In the context of sustained growth in air travel, rapid advancements in digital technology and ongoing cost pressures in the global aviation sector, Arthur D. Little has conducted a research study to examine the potential for digital technology to reduce total airport operating costs.
What the study highlights is that, while digital technology certainly has a role to play in helping airports extract greater efficiency from both OPEX and capital outlays, the benefits of effective digital transformation go far beyond cost reduction. Faced with multiple pressures, airports, it is argued, are rapidly approaching a ‘tipping point’ beyond which the needs and expectations of passengers, airlines and shareholders can no longer be met. In order to access the full range of benefits associated with more advanced levels of digital maturity, airports of all sizes need to re-evaluate traditional approaches to technology deployment, and embrace the concept of ecosystem-level digital transformation. On a positive note, the progress made in transitioning away from the ‘new normal’ of self-service and process efficiency toward the use of digital to optimize flow monitoring and passenger processing, must be noted. In recognition of this journey – which for many airports is far from complete – this study highlights the role of specific digital technologies, including cloud and big data, but also Internet of Things, virtual modeling and simulation and collaborative smart machines and robots, in enabling transformation.
The promise of greater cost efficiency, but also enhanced capacity, operational resilience and passenger experience, resonates with all airports. Yet, if airports are to realize the full potential of digital transformation and its associated benefits, there remains much to do. As this study highlights, to achieve effective digital transformation, airports must confront and overcome a number of challenges. At the most fundamental level the issue is how to first understand the different technologies available,and second, identify the practical applications that can deliver tangible benefits. To do this, airports must develop their own internal technological capabilities. Equally, while one could be forgiven for assuming that cost is a major barrier to the adoption of digital solutions, what this study finds is that, in many cases, it is the ‘soft’ cultural issues that are an even greater impediment. If airports cannot overcome the cultural and organizational barriers to change, then the material resources at their disposal will be of limited consequence, and the chances of digital transformation success will be much reduced.
Based on interviews with over 15 major airports and the views of selected industry experts, this paper demonstrates that the path toward airport digital transformation is not an easy one. Airport executives must consider key factors as they shape their strategies including the need for clarity of purpose and effective partnering and collaboration within the airport ecosystem. Furthermore, an ability to shape the required internal culture and sustained commitment needed to make effective decisions on technology selection and implementation are essential for success. For those airports that recognize and address these imperatives, digital transformation efforts can yield true step-change potential. Given the sector’s CAPEX-intensive nature, the importance of strong cost discipline will not go away. Nevertheless, for those airports at the digital frontline, it is not holistic cost reduction but broader benefits in the areas of revenue generation, operational performance and the customer experience, that are likely to provide the strongest rationale for the digital transformation agenda.