Everyone in the travel industry, especially airlines, is talking about sustainability right now. But investments are also being made in innovations that could form the industry decades from now.
Executives from the venture capital arms of three large travel companies — JetBlue, Alaska Airlines, and Amadeus — each shared details with Skift about what they are focused on in 2023 and going forward.
Each of them have a strong interest in sustainability, consistent with the rest of the industry. All three companies recently invested in the same startup, Volantio, which is an optimization software platform that helps airlines more efficiently fill open seats, and it also reports on carbon emissions on a per seat basis.
But, sustainability is not all they’re looking at.
Global distribution system companies and airlines are often criticized for using old technology, but each of these companies are, on the contrary, making investments that look toward the future.
For companies in any industry that have the resources for innovation, they’ll often create a venture capital arm to take equity stakes in startups doing that work. It is not as common in the travel industry, especially not for airlines. One benefit for startups that manage an investment from the venture arm of a travel company is the mentorship that comes from people working in the industry, and there’s often easier access to trials within those companies or their clients.
Below are more details on what each of the companies’ investors are thinking about right now.
JetBlue Ventures has five broad investment themes, but sometimes top focuses shift according to sentiment changes within the industry.
“We’re still very focused on sustainability tech,” said Amy Burr, president of JetBlue Ventures. “We’ve done a ton of investment in that space. We’ve got two more that we’re completing this month, and we’ll announce … in 2023.”
JetBlue is still interested in ideas like contactless bag tags and mobile-first technology that allow customers to self service post-pandemic, as well as artificial intelligence to improve operations efficiency.
Also, more of a risky, forward-thinking focus: blockchain.
There are announcements coming in 2023 about investments in two blockchain startups, Burr said. While blockchain has historically operated in conjunction with cryptocurrency, there are technologies being developed that utilize its digital data storage capabilities in a number of other ways.
One of the coming JetBlue announcements is about a startup whose platform is more of a baseline onto which other apps can be built, maybe platforms to do with tracking carbon credits or flights. The other announcement has to do with customer loyalty.
“Especially on the loyalty side, using blockchain as a basis for more of a digital wallet or digital identity I think is really growing and important,” Burr said. “We decided that it was the time was right to be part of that conversation and make sure that we understand what the use cases might be. It’s maybe not for JetBlue just yet, but it’s definitely something that may be coming.”
She feels similarly about biometrics in the industry: “The time is coming for it to be a little bit more widespread and to be accepted.”
About 40 percent of JetBlue’s investments should be immediately usable by JetBlue, but the rest of investments are in startups working on tech that may be important in the future.
“What we’re looking for are startups that we think are going to better travel and better the industry in general — and hopefully also be usable or strategic for JetBlue — but that is not necessarily a requirement,” Burr said.
JetBlue typically considers startups ready for Series A funding, annually screening roughly 1,500 startups focused on the broader travel industry. With four new deals coming, JetBlue will have closed on 46 investments since it was founded in 2016. The number of active portfolio startups is in the 30s, some having exited or dissolved.
“The way we look at it is if none of your portfolio companies ever go under, you’re not taking enough risk,” Burr said.
JetBlue had been an outlier in the industry as an airline with a venture arm until a couple of others got involved in recent years, including Alaska Airlines.
The airline launched Alaska Star Ventures in late 2021.
“The entire purpose, why we founded the fund, was recognizing that if we’re going to reach net zero by 2040, which is what we’ve publicly committed, it’s going to be a moonshot. It’s going to require technology that literally doesn’t exist in the world. It has been far less a financial motivation than a strategic one,” said Pasha Saleh, who is leading the Alaska Star Ventures work as head of corporate development for Alaska Airlines.
Plus, it occurred to the airline that being based in the Seattle area, it has more access to entrepreneurs in Silicon Valley, where a lot of these innovations are coming from, he said.
The venture arm started investing in 2022 into other firms: $15 million to UP.Partners, which is focused on the future of mobility, and $20 million to The Westly Group, which is focused on the future of energy.
“Recognizing that we’re new to this space, we didn’t start by making direct investments; we started by investing in other established funds and learning from them,” Saleh said.
Alaska Star already has made a couple of direct investments, including with long-time vendor Volantio. It also gave an airplane to ZeroAvia in exchange for equity. The startup is working to decarbonize flying by converting existing planes to zero emissions engines.
Being a smaller company compared to the larger airlines with venture capital arms, Saleh said he wants Alaska Star to make a point of taking a hands-on approach with startups in its portfolio.
In 2023, Alaska Star is ready to build a bigger portfolio of direct investments, with a rough goal of having 15 to 20 series A startups in the next few years, though he is also open to connecting with seed stage companies. Startups focused on sustainability will probably make up about 80 percent of the portfolio, he said.
Long term, part of the focus is on what Alaska could be decades into the future — maybe more than just an airline, maybe more of a mobility company providing an end-to-end journey that includes other forms of transportation.
“The way we do business in 2040 may be different than the way we’ve done it for the last 90 years, and so we want to know what new things are out there that could become part of our future business,” Saleh said.
Suzanna Chiu has been the head of Amadeus Ventures since it started in 2014. Since then, Amadeus Ventures has connected more than 250 startups to different parts of the company and has developed more than 30 joint projects with portfolio companies. The company adds about three to five startups to its portfolio each year.
Besides its global distribution system, Amadeus offers a wide range of software solutions for the travel industry.
“We are providing a lot of the essential technology services to the industry, but at the same time, there’s a lot of exciting things happening outside,” Chiu said.
From Chiu’s perspective, the top focus in innovation is creating a seamless end-to-end travel experience.
“Everything comes back to that,” Chiu said. “I think the pandemic has brought even more friction than before. Or maybe we’re more aware of it, the consequence of being trapped in foreign countries, et cetera. Overall, I think the industry is conscious of providing answers, almost like duty of care and for leisure.”
For Amadeus Ventures, that means looking at solutions that allow travel companies to be more flexible in terms of booking, like changing and canceling reservations. She referred to Hopper as the leader in that field.
A recent investment in Eccocar was done with the aim of filling in the gap between different forms of transportation. The Spain-based company is developing a mobile platform meant to link all forms of transport together, creating better mobility than can be achieved through car rentals and pre-arranged transfers alone.
“To be able to do all the contracs and the identification process, all the way to pick up, through a mobile phone,” Chiu said.
Automation with the use of data and artificial intelligence has been strong and is an ongoing piece that touches much of the innovation, she said.
“That topic of being able to provide that personalized services, and at the right time in the right place, is definitely an ongoing topic and I would say is definitely coming back as an ongoing trend,” she said.
The company is looking more deeply into how it can increase optimization in some of its existing products, like scheduling within an airport or loading of planes. And it’s looking at sustainability as part of enhancing the recovery in travel, she said. She referred to the company’s recent investment in CHOOOSE as its first step into that topic, allowing Amadeus to explore alongside a startup and its many customers.
“At the moment, it’s about carbon offsetting because that is the available solution. But also it’s sprawling into topics like sustainable aviation fuel, and how we can offer that in the right moment in the right way to the end travelers, and get them engaged in that discussion,” Chiu said.
Photo credit: JetBlue, Alaska Air, and Amadeus all have their own venture capital arms. Among their interests in 2023 will be new tech, like improving apps. Marko Geber / Getty Images