Airports: Digital Ecosystems

Increased demand for global air travel and freight, infrastructure constraints, cost pressures and increased traveler expectations are placing pressure on airport operators. This in turn, places pressure on the entire aviation supply chain.

In this article I will cover the phases of transformation that I believe will enable airports to address these challenges and set themselves up for success in a digital future where integration between all actors within the supply chain (ecosystem) is critical. In order to do so, there is one cardinal rule that organisations of any type must remember when embarking on their digital transformation:

Digital doesn't just mean technology. It presents a tangible business opportunity and it is critical the management team and board are driving the digital agenda. Success requires clarity of direction, focus and resilience.

Continued demand growth and pressure on legacy approaches:

• Passenger and freight numbers are forecast to continue to grow at an annualised rate ranging from 3.9% to 4.3% until 2035. This increase could occur faster than new facilities (runways, terminals, gates, access roads or new airports) can be built, placing demands on airport operators to better utilise current facilities and improve capital delivery capabilities.
• Airlines operate in a volatile market and fierce competition places downward pressure on airline fare prices and freight shipping rates which in turn places pressures on airport fees. This means airports must manage costs to remain cost effective and positively contribute to the aviation ecosystem.
• Traveler expectations have significantly increased as consumers have become accustomed to digital and mobile technology driving improved experiences across all industries. While airports are not always directly in control of the traveler experience they must influence a positive experience. 
• Global terrorism threat landscape and potential threats to aviation drive tighter controls over airport security for travelers, workers and partners and without innovation will continue to drive up costs.
• Adjacent businesses located in airports that generate revenue in areas such as retail, property and ground access are being disrupted.

The challenge airports are facing is to maximise current infrastructure, improve capital and operational efficiency and improve the overall airport experience for the travelers while delivering returns to their stakeholders. 

While the fundamentals of aviation will remain constant, digital will transform everything around them. 

(Side bar: LinkedIn doesn't allow advanced formatting so I had to create these in word and paste as an image. If there is a better way - please let me know!)

Airports need to engage with a digital future to help address these challenges and create a buffer against disruption. Efforts towards self-service check-in and process efficiency are only part of the picture, digital technology and data can help airports thrive by;

Airports must focus initial digital efforts on optimisation of their current business model, optimising revenues and costs to create a buffer against disruption. Then, leverage their investments to create entirely new opportunities within the digital ecosystem. 

The Airport ecosystem:

Airports are a complex and enclosed ‘system of systems’ that currently provide physical spaces for others to discharge their services (runway, terminals, retail spaces etc). These systems are:

• Technology Systems;
• Physical assets;
• Corporate processes;
• Systems of air movements and ground handling;
• 'Partners' that operate within these levels (Airlines, Service Providers etc)

In other words, the airport is the ecosystem in which all other businesses operate thus highlighting the inter-dependency of the different layers.

While the traveler passes through the airport they remain, primarily, the customer of an airline however they are also directly or indirectly engaging in services provided by retailers, the airport operator and service providers (cleaning/maintenance etc) while they are at the airport. This highlights the importance of the airport operator in orchestrating a seamless experience.

Digital, improving today;

The ‘digitised airport’ is about using digital solutions to make today’s business run better – improving efficiency (same effort, more output); and effectiveness (effort better placed, driving better outcomes).

What does it enable?

• Visibility: a real-time view of the current state of operations and workflows allowing you to see the problems and whether they are being addressed
• Efficiency: waste and duplication is eliminated
• Predictability: know when something will break or go wrong so it can be addressed proactively
• Flexibility: Enable airports to adjust our operations and offerings so they are effective, relevant, and competitive (e.g. dynamic parking prices)
• Seamless: travelers experience a smooth, comfortable and uninterrupted flow through the airport (to the greatest extent possible)

Connected, improving tomorrow;

The ‘connected airport’ brings together a rich, cohesive, and predictive picture of the airport (by integrating enormous stores of data from all aspects of operations, including from partners). Allowing airports to unlock better ways of working; and better propositions for travelers (data gives deeper insight).

What does it enable?

• Predictive: having a predictive picture of airport operations as a whole, and always being ‘60 minutes ahead’
• Connected: having the capacity to instantaneously activate the right people and processes to act on insight and predictions
• Holistic: being able to see the airport in real time as a ‘whole system’ and understand how the parts act on each other (e.g. how does parking spend influence retail spend; how do delays influence food choices?)
• Integrated: deep connectivity, collaboration, and visibility between all players (within and outside of the airport operator) – creating common pictures and reducing transaction costs.
• ‘Next level’ seamless: removing last remaining barriers to uninterrupted traveler flow

Intelligent, creating tomorrow

The intelligent airport is about bringing together the whole airport ecosystem into an integrated model. This enables airport operations to be coordinated across the whole 'system' and provides opportunities to improve partners operations and improved experiences via data insights within the airport context.

What does it enable?

• Orchestrated operations: Fully integrated and automated air and ground operations based on huge amounts of data shared by all parties.
• Hyper personalised connected traveler: Integrates passenger data from multiple sources (including retail partners) to enable highly personalised retail, services, mobility, and wayfinding.
• Connected propositions – inside and outside the airport: Extending the scope of our services by connecting offerings inside the terminal and beyond (eCommerce; out of airport baggage check-in, at home delivery)– freeing up space for peak retail ‘experiences’.

In this world the role and business model of the airport would shift radically - from delivering operations, to managing a system that extends capabilities beyond the confines of the physical environment. Airports would create value by orchestrating the right mix of partners and experiences – delivering efficient and effective operations, and great traveler experiences in partnership with all actors within the ecosystem (Airlines, other airports, service providers etc).

What should airports do now?

Airports are all currently implementing solutions that align with creating a digital airport. Critically, management teams need to ensure that digital projects are aligned with the overall enterprise direction.

Management teams should take the following actions, if not already doing so;

1. Engage in a process to understand what is possible, beyond just technology solutions.
2. Consider digital in the context of business model optimisaiton and creation, then collectively set and engage the business in a vision for the digital airport
3. Set a strategic program of initiatives aligned with the vision, including a review current and pipeline projects, current vs required capabilities and partnerships
4. Priorities data integration & insights to optimise operational efficiency on a platform that enables future integration. This is the foundation of a digital ecosystem.

Digital presents a very real opportunity for airports to improve operational performance improve traveler experiences, new business opportunities and reduced friction within the supply chain - but only if it is taken as seriously as any other key strategic initiative. Leaving digital to chance or the impulses of individual buyers will create lost opportunities and the risk of airports falling behind. Implementing point solutions without the fabric to tie it together will further complicated the environment.

The path to planning and successfully executing a digital strategy, particularly one that focuses on envisioning a new future, is filled with potential pitfalls and investment risk. Often a solution can be found without buying the new *insert shiny product* so having the right people and experience involved is critical. Whether you are considering an airport or other physical infrastructure transformation, I am happy to share my experience and insights so please feel free to reach out.

Acknowledgements:

During my time as CIO at Melbourne and Launceston Airports I had the opportunity to immerse myself in the business of airports. I spent time within the business units, read whatever I could find and subjected anyone willing to listen to my thoughts on airports to countless whiteboard sessions. The content of these readings and conversations have helped shape my thinking. Some of those directly relevant to this article are:

• Accenture: Countless intelligent people at Accenture
• Gartner: Research and analysts
• Airports Council International (ACI): Research
• Arthur D Little: Specifically, (https://www.adlittle.com/en/insights/viewpoints/airports-40)
• The airport Management & staff.