Fwd: Lessons from 100+ innovation units

 Research 

Innovation has long been a defining characteristic of the aviation industry but it’s also a paradox.

• On the one hand, aviation is one of humanity’s greatest technological achievements—a symbol of innovation that has fundamentally transformed the way we connect with the world.
• On the other hand, the pace of innovation in aviation appears to have slowed in recent decades. Many of the aircraft we fly today were developed years, often decades ago, and the customer experience—judging by persistently low satisfaction scores—often falls short of what passengers expect in a world driven by rapidly evolving technology.

In an effort to address this innovation dilemma, standalone innovation units—dedicated teams positioned outside corporate headquarters—have proliferated across the aviation industry over the past decade.

Their mission?

To break free from traditional corporate constraints, drive forward-looking initiatives, and tackle the sector’s most pressing challenges.

Last year, as the Lufthansa Innovation Hub marked its 10-year anniversary, we took the opportunity to start reflecting on the evolution of standalone innovation units in aviation, including our own trajectory. 

Today, we want to share what we’ve found out.

The Rise of External Innovation Units in Aviation

To get started, let’s take a bird’s-eye view of the sheer existence of such dedicated innovation units. 

It turns out these entities, designed to operate with a degree of autonomy, have gained massive popularity among aviation leaders over the past decade.

• Over the past ten years, we’ve tracked well over 100 such entities being founded. 

• While it’s difficult to determine precisely how many of these units are still operational today—companies are far more eager to announce their openings than their closures—the vast majority, according to our research, remains active.

This growing trend reflects a clear vote of confidence from aviation executives in the potential of these units to drive change. 

It also signals an industry-wide acknowledgment that tackling long-standing challenges sometimes requires breaking free from the constraints of traditional corporate structures.

With this context in mind, let’s dig deeper: 

• Where are these units focusing their efforts? 
• What challenges are they solving?
• And, crucially, are they living up to their potential?

The Many Faces of Innovation Units in Aviation

Before diving into the specific focus areas of aviation innovation units, it’s crucial to clarify what we actually mean by “innovation units.” 

The term can encompass a wide range of structures, responsibilities, and objectives, and not all innovation units are created equal.

• Based on our analysis of 100+ innovation units in aviation, we’ve identified five distinct types—or “innovation capabilities.” 
• Many units combine more than one capability to maximize their impact (ours at the Lufthansa Innovation Hub is a good example of this).

As the chart below shows, Innovation Labs, alongside Accelerators and Incubators dominate the aviation innovation landscape.

Why is this the case? We give more context in the full article.

Finding Focus: Why Clear Priorities Matter for Innovation

While the choice of innovation vehicle—be it an Innovation Lab, Accelerator, Venture Clienting Unit, Venture Building Specialist, or CVC (or a mix of these)—is essential, its effectiveness ultimately depends on the clarity of its focus areas.

Without a clear and strategic focus, innovation units risk disconnecting from their parent companies’ core challenges. 

At the heart of this disconnect lies a common issue: misalignment of innovation objectives. 

• Imagine a spectrum of goals—on one end, those tightly aligned with the core business; on the other, exploratory ventures designed to push the boundaries of what’s possible. 
• Striking the right balance between these two extremes is critical, and regular communication about this balance is often what separates long-lasting units from those that disappear as quickly as they are launched.

Focusing too heavily on tactical, short-term objectives tied to the core business can also be damaging. 

• One of the greatest advantages of an external innovation unit is its ability to remain somewhat separate, creating space for novel thinking that corporate structures often suppress. 
• When the relationship between an innovation unit and its parent company is healthy, this separation becomes an asset—enabling exploratory initiatives while staying grounded in the realities of the aviation industry.

So, what focus areas strike the right balance between incremental progress and visionary thinking?

Analyzing our dataset of 100+ aviation innovation units reveals a clear pattern: the leading focus areas align closely with immediate industry priorities but also leave room for tackling emerging challenges long-term.

At the top of the chart stands Sustainability, with over half of all aviation innovation units identifying it as a primary focus. 

This is a promising signal, as the aviation industry’s ability to secure its short- and long-term future depends on addressing its environmental imperatives.

Several innovation units are making meaningful strides in this area. For example:

• Delta’s Sustainable Skies Lab and Airbus’ UpNext innovation lab are partnering to develop hydrogen technology and test more efficient airframe and flying techniques.

• United Airlines Ventures’ Sustainable Flight Fund has raised over $200 million USD and invested in more than 10 sustainable aviation companies to date.

Diving Deeper: Focus Fields by Stakeholder Group

The next question we wanted to answer is howthe focus area prioritization varies across different stakeholder groups—airlines, airports, and aviation suppliers–especially when it comes to striking a balance between immediate and long-term innovation bets.

• To better understand this dynamic, we analyzed the relative importance of innovation focus fields for each stakeholder group. 
• Specifically, we measured the top focus areas by their positive delta from the average across all stakeholders.

What we found striking is that for two stakeholder groups, there is a clear split between one focus area that supports immediate, core-business objectives and another that reflects a more exploratory, future-oriented bet.

Take airlines, for example. 

• Nearly six out of 10 airline innovation units—regardless of their specific capabilities—prioritize AI and Machine Learning as a core innovation focus. 
• This figure is 17 percentage points higher than the industry average, emphasizing AI’s critical role in improving efficiencies and enhancing processes like customer interactions and operational workflows.

On the other end of the spectrum, airline innovation units are also leading in their focus on Web3 and immersive technologies. 

While Web3’s potential impact on travel remains a topic of debate, we’ve seen intriguing use cases emerge, such as blockchain for loyalty programs or VR-enabled immersive travel booking.

This dual focus suggests that airline innovation units have struck a thoughtful balance, aligning innovation efforts across short-term operational needs and long-term transformational opportunities.

The focus prioritization for airports and aviation suppliers like Airbus and Boeing looks a bit different (see the full analysis) but the dual approach of managing immediate as well as long-term innovation areas holds true as well.

Regional Nuances in Innovation Focus Areas

An even more nuanced perspective on focus fields emerges when we analyze innovation units based on their regional origins.

It turns out that the regional background plays a critical role in shaping the priorities of these units as well, with clear trends aligning with cultural and market-specific dynamics.

Innovation unitsin the Middle East, for example, stand out for their strong focus on enhancing the passenger experience, significantly more than their counterparts in other regions.

• This emphasis aligns with the region’s global reputation for luxury airlines and world-class passenger services. 

• Airlines like Qatar Airways and Emirates consistently dominate Skytrax awards, with Qatar Airways clinching “Airline of the Year” in 2024.

Europe: Leading the Charge in Sustainability

In Europe, on the other hand, sustainability dominates the focus areas of innovation units. 

This prioritization makes perfect sense given the region’s regulatory pressures and societal demand for greener aviation solutions.

• Take, for example, IAG’s Hangar51, which has made significant investments in startups working on sustainable aviation fuel (SAF), hydrogen-electric aircraft, and advanced fuel management systems. 

• Similarly, at the Lufthansa Innovation Hub, we have been heavily focused on sustainability-driven innovation. Over the years, we’ve successfully spun out ventures such as Squake, which facilitates seamless carbon offsetting for corporate travel, and built and expanded Compensaid into Lufthansa Group’s company-wide booking platform for carbon offsetting and SAF-based emissions reductions. 

Asia: Pioneering Emerging Technologies

Innovation units based in Asia are ahead of the curve when it comes to adopting and experimenting with emerging technologies like Web3, augmented reality (AR), and virtual reality (VR).

• This trend arguably reflects the region’s broader narrative as a global leader in consumer technology innovation. 

United States: A Strong Focus on Future Mobility

In the U.S., innovation units are heavily focused on Future Mobility. This trend aligns with the country’s leadership in AAM-related developments.

• Leading examples include United Airlines Ventures and JetBlue Ventures, both of which have invested in a wide range of AAM startups, from hydrogen-powered aircraft to electric and supersonic aviation solutions.

Standout Examples of Aviation Innovation Units

Building on the regional and stakeholder-specific insights from the previous section, let’s spotlight some standout innovation units that have carved out impressive niches in the aviation ecosystem.

Naturally, we at the Lufthansa Innovation Hub have a strong perspective on this topic. 

• Over the past decade, in our humble opinion, we’ve built one of the most comprehensive external innovation strategies in the entire Travel and Mobility Tech ecosystem—without a blueprint to follow. 
• Our work has spanned launching dozens of digital prototypes (several of which have scaled into rapidly growing standalone startups), making strategic VC investments in some of the most promising Travel and Mobility Tech pioneers, and building industry-wide tech platforms and research communities like TNMT (hello, everyone!). 
• Beyond that, we’ve played an active role in shaping Lufthansa Group’s innovation agenda, from introducing new pricing models and industry-first booking features to cultural transformation initiatives.

However, this analysis should not be about us—it’s about the broader innovation ecosystem. 

With that in mind, our full article highlights three other innovation units that stand out for their strategic vision and measurable impact. 

Airbus is one of them. 

For more details and our recommendations on how to supercharge today’s group of innovation units, check out the full analysis.

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 Deal Tracker 

– VC –

TravelPerk – the Barcelona-based business travel platform raised $200M in Series E funding led by Atomico and EQT, with participation from Noteus Partners and other investors. The funding will support U.S. expansion and product development.

Turbi – the Brazil-based car rental startup raised $53.34M in a Series D funding round through a combination of debt and equity from undisclosed investors.

Finout – the Israeli cloud cost management solution working with hospitality players like Choice Hotels raised $40M in Series C funding led by Insight Partners, with participation from other investors. The funds will be used to grow the engineering team and enhance the go-to-market strategies.

Paytrack – the Brazil-based corporate travel and expenses management platform raised $39.23M in a Series B funding round led by Riverwood Capital, with participation from other investors. The funds will be used to accelerate product innovation, integrate new payment solutions, and expand into international markets.

Naboo – the France-based corporate offsite booking platform raised $20.7M in Series A funding led by Notion Capital, with participation from other investors. The funds will be used to continue improving its technological platform and accelerate its presence in Europe.

HumanForest – the UK-based e-bike operator raised a totalof $16.1M, composed of $ 3.71M in Series B funding from B8 Venture Partners and other investors, and 12.38M in the form of debt from Fintex Capital. The funds will be used to expand the company’s operations, introduce three new e-bike types to its fleet, and invest in research and development to support its growth.

Wingbits – the Swedish flight tracking network raised $5.79M in seed funding led by Borderless Capital and Bullish Capital, with participation from Spartan Group and other investors. The funds will be used to offer rewards-based flight tracking using cryptographically-secured ADS-B receivers. 

Tryp.com – the Denmark-based travel planning platform raised $3.21M in later-stage funding led by Iberis Capital, with participation from EdenBase, ITV, and other investors. The funds will be used to enhance the AI capabilities and to scale the operations.

Offsite – the US-based corporate retreat marketplace raised $1.2M in later-stage funding from Ground Game Ventures and other undisclosed investors.

BlueWX – the Japan-based advanced weather forecast services provider for airlines and the aviation industry, raised $760K in Series A funding led by the University of Tokyo IPC, with participation from ANA Holdings, Global Brain, and Keio Innovation Initiative. The funds will be used to strengthen the business foundation, enhance the prediction model, and support recruitment.

Hagino – the Japanese hospitality recruitment platform raised $380K in seed funding led by Animal Spirits, with participation from ANOBAKA, OASIS FUND, and other investors. The funds will be used to support the company’s recruitment services for the hospitality industry and develop new related businesses.

— M&A —

Danitalia – the Denmark-based provider of villas, holiday apartments, and local knowledge for travelers, was acquired by Landfolk, the holiday homes marketplace for tourists, for an undisclosed amount.

Hello Travel – the French operator of Copines de Voyage, an online platform specialized in adventure travel for women, and Les Aventureurs, an OTA for adventure travel, was acquired by Groupe Altaï, the operator of a group of adventure OTAs, for an undisclosed amount.

Kovi – the Brazil-based online car rental and ride-sharing startup, was acquired by Moove, the mobility fintech startup, for an undisclosed amount.

RightRez – the US-based air travel technology company, was acquired by Mize, the travel technology provider, for an undisclosed amount. 

Sawadee Reizen – the Netherlands-based travel company and a subsidiary of Travelopia, was acquired by Intrepid Travel, the Adventure tour operator, for an undisclosed amount.