Smarter Airport Systems Transform Travel - IBM

Smarter Airport Systems Transform Travel - IBM
Creating smarter airports An opportunity to transform travel and trade
Executive summary Airports face multiple challenges, including meeting capacity demands, providing enhanced public service and increasing revenue — all while battling rising costs, increasingly dissatisfied customers and rigid information infrastructures. 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 transportation hubs and centers of economic vitality. To do so requires greater collaboration between airport stakeholders and a more integrated approach to managing and sharing information. Society has presented airport executives with a mandate to create airports that are smarter, just as airport infrastructures, systems and processes are becoming digitally aware, interconnected and infused with intelligence. By embracing new and existing technologies to acquire, associate and analyze information in the airport infrastructure and using that information to become more efficient and effective, airport operators can create a more responsive and agile operating and commercial environment. In addition, they can be recognized as leaders who harness shared information to: • Provide enhanced service to passengers, airlines and other customers. • Achieve real-time operational awareness, adaptability and readiness. • Decrease the cost of delivering services. • Generate business insights that benefit the airport, airlines and business partners. The smarter airport is a dynamic hub that connects a multi-modal transport network with people, information and trade; it serves the needs of the larger community and generates economic value for the region. It is a new frame of reference with enormous potential for growth and progress and for opportunities to think and act in new ways. 1 Creating smarter airports
Introduction The reason that current business models are no The demands being placed on all modes of longer as effective as they once were is that the transportation are growing, driven by expand- air travel environment is changing faster than ing populations, rapid urbanization, business organizations can adapt. Periods of economic globalization and the rapid adoption of new growth and decline, airline traffic volatility, short- technologies. These and other factors have term route network changes, evolving security created four imperatives for all operators in the rules and other governmental regulations all transportation ecosystem: characterize the current air travel environment. In this changing environment, airports and their • Predict demand and optimize capacity and business partners are struggling. It is clear that assets accordingly. a business model transformation is necessary. • Improve the end-to-end customer experience. Airport-initiated stakeholder collaboration and • Improve operational efficiency while reducing information technology are key enablers in the environmental impact. transformation of the airport business model to one that uses airport infrastructures better and • Continue to assure safety and security, with supports new commercially attractive offerings. less cost and impact on customers. This transformation requires big ideas from all participants in the global airport industry — Airports play an increasingly important role in from small operators to large airport authori- addressing these imperatives because they are ties in both high-growth and mature markets. a nexus for multi-modal transportation. Global multi-modal transportation needs more dynamic, economically viable airports that serve Airport operators are responsible for planning, as central hubs in networks of passenger, cargo designing, building and operating their capital- and information movements. Now that so many intensive infrastructure assets over long plan- technology avenues are open, it’s time to make ning horizons to meet commitments to the local the change. communities and metropolitan areas they serve. They have a long-term financial obligation to de- This paper provides a brief overview of the liver sustainable return on these assets. Current challenges that have mandated a change in the airport business models are often not yielding airport business model and then explains how the desired financial results, however. airports can use new strategies, current and emerging technology and paradigm shifts to Based on the Global Airport Revenue statistics become smarter airports. of the Airports Council International (ACI), aeronautical revenue does not cover all airport operations costs. Instead, net airport profit growth is now derived from non-aeronautical revenue because of higher margins and lower operating costs.1 Both airport revenue streams (aeronautical and non-aeronautical) are under pressure caused by reduced passenger numbers, cargo volumes and aircraft movements in the current economic environment. 2 Creating smarter airports
For airport operators, the top Mandate for change • Increased regulations industry challenges are: capacity Globally, airport authorities, owners and their New requirements from a large variety of business partners face a number of business regulatory bodies, including aviation authori- shortfalls, dissatisfied passengers, challenges: ties and national and local governments, put declining revenue, increased regu- pressures on airport operations. For example, lations and increased competition. • Capacity shortfalls new security requirements for the passenger Demand for air travel worldwide continues and cargo handling processes are caus- to expand, stretching capacity beyond the ing disruptions and are increasing airport breaking point. Currently about 2.2 billion costs. Safety and security costs have risen to passengers per year are using commercial almost 60 to 70 percent of airport operating aviation services. It is possible that, as the costs.7 In addition, environmental regulations world population increases and air travel affect all airports, regardless of size or loca- becomes even more available, by 2020, there tion. Some new regulations are likely to cause will be demand for 7 billion passenger trips. If significant changes to airport operations, current conditions persist, airline and airport such as those applicable to oil spill preven- passenger capacity will only be able to handle tion planning and directives to monitor and 6 billion travelers, creating a shortfall of critical control noise pollution, toxic air pollutants and infrastructure of 15 percent.2 carbon emissions. • Dissatisfied passengers • Increased competition A 2008 IBM survey of 1,000 passengers Strong airline alliances dominate the market. across the U.S. revealed a growing lack of As a result, airports compete with each other tolerance for poor agent interactions, bag- for airline and passenger traffic, while their gage fees, lost luggage and flight delays. local communities expect all attractive routes Customers have good reason to be dissatis- to be available. However, the larger share of fied. In 2008, almost one-quarter of sched- competition is from other forms of transpor- uled U.S. flights were delayed. Frustrated tation. High speed rail has had a significant U.S. air travelers avoided 41 million flights impact on air travel in continental Europe.8 over a period of 12 months ending in 2008, Airport operators and their infrastructure as- which cost the U.S. economy over $26 bil- sets cannot easily move to a better market, lion.3 so they must make their market more attractive to airlines, passengers and the larger air • Declining revenue travel stakeholder community. The International Air Transport Association (IATA) estimates that airlines will lose $11 These challenges have created an almost billion in 2009, after shedding $16.8 billion in overwhelming mandate for change. Airports 2008.4 These airline revenue losses have a must transform themselves and their business significant impact on the airport industry. In models to overcome the current challenges they total, the fees that airports charge the global face and thrive in the 21st century. They must airlines to use their facilities account for 21 become smarter airports. To do so requires a percent of overall airport income; the other 79 different mindset and a new level of collabora- percent is from commercial airport activities tion between all the major stakeholders in the and passenger service charges.5 With fewer air travel chain. passengers and the commercial sales per passenger down between 10 and 20 percent,6 airports face a dramatic decline in both aviation and non-aviation income. 3 Creating smarter airports
Smarter airports are connected networks that Technology can enable airports to transform the make it easy for passengers, cargo, informa- entire air travel process. However, technology tion and services to get where they need to is only an enabler. For airports to truly make the be. Such connectivity creates a new, positive leap to new, sustainable and profitable busi- experience for travelers from pre-flight to post- ness models, airport operators, airlines, ground flight. The seamless integration of information handlers, security operators, customs, retailers, from various processes—from check-in, to concession owners and public transport opera- security, to flight information displays, to bag- tors all must alter their mindsets from propri- gage, to boarding—streamlines airport opera- etary to collaborative. Collaboration is the key to tions. A single instrumented, interconnected planning and managing multi-modal operations and intelligent information architecture provides and commercial services effectively in every the flexibility to adapt to the changing needs aspect of the airport ecosystem. of airlines, airports and their customers. The result is a positive effect on airport revenue and Smarter airport enablers growth. For example: Operationally, an airport supports a complex process that spans multiple organizations, cat- • Technology connects the objects, people, egorized into three major components: passen- processes and systems in the air travel ger, cargo and aircraft departure, transfer and process and helps operators and service arrival. Each component consists of operational providers track their movements. With this processes that different organizations share, in- Smarter airports are connected information, airport operators and other avia- cluding air navigation services providers, ground networks that make it easy for tion service providers can allocate support handling, catering, airlines, various supporting resources just when they’re needed through- units and the airport operator itself. passengers, cargo, information and out the process. services to get where they need to • Air and multi-modal network alignment en- Decades of adding layer-upon-layer of informa- be. A single instrumented, intercon- tion technology have increased complexity, ables efficiencies, incentives and multi-brand- nected and intelligent information ing opportunities. Competitive pricing and resulting in cumbersome airport systems that schedules enhance door to door connectivity are expensive and inflexible. Is it any wonder architecture adapts to the chang- for passengers and cargo. then—as more people, equipment and systems ing needs of airlines, airports and have been added to the logistics of sustaining • New travel services can create consumer these complex and specialized systems—that their customers. revenue growth because passengers can current models have lost a great deal of the move through the airport with few hassles flexibility necessary to lower costs? and enjoy their experiences at the airport. • Regional logistics and trade based on related business activities in the airport’s region or country stimulate growth of the air travel network and land side connectivity. 4 Creating smarter airports
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-modal 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. Instrumented Interconnected Intelligent An opportunity to think and act in new ways This instrumented, interconnected and intelligent world presents airport authorities, owners and other stakeholders with tools and strategies they can use to create smarter airports that better serve passengers and customers, connect with multi-modal transportation centers and smooth the air travel process. The sections that follow define how instrumentation, interconnectivity and intelligence are being applied to airports. 5 Creating smarter airports
Instrumented Instrumentation also supports obtaining more Consider these predictions for 2010: airport operations information, such as utilization of terminal processes, passenger flows • 1 billion transistors per human on the planet and maintenance of critical airport assets such as runways, terminals and equipment. Exist- • 4 billion subscriptions to mobile telephones ing airport hubs in Europe, Asia and North and personal digital assistants America and new airports in emerging markets • 2 billion people with Web access are applying increased levels of instrumentation to the travel process. With information about • 1 trillion connected objects such as cars, ap- passenger flows from mobile devices with GPS pliances, cameras, roadways, pipelines and RFID tags, airport operators can locate passengers, cargo and bags while interacting Using these technologies and others, such as with individual passengers at each step in their wireless airport sensors, RFID tags and person- travel process, reducing costs and helping meet alized cards based on biometrics, you can track new security mandates. Airport staff can also be objects, people and airport processes through- better deployed in the airport to accommodate out the airport infrastructure and broader air these flows, which in turn improves capacity. travel chain. In fact, instrumented objects, people and processes are already providing masses of new transportation data around the world. For example, instrumented devices aid passenger navigation at self-service check-in kiosks, Using transistors, mobile phones, immigration, retail areas, security and gates personal digital assistants, GPS. in combination with wireless sensors in the wireless airport sensors, RFID tags airport area. Expect the presence of common- use self-service technologies to become more and personalized cards based on widespread as airports recognize their potential biometrics, it is possible to track ob- for further empowering passengers. jects, people and airport processes throughout an airport. 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 improved baggage sorting and reduced mishandled baggage, while increasing the capacity of the existing baggage system. The airports then can defer costly and disruptive expansion work. 6 Creating smarter airports
Interconnected • Shared services An airport operation has, on average, at least Shared services can include reusing data, 30 disparate systems running concurrently. For networks, software and computing resources many years, airport operators focused their to create interconnected information pro- technology purchases on separate solutions cesses between departments and partners. that responded to a single or unique opera- Using information technology, airports and tional need. For example, they invested in one airlines can work together to develop a solution for baggage handling, another for flight shared services model that meets the in- information display systems and yet another creasing demand for streamlined operations. for check-in. The result is an infrastructure with A shared services model supports growth original and older applications that are highly in- and organizational collaboration to meet flexible, complex and difficult to integrate. Each evolving challenges while reducing the effect system holds information that could improve of information silos that result in redundant airport service if shared with other systems; costs and inefficiency. however, most are simply silos that provide information only to a select group or enterprise. • Airport Operations Control Centers The purpose of an Airport Operations Control Connecting the different airport systems, with- Center (AOCC) is to oversee and align all air- out replacing the original infrastructure, makes it port processes from a single, trusted source, possible for airport operators and their business creating a common focus on punctuality, partners to share important information, such process quality and continuous improve- as that provided by instrumentation. They can ment. AOCCs feature modular, flexible Airports can accomplish intercon- develop business models for a consistent travel airport operating systems and an information nectivity with global informa- experience and optimal airport processes. Inter- architecture that can receive information from tion and connectivity standards, connectivity can be accomplished in a number anywhere in the airport and route it to where of ways, such as with: it needs to be to support all airport opera- shared services, airport operations tions processes. For example, airport staff control centers, shared services • Standardized, global airport connectivity and enterprise resource planning systems and IT optimization. Industry associations such as ICAO, IATA, can receive predicted passenger departure ACI and the American Association of Airport traffic volume so they can match resource Executives (AAAE) have begun working on levels with demand. Such alignment can help a framework that promotes global airport reduce the high cost of overstaffing and cor- interconnectivity with global information rect poor service levels. The AOCC can also standards. The goal is a more transparent use communication channels such as secure air travel chain, one that can better match Web portals to share information that can supply and demand for terminal capacity help integrate financial processes by creating and other airport process bottlenecks. The a unified situational and analytical view for framework would support the technologies airport management. 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 flows. 7 Creating smarter airports
• 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 result is the flexibility to adapt system capacity to changing needs and streamline IT operations. Virtualization also yields lower costs for energy 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 efficiency by integrating the real-time management of multiple airport systems and operations into a new AOCC. These systems automate and remotely capture performance measurement, which in turn facilitates improvements in operational planning for the airports. 8 Creating smarter airports
Intelligent When the systems of airports, airlines and service providers are instrumented and interconnected, operators acquire a wealth of new passenger-based information. Intelligent business applications help airport operators deci- pher this information to answer questions such as: “Are we managing our airport operations efficiently based on actual traffic 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 flows and facilitate better 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. Intelligent business applications The Manchester and Copenhagen airports are capturing real-time passenger flow data by pas- help airport operators answer ques- sively tracking the Bluetooth phones carried by tions such as: “Are we managing our passengers. This information ultimately helps the airport operations efficiently based airports eliminate bottlenecks, improve operations and optimize staffing levels. on actual traffic patterns?” In addition to more efficient airport operations and better utilization of the airport facilities, intelligent information infrastructures make it possible to introduce new services for passengers. Such services include virtualized passenger procedures that provide service beyond the boundaries of the physical airport, spreading peak congestion over locations and broader time intervals. For example, smart phone applications and kiosks located outside of the airport can enable remote check-in and deliver personalized 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. 9 Creating smarter airports
Experiencing a smarter airport Picture this: You’ve finally chosen your destination for your next vacation: Peru. You use a secure airport Web portal to book your flight 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 flight, you get a message on your phone with your flight details along with a 2D bar-coded boarding pass. On the way to the airport, you receive a scheduled departure confirmation 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. There’s 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 profile 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 flight is boarding, find 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 mobile phone based on the postal code of your final 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 flights 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 fiction film 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-flight 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. 10 Creating smarter airports
The strategies for a smarter Strategies for a smarter airport To realize their full potential as multi-modal airport include connecting trans- Smarter airports connect air transportation with hubs, airports must lead the creation of a sea and land travel, people, information and “transportation system of systems.” They must portation networks to improve move beyond physical infrastructure to help trade to serve the needs of the larger commu- competitive position, innovating nity and drive economic growth. To anticipate integrate operational processes and supporting for a consistent travel experience existing and future challenges, they collaborate technologies between transportation operators, to benefit from intelligent airport optimization the community and their customers. The reason and promoting sustainable devel- for this is that smarter airports do not recognize and to provide more value for the connected opment of the larger logistics and traveler, shippers and the full stakeholder traditional boundaries between air and other trade area community. ecosystem. The strategies necessary for this forms of transportation. Instead of competing connection and collaboration include: with rail, road and water, a smarter airport is a multi-modal hub with a large catchment area • Connect multi-modal transport networks to that offers regional and global air route connec- improve competitive position. tions and helps reduce overall transportation times and costs. At these hubs, more passen- • Innovate to upgrade operations and commer- gers and cargo can move more efficiently, serv- cial services for a consistent travel experience. ing more destinations, with increased on-time • Promote sustainable development of the performance. larger logistics and trade area community. To improve the traveler and customer experi- Connect multi-modal transport networks ence, airports can start by aligning air route To meet the increasing demand for transpor- networks and schedules with those of other tation, government officials are working with kinds of land transportation. Passengers and airport planners and embracing new concepts cargo shippers can then make informed plan- for mixed-use transportation facilities as part ning and purchasing decisions about each type of a larger economic model for growth. Global of transportation they use. Airports should also airports have a unique position in these projects adopt the actions of current world-class airports because they are concentration points for multi- by expanding land and sea travel networks to modal connectivity that facilitates movement offer new destinations. Frankfurt and Paris are between a city or region and the surrounding examples of airports that are connected with world. Currently, however, there is little coordi- high speed train networks. Amsterdam and nation between the different types of transpor- Hong Kong benefit from the existence of large tation found at airports and their environs. In seaports that strengthen the airports and vice fact, different transportation systems compete versa with additional traffic volumes and devel- with one another, often causing delays, confu- opment of logistics and trade areas. sion and passenger dissatisfaction. 11 Creating smarter airports
Innovate to upgrade operations and Promote sustainable development of the commercial services logistics and trade area community A smarter airport dramatically improves the Airports today are multifunctional trade areas. travel experience by optimizing the role of Arterial spines and trade clusters of aviation- airports in the surrounding world. Using existing linked businesses radiate outward for up to information to recognize opportunities, innova- approximately 12 miles (or 20 kilometers) from tive partnerships with investors can create new the airport. Such “aerotropolises” can include aviation and non-aviation services and facilities. corporate headquarters, aircraft maintenance Examples of the new services include: facilities, business parks, logistics centers, industrial parks, hospitality and entertainment • Web portals that provide greater levels of establishments, large retail centers and mixed- interaction with customer target groups use residential developments.9 • New airport loyalty concepts, such as airport Operators of smarter airports recognize the member cards for fast tracking and customer power of these aerotropolises and work to intimacy ensure their sustainability. Using the intelligence created by greater visibility of transportation • New retail, food and beverage services, ho- flows and direct access to travel and trade tels and parking information, they work with all the parties in these communities to create new avenues for • New media, entertainment, personal services economic growth. They also connect with other and information services at the airport infrastructures in their trade zones, such as security, energy and communication, to obtain This broad consumer business portfolio creates more information for analysis with the aim of a city-like airport that caters to the needs of all further optimizing business. passenger segments—from the budget leisure passenger to the premium first-class business In addition, airport operators are seeking col- traveler—by channeling stagnant travel time into laboration initiatives with other international positive experiences. airports to extend their global economic reach. These are like the alliance developments in the Airports that provide innovative services outside airline industry over the past 20 years and even those related to aviation benefit because they include collaboration with them. For example, develop new revenue sources. For example, in late 2008, Amsterdam Airport Schiphol and think of the benefits of retail brands advertis- Aeroports de Paris signed a 12-year alliance ing in active displays that change their ads in agreement of for a dual-hub concept. Two of real time based on the demographics of the the objectives of the alliance are to strengthen passengers at the airport. Passengers feel the relationship and collaboration with their catered to and retailers see increased sales. largest airline clients, Air France-KLM and the Also, consider the possibilities of having items SkyTeam Alliance, and to grow commercial passengers have ordered waiting for them at a and trade services together. Alliances between pick-up center at their arrival destination so that airports and airlines are also likely to increase, they don’t have to stop on their way to their ho- creating healthy competition for new travel tels or homes. Retailers, passengers, customer volumes and trade activities. service and delivery agencies all benefit from the strength of the airport brand in the commercial area. 12 Creating smarter airports
Creating strategic clarity, collabo- Promoting sustainable development of the larg- • How and where to position new entrants rating responsively and mitigating er trade community, improving competitive posi- in the airport market such as banking and tion with multi-modal transport networks and in- investment groups and large engineering and risks are part of the route to a novating to upgrade operations and commercial construction corporations smarter airport. services all represent the process of creating • The role of the airport in the economic re- a smarter airport from a strategic perspective. gion—as a public runway and terminal utility There are also tactical considerations — these service only—or an engine for growing multi- form the route to a smarter airport. modal transport, travel and trade interactions Routes to the smarter airport Collaborate responsively The appropriate route to a smarter airport If they are to thrive, airports and their business depends on the airport ownership model, cur- partners must collaborate to plan, manage rent and projected capacity and the ability to and operate the movement of passengers and accommodate future passenger growth, cargo cargo in the entire travel process. They need to traffic and customer requirements. However, develop a shared vision to resolve congestion, there are certain actions that are recommended customer dissatisfaction and other pressures regardless of the airport ownership model or such as national security and the environment. configuration. The key enablers of airport collaboration are: Create strategic clarity • The willingness of airport operators, their Without a clear understanding of an airport’s business partners and service providers, strategic position and growth objectives, motivated by a better economic model, to stakeholders can operate at cross purposes. achieve process integration for improved air Therefore, it is critical that all airport stakehold- travel services and lower overall airport costs ers understand the airport business model and the future strategic direction for growth based • The alignment of modern airport procure- on the major themes on the airport business ment, contracting and management pro- agenda. Some of the major considerations cedures to recognize the value of a new include: outsourcing business model with external providers handling non-core processes. • The competitive position of the airport in relation to other airports and forms of travel • The implementation of technology that pro- and transportation and how well the airport motes information-sharing between all airport can attract new airlines, travelers and related entities business activities • Investment priorities and trade-offs between Mitigate business risks core business dimensions such as aviation On the route to a smarter airport, operators, operations, commercial services and logistics airlines and other aviation stakeholders must and trade mitigate safety, security and financial risks while making sure that they are good corporate • Airport branding from low-cost leadership to citizens. For security and safety, airport stake- more customer intimacy holders should take advantage of emerging technologies, including fingerprint recognition systems, automated document identification systems, iris scanning systems, facial-recognition technologies and data analysis systems for pre-screening passengers. 13 Creating smarter airports
In the financial arena, there should be an • Do you have a map of your enterprise infor- emphasis on transforming fixed capital expen- mation infrastructure and applications that ditures into variable operating expenditures. shows which systems are integrated with Variable operating expenditures are created by those of the airlines, ground handlers, secu- focusing on core aviation activities and out- rity operators, customs, retailers, concession sourcing non-core activities to specialty services owners, public transportation operators and providers, such as handling, information, facility so on to take advantage of your combined management, security and so forth, based on assets, capacity and services? Is effective pay-for-use models. At the same time, airport governance in place? operators must continue to maintain strong • Which airport processes do you consider relationships with the local community as part core competencies performed by airport per- of their corporate social responsibility policies, sonnel versus business functions that could which should include noise and CO2 be executed by specialist service providers? emission reductions. • What are you currently doing to measure and Plan your route sense the health of your airport operations? A smarter airport is not built overnight. It What are your plans for incorporating such requires bold steps, investment and the will to information into near real-time collaborative create real transformation. Take a moment to decision making to answer these questions: score your organizational actions (- or +) against How are we doing? Why? How can this checklist of questions: we improve? • What are you currently using your best talent • How are you driving strategic collaboration for? What could be accomplished if they were with all airport business partners and opera- focused on helping the airport ecosystem tors of connecting modes of transportation? become instrumented, interconnected and Do you have senior level meetings with your intelligent? stakeholders to align shared vision, strategy and business operating models, including How did your organization score in the preced- joint business planning and actions? ing checklist? How many of those + signs are • Have you considered enlisting a third party your airport acting on right now? Would the per- with industry expertise, business transfor- son in the office next to yours score the airport mation experience and technology insight the same way? There might be an opportunity to help facilitate collaboration and process to transform travel and trade further. Let this improvement? This approach has been used checklist be your impetus to get started. 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 benefiting from the full value of multi-modal transportation networks, travel and trade services concepts in combination with an overall airport-wide strategy for total revenue and cost management? 14 Creating smarter airports
The time for airports around the Conclusion The time for airports around the world to Innovation partner for the changing world to change is now. To thrive in change is now. Current business models are airports industry the years to come, airport operators At IBM Global Business Services, we collaborate not yielding the desired results. Today, airport must transform their business pro- authorities, owners and their major business with our clients, bringing together business insights, partners are facing rising costs, declines in advanced research and technology to give them cesses to create smarter airports. revenue, growth constraints and an increasingly a distinct advantage in today’s rapidly changing dissatisfied customer base. To prevent these environment. With our integrated approach to busi- problems from worsening, airport operators ness design and execution, we help turn strategies must move away from “business as usual” into action. And with expertise in 17 industries and models and transform their business processes. global capabilities that span 170 countries, we can They must become smarter airports. help clients anticipate change and profit from new opportunities. Smarter airports are connected networks that make it easy for passengers, cargo, information 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 intelligent information architecture helps the airport adapt 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 airports to truly make the leap to new, sustainable and profitable business models, all stakeholders 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. 15 Creating smarter airports
About the authors Brian E. O’Rourke is the Global Airline Offering Frank Binnekade is currently Travel and Trans- Leader and Business Development Executive port Industry Solutions Leader for IBM India in the IBM Global Travel and Transportation and South Asia. In this capacity, he supports unit and has been actively involved in numer- airports, airlines and logistics clients with high ous consulting engagements and value added value business services, software and systems. initiatives for airlines and other clients. Using his Frank has more than 15 years of experience in professional training and 23 years of airline in- the global travel and transport domain, holding dustry experience, he helps airlines and airports various commercial management, supply chain use process optimization and technology to and business consulting positions that include become more efficient. He has worked directly completing a wide range of commercial, op- with the IATA to drive industry-leading solutions erational and route development engagements and he has co-authored and published several for international airport clients. Frank holds a aviation industry articles, including “The Innova- Master’s Degree in Business and Transport tive Airline, “Creating sustainable advantages in Economics from VU University Amsterdam. His competitive times,” “Service Oriented Archi- e-mail address is frank.binnekade@in.ibm.com. tecture for the Airline Industry” and more. His e-mail address is beorourk@us.ibm.com. Robert Biciocchi is the Solutions Leader, Americas, for the Customs, Ports and Border Charles Vincent is a Partner who leads the Dis- Management global solutions group in IBM, re- tribution and Travel and Transportation practice sponsible for the U.S. Airports Program and has in IBM Global Business Services in Southwest also been involved with border management Europe. His e-mail address is charles.vincent@ and commerce issues with the U.S. Transporta- nl.ibm.com. 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 officer in a successful international trade and logistics company and held other senior management positions in firms providing enterprise application solutions. His e-mail address is robert.biciocchi@us.ibm.com. 16 Creating smarter airports
References 1 IATA Economic Briefing, 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 briefing 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/file/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/files/2009_04_GoverningTheAerotropolis.pdf
® © Copyright IBM Corporation 2009 IBM Corporation Route 100 Somers, NY 10589 U.S.A. Produced in the United States of America 11-09 All Rights Reserved IBM, the IBM logo and ibm.com are trademarks of Interna- tional Business Machines Corp., registered in many jurisdic- tions worldwide. Other product and service names might be trademarks of IBM or other companies. A current list of IBM trademarks is available on the Web at “Copyright and trade- mark information” at www.ibm.com/legal/copytrade.shtml. References in this publication to IBM products or services do not imply that IBM intends to make them available in any other countries TTW03003-USEN-00

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