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Modernizing Airports for a Digitized Economy

December, 2018

  1. With significant rise in air traffic and number of passengers, what are the key measures India needs to take to cope with this rapid growth?

To prepare for surging demand and sustainable growth of aviation in India, our focus should be on building modern airports, inspiring low-cost carriers, improving capacity building initiatives, introducing hi-tech IT automation systems, exploring new routes for better connectivity, constructing 17 highways cum airstrips, and improving operational efficiency. The following steps could be taken to improve operational efficiency:

  • Central repository of all flight data

  • Automated aeronautical billing calculations

  • Better management of departure sequences and use of the runway, runway and apron management

  • Fixed and mobile resources management (comprising de-icing, runway capacity and passengers with reduced mobility) including staff

  • Dynamic flight information display system combined with graphical, video and textual information

  • Public address and media manager system

  • Automated baggage handling systems

  • RFID for baggage tracking

  • Simplified emigration and immigration checks.

  1. Is investment in development of smaller airports viable to enhance connectivity? Is MADC pursuing more projects of building smaller airports?

Yes, MADC is pursuing more projects to build smaller airports. Smaller and emerging airports offer a range of opportunities for foreign investors and airport operators for collaboration. Investment done in small airports reveal higher earnings multiple i.e. (EV/EBITDA) compared to bigger airports. As per study done by PWC on European Markets earnings multiple is 14-18 times for regional airports with higher growth compared to 10-14 times for bigger airports.

Small and emerging airports also need to have well established air connectivity to serve the passengers of their own market. It is imperative to have sufficient mix of good airlines and routes. Smaller Airports that depended on only one airline had to face shut down. For instance In Maharashtra Nanded, Kolhapur and Sholapur had to be shut down after Kingfisher Airlines stopped its operations.

A commitment from the Government will significantly boost the confidence of investors. Example, National Civil Aviation Policy (NCAP) 2016 of India provides a comprehensive way forward plan for the regional airport development. It has been proposed to develop no-frills airports at an indicative cost of USD 7-15 Million without insisting on financial viability either directly by government bodies or through PPP mode.

  1. While building airports, how do you leverage digitization to make airports at par with global standards?

The broader categories under which the digital transformation can be summarized are

  • Infrastructure

  • Open Data

  • Personal Experience

  • Digital Touchpoints & Biometrics

  • Virtual Control Room and the Internet of Things (IoT)

  • Innovations

Digital Transformation impacts all aspects of the Airport so in order to focus on the most promising area it is critical to identify key domains, where to deploy the digital strategy to significantly improve processes and services such as:

  • Airport Operations: While ‘digital’ is often interpreted as ‘business disruption’ it is important to understand that the digitalization of the core business is often a good way to start to realize benefits. For instance, a few examples of digital potential applications for core processes: Resource Management System leveraging the Internet of Things can provide more comprehensive solutions as it considers systems beyond just aircraft ETA and ETDs; employee efficiencies will increase by leveraging collaborative and web-services platforms; financial services to streamline and dematerialize Account Payables and Receivables processes to improve revenue recognition and fund availabilities; and Intelligent building management,

  • Security: Security remains a high priority for all Airports. Leveraging Artificial Intelligence coupled with video infrastructure could deliver significant enhancements such as biometric recognition, unusual behavior detection, profiling, unattended baggage management, and building and fencing access control monitoring,

  • Capacity management: A deep understanding and monitoring of passenger flow can help to optimize Airport infrastructure capacity and retail services offerings as well as predictive maintenance to reduce maintenance costs and maximize airport asset utilization,

  • Passenger services and intimacy: Customer focused mobile applications coupled with big data and CRM can help airports to provide personalized and differentiating e-services to passengers, allowing them to prepare and enhance their Airport experience and enhance Airport services consumption,

  • Stakeholder management: A successful Digital Transformation could provide tangible and economic benefits to each and every Airport stakeholder (i.e. Airlines, Passengers, Investors, local communities, Employees). Digital technologies could be a great help to enhance Airport Stakeholders’ relationship management using collaborative tools to provide and gather information,

  • External: It is important to not only assess physical and functional areas inside an airport but also outside with local and virtual communities. Airports are encouraged to leverage market innovation through strategic partnerships with key solution, service and/or technology providers which will help to accelerate digital transformation. This could be done in multiple ways depending on the Airport local needs and environment.

Thus, building an open ecosystem will help to anticipate business model evolution and increase agility to respond to business needs and create more value for all the stakeholders.

  1. What are the technology enabled innovations in Cargo operations and logistics being implemented in the marquee MIHAN Project?

MIHAN is using the latest state-of-the-art technology for cargo activities called Logistic Management System (LMS) for cargo sales and handling functions of import and export. The LMS system supports EDI interface with Indian Customs. The movement of the cargo can be tracked through LMS.

The air cargo Hub is undergoing a technology transformation – expanding from heavy use of legacy mainframe systems to more customised interfaces used for networking, planning, flight operations, revenue accounting, and other processes.

MIHAN is in talks to use platform, where the data about shipment is entered only once and then it is reused for creation of documents required by multiple agencies. This data is also transmitted to multiple agencies via industry standard EDI messages from a single system. This in turn will help Air Cargo Hub division to reduce its documentation effort.

By embracing technology and leveraging the latest advances, MIHAN will be able to streamline their operations, reduce costs, and optimise their efficiency.

  1. To enhance your operational efficiency, what are the digitization initiatives you have implemented in MADC, across purchase management, employee management, inventory management, vendor management etc?

MADC has partnered with Airports Authority of India (AAI). Over the years, AAI has developed a time tested, cutting edge solution SKYBOOKS360 – a mini ERP tool to effectively run a live aviation business and digitize the environment covering almost the entire aviation processes including purchase management, employee management, inventory management, vendor management. SkyBooks360 shall thus help MADC in making informed decisions using reports like audit trails, airspace usage, traffic volumes, economic values and more from primary transaction level to advanced dashboard reporting and analysis level.

  1. With the increasing adoption of Block Chain technology, how do you think it can be a game changer for the aviation sector?

Introducing Block Chain Technology along-with ERP will be a game changer in Aviation industry in the following areas:

Asset management:

Commercial aircraft assets are definitely an untapped market, with a visible lack of standardization. Unlike traditional databases, blockchain-based registries are consistent, immutable and secure from outside tampering.

Security

Extensive IT networks have become the backbone of the air travel industry, with every aircraft movement being represented by a stream of data. Blockchain solutions, while still a novelty, can help airlines and airports secure their data. In a blockchain, each record or ‘block’ of data has its own timestamp and is encrypted with credentials in a peer-to-peer relationship, which makes malicious tampering extremely difficult.

Buying an aircraft with Bitcoin

Crypto currencies, like Bitcoin and Monero, are just one of the multiple solutions built on the blockchain. We can buy you a growing number of digital assets, with more and more vendors accepting “virtual money” for tangible products, even real estate, provided Government regularizes through its policies and measures to avoid risks.

  1. In your view what are the key challenges and benefits from digital transformation of supply chain? How should companies overcome these challenges?

Once a company sets out a vision for its supply chain, it should articulate that vision in terms of business and technical capabilities. These challenges might include the following:

Better decision making. Machine-learning systems can provide supply-chain managers with recommendations for how to deal with particular situations, such as changing material planning and scheduling in response to new customer orders.

Automation. Automated operations can streamline the work of supply-chain professionals and allow them to focus on more valuable tasks. For example, digital solutions can be configured to process real-time information automatically (for example, automated S&OP preparation and workflow management), thus eliminating the manual effort of gathering, scrubbing, and entering data.

End-to-end customer engagement. Digital technology can make customer experiences better by giving supply-chain managers more control and providing customers with unprecedented transparency: for example, track-and-trace systems that send detailed updates about orders throughout the lead time.

Innovation. A digital supply chain can help a company strengthen its business model (for example, by expanding into new market segments) and collaborate more effectively with both customers and suppliers (for example, by basing S&OP decisions on information that is automatically pulled from customers’ ERP systems).

Talent. Digitally enabled supply chains have talent requirements that can be quite different from those of conventional supply chains. At least some supply-chain managers will need to be able to translate their business needs into relevant digital applications.

The benefits from Digital Transformation to Aviation Industry have wider repercussions.

There are a series of industry, customer and technology trends converging to redefine operating and business models in the travel ecosystem. New entrants – especially digital natives such as online travel aggregators (OTAs), meta-search engines and travel service platforms – are shaking up the financial value chain. Growing demand for travel, particularly in emerging markets, represents a significant opportunity for these new entrants, as they challenge incumbent businesses to rapidly adapt their own strategies to capture growth.

Technology will also have an impact on the industry workforce, with employees empowered by real-time information and decision-making support from AI to focus on their core strengths.

Living travel experience

Travelers will experience seamless journeys tailored to their habits and preferences. Companies along the Aviation, Travel and Tourism industry journey will optimize customer experience by collecting and exchanging data, and continuously generating insights. In time, travel will become frictionless, blending seamlessly with other everyday activities. Enabling the travel ecosystem Ecosystem roles are blurring as stakeholders throughout the customer journey vie to own the customer relationship. Digital platforms that enable ecosystem alliances will continue to emerge, as asset and information sharing become increasingly important from a B2B perspective.

Digital enterprise

Digital technologies that revolutionize manufacturing, optimize the real-time use of assets and eventually augment the industry workforce will transform operations. Innovations such as 3D printing, AI, the Internet of Things (IoT), virtual reality (VR) and digital platforms will enable flexible working and changes to core operational processes.

Safety and security

As identity management becomes increasingly digital, a collaborative effort towards boosting cyber security and protecting the privacy of traveler data will be crucial to maintaining customer trust and public safety. Digital technologies (e.g. biometrics such as facial recognition, IoT, crowd analytics and video monitoring via AI) will be used to create a ubiquitously secure environment.

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