With airlines losing billions over the course of the pandemic, they could be forgiven for focusing purely on flying planes.
Perhaps surprisingly, however, their corporate innovation units and startup accelerators have remained part of airlines' core strategies.
British Airways parent IAG is just kicking off its sixth Hangar 51 accelerator program looking for startups across various categories including sustainability, data and AI and connected operations.
Others such as its travel restart and distributed teams categories are a nod to the consumer travel experience going forward and the ongoing hybrid nature of work.
Dupsy Abiola, head of global innovation for IAG, acknowledges that while much has changed because of the pandemic, “black swan events are a really great opportunity for people to reset and think about what’s important to them.
“Also, in many ways it has reinvigorated the way people think about things and do things.”
Abiola says that IAG’s reasons for having an accelerator and investing in startups haven’t changed however.
“The fundamental principles around making very particular strategic investments in emerging technology remain the same.”
She adds that the appetite for corporate innovation also remains unchanged and that although many might think it’s harder to justify the investment currently, it’s viewed as a “core layer in the business.”
“It’s just a question of focus. When things change in the market, the response is to point the lens on certain strategic areas that have become more prominent as a result. The fundamental commitment to sustainability, to innovation, to ensuring we are pushing the boundaries may change slightly but, the principle remains.”
What did change was the need to make everything to do with the program virtual.
“Often corporate accelerators are outside the business, in a WeWork and a couple of execs appear for an hour. We spend time and energy engaging with our internal stakeholders and people in the C-suite throughout the business engage with the categories.”
Abiola says a lot of time was spent last year figuring out how to translate close collaboration elements of the accelerator virtually while still maintaining the “energy and spirit of this co-working relationship.”
On the plus side, running the program virtually meant it could be opened up to more startups, especially those from further afield, who previously might have found it challenging to attend the 10-week accelerator program.
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IAG is not alone in continuing to keep a sharp focus on innovation despite turbulent times.
JetBlue Technology Ventures, which invests in as well as partners with early-stage startups, has already made five investments since the beginning of 2021 and says there will be more.
Amy Burr, president of the airline’s venture arm, says now is a good time to invest.
“Crisis breeds innovation, and the corporations that are willing to invest in cutting-edge technology during these lean times are more likely to come out on top.”
A recent study from Space3ac, involving 85 corporations and almost 100 startups, reveals that in a drive to achieve greater efficiency, companies are looking at more ways to leverage “corporate venturing” to increase innovation.
The study goes on to reveal 50% of companies have a dedicated corporate strategy for collaboration with startups and 47% have implemented a startup scaling process.
It adds that partnerships with external incubators and accelerators are the most popular form of “corporate venturing,” followed by a dedicated department for startups and innovation.
Companies that allocate funds to invest in startups also remain optimistic about working with startups despite the pandemic, according to the research.
Just under a third say they plan to increase the budget allocation with 15% planning a significant increase and a further 50% planning to keep it at the same level.
Burr says that parent companies want to ensure corporate venture funds into startups will “fill a long-lasting or strategic business need” and that JetBlue has redoubled its commitment to the corporate venture capital model to boost industry innovation.
In terms of areas of investment, Burr says the pandemic has brought about three major areas of opportunity in travel.
“Contactless technology will continue to remain a priority as a new industry standard moving forward. Short-term rentals also became popular, and we see this trend reflected in mergers and acquisitions of key players. One area that’s remained constant is sustainability, perhaps the most important focus of all, and we’re particularly interested in identifying transportation solutions powered by alternative propulsion systems.”
While both Hangar 51 and JetBlue Technology Ventures are on the look out for their next startup investments and partnerships, Abiola has also kept an eye on previous cohorts of the accelerator.
She says that a number have raised capital in the past 12 to 18 months, others have been acquired and the airlines group continues to work with some.
She points to Sherpa as an example of a company that has raised funds as well as diverted its development focus to the opportunities provided by the pandemic.
Meanwhile, Volantio, a Hangar 51 company that also received investment from IAG, is one company that used the pandemic to expand its product portfolio.
“It’s great validation of our ability to identify really hot teams that are really adding value.”
On pivots, Abiola feels that it has been more a case of startups adapting to new opportunities than a complete change in direction.