CAPA-SITA Report On Innovation & Technology

CAPA-SITA Report on Innovation & Technology
Opportunities for Transformation in Indian Aviation

March 2012
Disclaimer
CAPACentreforAviation(CAPAIndia)andSITAhavemadeeveryefforttoensuretheaccuracyof theinformationcontainedinthispublication. CAPA India and SITA do not accept any legal responsibility for consequences that may arise from errors,omissionsoranyopinionsgiven.Thispublicationisnotasubstituteforspecificprofessional adviceoncommercialorothermatters.
Contents
Foreword:Dr.NasimZaidi,Secretary,MinistryofCivilAviation............................................................3 Foreword:Mr.FrancescoViolante,CEO,SITA........................................................................................4 Foreword:Mr.PeterHarbison,ExecutiveChairman,CAPACentreforAviation.................................6 ExecutiveSummary.................................................................................................................................7 OverviewofIndianAviation ...................................................................................................................9 . PassengerTraffic...............................................................................................................................10 Fleets.................................................................................................................................................11 CargoTraffic......................................................................................................................................12 AirportDevelopment........................................................................................................................13 ModernizationProgram................................................................................................................13 AncillaryAviationServices................................................................................................................14 GroundHandling...........................................................................................................................14 Maintenance,RepairandOverhaul..............................................................................................14 AirTrafficControl..........................................................................................................................15 GeneralAviation...........................................................................................................................15 TrainingandEducation.................................................................................................................15 Security.........................................................................................................................................15 CurrentChallengesinIndianAviation..................................................................................................15 ITandInnovationTrends:thegloballandscape...................................................................................18 IT&InnovationTrends:theIndianlandscape......................................................................................25 KeyFutureTechnologies...................................................................................................................26 MarketSurvey&Findings.....................................................................................................................27 PublicPrivatePartnershipAirports..................................................................................................27 AAIAirports.......................................................................................................................................32 Airlines..............................................................................................................................................34 GreenTechnology.............................................................................................................................37 Outsourcing.......................................................................................................................................38 GroundHandlers...............................................................................................................................38 BorderControl..................................................................................................................................38 AirTrafficManagement....................................................................................................................39 ITandInnovationinIndianATI.............................................................................................................41 Recommendations&Roadmap............................................................................................................43 Glossary.................................................................................................................................................44
CAPASITAReportonInnovation&Technology
Foreword
Dr.NasimZaidi Secretary MinistryofCivilAviation GovernmentofIndia
OverthelastfewyearsIndiahaswitnessedatransformationofitsaviationindustry.Intheyear2000 ourairportshandledaround42millionpassengers,tenyearslaterthepassengernumberincreased toover140million.By2020passengertrafficwillmorethantripletoaround450millionannual passengers,withIndiaexpectedtobeamongstthefivelargestaviationmarketsintheworld. Thehugegrowthofairtrafficpresentsanumberofchallenges.Inordertoaddressthesechallenges, investmentininfrastructureandskillswillbeneeded.Perhapsevenmoreimportantly,technological innovationwillberequiredtobringefficiencyandspeedtothesector. Informationtechnology(IT)hasalreadydeliveredsignificantimprovementsinefficiencyandcosts acrosstheaviationindustry,andwillcontinuetodoso.Butthisisonlythebeginning.Goingforward webelievethattheopportunityexistsforITtodrivetransformationalchangesinwaysthatearlier couldonlybeimagined. SITAhasbeenanactiveparticipantintheIndianairtransportcommunityforover60years.SITA innovatescollaborativelywiththeairtransportindustryandenablesthemtostayaheadofthe curve. AttheMinistryofCivilAviationweareworkingonnumerouspolicyandregulatoryinitiativesto createanenvironmentwhichencouragescompetitiveinnovationinouraviationsector,supported bytechnology,withtheultimateobjectiveofcreatingasafe,viableandsustainableaviation industry. Inlightofthissharedgoal,theinitiativebySITAandCAPAtopreparethisreportonthestateof technologyadoptionandinnovationinIndianaviationtoday,andtheoutlookforthefuture,is appreciatedandwillbehelpfulfortheIndianairtransportindustry.
Foreword
FrancescoViolante CEO SITA
ItisnowtwoyearyearssinceSITAandCAPAjointlyproducedtheir2010whitepaperonITinIndian Aviation.ThatreportexploredtrendsintheIndianairtransportindustryaswellaslookingatwhere andhowtheindustryspentitsITinvestmentdollars;analyzedmanagementtrends;andhighlighted somekeytechnologyprojects.ThefirstWhitePaperreportedfindingsonhowtheIndianaviation industryviewedanddeployedtechnology;thechallengestogreaterimplementation;andtheoverall strategicroleoftechnology.Sincethen,theindustryhasgrownfurtheronthebackofstrong demandfromdomesticpassengersandtherisingoutboundtravelfromIndia.Thisgrowthhasbeen fedbytheopeningofnewinternationalroutes;modernizingnonmetroairports;anddeveloping newairports. Indiaispoisedtoemergeastheworldsthirdlargestaviationmarketby2020.Thislevelofgrowthis inevitablyaccompaniedbychallengesinareaslikeinfrastructure,security,resourcesandthe regulatoryframework.Innovationwillplayanimportantpartinaddressingthesechallengesto supportthegrowingdemandsofIndiasaviation. SITAhasbeenacatalystforinnovationintheIndianairtransportcommunityforover60years.We havebeeninstrumentalinbringingnewtechnologytoIndia.Today,weareinvolvedinallaspectsof airtransportinIndia:fromcheckintothecockpit;fromboardingtothebaggagecarousel;from airlineoperationstoairportmanagement. SITAregardsitsrelationshipwiththeIndianairtransportindustryasatruepartnershipwherewe worktogetherforthebenefitoftheindustry.ThispartnershipisstrengthenedbySITAslonglasting relationshipwithIndianairports,airlines,groundhandlingcompaniesaswellasgovernmental agenciesandpolicymakers.BelowIhavehighlightedjustsomeexamplesofhowSITAworks togetherwithitspartnerstotransformtheindustry. SITAsPassengerServicesSystemsupportedtheintegrationandmodernizationplanofAirIndia.In addition,SITAprovidesAirIndiawithnetworkconnectivity,desktopinfrastructureandsupportatall domesticandinternationalstations,alongwithsolutionsforcheckin,airtoground communications,faresmanagementandbaggagetracing. Forairports,wesupplystateoftheartcheckinsystemsthatcanbeusedbyanyairline,suchas CommonUseTerminalEquipment(CUTE)installedin18airportsacrossIndiaandmorerecently CommonUseSelfService(CUSS)kiosks.Duringthenextyearwewillincreasethetallyofinstalled checkinsystems(CUTE/CUSS)to41airportsoutof43airportsinIndia.Thepassengerexperienceat theendofthejourneyisenhancedthroughourbaggagereconciliationsystemsatairportssuchas Bangalore,CochinandMumbai.WealsointroducedIndia'sfirstairportmanagementsystemat MumbaiInternationalAirport. CAPASITAReportonInnovation&Technology
5 Intheair,SITAsAIRCOMnetworkprovidescoverageacrossIndiathrough27VHFgroundstations andwealsoprovideFANS(FutureAirNavigationSystem)servicestotheAirportsAuthorityofIndia. SITAhelpsover50internationalanddomesticairlinesinIndiatocomplywithIndianGovernment requirementsforadvancepassengerinformationthroughitsAPISservices. ForthissecondwhitepaperTheCAPASITAReportonInnovation&Technologyweareonceagain proudtobeworkingwithCAPAtoproducethisvaluablereportonthestateoftheindustry.It providesanupdateontheITlandscapeinIndiasairtransportindustry,andalsohighlightssomeof thechallengesindeployinginnovativetechnologyacrosstheindustry.TheWhitePaperincorporates theperspectivesofthekeystakeholdersintheindustryandmakessomepredictionsforthefuture. AstheworldsleadingspecialistinairtransportcommunicationsandITsolutions,welookforwardto continuingtoworkwiththeIndianaviationcommunityandtheGovernmenttodriveinnovation duringthisexcitingperiodoftransformationandchange.
FrancescoViolante CEO,SITA
Foreword
PeterHarbison ExecutiveChairman CAPACentreforAviation
WearedelightedonceagaintopartnerwithSITAforthissecondreportontheroleoftechnologyin Indianaviation,providingavaluablefollowuptoouroriginaljointstudyconductedin2010. SITAistheworld'sleadingairtransportcommunicationsandinformationtechnologyspecialist.The organisationhasbeensynonymouswithaviationtechnologysolutionsforthelast60yearsandisthe idealpartnertosupportastudyofthisnature. ThesearechallengingtimesforIndianaviation.Wefaceanenvironmentwhichcallsfororiginal thinkingandsolutionstodevelopanew,viableandsustainablebusinessmodelfortheindustry.This 2012reportthereforeplacesadditionalemphasisoninnovation. Technologytodayhasthepotentialtobecomefarmorepervasiveandtotransformtheoperations ofairlines,airports,serviceprovidersandbordercontrol.Theaviationindustrycanleverage technologynotonlytodeliverfunctionalityandcostefficiencies,buttodriveenhancedpassenger experiences,newcommercialrevenuestreamsandimprovedsecurity.Inthisreportwesetoutto understandwhetherIndiasaviationindustryispositionedtograsptheseopportunities,andto presentaroadmapforthefuture. ThisstudyisthelatestinCAPAscommitmenttobringingglobalknowledgetoIndianaviation,by providinghighlevelresearchandmarketanalysisalongsideourreputedadvisoryservices. PeterHarbison ExecutiveChairman CAPACentreforAviation
ExecutiveSummary
CAPAandSITAhavejointlyconductedastudyontheimplementationoftechnologyandinnovation inIndianaviation.ThestudycombinesCAPAsextensiveongoingresearchandanalysisoftheIndian aviation sector with a customised survey programme involving primary interviews with key stakeholdersamongstairlines,airports,andgroundhandlersalongwiththoseinvolvedinairtraffic management,customsandimmigration.ThisjointCAPASITAreportoninnovationandtechnology buildsupontheearlierstudyconductedin2010. In2012,airporttrafficwillexceed150millionpassengers,ofwhich60per centwillbe handledat private airports. By 2020 airport traffic is expected to reach 450 million passengers (360 million domesticand90millioninternational)alongwith6.5milliontonnesofcargo.ThiswouldmakeIndia thethirdlargestaviationmarketintheworldbywhichtimeIndiaisexpectedtogeneratemorethan 30millionannualoutbounddeparturesandmorethan13millioninboundvisitors.Over90million passengersareexpectedtopassthroughDelhiairportaloneby2020. Overthenext10years,all6metropolitancities(Bangalore,Chennai,Delhi,Hyderabad,Kolkataand Mumbai) are expected to have provisioned for a second airport, and Mumbai will need to start preparingforathird.SeveralnonmetrocitiessuchasAhmedabadandPunewillalsooutgrowtheir existinginfrastructureandrequirenewairports.Totalinvestmentinthesectorbetween 2004and 2020isexpectedtoreachUS$120 billion,ofwhich US$80billionisrepresentedbyaircraft,US$30 billion in airport infrastructure and US$10 billion in ancillary services such as ground handling, maintenance,airtrafficmanagement,securityandtraining.By2020Indiaisexpectedtohaveafleet ofmorethan1,000scheduledaircraftand2,000generalaviationaircraft. Themagnitudeofgrowthisboundtogenerateastrainontheexistinginfrastructureintheindustry. Keeping this in mind, technology and innovative practices will be critical components to facilitate business transformation. Although the projected growth seems startling, it is not unprecedented. Over the last decade China has actually experienced slightly faster expansion than is forecast for India over the next ten years. So it is achievable. But it requires an enabling policy and regulatory environmentwhichremovesunnecessaryandobstructivedistortionstocreatealevelplayingfield and encourages investment in infrastructure. The Indian government is addressing this and has takensometentativebutpositivestepsinthisdirection. Industry also needs to play its role as the viability of airlines is critical to the health of the entire valuechain.Overthelast6years,IndiasairlineindustryhasaccumulatedlossesofUS$8.5billion,a clearly unsustainable situation which must be remedied. But it should not be forgotten that there have been a number of positives resulting from this. Airlines have in part lost money because of competition and low fares, there hasconsequently been a significant consumer surplus. The rapid expansionintrafficstimulatedbylowfaresprecipitatedtheairportmodernizationprogrammeand attracted widespread investor interest. It also benefited hotels and generated employment in the tourismindustry.Unfortunately,theairlineindustryhaslargelyshoulderedtheburdenalone.The time has therefore come to for airlines to establish new, viable business models that generate a reasonablereturnoncapitalandcanwithstandexternalshocksfromtheeconomy,competition,fuel pricesandexchangerates.Sustainableairlinesarerequiredtosupportasustainableindustry.
8 Technology has the potential to play a central role in creating this new transformational business model.Thisreportwasinitiatedinordertoassesswhetherairlineshaverecognizedthis.Information technologyandtheuseofanalyticscouldbeasimportantforanairlineasanaircraftbecauseitcan drive a competitive business model by reducing costs, increasing efficiencies, enhancing the customerexperienceandgeneratingnewrevenuestreams. InthepastITwaslargelyinternallyfocused,supportingprocessesandfunctionality.However,nowit enables closer integration with the customer experience, and the ability to shape and personalise the relationship with the passenger, from the time of planning and booking, through to airport facilitation, inflight, baggage claim and service recovery. Technology, if deployed correctly, can deliversimplicityandtransparency. However,theprogressoftechnologyimplementationacrossIndianaviationsince2010hasnotbeen encouraging with little that was planned then being delivered by 2012. This partly reflects the financial difficulties being faced by the industry but in addition, our study found that IT is still not consideredatoolofstrategicimportance.TechnologyinIndianaviationislargelyconsideredtobe anoperationalissueratherthanforminganintegralcomponentofthecompanyskeyobjectivesand isnotdirectlylinkedto profitandlossperformance.ITislargelynotusedforrevenue generation, and in the case of cost reduction the approach is quite unstructured, such that there is limited measurementoftheefficienciesthatareachieved. In most cases the awareness of technology, and the benefits that it can drive, is limited to the operationalworkforceordomainhead.OurstudyfoundthatChiefTechnology/InformationOfficers (CTOs/CIOS)intheIndianaviationsectorarehighlyskilledandqualified,buttheroleisnotyetpart ofthemostseniordecisionmakingteamsthatchangethedirectionoforganizations. Until CTOs and CIOs are given greater recognition, industry leadership will by and large fail to recognize the critical strategic role that customercentric technology can play in transforming financialandoperationalperformance. Thelowerpriorityattachedtotechnologyalsoimpactsthespeedofdecisionmakingandallocation ofbudgetswhichslowsdownimplementation.OurobservationisthatIndianaviationtodayismore focused on catching up with existing global practices rather than establishing new innovative benchmarks.
OverviewofIndianAviation
India has seen a transformation of its aviation landscape since 2004, positioning it as one of the fastestgrowingandmostexcitingmarketsintheworldtoday. In2000just42millionpassengerspassedthroughairports;agovernmentcommitteehaddeclared Indias airports were for the most part an embarrassment; and only 2 percent of traffic was handledatprivatizedairports.Inthedomesticarenathelowcostairlinemodelwasunknownand AirIndiawastheonlyIndiancarrierpermittedtooperateinternationalservices. Fast forward to today and airport traffic has more than tripled to over 150 million in 2012, 60 percentofthisatprivatizedairports,someofwhicharewinninginternationalawards.Thelowcost modelnowdominatesthedomesticmarketwithcloseto70percentmarketshareandsevenIndian carriersflyoverseas. Thescheduledcommercialfleethasgrownfrom119aircraftin2000to437today,representingan investmentofUS$16billion.Meanwhile,afurtherUS$1.5billionworthofgeneralaviationaircraft havebeenpurchased,includingmorethan100businessjets.CombinedwithUS$8.6billionofcapital expenditure in airport modernization and development and US$1 billion in ancillary activities, the totalinvestmentinIndianaviationsince2000isestimatedatoverUS$27billion. Overthenext10yearsweexpectthisrapidrateofgrowthtocontinue.Passengertrafficisexpected toreach452millionby2020,makingIndiathethirdlargestaviationmarketintheworld,alongwith 6.5 million tonnes of cargo. A fleet of over 1,000 scheduled aircraft and 2,000 general aviation aircraft will operate from rapidly expanding world class airports and all six metropolitan cities are expectedtohaveprovisionedforasecondairport(athirdinthecaseofMumbai)by2020.Over90 millionpassengersareexpectedtopassthroughDelhiAirportaloneby2020. The overall expansion of the industry will drive investment in air traffic management, safety and security,groundhandling,maintenance,educationandtrainingandotherancillaryservices.Indiais alsolookingtodevelopfurtheritsaerospacesectorwithplanstolaunchanindigenous7090seater regionalaircraft.IfIndiasrelativelylowercoststructurecanbecombinedwithinternationalquality standards,thereisanopportunitytocreategloballycompetitiveprovidersthatcanservicenotonly Indiasrequirements,butalsoattractclientsworldwide.Totalincrementalinvestmentinthesector isexpectedtoreachclosetoUS$100billionoverthenextdecade. SummaryofHistoricalandProjectedIndicatorsofIndianAviationGrowth DomesticPassengers InternationalPassengers ScheduledAirlineFleet DomesticCargo InternationalCargo 2000 14million 14million 116aircraft 0.1milliontonnes 0.6milliontonnes 2010 52million 37million 397aircraft 0.4milliontonnes 1.5milliontonnes 2020 180million 90million 1,030aircraft 1.2milliontonnes 4.0milliontonnes
10
PassengerTraffic
OverthelastdecadepassengertrafficinIndiahasgrownmorethanthreefoldfrom42millionairport passengersin2000to141millionpassengersin2010. Domestic&InternationalPassengerTraffic2000to2010
Source:CAPA,AAI
CAPAhasdevelopedforecastsforthecomingdecadebasedonacombinationofregressionanalysis and a qualitative assessment of the key drivers of traffic. We project continued rapid growth with traffic expected to increase to 450 million by 2020. Although the growth is similar to that experiencedoverthelasttenyears,occurringasitwilloffamuchlargerbase,theabsoluteincrease will be more than three times as much. CAPA estimates that this level of growth will require investment of US$120 billion over the next ten years and will generate significant business opportunitiesforairlines,airportoperators,architectsandplanners,aircraftmanufacturers,leasing companies,exportcreditagencies,equipmentsuppliers,maintenanceorganisationsandeducation andtrainingproviders. CAPAForecastforIndianAirportTrafficin2020
Domestic AirlinePax 14m 52m 180m
IntlAirline Pax 14m 37m 90m
Airport Pax* 42m 141m 450m
10year CAGR 12.9% 12.3%
Absolute Growth 99m 309m
2000 2010 2020
Source:CAPAProprietaryModel *Number of airport passengers in the country is equivalent to twice the domestic airlines passengers (each of which generatestwoairportmovements,adepartureplusanarrival),plusthenumberofinternationalpassengers.
11
Fleets
Indiascommercialaviationsectorconsistsofthefollowingscheduledpassengerairlinesoperatinga totalfleetsizeof437aircraftaccordingtotheDirectorateGeneralofCivilAviation(DGCA)aircraft register as at December 2011. Since 2000, aircraft with a purchase of price of US$16 billion have beenimportedintothecountry: Air India, the stateowned airline, operates full service domestic and international services. It alsohasawhollyownedlowcostsubsidiary,AirIndiaExpress,whichoperatesoninternational shorthaul routes. Plans to launch Air India Express on domestic routes have not yet been implemented. JetAirwaysoperatesfullservicedomesticandinternationalservices.Thecarrierhasconfigured approximately70percentofitscapacityunderanofrillsbrand,JetKonnect.Inaddition,Jethasa whollyownedlowcostsubsidiary,JetLite.Theairlineplanstomergeitstwolowcostoperations underasinglebrandin2012. KingfisherAirlinesoperatesfullservicedomesticandinternationalservices.SimilartoJet,ithad configured approximately 70 percent of capacity under a nofrills brand, Kingfisher Red. However,inOctober2011theairlineannouncedthatitwouldbephasingoutthelowcostbrand andmovingtoanentirelyfullserviceoperationwithaircraftconfiguredwithtwoclasses. IndiGo,SpiceJetandGoAirareindependentlowcostcarriers.Inadditiontodomesticservices, IndiGo and SpiceJet operate shorthaul international services to the Gulf, South and Southeast Asia. IndianScheduledAirlineFleetsasatDecember2011
Source:CAPA,DGCA
The fleet is heavily skewed towards narrowbody aircraft which represent over 70 percent of the total.Largerwidebodiesandsmallerregionalaircrafteachrepresentabout15percentofthefleet. Withintheregionalsegmentthebalanceistippingawayfromregionaljetstoturboprops.By2020 weexpectthefleetsizetohavegrownto1,030aircraft,ofwhichapproximately65percentwillbe narrowbodies. CAPASITAReportonInnovation&Technology
12
CargoTraffic
AircargoinIndiaisshowingstronggrowthbutisatanearlystageinitsdevelopment.Totalaircargo handledatallIndianairportsin2010reached2.35milliontonnes.Thisiscomparabletothevolumes handledatDubaiAirport.AndthefivelargestcargoairportsinChina(HongKong,Shanghai,Beijing, GuangzhouandShenzhen)collectivelyhandledcloserto10milliontonnes. Domestic&InternationalAirCargoVolumeshandledatIndianAirports
Source:CAPA,AirportsAuthorityofIndia
As is often the case in India, growth has occurred despite challenges related to airport facilities, technologycustomsprocessingandbureaucracy.Withappropriateinfrastructure,investmentanda conduciveregulatoryframework,theunderlyingpotentialcouldbeunleashed. CAPAforecaststhataircargovolumescouldtripleover10yearsfrom2.35milliontonnesin2010to 6.51milliontonnesin2020. CAPAProjectionsforGrowthofIndianAirCargoVolumesto2020
Domestic CargoCarriage (tonnes) 144,000 426,000 1,237,000
IntlCargo Carriage (tonnes) 557,000 1,496,000 4,035,000
AirportCargo Volumes* (tonnes) 846,000 2,348,000 6,510,000
10Year CAGR
Absolute Growth (tonnes) 1,502,000 4,161,000
2000 2010 2020
10.8% 10.7%
Source:CAPAProprietaryModel,IndustrySources *Volume of airport cargo volumes in the country is equivalent to twice the domestic cargo carried by airlines (as each tonneofcargoshandletwice,onloadingandunloading),plusthevolumeofinternationalcargo.
13
AirportDevelopment
India has 130 designated airports, of which 80 currently have scheduled services. The Airports AuthorityofIndia(AAI),thestateownedairportoperator,isresponsiblefor125oftheseairports. FiveairportsDelhi,Mumbai,Bangalore,HyderabadandCochinareoperatedunderpublicprivate partnership(PPP)models.InallbutCochin,theprivateequitystakeis74percent. In 2010 Indias operational airports handled over 141 million passengers, including 104 million domesticand37millioninternationalpassengers,representingyearonyeargrowthof15.9percent. Thetop10airportshandled80percentofalltrafficacrossthecountry. TotalPassengerNumbersHandledin2010 Airport PassengerNumbers NewDelhi 29.9million Mumbai 29.1million Chennai 12.0million Bangalore 11.6million Kolkata 9.6million Hyderabad 7.6million Cochin 4.3million Ahmedabad 4.0million Goa 3.1million Pune 2.8million Source:CAPA
ModernizationProgram
In 2005 the government of India announced a US$10 billion airport modernization plan for the periodthroughto2010.Thekeyelementsofthisplanincluded: Upgrade and modernization of Delhi and Mumbai Airports through the PublicPrivate Partnership(PPP)model(INR230billion) Construction of greenfield airports at Bangalore and Hyderabad through the PPP model (INR45billion) UpgradeandmodernizationofKolkataandChennaiAirportsbytheAAI Upgradeandmodernizationof35nonmetroairportsbytheAAI. Indiasairportupgradeandmodernizationprogrammereachedamajormilestonein2010,withthe openingofthenewTerminalThree(T3)atDelhiInternationalAirport.Constructedatanestimated costofUS$2.8billion,T3istheflagshipoftheIndianairportsystemandhasthepotentialtobethe firsthubinthecountry. Over the next 10 years the airport sector is expected to see a further investment of US$20 billion whichwillconsistof: Upgradeofexistingairports Greenfieldairportconstruction Provisioningforsecondairportsateachofthemetros CAPASITAReportonInnovation&Technology
14 UpgradeofExistingAirports Bangalore Delhi Secondphaseexpansiontocommence Expandcurrentterminal Constructsecondterminal Kolkata Upgradeprogramdueforcompletionin 2012.
Mumbai IntegratedTerminalTwoduefor completionby2012/13
NonMetroAirports Upgradeandmodernizationprogramto becompleted
AdditionalAirports Afurther45airportshavebeenidentified formodernizationbytheAAI
Chennai Upgradeprogramdueforcompletionin 2012.Likelytobefollowedbygreenfield secondairport.
Overall Projectedgrowthwillnecessitate provisioningforasecondairportateach ofthemetrocities(andathirdinthecase ofMumbai),pavingthewayforatotalof 13metroairports.Possibilityofasecond airportinAhmedabadaswell.
AncillaryAviationServices
Although airlines and airports are the most visible elements of the air transport industry, the aviation value chain consists of numerous other activities each of which plays a critical role in supportingthesmoothfunctioningandgrowthofthesector.
GroundHandling
There is an estimated US$500 million market in passenger and cargo ground handling services in India today. In 2007, the Government announced plans to introduce a new policy to improve security due to the many companies operating at the airport, and to provide a competitive environment.Thepolicystatedthattherewouldbeamaximumofthreegroundhandlingcompanies ateachofthemetroairports.Airlinesappealedarguingthatthiswouldresultinlowerserviceand higher costs. Planned introduction of the policy has been repeatedly deferred until at least mid 2012.
Maintenance,RepairandOverhaul
CAPAestimatesthattheIndianmaintenance,repairandoverhaul(MRO)marketisvaluedatUS$900 million and projects that it could grow to US$2.85 billion by 2020. By that date the Indian fleet is expected to exceed 1,000 commercial aircraft and 2,000 nonscheduled aircraft. Most heavy maintenanceactivityontheIndianfleetiscurrentlyconductedoffshore.Withtheprojectedgrowth ofthefleet,themarketwillsoonachievesufficientscaletobeabletosupportthedevelopmentof incountryfacilities.However,keybarriersinclude:afiscalenvironmentwithamultiplicityoftaxes thatraisethecostbaseofincountrythirdpartyMROs;ashortageofspecificaircraftmaintenance skillsandtraining;andstrongcompetitionfromoperatorsintheUnitedArabEmiratesandAsia.
15
AirTrafficControl
Air navigation services in India are provided by the Airports Authority of India (AAI). The AAI has preparedanewplanforupgradingairtrafficmanagement(ATM)andcommunications,navigation and surveillance (CNS) which includes the implementation of modern radar coverage with ADSB (Automatic Dependent SurveillanceBroadcast), multilateration, transition from voice communication and ground based navigation to digital communication and satellite based navigation,knownasGAGAN(Indiassatellitebasedaugmentationsystem).Overthenext10years investment of over US$1.52.0 billion will be required across the value chain in areas such as communication, navigation, surveillance, automation, meteorology, technology, maintenance and training.
GeneralAviation
Thegeneralaviation(GA)sectorinIndiaissignificantinsizewithanestimated750activeaircraft, compared with just over 400 scheduled aircraft. However, the sector is highly fragmented, unstructured and underfunded. It faces numerous challenges including the lack of a supportive regulatoryframeworkandtheabsenceofdedicatedinfrastructureatairports,andmaintenanceand trainingfacilities.Nevertheless,givenIndiaseconomicgrowth,largelandmass,variedterrainandin many cases poor surface connectivity there are multiple opportunities for GA operations for business, tourism, industrial support and emergency services. CAPA estimates that the fleet could expandtoover2,000aircraftby2020.
TrainingandEducation
Askilledandcompetentworkforceisessentialforasafeandefficientindustry,buttheindustryhas apoortrackrecordinhumanresourcesplanning.Indianaviationneedstorecruitandtrainpeoplein unprecedented numbers. CAPA forecasts that India will require an additional 300,000350,000 employeesintheaviationsectoroverthedecade2012to2022.Inaddition,theGulfwillrequirean additional500,000employees,alargeproportionofwhichwillcomefromIndia.
Security
CAPAestimatesthataninvestmentofUS$1.5billionto2billionwillberequiredinairportsecurity overthenextfewyears,bothtoupgradeexistingfacilitiesandtoequipnewterminalsandairports. Indianairportswillhavetocontinuetooperateunderaheightenedlevelofsecurityinthemedium termandcontinuousinvestmentwillbenecessarytoupgradeairportequipmentandprocessesto internationalstandards.
CurrentChallengesinIndianAviation
Indias aviation industry today is fundamentally unviable. A negative regulatory and policy framework, significant structural challenges, a high cost environment and serious under capitalisationhavecombinedtocreateasituationinwhichvirtuallyeverystakeholderintheaviation valuechain (airlines,airports,generalaviation)isfinanciallyweak,withairlinesparticularlyfragile. OverthelastsixyearsIndiasairlineshaveaccumulatedlossesofapproximatelyUS$8.5billionand Indias3largeairlinegroupshavetotaldebtsofaroundUS$16billion.Someofthereasonsbehind thispoorperformanceinclude: CAPASITAReportonInnovation&Technology
16 Policy & Regulatory: Indias policy and regulatory framework is not aligned with industry viability. And it adopts a fragmented approach which considers airlines, airports, ATM and general aviation as separate, unconnected activities with no long term strategic plan for the sector. Structural Issues: These are some of CAPAs observations about the issues which impact the operationsoftheairlinesector: o Taxation: The highly punitive fiscal regime in India is the primary problem for the aviation sector. The cost of Aviation Turbine Fuel in India is almost 60 percent higher thaninternationalbenchmarks.Inadditionaltotaxationonfuelthereareseveralother fiscalimpostsincludingservicetaxandwithholdingtax. Cost of Operations: Aside from fuel, Indian aviation is facing an increasing cost environment.WithalmostUS$10billionofinvestmentinairportsoverthelast5years, airportchargesareexpectedtoincreaseinthecomingmonths,particularlyatthemajor metros. The need to upgrade ATM infrastructure is also expected to result in higher charges.Meanwhile,ashortageofmanpowerandafailuretoplanforpeopleortraining meansthatstaffcostsareincreasingaheadofinflation. Foreign Direct Investment: Although India permits foreign investment in the airline sector,foreignairlinesareexcluded. Thereisno clearrationale astowhytheinvestor class that would bring the most expertise and strategic synergies, is barred from participating.However,itisexpectedthatthisanomalywillberemovedin2012. RouteDispersalGuidelines:Therequirementtooperatesocialobligationroutescreates a distortion for the airlines and at the same time does not appear to be achieving the ultimate objective of delivering greater connectivity to remote and less developed regions. 5 Year / 20 Aircraft Rule: There is no logic for the discriminatory regulation which preventsIndiancarriersfromoperatingoverseasuntiltheyhavecompletedfiveyearsof domesticoperationsandoperateafleetofatleast20aircraft.Foreigncarriersflyinginto Indiaarenotsubjecttothishurdle. International Traffic Rights: Most Indian carriers are now eligible to operate international services and wish to do so, but are facing delays in obtaining rights to launchnewroutesduetoAirIndiasfirstrightofrefusal.AirIndiahaslimitedcapability tooperatenewroutes,meanwhileblockingprivatecarriersfromdoingso. Alliances: The process of Indian carrier accession to membership of Star Alliance and SkyTeam has become Air Indiacentric and is holding up the integration of Indian aviationintotheglobalsystem.Alliancemembershipcouldprovidevaluablepassenger feedbothintermsofvolumesandyields. Commercial Flexibility: The restrictions on airlines being able to adjust their forward schedulesinresponsetomarketdemandlimitstheircommercialflexibility. Legal Framework: Aviation is subject to acts of parliament which date from the 1930s with limited relevance to todays environment. This structure imposes archaic procedureswhichresultinhighercosts.
o o
17 o Safety: A shortage of airworthiness inspectors and air traffic controllers raises safety issuesandlittleprogressappearstohavebeenmadeontheseconcerns.
Supply Side Efficiency: Low productivity of Indias strategic infrastructure assets such as runwaysandairspacehasamajorimpactonairlineefficiency. Congestion,holdingpatternsandextendedturnaroundtimesallservetoincreasecosts.In addition, low efficiency of infrastructure means that available capacity is exhausted early, capex needs to be invested in building new airports earlier than should otherwise be the caseandthesecostswillultimatelybepassedontotheairlines. Onthemanpowerfront,ashortageofskillsandtraininginfrastructureandafailuretoplan for people means that staff costs are increasing and in some cases there is a danger that aircraftmaybegroundedduetoanabsenceoftechnicalresources. Manyoftheissuesoutlinedabovehavebeenontheagendaforseveralyearsbutlittleprogresshas been made, contributing to the current situation. However, a crisis should never be wasted. The currentissueshavefirmlyplacedaviationonthenationalagenda.Themomentumshouldnotbelost and instead we consider this an ideal opportunity to implement long overdue reforms and to developinnovativesolutionstoestablishanewsustainablebusinessmodelfortheindustry.
18
ITandInnovationTrends: thegloballandscape
Its all about the passenger. Every year SITA undertakes extensive global surveys to track major trends and technologies across the worlds air transport industry. The surveys not only gather the opinions of senior executives at airlines and airports. They also address the most important stakeholderofthemall:thepassenger. SITAs latest Airline IT Trends Survey was released in June 2011, followed bythe Airport IT Trends Survey as well as the Passenger SelfService Survey in October. All three surveys are built on solid methodology, and enjoy a high level of engagement globally, ensuring results that are relevant to regions and organization types across the world. The Airline IT Trends Survey represents airlines carrying 1.25 billion passengers a year, with around 100 airlines representing 57 percent of world passengertraffic.AirportITTrendsSurveyrepresentssome200airportswhichmanage43percent of world traffic, accounting for 2.1bn inbound and outbound passengers. The Passenger Self Service Survey represents 2,547 passenger interviews at six major airports across the globe. See www.sita.aeroformore.
ITspendingandinvestmentpriorities
Nowhereareimmediateandpressingtrendsandtechnologiesmoreevidentthaninthecurrentand planned IT spend of the air transport industry. SITAs latest survey results suggest airlines and airportsreceivedfurtherincreasesinbudgetin2011onthebackofarecoveryforthefullfinancial year in 2010. In light of a predicted increase in industry revenues, this indicates an increase in absoluteterms.Takingintoaccountthisincreaseinrevenue,itwouldmeanariseinspend,inreal terms,forthesecondconsecutiveyear. ITexpensesencompass: Capitalexpenditure(CAPEX):thatis,theannualamortizationofITequipment. Operational expenditure (OPEX): that is, operation and maintenance expenses for the currentfiscalyearthathavenotbeencapitalized. Thesurveyresponsesuggeststhatforthemajorityofairlines,operationalITspendin2011remained stable,atanaverageof1.8percent(aspercentageofrevenue)whiletheaveragecapitalITspendis atalmost1percentofrevenue. The level of spend remained almost the same as in 2010. Together with the increase in industry revenues,onaglobalbasis,thismeansthatitalmostrecoveredtoprerecessionlevels.82percent ofairlinestoldSITAthattheirITspendincreasedorstayedthesamein2011.Almost60percenthad receivedanincreaseinspend. Clearly,themoodfor2012ismoreguarded.Butwhatsclearfromthesurveysisthatmostairports and airlines through the peaks and troughs experienced by the air transport industry remain determinedtokeepafocusontheirfuturegoals. CAPASITAReportonInnovation&Technology
19 ExpectedChangeinITBudgets
Topinvestmentpriority:improvecustomerservice
Service has always been at the forefront of the air transport industrys IT agenda. Latest survey resultsshownodeviationfromthat.Airlinesandairportsrankimprovedcustomerservicehighestas adriverforITinvestments. Whatssignificantisthatin2011customerserviceshiftedbacktoitstopposition,withinvestment recovering from the lower levels recorded for 2010. This highlights the importance of customer service and its central position to the IT strategy and direction for both airports and airlines. Of course,astheindustryrecovers,costreductionisstillahighpriority.ButSITAssurveysshowthat forIT,costreductionisnolongernumberoneonthewatchlist.
20 Withcustomerservicesittingastoppriority,whatdoesthismeanintermsoftechnologyadoption andthetechnologylandscapeinthenextcoupleofyears?Afocusonpassengerinteractionreveals someanswers.
Passengerinteractionevolutioninthenext35years
Choosing/buyingtravelservices
Airlinewebsitesstilldrivethemajorityofthedirectticketsales,butotherchannelsarestartingto complement website. In fact, the number of channels is increasing fast. Airlines show a strongly interested in adding new sales channels: mobiles take top position with 85 percent of airlines planningtosellticketsthroughthecustomersmobilesby2014,while7outof10airlinesplantosell ticketsonkiosksandonsocialmediachannels. Thereareofcourseotheremergingsaleschannelsbesidessocialnetworkchannels,suchasGoogle flight search pointing directly to the airline site. The impact of this on the airlines sales channel strategyremainstobeseen.
21
Themarchofthemobile
Mobilityisamassivetrendandanarearifewithrapidinnovation.Some54percentofpassengers carried a smart phone in 2011, up from 28 percent in 2010 and 16 percent in 2008. The mobile phoneisafastgrowingextensionofselfservice.Itsimportanceinenablingpassengerstopurchase servicesisincreasing. Already, passengers have grown familiar with selfservice offered on airline websites. So much so that79percentofpassengerswantmoreselfserviceoptionsontheirairlinewebsite,accordingto SITAs Passenger SelfService Survey. Looking at the trends so far, passengers are likely to expect moreandmoreselfserviceoptionsextendedtotheirmobiledevices.
Preflightinteraction
Itisexpectedthatby2014overtwothirdsofpassengerswilluseselfservicecheckin.Althoughif checkinisstillrequiredatthattime,thenitwillnolongerbeusedinthetraditionalway,withthe majorityofpassengerscheckingin45to75minutesbeforeaflightleaves. Kiosk and online checkin are well established and reaching a plateau. Any further usage will require the removal of other obstacles, such as the introduction of Baggage drop off points. In CAPASITAReportonInnovation&Technology
22 fact,baggageisamajorinhibitorfortheadoptionofmoreselfservice.Onethingisclear.Themobile phoneisfastbecomingaviablechannelforpreflightinteraction,with15percentexpectingtouseit for this reason by 2014, a rise from the 3 percent now. Smart phone penetration will boost this further WhatweareseeingfromSITAsITTrendsSurveysisthewillingnessandpreparednessofairlinesand airports to invest in technology, innovations, processes change and standards to remove the obstaclesfortheadoptionofmoreselfservice,forexample: Airlinesandairportsplantoincreasethecapabilityofbagtagprintingby2014 Commonbagdropisthenextstep,withpenetrationstillinitsinfancy.Thecurrent4percent willrisetoanimpressive51percentofairlinesplanningtoprovidethiscapabilityby2014to theirpassengers. Thentherearealsoautomaticsecurityandboardinggates.Thesearestartingtoemergeasa wayofspeedinguppassengerflowatairports. Clearly,tomakethesetrendsareality,technologymustmatureandfurtherintegrationeffortsmust takeplacebetweenairlines,airportsandauthorities.
Newcustomerserviceoptions
Worldsmartphoneadoptionexperienceda73percentyearonyeargrowth,with107.7millionunits shipped in Q2 2011 (source: Canalys). In SITAs Passenger SelfService Survey the percentage of interviewedpassengerscarryingsmartphoneshadalmostdoubledoverthepreviousyear:overhalf werecarryingasmartphone. TheiPhoneispopularacrossallagegroupsandisthepreferredsmartphoneofbothbusinessand leisure travelers. With rising adoption of smartphones and greater functionality, passenger expectationsareincreasing:moreandmore,theywantsmartphonestosupporttheirjourney.
SITAs passenger survey found that passengers want to see improvements in communication: I acceptthatifsomethingmaynotgoasplanned,butIwouldliketobeinformedintime,clearlyand concisely. There are implications for notifications about flight status. We will see an increase in this functionalityprovidedtomobiledevices.Forairlines,itwillrisefrom51percenttodayto94percent by2014;forairports,thefigureswillrisefrom48percentto81percent.
23 Butotherchannelsarestartingtocomplementthisprocess.Socialnetworksareincreasinglybeing used to communicate with passengers (and for passengers to communicate with airlines). Not surprisingly,airlineswillseeanincreaseinprovidingthiscapabilityfrom23percentto76percentby 2014,whileairportswillseeariseto73percentfromthecurrent36percent. What is clear is that interaction with passengers is becoming ever more complex as new communicationschannelsareadded.Allofthesechannelsnotonlyrequiremanagementinrelation topassengerdemands,buttheyalsoproduceadditionaldataaboutcustomers.Thisisvaluabledata thatalsoneedstobemanaged,togainaconsistentpictureaboutpassengersandmaintainservice qualityacrossallchannels. Anotherareaofinnovation,navigationservices,issetforgreaterpopularitytoo.Inparticular,ahigh percentageisdemandingtheseservices.SITAhasbeenactiveininnovatinginthisarea.Airportsare ontheirwaytobuildnavigationservices.By2014,49percentplantohavethem,arisefromtodays 5percent. Navigatingthroughtheairport:iphoneappforFrankfurt
Cloudtechnologytogainground Tobeabletodelivernewlevelsofcustomerserviceandenablesomeofthefunctionalitythatwill enhance the passenger journey, airlines and airports must invest into upgrades to their existing IT infrastructure.Hereagain,newtechnologiesandinnovationsaresettingthepace. Newareassuchasautomatedboardinggates,bagdrop,passengerflowmanagement,tonamejust afew,requirenewequipmentorupgradestoexistingones.Airlinesandairportsarebothwellaware ofthekeyroletechnologyplaysinthetransformationofcustomerservice.Bothconsiderupgrading theirinfrastructureasbeingessentialtotheirbusinessstrategy. Scalabilityandflexibilityofinfrastructureareimportantdriversforinfrastructureinvestmentsatthe best of times, but even more so in volatile economic times. Cloud and virtualization technologies playasignificantroleinthis. Investmentsincloudandvirtualizationaregatheringpace.SITAssurveysconfirmthattheindustry isacceptingtheconceptandbenefitsofvirtualizationandcloudcomputing:asmanyas9outof10 airlines and airports have already implemented or are planning to implement Infrastructureasa Service(IaaS)by2014.
24 Sowhosdrivingtheinnovation? Looking across the three SITA surveys, its not unreasonable to consider the question: So who exactly is driving the trends, technologies and innovations that are so critical to the airline and airportagenda? Giventhatairlinesandairportsarebothsharplyfocusedonthepassengerjourney,aswellastheir passengers perceptions and loyalties, we dont need to look too far for the answer. And lets not forget,witheverincreasingcompetitionforpassengers,improvingcustomerservicehasclimbedto topoftheITagendaintermsofinvestmentcriteria. The bottom line is that there is really no other choice. Passengers, as SITAs passenger survey demonstrates, are mecentric. They are technology savvy and they demand service. They are preparedtousemoreselfservice,acceptnewchannelsandnewtechnologies.Theyarelookingfor innovations. If all the plans expressed in SITAs surveys become reality, the industry will see a big transformationofthepassengerprocess,withthemobilebeingamajorcatalyst. Globaltrendsandtechnologiesinairtransport.Ataglance
25
IT&InnovationTrends: theIndianlandscape
Technology can play a strategic role in business transformation for the Indian ATI. However, the aviation ecosystem needs to facilitate an environment which promotes the implementation of technology and the creation of innovative IT solutions. Currently technology in Indian aviation is faced with certain barriers towards effective and gainful implementation, either due to policy constraints faced in the external environment or on account of IT being a noncore strategy at an enterpriselevelacrossmoststakeholders. The approach to IT and its prioritization varies between organizations at present. Stakeholders acrossthesectorarenotalignedwithITapplicationstoreapthebenefitsoftechnology.However,IT ability is being looked at by stakeholders to add value to the service delivery initiatives being planned. Airports are looking to benefit from the establishment of centralized Airport Operations Control Centres(AOCC)andprocessautomationofpassengerservicesinairportsby2017.Airportsatmetro citieshavechangedthewayITinfrastructureisviewedwithinthesector.However,thepaceofwide scaleITimplementationacrossallairportshasscopeforimprovement.Airlinesexpecttechnologyto become more B2C focussed as consumer expectation will drive the need for technology. Most airlinesexpectaparadigmshifttomobilitysolutionsoverthenextcoupleofyears. Warehouseoperationsofgroundhandlerspresentanopportunitytoimplementsolutionstowards ecargoandconsignmenttracking.Additionallythereisaneedforsolutionstoautomateoperations in order to increase efficiencies. Technology for ground handling firms is customized locally and is deployedonaneedsbasis. StakeholdersinIndianaviationbroadlyhighlightsimilardriverstowardstechnologydeployment. KeyDrivers2012
1.Cost Reduction
4. Customer Experience
Key Drivers
2. Efficiencies
3.Revenue Generation
KeySnapshot2012 Hybridmodelforoutsourcing between6080percentnoncore functions. Implementationofexistingglobalbest practices. Mobilityforpassengerprocessing, FIMSforATMoperations,and biometricsforscreeningarefocus areas. MostlynonexistentR&Dfacilities. Securityconstraintsduetopolicy,act asbarrierstoeffectivedeployment. SlowrateofITdeploymentsince 2010. Technologydeployedismore operationalthanstrategic.
26
KeyFutureTechnologies
Indian aviation is likely to witness some key technologies being deployed, which are expected to have a positive impact on businesses and operations in the future. However, this will need to be supportedbyfavorablepolicyandindustryinitiatives.Somekeyfuturetechnologiesidentifiedinthe industrysurveyare: Biometricsforemployeesandpassengersisexpectedtobeinplaceoverthenext3to5years. Serverandapplicationvirtualizationarebothbeingconsideredasameanstoreducethecostsof IT, with server virtualization being seen as the priority given the impact on reducing server infrastructure. There is also growing interest in the asaservice approach that cloud computingbringstotherationalizationandcostreductionofITinfrastructure. Anintegratedradarsystemisatanearlystageofimplementationandisexpectedtobecritical as it will cover the blind areas not covered by the current radar systems. Also FIMS (flight information management system) will assist in communicating available flight details to air trafficcontrolandisexpectedtobeimplementedacrossairportsisthenearfuture. Mobilitysolutionstofacilitatepassengerprocessingforairlines(mobilecheckin,boardingpass onmobileetc)andtosupportstaffefficiency. Onboardinternetandphoneconnectivityisenvisagedinthenext5years. Radio frequency identification (RFID) is to be implemented by 2015. Opportunity exists to go beyond simply baggage reconciliation and deploy RFID for cargo handling, asset and inventory controlandpassengertracking. Selfservicekiosksareexpectedtowitnessfullscaledeploymentby2014. Commonuse solutions will become increasingly common, and the use of a shared platform shouldpermittheprovisionofamoreseamlessservice. Websolutionsforfilingofflightplanthroughtheinternet. Somekeysolutionsthathavewitnessedincreased deployment amongstairportsandairlinessince thestudythatwasconductedin2010include: increasedfocusonwebsitesasamediumtoincreasesalesanddistributionforairlines;
socialnetworkingapplications; implementation of Common User Terminal Equipment (CUTE) across PPP airports, with
expansionunderwayacross25nonmetroairports; ERPandbusinessintelligencesolutionsacrossthevaluechain; Baggagereconciliationsystems; Flightinformationdisplaysystems; Visualdockingsystems.
27
MarketSurvey&Findings
ThequalitativesurveywasconductedinJanuaryandFebruary2012,coveringtheentirevaluechain oftheairporttransportindustryincludingairports,airlines,groundhandlers,theMinistryofHome Affairs, Custom and Excise, and the Bureau of Immigration. The perspectives were sought from Heads of IT, Chief Financial Officers (CFO), Chief Executive Officers (CEO) and senior bureaucrats fromthesestakeholders.
KeyContributors
Airports 6metroairports 1nonmetroairport AirportsAuthorityof IndiaHeadOffice Airlines 3fullservicecarriers 4lowcostcarriers 6foreignairlines 1cargoairline Others AAIATM 3groundhandlers MinistryofHomeAffairs CustomsandExcise BureauofImmigration
PublicPrivatePartnershipAirports
Introduction
PPP airports in India currently handle 60 percent of the passenger traffic and are keen to deploy numeroustechnologyinitiatives.TheseairportswillrequirearobustITinfrastructuretohandlethe projectedgrowthlevelsinpassengerandcargotraffic. The market survey revealed that most PPP airports have a defined strategy towards technology implementation. PPP airport spend as a percentage of revenue is expected to remain steady at around45percentduring201213,howevergiventhehigherbaseofrevenue,ITspendwillwitness anincreaseinabsoluteterms. Reflectingacontinuedpositiveoutlookforthenextyear,80percentofsurveyrespondentsexpectIT spendtoincrease,while20percentexpectbudgetstostaythesamein2013. TheimportanceofIT in decision making is increasing with CTOs getting representation at board levels in some cases. However,thereisverylimitedfocusonresearchingtheimpactoftechnologyattheseairports.
DuetothechallengingenvironmentprevalentinIndianaviation,thecriticalfocusforairportsison developing solutions to facilitate cost reductions. This was followed by improvements in business processes and enhancement of the customer experience. Surprisingly, capturing revenue opportunitieshavealowpriorityfortheseairportsintheshort term.PPPairportsaimtobecome moretechsavvytoalignthemselveswithglobalbestpracticesinthenext5years. CAPASITAReportonInnovation&Technology
28 ITspendingaspercentofrevenueinFY2012* Increaseinspendingfromlastyear*
FY2017 FY2014 FY2012 03%
60% 60% 100% 36% 69%
20%
20%
40%
1012%
SampleSize5
KeyDriversforITimplementation
SampleSize5
Reducing costs 80%
*Percentageofrespondents
Virtualization 80% Selfservice kiosks 80% Cloud computing 40% 70% 70% 70% Biometrics 50% NFC 65% RFID PriorityLevel Social networking
Improving customer experience
60%
Improving business 70% processes 20%
Selfscanning onmobile
Revenue opportunities
Prioritylevel
ProgressinTechnologyatPPPAirportssince2010
PPP airports witnessed investments across three broad categories over the last couple of years covering enhancement of the passenger experience and facilitation, improving airport operations and strengthening IT infrastructure. Technologies for passenger experience enhancement such as selfservice kiosks, information exchange via mobile and social networking along with FIDS have gained importance during the period. All PPP airports have CUTE deployed; while business intelligence gained managements attention. Solutions such as baggage reconciliation (BRS), RFID, biometricidentificationsolutionsandhandheldsforinternalcommunicationattractedattention.In termsofITinfrastructure,airportslookedatimplementingvirtualizationandERPsolutions. Passenger facilitation technologies saw increased rollout of selfservice functionality and its acceptance by passengers. Kiosk checkin has been the major focus area and saw widespread implementationatPPPairports.AtpresentPPPairportsareplanningtoextendselfservicekiosksfor thepurposesoflostbaggageandtransfers.Moreover,mostairportsimplementedFIDSsystemsand are also planning to automate the public announcement system to reduce noise. In the last two years,fouroutoffivePPPairportsestablishingasocialmediapresence.Currentlysocialnetworking isbeingusedprimarilyforcustomerrelationshiphandling,thoughfurtherplansincludepromotion ofservicesandflightupdates. CAPASITAReportonInnovation&Technology
29 Application SelfServiceFacilities KioskCheckin Lostbaggagekiosk SelfServicebagdrop Selfscanningmobile2Dboarding passes TransferKiosk FlightDisruptionkiosk SelfScanningofpassport/ID's AncillaryRevenuesEnhancement Biometrics RFID SocialNetworkingpresence Virtualization MobileApplication CUTE ERPimplementation Businessintelligence Inlinebaggagescreeningsystem BaggageReconciliationSystem(BRS) Handheldforinternal communication VisualDockingSystems Cloudcomputing FIDS AOCC
Nil Low Moderate
Status in2010
Status in2012
Remarks Possibleimplementationby2014 Highinterestamongairports,stalled bysecurityandregulatorypolicies Fewairportsinterested Highinterestamongairports,stalled bysecurityandregulatorypolicies UnderconsiderationbyPPPairports Currentlyusedforemployeeentry Implementedforcargooperations Mostlyforcustomerrelationship handlingandinformationsharing Onlyforserverandapplication Interesttowardsprivatecloud
Mobilitysolutionsarebelievedtoplayacriticalroleamongairportoperators,butdependencieson otherstakeholderssuchassecurityinstitutionsareposingahindranceinimplementationandhence thepriorityallocatedtomobilityisdecliningwhenitshouldinfactbetheopposite.Indianairports could consequently be left behind. The adoption of RFID has been slow in India even for the sole purpose of baggage recovery, whereas other markets are already expanding deployment to re designcheckin,cargohandling,assetmanagementandevenpassengertracking. However, despite the various initiatives underway, we did not observe a focus on creating a seamless customer experience, instead there are individual projects being developed in isolation. This approach does not keep the customer at the centre, nor does it effectively support the organizationsownstaff.Airportsneedtodevelopaplatformwhichintegrateseachofthevarious elements.
High
VeryHigh
30 Andwhereasimmigrationandsecurityagenciesarefrequentlydescribedasholdingupprogress,itis criticaltoincorporatethemintothenewsystemsasdifficultasitmaybe.Infact,sincecreatinga customerfocusedcultureattheseagenciescouldbedifficult,technologytakesonaddedimportance asithasthepotentialtoreducethenumberoftouchpoints. StatusofSelfServiceFunctionalities*

Automatedgates SelfscanningofID's Disruptionmgmt Lostbaggagereporting Selfservicebagdrop Selfservicetransfer KioskCheckin underevaluation Alreadydone Byendof2012 20% 40% 20% 20% 20% 40% 60% 20% 100% Byendof2014 Noplans 40% 20% 20% 40% 80% 40% 20% 20% 60% 20%
SampleSize5
Business intelligence has gained greater importance in improving airport operations, as is being considered by 60 percent of the respondents. Further, keen interest has been displayed to implement technologies like biometric identification for employee entry along with handheld devicesforinternalcommunication.Additionally,theairportsarealsoconsideringotherapplications ofbiometricsincludingpassengercheckinandboardingetc.butareawaitingregulatoryapprovals. BaggageReconciliationSystems(BRS)havebeenimplementedbymostPPPairports.RFIDgenerated alotofinterestin2010buthasseenlimitedimplementationby2012. StatusofBiometrics*
Boarding Securirtycheckpoint Passengercheckin Employeeentry Alreadyoffered 12years 40% 40% 40% 20% 20% 20% 100% 35years NoPlans 40% 40% 40%
SampleSize 5
IT infrastructure at airports is expected to improve on account of implementing new or upgraded ERPsolutionsandvirtualization,whichintroduceefficiencies.Servervirtualizationhasbeenableto attracttheattentionofthePPPoperators,with20percentofairportshavingimplementedit,while afurther60percentareinadvancedstagesofitsimplementationwithafocusoncostreductionand creatingapaperlessoffice.Cloudcomputingdoesnotseemtobeapriorityareawithairportsmostly on account of data security issues, only a private cloud for limited applications is under consideration. CAPASITAReportonInnovation&Technology
31 StatusofVirtualization*
Desktop virtualization Application virtualization** Serverandstorage virtualization Underevaluation 20% Alreadydone
40% 40% 20%
20% 40%
20%
20% 20%
60% Byendof2014 NoPlans
Byendof2012
**ApplicationvirtualizationisimplementedatonePPPairportonalimitedscale
SampleSize 5 TechnologyOutsourcingStatus *Percentageofrespondents
Airports are following a hybrid model for IT outsourcing. Airports have outsourced around 80 percentoftheirnoncoreactivitiescitingcostandexpertiseasthemajorreasons.However,asan exceptiontothetrend,amajorprivateairportinSouthernIndiapracticesaninsourcingmodelwith astrategicviewtoavoiddelaysinsoftwaremodifications,anddevelopingexpertise.
ChallengesinTechnologyImplementation
PPPairportshavecitedsecurityregulationsasamajorhindranceintechnologydeployment.Thisis followedbyascarcityofskilledmanpowerinaviationITtechnologiescoupledwiththeattritionof trainedresourcesinatightlabourmarket.Limitedtechnologicalknowledgeattheenterpriselevelis also seen as a challenge. Limited scalability of applications coupled with a lack of commonality betweentechnologyplatforms,alongwiththepresenceofvariousstakeholderspresentsadditional challenges for airports. Interestingly, very few airports cited issues such as limited budgets for IT, nonavailabilityoftechnologyorlackofmanagementorboardsupport. TechnologyOutsourcingStatus KeyChallengesTowardsITimplementation
AviationITskill scarcity 90% Lackof commanality 60% Budgetary limitations
20% Outsourced Insourced

Regulatory approval
40%
90% 70% Dependencies
50% Limited scalability
80%
SampleSize5
PriorityLevel

32
AAIAirports
Introduction
Indian airport infrastructure is being stretched by the rapid growth in air traffic. To cope with the demand,theAAIisplanningtoincreaseitsspendonIT.Intheshortterm,theAAIplanstospend around2percentoftotalrevenueonIT,whileitislookingatincreasingitto5percentoverthenext fiveyears.Developmentofresearchanddevelopmentcapabilitiesisnotacurrentfocusarea. AAIPlannedSpendingonITasProportionofRevenue
AAI is considering investment in solutions such as virtualization, self service kiosks, FIDS, ERP, and RFID.Additionally,AAIplanstoimplementBRSsolutionsatitsmajorairportswithintwoyears.Itis alsoconsideringlimitedimplementationofbiometricstoenhancesecurity.AAIisevaluatingserver virtualizationalongwiththedeploymentofCUTEat13airportsinthefirstphaseand25airportsin thesecondphaseofimplementation.AOCCisplannedtobeimplementedat10airportswithinthe next2years. KeyDriversforITimplementation KeyfutureareasofinvestmentinIT
ERP
RFID Key Technologies
FIDS
Virtual ization
Self service kiosk
33
ProgressinTechnologyatAAIAirportssince2010
Application SelfServiceFacilities KioskCheckin Lostbaggagekiosk SelfServicebagdrop Selfscanningmobile2Dboarding passes TransferKiosk FlightDisruptionkiosk SelfScanningofpassport/ID's Biometrics RFID SocialNetworkingpresence Virtualization MobileApplication CUTE Status in2010 Status in2012 Remarks Willbeatmajorairportsbyendof 2012 Underevaluationtoenhancesecurity ofsensitiveareas Planstoimplementforcargoin35 years Noplansinshortterm Servervirtualizationunderevaluation Planstoimplementat13airportsin1st phaseandthenanother25airportsin 2ndphase Currentlyunderimplementation Noplansinshortterm PartofChennaiandKolkata modernization Currentlyunderimplementation
VeryHigh
ERPimplementation Businessintelligence Cloudcomputing FIDS AOCC

Nil Low Moderate
AAIoutsourcesmostITfunctionswhileretainingprojectmanagementandmonitoringinhouse.The majorbottleneckforITimplementationhasbeencitedasthelengthybureaucraticproceduresand approvalprocesses.
High
34
Airlines
Introduction
TheairlinesectorinIndiahasbeenstrugglingfinanciallyforthelastfewyears.Thishassignificantly limitedtheirspendingcapabilityontechnology.SpendingonITwasobservedtobeintherangeof1 3percentofrevenueinFY2012.Thiscanbeconsideredasmoderatespendingwhencomparedwith globaltrendswhichwerearound1.8percent.Consideringthecurrentfinancialscenarioofairlines, ITspendingisnotexpectedtoincreasemuchoverthenexttwoyearsexceptinthecaseofacouple of airlines. However, 70 percent of respondents believe that spending on IT will see a robust increase over the next five years depending on the external factors. However, airlines do not considerdevelopmentofresearchanddevelopmentcapabilitiesinITasaninvestmentarea. ITSpendsofAirlinesInFY2012 Afewcarriersmigratedfrom moderateintothiscategory duetothecurrentfinancial scenario Veryfewcarrierswithfocus andcapabilitytospendonIT
KeydriversforITimplementationforairlinesareobtainingoperationalefficiencyandbringingabout enhancementofcustomerexperiencecoupledwithcostreductions.Additionally,thiswasfollowed byaugmentationofrevenuebeingconsideredby60percentofrespondents. Mobility solutions are emerging as a key IT investment area for the future with 90 percent of respondents planning some form of implementation in the next 12 years. Virtualization, cloud computing, BI and multiple applications of social networking are being considered actively. Furthermore,technologyimplementationforcargooperationswillwitnessthedeploymentofRFID andbarcodingsolutions.Thiswillbesupportedbyapplicationsforautomatingprocesses. KeyDriversforITImplementation
Reducingcosts 80% Improving customer experience Improving business processes
CRMupgrade 80% Cargomgmt solutions Revenuemgmt. upgrade 70% 80% 90% Mobility Solutions
KeyFutureAreasofInvestmentinIT
Virtualization 80% Cloud
60% computing 40% Social networking
90%
90%
60% Revenue opportunities
65% RFID
PriorityLevel
PriorityLevel
35
ProgressinTechnologyatAirlinessince2010
Deployment of technology has been slow since 2010, mostly due to the financial strain caused by highfuelprices.Mobilitysolutionsgatheredsomepaceintheirimplementationwithmanyleading airlines launching mobile websites and applications to offer mobile checkin, information updates and booking. Moreover, many airlines also upgraded their websites to make them more user friendly and in order to reduce dependency on GDS. Websites were also upgraded to offer more ancillary services such as tour packages, airport transfers etc. Progress was also seen on the core technologies front with the upgrade of revenue management systems, maintenance systems, and passenger and cargo management systems. MIS and business intelligence systems also saw an increaseintheirapplicationwithairlineslookingtocontrolcostsandincreaserevenuestreams.
Application SelfServiceFacilities WebCheckin KioskCheckin MobileCheckin AncillaryRevenues Ecommerce Businessintelligence Remotelocationcheckin ERP&costoptimizationsoftwares FlightOperations Inventory&RevenueManagement upgrade Distributionthroughownwebsite RFID IntegrationinITplatforms SocialNetworkingpresence
Nil Low Moderate
Statusin 2010
Statusin 2012
Remarks Highinterestarea Highinterestarea Highinterestarea AtAirportMetrolink Highinterestarea Majorimplementationfor cargooperations TowardsfeedbackandCRM
High
VeryHigh
Airlines are very optimistic about mobility solutions, and are striving hard to utilize them for passengerandemployees.Additionally,airlinesarealsoplanningtointroducemobilitysolutionsfor communication between cockpit and ground staff. For cargo operations, airlines plan to introduce tracking,baggagereceiptanddigitalapplicationstoreducepaperandmakeprocessesleaner.
36 StatusofMobilityApplications*
Integratingwithsocialnetworks Automatedaccesstolounges(BCBP) Targetingpassengerswithoffers Boardingpassestomobile Checkinviamobile Notificationflightstatus LostBaggagereporting Alreadydone Byendof2012 50% Byendof2014 50% 50% 50% 50% 60% 100% 50% Noplans 50% 50% 50% 50% 40%
SampleSize14
Social networking is being considered to enhance feedback mechanisms, information sharing with passengersandproductpromotionsoverthenexttwoyears.Ticketsalesthroughsocialnetworking arebeingconsideredbyafewairlinesoverthenextfiveyears. Virtualization and cloud services have seen increased deployment, with server and storage virtualizationregistering60percentdeploymentwhileanother20percentisunderadvancedstages of implementation. Stakeholders are implementing virtualization applications in order to achieve betteragility,flexibilityandlowercosts. StatusofVirtualization*
Desktopvirtualization Application virtualization Serverandstorage virtualization Alreadydone
20% 40%
20%
40% 40%
20% 20% 20% 20% Noplans
60% Byendof2012 Byendof2014
Underevaluation
SampleSize 14
Cloud computing is being considered only by a few airlines, specifically as a private cloud environment. Security of information has been cited as the biggest concern towards deployment. Additionally,inflightmobileconnectivityandonboardinternetarefocusareasforairlines,someof whomarelookingtodeploytheseservicesby2014.

37
Technologyoutsourcingstatus
AirlineshaveadoptedahybridmodelbyoutsourcingmajorityofnoncoreITfunctions.Oneofthe largestLCCoperatorsinIndiaoutsources80percentofnoncoreITfunctions.
ChallengesinTechnologyImplementation
Major challenges faced by airlines include limited scalability and lack of aviation IT skills with 90 percent and 85 percent of respondents citing them respectively. An additional bottleneck for IT deploymentwasdependencyonotherstakeholders.However,budgetarylimitationmayprovetobe aseriouschallengeconsideringthedeterioratingfinancialhealthofairlinesinIndia. TechnologyOutsourcingStatus KeyChallengestowardsITImplementation
AviationIT skillscarcity 85% Lackof commanality 50% Budgetary 60%limitations
Regulatory approval
80%
90%
Limited scalability

SampleSize 14
80% Dependencies PriorityLevel
GreenTechnology
GreenTechnologyinitiativesinIndianaviationarebecomingextremelyimportantastheycontribute notjusttotheenvironmentbutalsohelpinsavingcosts.Greentechnologyisgoodbusiness.Indian aviationhasmadeastartbutitisfarfrombeingpartoftheindustrysDNA.Moststakeholdersdo notyethaveawelldevelopedstrategytowardstheuseofgreentechnologybeyondafewindividual initiatives. Thereislimiteddefinitionoflongertermgreengoalsbothatanindustryandanorganizationallevel intermsofacomprehensiveprogrammeandsetoftargetswithrespecttoairquality,water,noise, wasteandemissions. Airports are arguably further ahead in this regard than airlines, with some private airports having obtained internationally recognized LEED certification highlighting their environmentfriendly initiativesinareassuchasrainwaterharvesting,useofelectricvehicles,recyclingandanemphasis ontheuseofnaturallight.ThefactthatIndiasairportinfrastructureisbeingdevelopedlargelyfrom scratch means that there is an opportunity to incorporate the latest technologies with respect to intelligentandgreenairports.Aproactiveapproachisnecessary,asenvironmentalactivismislikely tobebecomesignificantlymorepronouncedintheyearstocome. CAPASITAReportonInnovation&Technology
38 GreenInitiatives
Outsourcing
Technology outsourcing strategy for most stakeholders follows a hybrid approach in which the majority of noncore IT functions are outsourced. In most cases, 6080 percent of the noncore functions are outsourced to a domainexpert while the rest are retained in house due to strategic reasons. Noncore functions include management information systems, call centres, security solutionsetc.AnexceptiontotheoutsourcingmodelisaprivateairportoperatorinSouthernIndia, whereallITfunctionsareretainedinhouseinordertodevelopexpertiseinternally.
GroundHandlers
Groundhandlingagenciessawslowimplementationoftechnology,onthebackofrisingcompetition impacting their bottom line. However, technological implementation has increased due to the privatizationofmajorairports.Automationofmaintenancetaskingandreportingsystemshasbeen implemented along with airline and airport operations systems. Ecargo initiatives are being consideredinordertosimplifycargooperations.Theexpansionofapplicationsusingbarcodingand RFIDtaggingarealsounderevaluation.Moreover,groundhandlingapplicationsusedinIndiawere observedtobeinlinewithglobalstandards.Themajorbottleneckisdependencyonfactorssuchas securityprocessesandtheagenciesresponsibleforsecurity.
BorderControl
Initiatives towards Border Management Solutions (BMS) have witnessed slow deployment since 2010 broadly on account of policy issues. Initiative towards APIS systems at major international airports saw deployment towards increasing security and efficiency of border control. Solutions towards prescreening of passengers and using PNRs for risk assessment have already been implemented. Plans outlined in 2010 for biometric systems and electronic documentation (bar codedboardingpasses)inpassengerprocessinghavehadsomeprogressbutwilltakeanother34 yearstoimplement.MajorchallengesimpactingBMSisthelackofskilledITpersonnelandtheslow decisionmakingprocessingovernmentorganizations.
39
AirTrafficManagement
Innovation in ATM is critical for the development of a sustainable aviation industry. The Inter GovernmentalPanelonclimatechangeestimatesthataddressingairportandairspaceinefficiencies couldreduceemissionsby12percent.Keyinnovationsbeingadoptedgloballyinclude: Greater coordination between civil and military departments to create more direct air routes. IntroductionofmeasuressuchasContinuousDescentcansaveasmuchas400kgoffuelper landing,or1tonneofCO2 Gate to Gate Management initiatives which take into account potential delays along the entireroute.Aircraftdonottakeoffifcongestionisexpectedatthedestinationtoprevent unnecessaryholdingpatterns.Aircraftinholdingpatternsatloweraltitudescanburnfives timesasmuchfuelasatcruisingheights. USD58billionofinvestmentisrequiredinATMglobalby2020. TheSingleEuropeanSkyandtheUSNextGenAirTransportSystemarekeyprioritiesandthefocusis nowswitchingtoIndiaandAsia.ATMinIndiahaswitnessednumeroustechnologicaldevelopments since2010.Keydriverspushingthepaceoftechnologyupgradationarerapidlyincreasingtrafficflow andinternationalcompliancerequirements. Followingarethekeyinitiativesplannedoverthenext45years: Streamlinedfilingofflightplansthroughtheinternet. IssuanceofNoObjectionCertificatestobuildingsseekingheightclearanceinthevicinityof airports. Implementation of GAGAN (GPSaided geoaugmented navigation) by June 2013 making India the fourth country to have a satellitebased augmentation system (SBAS). This will enhanceIndiasdomesticATCcapabilitiesbutwillalsoimprovetheregionalflowofaircraft withitswidecoverage. First phase of the implementation of nextgeneration surveillance technology Automatic DependentSurveillanceBroadcast(ADSB),whichwillreplaceradarastheprimarymethod forcontrollingaircraft.Thefirstphaseoftheprogramwillbecompletedbytheendof2012 andwilladdress14locationsinIndia. FlightInformationManagementSystem(FIMS)needstobeimplementedacrossairportsto assistincommunicatingflightdetailstoairtrafficcontrol. Implementationofcrosscouplingoffrequenciestoallowbettercommunicationbetweenair trafficcontrollers. Implementation of Central Air Traffic Flow Management (CATFM) and Ground Based AugmentationSystem(GBAS)andwillbeimplementedinthenext45yearsincollaboration withtheUSTradeDevelopmentAgency(USTDA)
40 ConsolidationdowntotwoFlightInformationRegions(FIR)insteadofthecurrentfour,will removeexistingblindspots.Theplanisexpectedtobeimplementedinthenext45years. ImplementationofICAOsAviationSystemBlockUpgradetobringglobalinteroperabilityin ATCsystemsandachieveefficientflightpaths. For ATM, challenges have been encountered while implementing new technologies due to the bureaucracyassociatedwithinternalprojectapprovals.
41
ITandInnovationinIndianATI
RoleandSignificance
InnovationinITcanplaytheroleofadifferentiatorandfacilitatebusinesstransformation.However, stakeholders in Indian aviation primarily implement solutions to simplifying processes. For most players innovation seems to be the implementation of existing global best practices rather than settingnewbenchmarks. Stakeholderscangeneratetangible benefitsto the businessby deployinginnovativetechnologyIn Southern India, a private airport operator has been able to increase nonaeronautical revenue by implementingsolutionssuchaskioskandwebcheckinwhichprovidepassengerswithmoretimeto visit the airport shops. Nonaeronautical revenues registering a spurt due to such technology deploymentareretailsales,rentals,androyaltiesearnedthroughbuildingsolutionsforpassengers onbehalfofmobilecompanies. InnovativeSolutionsbasedonSurveyFindings a) PassengerFacilitation Information sharing through social networkingwillbeimplementedtoalarge extentacrossairportsandairlinesby2017. Web checkin has reduced time spent at checkincounters. Deployment of common user platforms have reduced queues and improved passengerflowatairports. Mobility will facilitate processes like mobilecheck in and mobile boarding passes. b) EnhancingSecurity CAPASITAReportonInnovation&Technology Capturingpatternsandclosemonitoringof operationsbasedontrends. Access control systems like biometrics will be introduced to secure personnel identificationatairports. Simplifying security procedures by providing online application. Use of bar coding. Passenger tracking solutions through the useofintelligentcameras.
42 c)OptimizingOpportunities d) ImprovingBusinessPerformance
Web based solutions provide an opportunity to improve distribution channelsandareas. GPRSbasedBIsolutionstofindoutstation tostationspaceallocation.(AirCargo) Automating processes can facilitate more functions in a given time slot. (Increased revenueAirCargo) Upgradedinventorymanagementsolutions forhighandlowyieldinventoryplacement. (AirCargo)
Wireless communication between cockpit andgroundstaff. Automated self boarding will reduce manualprocesses. Mobile applications can increase ancillary revenuethroughticketsales. Virtualization and cloud computing can helpreduceITinfrastructurecosts.
The market survey suggests that innovation can contribute to an improvement in efficiencies and operations. Some key technologies facilitating business transformation are expected to be biometrics, business intelligence, and mobility. Industry stakeholders are seeking an environment favourable towards the deployment of such solutions. Certain players are taking the initiative to provideaplatformtosupportinnovation.Forinstance,alargeprivateairportinNorthernIndia,is evaluatingthesettingupofaninnovationpanel.

43
Recommendations&Roadmap
Technology has the potential to play a central role in creating a new transformational business model. Information technology and the use of analytics could be as important for an airline as an aircraftbecauseitcandriveacompetitivebusinessmodelbyreducingcosts,increasingefficiencies, enhancingthecustomerexperienceandgeneratingnewrevenuestreams.However,recentprogress in this direction has been slower than planned. Partly this reflects the financial difficulties being facedbytheindustry,butasoutlinedbelowmorecanbedonetorecogniseITasatoolofstrategic importancefortheaviationindustry: Thefirststepindevelopinganew,transformationalbusinessmodelistorecognizethatone isrequired.Thisunderstandingshouldpermeatetheentireindustryatalllevels. The Ministry of Civil Aviation can play an important role by ensuring that the policy and regulatory framework is designed with viability and sustainability at its core, as well as of coursesafety.Overregulationanddistortionsstifleinnovation,removingtheseisoneofthe mostimportantstepsthatcanbetakentoencouragenewthinking. Technology is changing fast and its implications are widespread. We recommend that the Ministrydevelopstheinternalcapabilitiestounderstandtherapidpaceofchangeinglobal aviation.ThisisparticularlytrueinIndiawherethegovernmentwillcontinuetoplayavery centralroleintheindustryforatleastthenext5years. We highly recommended that the Ministry establish mechanisms which incentivise, recognizeandawardinnovationandthensupportthesharingofsuchknowledgeacrossthe industry.Thiswouldentailtheestablishmentofaresearchand developmentcentrewhich workscloselywithindustry,andsupportstheworkofinhouseresearch. Researchinthiscontextisrequiredtounderstandthecustomer.Itisonlybygettingcloseto thepassengerthatappropriateinnovationwillflow.Researchshouldbeusedtoassessthe businessagainstglobalbenchmarksinIT,conductgapanalysisandtobridgethedifference. OnlyonceIndiahascaughtupwithbestpracticeisthereanopportunitytotrulyinnovate. Industry has to play its part. The current situation is challenging but it is possible to turn aroundfromhere.Althoughtheoperatingandpolicyenvironmenthasnotbeenconducive to viability, rather than continuously focusing on the challenges, industry can take a pro activeapproachtodevelopinginnovativesolutionstoovercomethesechallenges. Aviationbusinessesshouldactivelyseektooutsourcenoncoreactivities.Thisfirstlyrequires a clear definition of what is considered core. Outsourcing provides access to the latest technology, bestinclass providers, supports faster decisionmaking and implementation andreducescapitalexpenditure.Businessshouldideallymeasureprocessimprovementsin ordertobeabletodemonstratethecostbenefitanalysis. Weencourageindustryleaderstorecognizetechnologyasapointofdifferentiation.ITcan formanintegralcomponentofthecompanyskeyobjectives,directlydrivingprofitandloss performance. CTOs and CIOs can then be given the opportunity to participate in strategic decisionmaking. CAPASITAReportonInnovation&Technology
44
Glossary
Abbreviation AAI ACI ADSB AOCC ATC ATI ATM BI BMS BRS CATFM CDM CEO CFO CNS CTO CTO CUTE Ecargo ERP FIDS FIMS FIR FY GA GBAS GDS GPS ICAO ID IT LCC MIS MRO NOTAM PAsystem PNR PPP R&D RFID SBAS SOA T3 USTDA CAPASITAReportonInnovation&Technology Meaning AirportsAuthorityofIndia AirportCouncilInternational AutomaticDependentSurveillanceBroadcast AirportOperationsControlCentres AirTrafficControl AirTransportIndustry AirTrafficManagement BusinessIntelligence BorderManagementSolutions BaggageReconciliationSystem CentralAirTrafficFlowManagement CollaborativeDecisionMaking ChiefExecutiveOfficer ChiefFinancialOfficer Communication,Navigation&Surveillance ChiefTechnicalOfficer ChiefTechnologyOfficer CommonUserTerminalEquipment Electroniccargo EnterpriseResourcePlanning FlightInformationDisplaySystem FlightinformationManagementSystem FlightInformationRegions FinancialYear(ApriltoMarch) GeneralAviation GroundBasedAugmentationSystem GlobalDistributionSystem GlobalPositioningSystem InternationalCivilAviationOrganization Identification InformationTechnology LowCostCarrier ManagementInformationSystem Maintenance,RepairandOverhaul NoticestoAirmen PublicAddressSystem PassengerNameRecord PublicPrivatePartnership ResearchandDevelopment RadioFrequencyIdentification SatellitebasedAugmentationSystem ServiceOrientedArchitecture Terminal3,DelhiAirport USTradeDevelopmentAgency

CAPA-SITA Report On Innovation & Technology

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

CAPA-SITA Report On Innovation & Technology

Uploaded by

Copyright:

Available Formats

CAPA-SITA Report on Innovation & Technology

Opportunities for Transformation in Indian Aviation

Domestic AirlinePax 14m 52m 180m

IntlAirline Pax 14m 37m 90m

Airport Pax* 42m 141m 450m

10year CAGR 12.9% 12.3%

Absolute Growth 99m 309m

2000 2010 2020

Domestic CargoCarriage (tonnes) 144,000 426,000 1,237,000

IntlCargo Carriage (tonnes) 557,000 1,496,000 4,035,000

AirportCargo Volumes* (tonnes) 846,000 2,348,000 6,510,000

Absolute Growth (tonnes) 1,502,000 4,161,000

2000 2010 2020

14 UpgradeofExistingAirports Bangalore Delhi Secondphaseexpansiontocommence Expandcurrentterminal Constructsecondterminal Kolkata Upgradeprogramdueforcompletionin 2012.

Mumbai IntegratedTerminalTwoduefor completionby2012/13

NonMetroAirports Upgradeandmodernizationprogramto becompleted

AdditionalAirports Afurther45airportshavebeenidentified formodernizationbytheAAI

Chennai Upgradeprogramdueforcompletionin 2012.Likelytobefollowedbygreenfield secondairport.

Overall Projectedgrowthwillnecessitate provisioningforasecondairportateach ofthemetrocities(andathirdinthecase ofMumbai),pavingthewayforatotalof 13metroairports.Possibilityofasecond airportinAhmedabadaswell.

20 Withcustomerservicesittingastoppriority,whatdoesthismeanintermsoftechnologyadoption andthetechnologylandscapeinthenextcoupleofyears?Afocusonpassengerinteractionreveals someanswers.

expansionunderwayacross25nonmetroairports; ERPandbusinessintelligencesolutionsacrossthevaluechain; Baggagereconciliationsystems; Flightinformationdisplaysystems; Visualdockingsystems.

FY2017 FY2014 FY2012 03%

60% 60% 100% 36% 69%

Improving customer experience

Improving business 70% processes 20%

40% 40% 20%

60% Byendof2014 NoPlans

20% Outsourced Insourced

90% 70% Dependencies

50% Limited scalability

RFID Key Technologies

Self service kiosk

ERPimplementation Businessintelligence Cloudcomputing FIDS AOCC

AAIoutsourcesmostITfunctionswhileretainingprojectmanagementandmonitoringinhouse.The majorbottleneckforITimplementationhasbeencitedasthelengthybureaucraticproceduresand approvalprocesses.

60% computing 40% Social networking

60% Revenue opportunities

Remarks Highinterestarea Highinterestarea Highinterestarea AtAirportMetrolink Highinterestarea Majorimplementationfor cargooperations TowardsfeedbackandCRM

Desktopvirtualization Application virtualization Serverandstorage virtualization Alreadydone

20% 20% 20% 20% Noplans

60% Byendof2012 Byendof2014

80% Dependencies PriorityLevel

You might also like