IMB Creating Smarter Airports - An Opportunity to Transform Travel TTW03003USEN

7/28/2019 IMB Creating Smarter Airports - An Opportunity to Transform Travel TTW03003USEN

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Creating smarter airports

An opportunity to transform travel and trade


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1 Creating smarter airports

Executive summary

Airports ace multiple challenges, including meeting capacity demands, providing enhanced

public service and increasing revenueall while battling rising costs, increasingly dissatis-

fed customers and rigid inormation inrastructures. These challenges and pressures are

evidence that their current business processes need revitalization.

Even with their challenges, airports have the potential to become multi-modal transporta-

tion hubs and centers o economic vitality. To do so requires greater collaboration between

airport stakeholders and a more integrated approach to managing and sharing inormation.

Society has presented airport executives with a mandate to create airports that are smarter,

just as airport inrastructures, systems and processes are becoming digitally aware, inter-

connected and inused with intelligence. By embracing new and existing technologies to ac-

quire, associate and analyze inormation in the airport inrastructure and using that inorma-

tion to become more efcient and eective, airport operators can create a more responsive

and agile operating and commercial environment. In addition, they can be recognized as

leaders who harness shared inormation to:

Provide enhanced service to passengers, airlines and other customers.

Achieve real-time operational awareness, adaptability and readiness.

Decrease the cost o delivering services.

Generate business insights that beneft the airport, airlines and business partners.

The smarter airport is a dynamic hub that connects a multi-modal transport network with

people, inormation and trade; it serves the needs o the larger community and generates

economic value or the region. It is a new rame o reerence with enormous potential or

growth and progress and or opportunities to think and act in new ways.


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IntroductionThe demands being placed on all modes of

transportation are growing, driven by expand-

ing populations, rapid urbanization, business

globalization and the rapid adoption of new

technologies. These and other factors have

created four imperatives for all operators in thetransportation ecosystem:

Predict demand and optimize capacity and

assets accordingly.

Improve the end-to-end customer experience.

Improve operational efciency while reducing

environmental impact.

Continue to assure safety and security, with

less cost and impact on customers.

Airports play an increasingly important role in

addressing these imperatives because they are

a nexus for multi-modal transportation.

Airport operators are responsible for planning,

designing, building and operating their capital-

intensive infrastructure assets over long plan-

ning horizons to meet commitments to the local

communities and metropolitan areas they serve.

They have a long-term nancial obligation to de-

liver sustainable return on these assets. Current

airport business models are often not yielding

the desired nancial results, however.

Based on the Global Airport Revenue statistics

of the Airports Council International (ACI), aero-

nautical revenue does not cover all airport op-

erations costs. Instead, net airport prot growth

is now derived from non-aeronautical revenue

because of higher margins and lower operating

costs.1 Both airport revenue streams (aeronauti-

cal and non-aeronautical) are under pressure

caused by reduced passenger numbers, cargo

volumes and aircraft movements in the current

economic environment.

The reason that current business models are no

longer as effective as they once were is that the

air travel environment is changing faster than

organizations can adapt. Periods of economic

growth and decline, airline trafc volatility, short-

term route network changes, evolving security

rules and other governmental regulations allcharacterize the current air travel environment.

In this changing environment, airports and their

business partners are struggling. It is clear that

a business model transformation is necessary.

Airport-initiated stakeholder collaboration and

information technology are key enablers in the

transformation of the airport business model to

one that uses airport infrastructures better and

supports new commercially attractive offerings.

This transformation requires big ideas from all

participants in the global airport industry

from small operators to large airport authori-ties in both high-growth and mature markets.

Global multi-modal transportation needs more

dynamic, economically viable airports that serve

as central hubs in networks of passenger, cargo

and information movements. Now that so many

technology avenues are open, its time to make

the change.

This paper provides a brief overview of the

challenges that have mandated a change in the

airport business model and then explains how

airports can use new strategies, current and

emerging technology and paradigm shifts tobecome smarter airports.


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Mandate for changeGlobally, airport authorities, owners and their

business partners face a number of business

challenges:

Capacity shortalls

Demand for air travel worldwide continuesto expand, stretching capacity beyond the

breaking point. Currently about 2.2 billion

passengers per year are using commercial

aviation services. It is possible that, as the

world population increases and air travel

becomes even more available, by 2020, there

will be demand for 7 billion passenger trips. If

current conditions persist, airline and airport

passenger capacity will only be able to handle

6 billion travelers, creating a shortfall of critical

infrastructure of 15 percent.2

Dissatisfed passengers

A 2008 IBM survey of 1,000 passengers

across the U.S. revealed a growing lack of

tolerance for poor agent interactions, bag-

gage fees, lost luggage and ight delays.

Customers have good reason to be dissatis-

ed. In 2008, almost one-quarter of sched-

uled U.S. ights were delayed. Frustrated

U.S. air travelers avoided 41 million ights

over a period of 12 months ending in 2008,

which cost the U.S. economy over $26 bil-

lion.3

Declining revenue

The International Air Transport Association

(IATA) estimates that airlines will lose $11

billion in 2009, after shedding $16.8 billion in

2008.4 These airline revenue losses have a

signicant impact on the airport industry. In

total, the fees that airports charge the global

airlines to use their facilities account for 21

percent of overall airport income; the other 79

percent is from commercial airport activities

and passenger service charges.5 With fewer

passengers and the commercial sales per

passenger down between 10 and 20 per-

cent,6 airports face a dramatic decline in both

aviation and non-aviation income.

Increased regulations

New requirements from a large variety of

regulatory bodies, including aviation authori-

ties and national and local governments, put

pressures on airport operations. For example

new security requirements for the passenger

and cargo handling processes are caus-ing disruptions and are increasing airport

costs. Safety and security costs have risen to

almost 60 to 70 percent of airport operating

costs.7 In addition, environmental regulations

affect all airports, regardless of size or loca-

tion. Some new regulations are likely to cause

signicant changes to airport operations,

such as those applicable to oil spill preven-

tion planning and directives to monitor and

control noise pollution, toxic air pollutants and

carbon emissions.

Increased competition

Strong airline alliances dominate the market.

As a result, airports compete with each other

for airline and passenger trafc, while their

local communities expect all attractive routes

to be available. However, the larger share of

competition is from other forms of transpor-

tation. High speed rail has had a signicant

impact on air travel in continental Europe.8

Airport operators and their infrastructure as-

sets cannot easily move to a better market,

so they must make their market more attrac-

tive to airlines, passengers and the larger air

travel stakeholder community.

These challenges have created an almost

overwhelming mandate for change. Airports

must transform themselves and their business

models to overcome the current challenges they

face and thrive in the 21st century. They must

become smarter airports. To do so requires a

different mindset and a new level of collabora-

tion between all the major stakeholders in the

air travel chain.

For airport operators, the top

industry challenges are: capacity

shortfalls, dissatisfied passengers,

declining revenue, increased regu-

lations and increased competition.


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Smarter airports are connected networks that

make it easy for passengers, cargo, informa-

tion and services to get where they need to

be. Such connectivity creates a new, positive

experience for travelers from pre-ight to post-

ight. The seamless integration of information

from various processesfrom check-in, tosecurity, to ight information displays, to bag-

gage, to boardingstreamlines airport opera-

tions. A single instrumented, interconnected

and intelligent information architecture provides

the exibility to adapt to the changing needs

of airlines, airports and their customers. The

result is a positive effect on airport revenue and

growth. For example:

Technology connects the objects, people,

processes and systems in the air travel

process and helps operators and service

providers track their movements. With thisinformation, airport operators and other avia-

tion service providers can allocate support

resources just when theyre needed through-

out the process.

Air and multi-modal network alignment en-

ables efciencies, incentives and multi-brand-

ing opportunities. Competitive pricing and

schedules enhance door to door connectivity

for passengers and cargo.

New travel services can create consumer

revenue growth because passengers can

move through the airport with few hasslesand enjoy their experiences at the airport.

Regional logistics and trade based on related

business activities in the airports region or

country stimulate growth of the air travel

network and land side connectivity.

Technology can enable airports to transform the

entire air travel process. However, technology

is only an enabler. For airports to truly make the

leap to new, sustainable and protable busi-

ness models, airport operators, airlines, ground

handlers, security operators, customs, retailers,

concession owners and public transport opera-tors all must alter their mindsets from propri-

etary to collaborative. Collaboration is the key to

planning and managing multi-modal operations

and commercial services effectively in every

aspect of the airport ecosystem.

Smarter airport enablersOperationally, an airport supports a complex

process that spans multiple organizations, cat-

egorized into three major components: passen-

ger, cargo and aircraft departure, transfer and

arrival. Each component consists of operational

processes that different organizations share, in-cluding air navigation services providers, ground

handling, catering, airlines, various supporting

units and the airport operator itself.

Decades of adding layer-upon-layer of informa-

tion technology have increased complexity,

resulting in cumbersome airport systems that

are expensive and inexible. Is it any wonder

thenas more people, equipment and systems

have been added to the logistics of sustaining

these complex and specialized systemsthat

current models have lost a great deal of the

exibility necessary to lower costs?

Smarter airports are connected

networks that make it easy for

passengers, cargo, information and

services to get where they need to

be. A single instrumented, intercon-

nected and intelligent information

architecture adapts to the chang-

ing needs of airlines, airports and

their customers.


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Now, however, there is an opportunity for airports to think and act in new ways. The world is becoming

Instrumented

RFID tags, mobile phones and other connected devices are creating the ability to sense, measure

and track locations and conditions of objects, people and processes over door to-door multi-moda

transport networks.

Interconnected

Technology has evolved to the point that there are now large networks that connect all types of

objects, creating multitudes of interactions between people, places and things.

Intelligent

Instrumented and interconnected information infrastructures and other assets can now communicate

with sophisticated business systems so that we can mine more data, analyze relationships, identify

new patterns and make informed decisions in real time.

This instrumented, interconnected and intelligent world presents airport authorities, owners and othe

stakeholders with tools and strategies they can use to create smarter airports that better serve pas-

sengers and customers, connect with multi-modal transportation centers and smooth the air travel

process. The sections that follow dene how instrumentation, interconnectivity and intelligence are

being applied to airports.

Instrumented Interconnected Intelligent

An opportunity to think and act in new ways


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Instrumented

Consider these predictions for 2010:

1 billion transistors per human on the planet

4 billion subscriptions to mobile telephones

and personal digital assistants

2 billion people with Web access

1 trillion connected objects such as cars, ap-

pliances, cameras, roadways, pipelines

Using these technologies and others, such as

wireless airport sensors, RFID tags and person-

alized cards based on biometrics, you can track

objects, people and airport processes through-

out the airport infrastructure and broader air

travel chain. In fact, instrumented objects, peo-

ple and processes are already providing masses

of new transportation data around the world.

For example, instrumented devices aid passen-

ger navigation at self-service check-in kiosks,

immigration, retail areas, security and gates

in combination with wireless sensors in the

airport area. Expect the presence of common-

use self-service technologies to become more

widespread as airports recognize their potential

for further empowering passengers.

The airports in Las Vegas, Amsterdam and Hong

Kong use RFID to sort and track baggage. Better

read rates over the bar coded tags have improvedbaggage sorting and reduced mishandled baggage,

while increasing the capacity of the existing bag-

gage system. The airports then can defer costly and

disruptive expansion work.

Instrumentation also supports obtaining more

airport operations information, such as utiliza-

tion of terminal processes, passenger ows

and maintenance of critical airport assets such

as runways, terminals and equipment. Exist-

ing airport hubs in Europe, Asia and North

America and new airports in emerging marketsare applying increased levels of instrumentation

to the travel process. With information about

passenger ows from mobile devices with GPS

and RFID tags, airport operators can locate

passengers, cargo and bags while interacting

with individual passengers at each step in their

travel process, reducing costs and helping meet

new security mandates. Airport staff can also be

better deployed in the airport to accommodate

these ows, which in turn improves capacity.

Using transistors, mobile phones,

personal digital assistants, GPS.

wireless airport sensors, RFID tags

and personalized cards based on

biometrics, it is possible to track ob-

jects, people and airport processes

throughout an airport.


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Interconnected

An airport operation has, on average, at least

30 disparate systems running concurrently. For

many years, airport operators focused their

technology purchases on separate solutions

that responded to a single or unique opera-

tional need. For example, they invested in onesolution for baggage handling, another for ight

information display systems and yet another

for check-in. The result is an infrastructure with

original and older applications that are highly in-

exible, complex and difcult to integrate. Each

system holds information that could improve

airport service if shared with other systems;

however, most are simply silos that provide

information only to a select group or enterprise.

Connecting the different airport systems, with-

out replacing the original infrastructure, makes it

possible for airport operators and their businesspartners to share important information, such

as that provided by instrumentation. They can

develop business models for a consistent travel

experience and optimal airport processes. Inter-

connectivity can be accomplished in a number

of ways, such as with:

Standardized, global airport connectivity

Industry associations such as ICAO, IATA,

ACI and the American Association of Airport

Executives (AAAE) have begun working on

a framework that promotes global airport

interconnectivity with global informationstandards. The goal is a more transparent

air travel chain, one that can better match

supply and demand for terminal capacity

and other airport process bottlenecks. The

framework would support the technologies

that can transform processes in areas such

as aircraft handling, security, baggage and

check-in. Examples include new tools such

as airport-wide performance dashboards that

make it easy to view real-time information to

improve travel ows.

Shared services

Shared services can include reusing data,

networks, software and computing resources

to create interconnected information pro-

cesses between departments and partners.

Using information technology, airports and

airlines can work together to develop ashared services model that meets the in-

creasing demand for streamlined operations.

A shared services model supports growth

and organizational collaboration to meet

evolving challenges while reducing the effect

of information silos that result in redundant

costs and inefciency.

Airport Operations Control Centers

The purpose of an Airport Operations Contro

Center (AOCC) is to oversee and align all air-

port processes from a single, trusted source,

creating a common focus on punctuality,process quality and continuous improve-

ment. AOCCs feature modular, exible

airport operating systems and an information

architecture that can receive information from

anywhere in the airport and route it to where

it needs to be to support all airport opera-

tions processes. For example, airport staff

and enterprise resource planning systems

can receive predicted passenger departure

trafc volume so they can match resource

levels with demand. Such alignment can help

reduce the high cost of overstafng and cor-

rect poor service levels. The AOCC can alsouse communication channels such as secure

Web portals to share information that can

help integrate nancial processes by creating

a unied situational and analytical view for

airport management.

Airports can accomplish intercon-

nectivity with global informa-

tion and connectivity standards,

shared services, airport operations

control centers, shared services

and IT optimization.


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Optimization of IT infrastructure

The cost and complexity of IT systems can

be reduced using a technique known as

virtualization. Shared servers and storage,

which can be in-house or offsite, can run

multiple applications so that a server for each

application is no longer necessary. The resultis the exibility to adapt system capacity to

changing needs and streamline IT operations.

Virtualization also yields lower costs for en-

ergy and space, while helping convert capital

expense to operational expense.

Frankfurt Airport Fraport and Hong Kong Chek Lap

Kok International Airport have achieved improved

safety, security and operations efciency by

integrating the real-time management of multiple

airport systems and operations into a new AOCC.

These systems automate and remotely captureperformance measurement, which in turn facilitates

improvements in operational planning for the airports.


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Intelligent

When the systems of airports, airlines and

service providers are instrumented and inter-

connected, operators acquire a wealth of new

passenger-based information. Intelligent busi-

ness applications help airport operators deci-

pher this information to answer questions suchas: Are we managing our airport operations ef-

ciently based on actual trafc patterns? Also,

with such intelligence, airport operators, airlines

and service providers can develop new areas

of air travel process integration that change the

dynamics of passenger ows and facilitate bet-

ter airport and aircraft capacity utilization. For

example, intelligent systems can monitor gate

usage to determine the availability of space for

aircraft. Boarding and baggage procedures that

use technology to help locate travelers and their

baggage for quicker boarding can also improve

turnaround time.

In addition to more efcient airport operations

and better utilization of the airport facilities,

intelligent information infrastructures make itpossible to introduce new services for passen-

gers. Such services include virtualized passen-

ger procedures that provide service beyond the

boundaries of the physical airport, spreading

peak congestion over locations and broader

time intervals. For example, smart phone appli-

cations and kiosks located outside of the airport

can enable remote check-in and deliver person-

alized information about schedule changes to

travelers, streamlining the time and resources

needed to support passenger peak demand

periods while improving customer service.

Instrumented, interconnected and intelligent

airport systems are the backbones of a smarter

airport and are key enablers of smarter airport

strategies.

The Manchester and Copenhagen airports are

capturing real-time passenger ow data by pas-

sively tracking the Bluetooth phones carried by

passengers. This information ultimately helps the

airports eliminate bottlenecks, improve operations

and optimize stafng levels.

Intelligent business applications

help airport operators answer ques-

tions such as: Are we managing our

airport operations efciently based

on actual trafc patterns?


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Experiencing a smarter airport

Picture this: Youve nally chosen your destination for your next vacation: Peru. You use a secure airport Web portal

to book your ight and get a tour of what to expect at the new airport terminal in your city, along with hints and tips

related to the Peruvian culture and history. Forty-eight hours before your ight, you get a message on your phone

with your ight details along with a 2D bar-coded boarding pass. On the way to the airport, you receive a scheduled

departure conrmation and learn that there are no delays. When you get to the airport, a text message greets you

with your gate numbers and boarding time. You tag your luggage yourself and drop it off at a check-in kiosk.

Theres a line to check in, so a roving check-in agent uses a mobile device to check your passport and completes

the check-in process, so that you can proceed directly to your gate. On your way to the gate, you decide that a

Spanish-English dictionary would be helpful. You pick one out and pay for it using Near Field Communication on your

mobile phone. Your personalized shopper prole has sent you locations of items of interest available at shops in the

airport and you remember to buy motion sickness medication for your ferry ride from Callao to see sea lions on the

Isle of Palominos. You receive an alert that your ight is boarding, nd your gate using the interactive airport PDA

map and use the 2D bar-coded boarding pass to get on the plane. When you arrive in Lima, you already know what

carousel your bags are on, thanks to another text message on your mobile phone. Because you had the foresight to

register with the relevant authorities, you proceed through immigration quickly using a biometric scanner. After you

retrieve your bags and go through customs, you will be able to pick up the guidebooks that you pre-ordered during

the reservation. You also receive information about train schedules and other modes of transport on your mobilephone based on the postal code of your nal destination.

Throughout all these activities, airport security at each airport can identify selected travelers or suspicious objects

with video surveillance throughout the terminal in the central airport operations control center. Meanwhile, airport

staff receives real-time information about arriving and departing ights and irregular operations messages on their

mobile devices. Your impression is of a well-run airport with all operations functioning properly without delays.

This is not a scene from the latest science ction lm or video game. This is a picture of an integrated travel process

in an airport that uses the latest technology and collaboration to:

Add real-time information to the pre- and post-ight air travel process.

Collect more information for analysis and airport optimizations.

Eliminate unnecessary costs in air travel operations and improve decision making.

Improve baggage handling speed and accuracy

Facilitate core airport processes and minimize the hassle factor.


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Strategies for a smarter airportSmarter airports connect air transportation with

sea and land travel, people, information and

trade to serve the needs of the larger commu-

nity and drive economic growth. To anticipate

existing and future challenges, they collaborate

to benet from intelligent airport optimizationand to provide more value for the connected

traveler, shippers and the full stakeholder

ecosystem. The strategies necessary for this

connection and collaboration include:

Connect multi-modal transport networks to

improve competitive position.

Innovate to upgrade operations and commer-

cial services for a consistent travel experience.

Promote sustainable development of the

larger logistics and trade area community.

Connect multi-modal transport networks

To meet the increasing demand for transpor-

tation, government ofcials are working with

airport planners and embracing new concepts

for mixed-use transportation facilities as part

of a larger economic model for growth. Global

airports have a unique position in these projects

because they are concentration points for multi-

modal connectivity that facilitates movement

between a city or region and the surrounding

world. Currently, however, there is little coordi-

nation between the different types of transpor-

tation found at airports and their environs. In

fact, different transportation systems compete

with one another, often causing delays, confu-

sion and passenger dissatisfaction.

To realize their full potential as multi-modal

hubs, airports must lead the creation of a

transportation system of systems. They must

move beyond physical infrastructure to help

integrate operational processes and supporting

technologies between transportation operators,

the community and their customers. The reasonfor this is that smarter airports do not recognize

traditional boundaries between air and other

forms of transportation. Instead of competing

with rail, road and water, a smarter airport is a

multi-modal hub with a large catchment area

that offers regional and global air route connec-

tions and helps reduce overall transportation

times and costs. At these hubs, more passen-

gers and cargo can move more efciently, serv-

ing more destinations, with increased on-time

performance.

To improve the traveler and customer experi-ence, airports can start by aligning air route

networks and schedules with those of other

kinds of land transportation. Passengers and

cargo shippers can then make informed plan-

ning and purchasing decisions about each type

of transportation they use. Airports should also

adopt the actions of current world-class airports

by expanding land and sea travel networks to

offer new destinations. Frankfurt and Paris are

examples of airports that are connected with

high speed train networks. Amsterdam and

Hong Kong benet from the existence of large

seaports that strengthen the airports and viceversa with additional trafc volumes and devel-

opment of logistics and trade areas.

The strategies for a smarter

airport include connecting trans-

portation networks to improve

competitive position, innovating

for a consistent travel experience

and promoting sustainable devel-

opment of the larger logistics and

trade area community.


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Innovate to upgrade operations and

commercial services

A smarter airport dramatically improves the

travel experience by optimizing the role of

airports in the surrounding world. Using existing

information to recognize opportunities, innova-

tive partnerships with investors can create newaviation and non-aviation services and facilities.

Examples of the new services include:

Web portals that provide greater levels of

interaction with customer target groups

New airport loyalty concepts, such as airport

member cards for fast tracking and customer

intimacy

New retail, food and beverage services, ho-

tels and parking

New media, entertainment, personal services

and information services at the airport

This broad consumer business portfolio creates

a city-like airport that caters to the needs of all

passenger segmentsfrom the budget leisure

passenger to the premium rst-class business

travelerby channeling stagnant travel time into

positive experiences.

Airports that provide innovative services outside

those related to aviation benet because they

develop new revenue sources. For example,think of the benets of retail brands advertis-

ing in active displays that change their ads in

real time based on the demographics of the

passengers at the airport. Passengers feel

catered to and retailers see increased sales.

Also, consider the possibilities of having items

passengers have ordered waiting for them at a

pick-up center at their arrival destination so that

they dont have to stop on their way to their ho-

tels or homes. Retailers, passengers, customer

service and delivery agencies all benet from

the strength of the airport brand in the com-

mercial area.

Promote sustainable development o the

logistics and trade area community

Airports today are multifunctional trade areas.

Arterial spines and trade clusters of aviation-

linked businesses radiate outward for up to

approximately 12 miles (or 20 kilometers) from

the airport. Such aerotropolises can includecorporate headquarters, aircraft maintenance

facilities, business parks, logistics centers,

industrial parks, hospitality and entertainment

establishments, large retail centers and mixed-

use residential developments.9

Operators of smarter airports recognize the

power of these aerotropolises and work to

ensure their sustainability. Using the intelligence

created by greater visibility of transportation

ows and direct access to travel and trade

information, they work with all the parties in

these communities to create new avenues foreconomic growth. They also connect with other

infrastructures in their trade zones, such as

security, energy and communication, to obtain

more information for analysis with the aim of

further optimizing business.

In addition, airport operators are seeking col-

laboration initiatives with other international

airports to extend their global economic reach.

These are like the alliance developments in the

airline industry over the past 20 years and even

include collaboration with them. For example,

in late 2008, Amsterdam Airport Schiphol andAeroports de Paris signed a 12-year alliance

agreement of for a dual-hub concept. Two of

the objectives of the alliance are to strengthen

the relationship and collaboration with their

largest airline clients, Air France-KLM and the

SkyTeam Alliance, and to grow commercial

and trade services together. Alliances between

airports and airlines are also likely to increase,

creating healthy competition for new travel

volumes and trade activities.


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Promoting sustainable development of the larg-

er trade community, improving competitive posi-

tion with multi-modal transport networks and in-

novating to upgrade operations and commercial

services all represent the process of creating

a smarter airport from a strategic perspective.

There are also tactical considerationstheseform the route to a smarter airport.

Routes to the smarter airportThe appropriate route to a smarter airport

depends on the airport ownership model, cur-

rent and projected capacity and the ability to

accommodate future passenger growth, cargo

trafc and customer requirements. However,

there are certain actions that are recommended

regardless of the airport ownership model or

conguration.

Create strategic clarityWithout a clear understanding of an airports

strategic position and growth objectives,

stakeholders can operate at cross purposes.

Therefore, it is critical that all airport stakehold-

ers understand the airport business model and

the future strategic direction for growth based

on the major themes on the airport business

agenda. Some of the major considerations

include:

The competitive position of the airport in

relation to other airports and forms of travel

and transportation and how well the airport

can attract new airlines, travelers and related

business activities

Investment priorities and trade-offs between

core business dimensions such as aviation

operations, commercial services and logistics

and trade

Airport branding from low-cost leadership to

more customer intimacy

How and where to position new entrants

in the airport market such as banking and

investment groups and large engineering and

construction corporations

The role of the airport in the economic re-

gionas a public runway and terminal utility

service onlyor an engine for growing multi-modal transport, travel and trade interactions

Collaborate responsively

If they are to thrive, airports and their business

partners must collaborate to plan, manage

and operate the movement of passengers and

cargo in the entire travel process. They need to

develop a shared vision to resolve congestion,

customer dissatisfaction and other pressures

such as national security and the environment.

The key enablers of airport collaboration are:

The willingness of airport operators, their

business partners and service providers,

motivated by a better economic model, to

achieve process integration for improved air

travel services and lower overall airport costs

The alignment of modern airport procure-

ment, contracting and management pro-

cedures to recognize the value of a new

outsourcing business model with external

providers handling non-core processes.

The implementation of technology that pro-motes information-sharing between all airport

entities

Mitigate business risks

On the route to a smarter airport, operators,

airlines and other aviation stakeholders must

mitigate safety, security and nancial risks

while making sure that they are good corporate

citizens. For security and safety, airport stake-

holders should take advantage of emerging

technologies, including ngerprint recognition

systems, automated document identication

systems, iris scanning systems, facial-recogni-tion technologies and data analysis systems for

pre-screening passengers.

Creating strategic clarity, collabo-

rating responsively and mitigating

risks are part of the route to a

smarter airport.


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In the nancial arena, there should be an

emphasis on transforming xed capital expen-

ditures into variable operating expenditures.

Variable operating expenditures are created by

focusing on core aviation activities and out-

sourcing non-core activities to specialty services

providers, such as handling, information, facilitymanagement, security and so forth, based on

pay-for-use models. At the same time, airport

operators must continue to maintain strong

relationships with the local community as part

of their corporate social responsibility policies,

which should include noise and CO2

emission reductions.

Plan your routeA smarter airport is not built overnight. It

requires bold steps, investment and the will to

create real transformation. Take a moment to

score your organizational actions (- or +) againstthis checklist of questions:

How are you driving strategic collaboration

with all airport business partners and opera-

tors of connecting modes of transportation?

Do you have senior level meetings with your

stakeholders to align shared vision, strategy

and business operating models, including

joint business planning and actions?

Have you considered enlisting a third party

with industry expertise, business transfor-

mation experience and technology insightto help facilitate collaboration and process

improvement? This approach has been used

by some airports to help align all stakeholders

with a common purpose.

What are you currently doing to provide your

passengers with a consistent and predictable

airport experience along all the links of the air

travel chain? What do you plan to do in the

future? How do you measure your progress?

To what degree are you beneting from the

full value of multi-modal transportation net-

works, travel and trade services concepts incombination with an overall airport-wide strat-

egy for total revenue and cost management?

Do you have a map of your enterprise infor-

mation infrastructure and applications that

shows which systems are integrated with

those of the airlines, ground handlers, secu-

rity operators, customs, retailers, concession

owners, public transportation operators and

so on to take advantage of your combinedassets, capacity and services? Is effective

governance in place?

Which airport processes do you consider

core competencies performed by airport per-

sonnel versus business functions that could

be executed by specialist service providers?

What are you currently doing to measure and

sense the health of your airport operations?

What are your plans for incorporating such

information into near real-time collaborative

decision making to answer these questions:

How are we doing? Why? How canwe improve?

What are you currently using your best talent

for? What could be accomplished if they were

focused on helping the airport ecosystem

become instrumented, interconnected and

intelligent?

How did your organization score in the preced-

ing checklist? How many of those + signs are

your airport acting on right now? Would the per

son in the ofce next to yours score the airport

the same way? There might be an opportunityto transform travel and trade further. Let this

checklist be your impetus to get started.


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ConclusionThe time for airports around the world to

change is now. Current business models are

not yielding the desired results. Today, airport

authorities, owners and their major business

partners are facing rising costs, declines in

revenue, growth constraints and an increasinglydissatised customer base. To prevent these

problems from worsening, airport operators

must move away from business as usual

models and transform their business processes.

They must become smarter airports.

Smarter airports are connected networks that

make it easy for passengers, cargo, informa-

tion and services to get where they need to be.

The seamless integration of information from all

airport processes streamlines airline operations.

A single instrumented, interconnected and intel-

ligent information architecture helps the airportadapt to the changing needs of airlines, aviation

service providers and customers. The result is a

positive effect on airport revenue and growth.

Technology can help transform the entire air

travel process, but it is only an enabler. For air-

ports to truly make the leap to new, sustainable

and protable business models, all stakehold-

ers involved must become collaborators rather

than competitors. With collaboration comes the

effective planning and management of multi-

modal operations and commercial services in

every aspect of the airport ecosystem.

Innovation partner or the changing

airports industry

At IBM Global Business Services, we collaborate

with our clients, bringing together business insights,

advanced research and technology to give them

a distinct advantage in todays rapidly changing

environment. With our integrated approach to busi-

ness design and execution, we help turn strategies

into action. And with expertise in 17 industries and

global capabilities that span 170 countries, we can

help clients anticipate change and prot from new

opportunities.

The time for airports around the

world to change is now. To thrive in

the years to come, airport operators

must transform their business pro-

cesses to create smarter airports.


17/19


About the authorsFrank Binnekade is currently Travel and Trans-

port Industry Solutions Leader for IBM India

and South Asia. In this capacity, he supports

airports, airlines and logistics clients with high

value business services, software and systems.

Frank has more than 15 years of experience inthe global travel and transport domain, holding

various commercial management, supply chain

and business consulting positions that include

completing a wide range of commercial, op-

erational and route development engagements

for international airport clients. Frank holds a

Masters Degree in Business and Transport

Economics from VU University Amsterdam. His

e-mail address is [email protected].

Robert Biciocchi is the Solutions Leader,

Americas, for the Customs, Ports and Border

Management global solutions group in IBM, re-sponsible for the U.S. Airports Program and has

also been involved with border management

and commerce issues with the U.S. Transporta-

tion Security Agency, U.S. Coast Guard and

U.S. Customs and Border Protection. An active

member in the ACI and IATA industry working

groups, he has helped to lead several large

airport modernization projects. He has also

served as an executive ofcer in a successful

international trade and logistics company and

held other senior management positions in rms

providing enterprise application solutions. His


Brian E. ORourke is the Global Airline Offering

Leader and Business Development Executive

in the IBM Global Travel and Transportation

unit and has been actively involved in numer-

ous consulting engagements and value added

initiatives for airlines and other clients. Using his

professional training and 23 years of airline in-dustry experience, he helps airlines and airports

use process optimization and technology to

become more efcient. He has worked directly

with the IATA to drive industry-leading solutions

and he has co-authored and published several

aviation industry articles, including The Innova-

tive Airline, Creating sustainable advantages in

competitive times, Service Oriented Archi-

tecture for the Airline Industry and more. His


Charles Vincent is a Partner who leads the Dis-

tribution and Travel and Transportation practicein IBM Global Business Services in Southwest

Europe. His e-mail address is charles.vincent@

nl.ibm.com.


18/19

References1 IATA Economic Brieng, July 2009. http://www.iata.org/NR/rdonlyres/4929507D-5B4B-430B-

A52C-A201BBE1A434/0/Infrastructure_Costs_Jul09.pdf

2 ACI Passenger and Freight Forecasts, 2005-2020: Flag shortage of airport capacity, Airports

Council International, 23 August 2005, http://www.docstoc.com/docs/9887809/ACI-Passenger-

and-Freight-Forecasts-2005-2020-Flag-Shortage-of-Airport

3 RITA, Bureau of Transportation Statistics, 2009. http://www.transtats.bts.gov/HomeDrillChart.asp

Press releases from Transportation Industry Association, May 29 and June 26, 2008: http://www.

ustravel.org/pressmedia/pressrec.asp?Item=900; http://www.ustravel.org/pressmedia/pressrec.

asp?Item=905

4 Statements made by CEO Giovanni Bisignani at the 65th IATA Annual General Meeting in Kuala

Lumpur June 2009 and updated at press brieng in Washington September 15th 2009, http://

www.iata.org/pressroom/speeches/2009-09-15-01.htm

5 Angela Gittens, Airport Strategies and Stakeholder Partnerships in Challenging Times, ACI 3rd

World Civil Aviation Chief Executives Forum, 2009. http://www.airports.org/aci/aci/le/Speeches/AGI/2009/WCAEF_060809_website.pdf

6 Airports Council International speeches, http://www.aci.aero/cda/aci_common/display/main/

aci_content07_c.jsp?zn=aci&cp=1-7-3475^31035_666_2__

7 Angela Gittens, Director General ACI, Airport Strategies.

8 Peter Jorritsma, Substitution Opportunities of High Speed Train for Air Transport, Aerlines e-zine,

2009. http://www.aerlines.nl/index.php/2009/substitution-opportunities-of-high-speed-train-for-air

transport/

9 Dr. Stephen Appold and Dr John Kasarda, Governing the aerotropolis, Global Airport Cities.

Spring 2009. http://www.aerotropolis.com/les/2009_04_GoverningTheAerotropolis.pdf


19/19

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