Airlines and airports are not shy to spend on technology. Raini Hamdi finds out why and how the investment will change the way passengers travel in the future
A media roundtable organised by SITA in Singapore recently painted a picture of future air travel that is, in one word, smart.
Imagine the day when a client, upon arrival at the airport, is whisked away by a service staff who has every relevant information about him literally on eye or hand through smart glasses, watches or phones.
Or when long and horrifying US immigration queues are a thing of the past, thanks to self-service immigration clearance kiosks.
Or when a client passing through the airport gets just the discount vouchers he needs popping up on his smartphone or tablet because ‘beacons’ installed around the airport track his whereabouts.
Or when arrival and departure information boards will be non-existent because beacon technology will prompt a client’s smartphone when he should board, at which gate and how long it takes to get to the gate.
All these technologies are being trialled today by airlines and airports. They will have implications for the travel trade which will be felt in time.
Airport IT spending has grown at a compounded annual growth rate (CAGR) of 12 per cent since 2010, despite airport revenues rising only 2.8 per cent CAGR over the same period, according to the latest Airport IT Trends Survey sponsored by SITA.
In 2013, airports were tipped to spend 5.4 per cent of their revenues on IT, up from 4.9 per cent in 2012 and 4.3 per cent in 2011. This equates an IT spend of US$6 billion by airports globally.
With the exception of Europe, where 35 per cent of airports expect a decrease in IT spend this year, in all other regions – North America, the Middle East and Asia-Pacific – their airports expect IT spend to remain stable or increase further this year. In Asia-Pacific, China airports’ IT spend is forecast to reach 5.9 per cent of revenues last year, well ahead of the global average and worth US$580 million in absolute dollar terms. It is expected to rise further this year.
Airlines are spending less on IT than airports, however, at 2.2 per cent of their total revenues this year (source: the latest SITA-sponsored Airline IT Trends Survey), but that still is a massive amount.
SITA’s record revenue of US$1.63 billion last year only attests to IT spending by airlines and airports. This was on the back of a record US$2.2 billion in contracts, more than half of which was new business. SITA, 100 per cent owned by the air transport community, operates on a commercial-cooperative model.
Why are airlines and airports prepared to invest in IT? According to Ilya Gutlin, SITA president Asia-Pacific, “for the last two years, customer experience came up as the number one reason for investment, not factors such as cost savings, security, etc”.
Reducing cost of operations comes second after improving passenger service as the aim airports hope to achieve from IT spending, the latest Airport IT Trends Survey shows.
Many airports in Asian countries, especially those in emerging markets, are being driven to spend on IT by extraordinary passenger growth. Indonesia, the biggest aviation market in South-east Asia, counted over 68 million passengers in 2013; the market is forecast to reach more than 300 million passengers by 2025.
This motivated Angkasa Pura I, which operates 13 airports across Eastern Indonesia, to deploy technology. In May, it awarded SITA the contract to install IT that allows any airline to use any agent desk, gate position or self-service kiosk for passenger check-in and bag drop, and to incorporate the electronic passenger service charge into the passenger flow monitoring system, which provides accurate revenue collection, faster check-in and passenger processing.
“We have set an aggressive timeline to deploy the technology in all our airports within a year. This will allow us to cater for the doubling of passenger numbers expected in Indonesia over the next five years,” said Tommy Soetomo, CEO, Angkasa Pura I, in a statement.
The rise of low-cost carriers (LCCs) in Asia is also fuelling IT spend in the region. In June, Kuala Lumpur’s new LCC terminal klia2 deployed technology that makes check-in and boarding simpler, and processes baggage efficiently, ensuring on-time departures, which is key for LCCs. Airlines such as AirAsia, Malindo Air, Cebu Pacific and Tigerair are already using the system.
For the last two years, customer experience came up as the number one reason for (IT) investment (by airports and airlines), not factors such as cost savings, security, etc.
Ilya Gutlin
President
SITA Asia-Pacific
What’s next
The next steps, according to Gutlin, would be wearable technology, beacon technology and more customer self-service technology.
Results of the wearable technology trials Virgin Atlantic and Copenhagen Airport did recently with SITA were promising, he said.
Virgin tried with two devices, Google Glass and Sony smartwatch, which were worn by its Upper Class staff to see if this could result in better customer experience.
“The main idea is to free staff from being behind a wall looking at passenger details,” said Gutlin. “But the problem it (Virgin) ran into with the Sony watch was, as the staff kept having to look at the watch for the details, it was as if they were sending the signal to the customer that they were bored by him. So the staff became uncomfortable using the watch or their smartphone (which was also trialled).
“With the Google Glass, it was the passengers who were a bit nervous; they were asking questions like, ‘What’s going on? Are you taking my picture? What are you seeing in there?’ But after a while, they got excited and asked, ‘Can I see what you are seeing in there?’ They became quite involved and got used to it within a short period of time.
“Virgin learnt that the glasses, though a bit geeky, were fairly comfortable to wear. The staff felt they enabled them to provide better service and there was a lot less paperwork along the way. But they also found the battery life was not great and the glasses needed to be recharged often.
“So whereas Virgin is not going to go with the Sony watch or the smartphone, it is still considering how it can roll out the Google Glass.”
With beacons, airlines can easily provide passengers with indoor directions, walk times to gates, lounge access and alerts about boarding, to name a few uses. iBeacon is a technology Apple introduced with iOS 7 that uses Bluetooth to trigger the display of location-relevant information on devices at the right time and situation.
A pilot project at Dallas/Fort Worth International Airport is the world’s biggest airport deployment of beacons to date, while SITA has launched a Common-use Beacon Registry, so that beacons are consistently deployed at all airports. “We’re still in a discovery phase on how this will work. We’re looking at this potentially as the breakthrough in improved customer service,” Gutlin said.
Self-service is also expected to rise. “People are a lot more comfortable using their smartphones and tablets, and self-service kiosks. As people get more comfortable with self-service, they prefer to deal with equipment rather than people,” Gutlin said.
According to the Airport IT Trends Survey, check-in kiosks will be an option at 98 per cent of airports by 2016. Existing kiosks are being upgraded to allow bag-tag printing, with more than four out of five airports offering the service by 2016.
Nine out of 10 airports will offer bag drop as well, with two-thirds offering unassisted bag drop by 2016. Self-boarding gates are being adopted at a similar pace.
Meanwhile, new self-service passport control kiosks at Miami International Airport are processing passengers in less than two minutes. The kiosks scan a passenger’s passport, collect flight information and declaration data, take a photo and give the passenger a receipt to present to an agent on the way out.
Currently for US passport holders and returning Canadian passport holders entering the US, the kiosks will be extended to nationals of visa-waiver countries, including self-service fingerprint capture, in the second phase.
This article was first published in TTG Asia, September 12, 2014 issue, on page 5. To read more, please view our digital edition or click here to subscribe
