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IT Last modified on November 14, 2009

Everyone's a winner

IT outsourcing delivers a win-win-win situation for airports, airlines and the travelling public, writes Bob Kwik.

Airports are becoming increasingly dependent on IT infrastructure while trying to reconcile the sometimescompeting demands for service improvement and cost reductions. It is without doubt a difficult job, but leading airport operators have discovered how to reconcile these goals without compromise.

So how do they do it? The answer lies in transforming the IT department from an internal support organisation into a profit-oriented line of business, and this is where IT outsourcing presents the ideal solution for airports.

Well managed, airport IT outsourcing can enable airport operators to focus on their core business of running a secure, passenger-friendly and efficient airport environment, while allowing industry experts to efficiently run the IT department in line with the airport’s strategic objectives, including improved financial control and cost reductions.

In addition, a unique advantage is the benefit of moving IT into a separate organisation, enabling airports to work in partnership with industry experts such as SITA, to transform this new organisation into the IT and communications service provider to the airlines, tenants, agencies and passengers at the airport.

This can be achieved with total outsourcing of all IT systems, as is the case with Düsseldorf International Airport, or partial outsourcing of the IT infrastructure, as at Amsterdam Schiphol.

In-house airport IT departments generally struggle to make the transition to becoming a commercial IT service provider, hence the distinct advantage of leveraging the outsourcing agreement to accomplish this business transformation. The new outsourced IT and communications provider brings a number of benefits to the airport, the passengers and the airlines.

From the airlines’ point of view, they are increasingly seeing airports as an extension of their corporate IT infrastructure. Many of the airlines’ IT systems are present in the airports from which they fly, and those systems now commonly run over the airport’s IT infrastructure.

The trend is generally considered to have started with the CUTE check-in system when it was launched in time for the 1984 Olympics in Los Angeles, and since then we have seen an ever-increasing trend of airlines relying on airport IT systems.

SITA’s Airport Hub further illustrates the airlines’ growing need for shared telecommunications infrastructure at airports. Deployed in 110 airports, Airport Hub services are used by more than 200 airlines, ground handlers and other airport customers to reduce the cost of connecting to their corporate IT systems via shared infrastructure at airports.

The benefit to the airlines is quite simply a higher level of service at a much lower cost, and it enables the airports to provide an enhanced IT service offering.

Already we are seeing airlines using airports’ wireless network for operational needs, and SITA is leading a programme to allow different airlines to use any airport wireless network. Again this lowers costs for the airline and yields additional revenue for the airport, while making better use of the airport’s wireless infrastructure and improving the operational efficiency of airlines.

Today’s passengers have IT needs. Many expect airport-wide wireless Internet access, at reasonable rates, and also expect their mobile phones to work everywhere they are. In response to this trend, Atlanta Hartsfield Jackson was the first major airport to have wireless Internet available to passengers anywhere in the terminal, and to offer a choice of wireless Internet prices and providers.

This year’s Passenger Self-Service Survey shows that ‘dwell time’ in the airport before flight departure is the one step of the journey which passengers would most like to change after security screening, and almost 50% of those passengers want improved Internet access capabilities.

We know that the needs of passengers extend beyond IT. Passengers want a simple, pleasant journey through the airport. They want mobile and self-service check-in, baggage to be tracked, and border security to be paperless and automated. These mission critical systems are dependent on the airport’s IT and communications infrastructure.

The highly-available shared use systems provided by the outsourced IT organisation are ideally positioned to both capture the revenue from the passengers’ IT needs, and provide the resilient environment demanded by today’s automated passenger journey.

The trend is clear. Airport IT infrastructure is increasingly critical not only to airport operators, but to the airlines and the travelling public. The outsourced IT service provider must invest to provide this infrastructure, but this investment is offset by the revenues gained by selling these services to the airlines, retailers, tenants, staff and passengers at the airport. So the win-win-win is a more resilient infrastructure and an improved IT service offering at a lower cost .

Let’s illustrate this with an example. Airlines frequently change where and how they operate at airports, adjusting their operations to meet passengers’ needs, open new air services and close unprofitable routes, for instance. This necessitates new voice and data services at a particular location at the airport, or a change to those services.

In the past, the airline would have to contract a local IT company to make the necessary changes, which can be costly and difficult to manage. With the new model, the airline contacts the outsourced IT organisation service desk, and simply requests a change to the service, based on standard pricing. The order is placed, with an agreed delivery time and level of service.

The airline gets a simple, efficient, pay-per-use service, at a cost effective rate. This allows it to easily adjust its operations, which enables further cost savings, and also makes the airport a more attractive one from which to operate.

The airport, of course, gets the revenue from the service and a satisfied airline, which is more willing to do business from that airport. Underpinning all this is the outsourced service provider, who must, of course, deliver the service to the level anticipated. And herein lies both the benefits and pitfalls.

It is absolutely critical that the outsourced service provider transforms itself from the IT department it came from. This is why many airports don’t fully attain the benefits of becoming a service provider, and why outsourcing is ideally positioned to help airports accomplish this.

Furthermore, this ongoing revenue stream further funds investments and service improvements, without the need to increase the budget. This additional investment in turn allows enhanced services to be offered, such as Gold, Sliver and Bronze service levels at varying rates.

This is not new. Many airports have been offering IT and communications services to their tenants. One of the largest airports in the UK offset their IT costs by 30% in this way.

Indeed, many airports have a piecemeal solution, working with specialised suppliers to provide telephony, wireless Internet or cabling services at the airport to the tenants and passengers. However, some relatively recent trends in the industry are challenging this fragmented model and are pointing to a larger solution.

We have already seen the airlines’ and passengers’ perspective and their increasing reliance on the airport IT systems. In addition, it’s the airport’s IT infrastructure itself that is changing.

IT infrastructure, which broadly includes the network, wireless services, telecommunications and desktop, is increasingly being converged into a single infrastructure, with a common network supporting all data, voice and video at the airport. This is almost always the norm for any new terminal, and increasingly airports are converging separate IT infrastructure systems into a single homogenous system. This is driven by the systems and applications running on the network, which in the past would have been separate isolated systems.

A good example of this is the move to video over the IP data network. It is used not only for critical security video surveillance but also for revenue generation services. In Dublin Airport’s new terminal for example, the operator will offer television services to the tenants, utilising the data network to transport the television video signal to any location in the airport.

This move towards implementing integrated airport IT infrastructure and communications systems is the foundation for airports to reconsider their existing IT strategy and how they provide services to the tenants, and how to generate ancillary revenue. With this new infrastructure, there is a low incremental cost to provide such services.

While this is common for new airport terminals, it can be an expensive investment for an existing terminal. It is often the case that airports will launch the capability to provide IT services when a new terminal with a modern IT infrastructure is constructed, and then use this to develop and grow their IT services in their existing terminals with more outdated, fragmented IT systems.

This was the case, for instance, at Toronto Pearson where, after its new Terminal 1 was opened, they redeveloped the infrastructure in the other terminals in order to offer the services their customers had grown to expect from the new facility.

There is further room for growth once the IT infrastructure has been implemented throughout the terminal. Apart from increasing the quality and scope of services, new service offerings can be provided via the outsourced IT service delivery organisation.

Leading airports such as Zurich are even offering services such as data storage and application hosting for tenants at that airport. There is also geographical room for growth. In Tunisia, Aviation IT Services Africa (AISA), the outsourced joint venture between SITA and Tunisair, is looking to provide services to airports throughout Tunisia.

According to the latest SITA Airport IT Trends Survey, airports’ top priorities are improving customer service and satisfaction, and reducing costs. Earlier this year Gartner, a leading IT research company, announced that outsourcing was increasing in response to the global economic crisis, but cautioned not to outsource simply to save costs, but to outsource to achieve business objectives.

The airport IT world is rapidly evolving, with unprecedented dependency on ever more complex IT systems. Airlines and the community of users at the airport want to tap into this resource of IT capability, and reap the commercial and operational benefits, and airports know what steps are necessary in order to provide the services that their customers need.

Outsourcing airport IT Infrastructure presents the ideal solution to create awinning solution for airports to continuously improve service to the airlines and travelling public, to maintain and develop state of the art IT systems, and to combat the ever-increasing financial pressures.

In short, IT outsourcing can be a win-win-win for the air transport industry.

Airport World 2009 - Issue 5

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