Europe facing a potential doubling of transition rates compared to pre-pandemic levels [68][69] Skills Demand - There is a projected increase in demand for STEM and healthcare professionals, with expected growth rates of 17-30% in these sectors by 2030 [58][63] - Conversely, occupations in food services, production, and customer service are anticipated to decline, with potential job losses ranging from 300,000 to 5 million in Europe [59][63] Automation and AI Impact - The report indicates that by 2030, 27% of hours worked in Europe and 30% in the U.S. could be automated, driven by advancements in generative AI [77] - The potential for automation is expected to rise significantly by 2035, with projections of 45% in Europe and 48% in the U.S. [77] Productivity Growth - Embracing technology and proactive worker redeployment could lead to productivity growth rates of up to 3% annually in Europe through 2030, while slow adoption could limit growth to 0.3% [16][66] - The report underscores the importance of making strategic choices today to enhance productivity and societal outcomes in the future [16][37]

Investment Rating - The report does not explicitly provide an investment rating for the luxury industry Core Insights - The luxury industry is experiencing a significant slowdown after a period of exceptional growth, with a projected annual growth rate of 1 to 3 percent from 2024 to 2027, compared to a 5 percent compound annual growth rate from 2019 to 2023 [31][35] - Price increases accounted for over 80 percent of the luxury industry's growth during the previous five years, while volume gains were more moderate [30][72] - The luxury client base is becoming more diverse, with younger clients seeking unique experiences rather than just luxury goods, creating new challenges for brands [33][34] Market Backdrop - The personal luxury goods industry grew at a rate of 5 percent per year from 2019 to 2023, with price increases driving much of this growth [53][54] - The luxury sector's economic profit nearly tripled from 2019 to 2024, indicating strong financial performance despite the current slowdown [60][62] - The Chinese market, which grew at 18 percent annually from 2019 to 2023, has been a significant driver of luxury growth, but is now facing macroeconomic challenges [32][53] Strategic Imperatives - Luxury executives are advised to conduct a strategic reset, restore product excellence, rethink customer engagement strategies, bridge talent capability gaps, and futureproof their portfolios to navigate the current market challenges [37][43] - Investment in technology, AI, and data capabilities is essential for uncovering customer insights and personalizing customer journeys [40][45] - Brands must clarify their core values and align on priority clients to sharpen long-term strategies and maintain brand relevance [44][45]

Industry Investment Rating - The report does not explicitly provide an industry investment rating [1][2][3] Core Viewpoints - The report focuses on economic empowerment and how companies can benefit more people by improving income and affordability [1][9][16] - It analyzes 120 economies, covering 90% of the global population, categorized into lower-income (GDP per capita < $5,000), middle-income ($5,000-$20,000), and higher-income (>$20,000) groups [2] - The empowerment line is defined as the private cash expenditure required for basic needs, including a 10% allocation for recreation and a 5% savings buffer [3][5] - The report estimates the share of the population below the empowerment line using consumption and distribution data [6] - It highlights the importance of stable jobs with sufficient wages and affordable essential goods (housing, food, transportation, healthcare, education) for economic empowerment [12][16] Income Analysis - The report uses four labor market metrics: working-age population, labor force participation, unemployment rates, and stable jobs with sufficient wages [12] - For countries with GDP per capita > $10,000, it considers time-related underemployment and low-pay rates, while for those < $10,000, it focuses on formal employment share [13] - The analysis identifies best-performing countries based on labor market metrics and estimates the population that could be lifted to empowerment by improving one element [14][15] Cost Analysis - The report calculates a "lowest-cost line" for essential goods and services, excluding statistical outliers and identifying top-quartile economies [18][19] - It estimates the population that could achieve empowerment through improved affordability by comparing costs to the lowest-cost line [20] Cost-to-Impact Ratios - The report evaluates cost-to-impact ratios for initiatives aimed at economic empowerment, using external data and academic assumptions [21] - It notes that ratios may improve with better targeting or more substantial benefits, such as supporting housing for low-wage employees [22]

Investment Rating - The report emphasizes the need for banks to transition from experimentation to becoming AI-first institutions to unlock material financial value from AI technologies [1][3]. Core Insights - AI is transforming the banking industry, but many banks remain in the experimental phase. To thrive, they must adopt AI technologies enterprise-wide [3][18]. - Successful AI transformation requires investment across multiple interdependent layers of the organization, as underinvestment in any one area can hinder overall progress [4][22]. - Leading banks view AI as a transformational tool, focusing on core strategic priorities such as revenue enhancement and customer satisfaction [22][68]. Summary by Sections AI Transformation Essentials - Banks need to modernize core technology, reimagine customer experiences, and enhance decision-making processes through AI [4][18]. - A comprehensive AI capability stack is essential, including automated cloud provisioning, streamlined architecture, and a central AI control tower [4][54]. Business Areas for AI Transformation - Banks can identify high-impact subdomains for AI transformation, such as customer underwriting, risk management, and sales and marketing [7][12]. - The report identifies that a typical bank has around 25 subdomains that could benefit from AI rewiring, with a focus on those with high business impact and technical feasibility [24][27]. Multiagent Systems - Multiagent systems are highlighted as a key component in automating complex banking workflows, improving productivity by 20 to 60 percent in tasks like credit memo preparation [21][45]. - These systems can act as virtual coworkers, capable of planning and executing tasks, thus enhancing both customer and employee experiences [61][67]. Investment in AI Capabilities - To extract value from AI, banks must invest across the entire AI capability stack, including enterprise data, machine learning operations, and core technology [68][77]. - The report stresses the importance of a full-stack approach that combines generative AI with traditional analytics and digital tools [72][78].