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Digital transformation in an airport

Prashant Kumar, Pranav Toshniwal and Hardeep Singh, from the Transportation and Distribution Strategic Insights Group at Capgemini Consulting in Mumbai write on how digital technologies are enabling airports to enhance the passenger experience and boost diminishing revenues

Airports across the world are witnessing a constant upsurge in the number of passengers, which would ideally imply a corresponding increase in revenues. A study by Datamonitor showed that the growth in the number of passengers (CAGR 3.9%) would be more than the growth in revenue (CAGR 2.9%) over the period 2010-15. This is not good news as it could imply declining customer satisfaction.

“It is estimated that by 2012, airports worldwide will lose close to $28 billion in retail spend, due to lack of right customer knowledge” – Blackstone Gates.

Along with a growth in the number of passengers, airports are facing critical issues of enhancing the customer experience and increasing revenues. To address these challenges, leading airports are leveraging digital technologies.

Research suggests that aeronautical revenues, which have traditionally been the mainstay of the airport business, have come under significant pressure in the face of market liberalization. On the one hand, growing competition among airlines is forcing them to operate on limited margins and on the other there is stagnation in the airfares of regulated airlines. Additionally, the privatization of airports along with a steady decline in state control and funding is pushing the need to generate additional revenue for sustenance of the business.

Since aeronautical revenue in most of the markets is regulated, it is vital for airports to look at revenue generation opportunities in non-aeronautical areas such as retail, parking, advertisement, property and facility renting. The ACI, Airport Economics Survey 2010 showed that 46% of the worldwide total airport income in 2009 came from non-aeronautical streams. Non-aeronautical revenues critically determine the financial viability of an airport as these tend to generate higher profit margins than aeronautical functions.

“Every pound made by us is invested in refurbishing & redeveloping the terminals offering 740,000 square feet of retail space providing the excellent shopping experience we know our passengers expect” says John Holland-Kaye, Heathrow's Commercial Director, which just shows that leading airports are realizing the need to perk up their non-aeronautical revenues in order to remain profitable.

Additionally, airports are now faced with increasing expectations of passengers, who are accustomed to sophisticated, fast-changing technology environments at home and at work. Passengers are expecting seamless experience at all possible touch points.

Empirical studies have shown a direct relation between non-aeronautical revenue and the time a passenger spends at the airport. Therefore, revenue generation eventually is related to passenger experience. Research indicates that leading airports, across the globe, have either deployed or are deploying digital technologies to enhance passenger experience.

Shift in role of airports

Airports are making the transition from being infrastructure providers to service providers wherein the focus has shifted on enhancing passenger services and improving revenue generation. Passenger expectations and airport business imperatives are intersecting with consistently increasing adoption of digital tools and technologies. Even mobile phone usage is continuously evolving, from being just a passenger communication channel, to an interaction/ transaction driven interface for the passenger. Airports are also devising comprehensive mobile social media strategies to increase revenue generation opportunities and enhance customer intimacy.

Today, airports across the globe are deploying a plethora of technological solutions ranging from self-service kiosks, Biometrics, Near Field Communications (NFC), Radio-frequency Identification (RFID), smartphone apps, social media, Wi-Fi/ Bluetooth tracking, Augmented Reality, digital interactive displays, digital download kiosks etc. According to Airline IT Trend Survey 2010, conducted by SITA, new age digital technologies are being rapidly adopted by airports across the globe to overcome the challenges and improve their service offerings.

Heathrow uses Smartphone app namely “About Airport Parking” allows passengers to book parking slots at airport through their mobile phones. Moreover, the airport provides “self service car finder kiosk” to help passengers in identifying the location of a parked car and is leveraging augmented reality-based mobile apps that are also gaining acceptance in locating parked cars. Heathrow is also using Bluetooth passenger tracking to track passenger movements throughout the airport infrastructure including queues, check-in and security and immigration areas. They have also deployed self-service kiosks to ease access to check-in, and ensuring hassle-free airport access. Besides, the airport also provides Smart App called ‘Heathrow Airport Guide’ which features terminal maps, guides for the shops and restaurants and live flight updates simulating a new airport experience.

In its efforts to reduce waiting time at check-in, Bengalaru International Airport (BIAL) in India has introduced 2D barcode scanners at the gate counters and self check-in kiosks for both CUSS check-in and Web check-in. BIAL has also deployed digital solutions like baggage reconciliation and baggage arrival system to minimize issues of lost baggage and also to keep a check on the real time performance of the average baggage delivery time.

Digital technologies act as the nervous system of an airport, touching and managing every point of interaction. These technologies enable airports in the exchange of real-time information, deep cross-silo collaboration, and airport-wide process integration. Smart airports significantly improve operational efficiencies, passenger services, and advanced security capabilities. Airports are exploiting the power of emerging and maturing technologies, with advanced and pervasively deployed sense-analyze-respond capabilities.

Digital technologies used at airports are at different levels of maturity wherein social media, baggage tracking and self-service kiosks are gaining momentum. Even today, airports continue to face critical efficiency issues due to a disparate mishmash of technology and systems, which is less than ideal when it comes to managing passenger flows, maximizing the passenger’s dwell time and ensuring quick turnaround. Transforming a legacy airport into an intelligent one mandates investment in digital technologies, improved operational and passenger processes along with realignment of organization functions

The authors can be contacted at This email address is being protected from spambots. You need JavaScript enabled to view it. , This email address is being protected from spambots. You need JavaScript enabled to view it. , This email address is being protected from spambots. You need JavaScript enabled to view it.

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