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Executive Vice President, Airport IT, Amadeus
What is the expected direction of IT expenditure in the digitally enabled airport of tomorrow? As airports become more digitally mature and continue on their journey toward Airport 3.0 and beyond, a key benefit is the ability to realize efficiencies in terms of total IT spend.
In some regards, this is a logical conclusion. Cloud technology, for instance, offers the possibility to replace (or at least reduce the number of) CAPEX heavy on-site servers and data storage facilities, with more cost-effective, cloud-based solutions.
The introduction of generic customer-facing platforms for check-in can also help airports to reduce costs. Costs such as those associated with the maintaining of multiple different, airline-specific applications and network connections.
However, the assumption that digital transformation will have a main focus on reducing costs would appear to be premature. In interviews with the leading airports that took part in the Arthur D. Little airport digital transformation study commissioned by Amadeus, the clear majority did not associate digital transformation with an objective of cost reduction. On the contrary, the consensus was that in order to realize cost, revenue and customer experience benefits for the wider airport ecosystem, airports expect to spend more on enabling new IT solutions.
By considering big data and analytics as an example, we can better understand this trend. To reap the benefits of real-time decision-making capabilities, airports must invest in big data and analytics solutions and capabilities. This is not a one-off investment and requires sustained investment over many years as there is often a degree of ‘catch up’ required, meaning that the investment sums involved are not small. Over time, airports will hope to recoup their investments in the form of cost, revenue and customer experience benefits, and value creation for stakeholders.
The transformative role of Airport Collaborative Decision Making (ACDM)
In the context of growing IT expenditure, the ability of airports to deliver against their digital transformation strategies will increasingly depend on their ability to form and embed collaborative working relationships with the many other stakeholders that make up the airport ecosystem. In this regard, ACDM can be singled out as having a special role to play in enabling airports to complete the transition from Airport 2.0 to 3.0 and beyond.
Almost without exception, participating airports in this study agreed that by making it easier for the multiple parties in the airport ecosystem to work together and reach better decisions, ACDM is a major opportunity to optimize the efficiency of airport operations and reduce the total cost of airport operations.
To achieve this, airports and their business partners need access to consistent, reliable data, available in real-time, in which the shared data sets are supported by a common set of definitions. The benefits presented by ACDM include avoidance and reduction of delay-related costs and the gradual reduction of operational slack, thereby enhancing the airport’s total operating efficiency. One major Asian airport group that took part in the study implemented an ACDM solution in 2016 based on web technologies and handheld devices. While the airport benefited from reduced noise and emissions, improved punctuality and optimized gate/stand planning and management, similar benefits were passed on to airlines and ground handlers. For example, airlines benefited from reduced taxi times and improved On Time Performance and ground handlers have been able to more effectively allocate resources with resulting benefits for productivity and customer satisfaction.
Digital technology presents airports and their users with a wealth of new opportunities. As demonstrated in the airport digital transformation report, these opportunities extend beyond a focus on cost reduction and can also deliver step change benefits for revenue generation, operational performance, and the customer experience. To deliver and sustain these benefits, airports must develop the culture and capabilities to anticipate future digital technologies, innovate so that the technologies find tangible applications that are relevant to the specific airport, and invest in the capabilities and partnerships that will be needed to deliver sustained digital transformation.