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Travel and Logistics
Data and AI in Travel Industry for a Memorable Passenger Experience
Highlights
- The current operating model of airports that relies on vertical decomposition of functions results in silos and becomes an impediment to convergence.
- The model must be reimagined to make airports adaptable and resilient. This will involve incorporating cross-industry best practices into airport functions.
- A unique operating model that relies on four functional and digital components will deliver consistent stakeholder experience and enhance operational efficiencies.
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Design of core airport functions needs to evolve
Global uncertainty in the last couple of years exposed airports to financial viability risks.
As they teetered under the impact of the severe economic blow, airports were made acutely aware of the need to build resilience and deliver enhanced customer experience. They realized that to achieve this objective, they will have to expand their role from being an infrastructure provider to an ecosystem enabler. This approach would not only provide an effective platform for rebuilding and sustaining traveler experience, but also create new revenue opportunities and optimize operational expenses.
However, the design of core airport functions—such as operations and commercial—has not evolved enough to support this progression. Now, with smart digital technologies having matured immensely to support collaborative organizational design, it is time for airports to reimagine the operating model.
Current challenges
Traditional airport operating models have many inherent challenges.
Traditionally, the operating model for airports has relied on vertical decomposition of different functions (Figure 1) to form accountable business units. This approach provides a view of ’who’ is ultimately accountable for a functional output. However, due to siloed functioning, this model suffers from a couple of key shortfalls:
- Driving holistic customer outcomes for airport customers (such as traveling guests, airlines, ground handlers, concessionaires, and other tenants) requires convergence of purpose for respective customer segment. A functionally decomposed organization foils such convergence as the need to work towards a collective purpose is not formally recognized within each function.
- Airports can derive exponential value for their invested capital by enabling an ecosystem and playing the role of matchmaker for demand and supply. This aspect is not given due importance in the current model, nor is there any formal structure to enable this.
Illustrative function decomposition of a typical airport
These inherent inflexibilities in the current operating model hinder efficient cross-functional integration, affecting the readiness to take advantage of emerging opportunities and significantly delaying return on investments.
Reimagining the airport operating model
By adopting the traditional model, airports have developed into special purpose travel infrastructure hubs.
Illustrative cross-industry mapping for airports
They should, however, draw lessons from other mature industries that have used smart techniques for mass customization, such as Nissan’s Car Configurator, to reimagine an enterprise. These techniques transform business operations by turning core functions into a configurable set of highly digitalized special-purpose capabilities for greater agility, speed, and variety in dealing with business uncertainties.
Extending this paradigm further, it is useful to model an airport as an industry of industries and map it to several industries from which it can derive inspirations and best practices. For instance, modeling the passenger flow management function as an integrated logistics chain problem will help map best practices from the logistics business and adopt concepts such as elastic logistics that ensure resilient supply chains by dynamically responding to demand-supply variations. Such a capability will enhance resilience, given that the core resources an airport needs to sustain its business are constantly subject to dynamicity in demand and supply.
Similarly, to enhance non-aeronautical revenues from travelers, airports can replicate retail industry’s idea of customer personalization to drive loyalty and enhance wallet share of loyal customers.
This approach of mapping airport functions to cross-industry best practices will result in deeply specialized capabilities focused on efficiency and excellence.
Airports should also drive holistic value across their wide-ranging commitments:
- They must foster an inclusive travel ecosystem that assures seamless and stress-free mobility services to wide-ranging traveler personas. They should drive mass-customized traveler interactions and empathetic service recovery practices.
- Airports should become an attractive business proposition for infrastructure investors by transforming into multi-faceted experience arenas that drive greater overall throughput through digitally orchestrated operations.
- Airports should become a partner for the success of constituent businesses—service providers, tenants, and other concessionaires. They should support inclusive growth by nurturing small and medium enterprises into airport concessions; take greater accountability for airline performance and establish a truly outcome-centered commercial model with airlines; and take parental responsibility in nurturing seeded enterprises.
- Sustainability should become an important agenda for airports while they continue to be enablers of regional economic growth.
Driving holistic outcomes often requires coordinating outputs from various functions to ensure progression towards a common purpose. There is, therefore, a need to nurture and develop capabilities in the form of ’experience orchestrators’. These orchestrators are functions that excel in delivering empathetic services that require robust integration across functions, and across ecosystem players.
This reimagination of airport capabilities to drive purpose-led ecosystem convergence will help develop adaptability and resilience to evolving business circumstances. These capabilities will form the building blocks of an adaptive airport operating model.
Adaptive airport operating model
An adaptive operating model will help airports overcome challenges posed by the traditional models and make them resilient.
The adaptive model has two primary functional components supported by digital foundational components.
The primary functional components are:
- Ninja core: Redesigning core functions of airport into specialized ninjas.
- Experience orchestrator: Develop empathetic orchestration capabilities to drive end-customer outcomes.
The digital foundational components are:
- Enterprise functions: Drive greater agility within enterprise services by leveraging digital tech and augmented by cognitive automation.
- Digital toolkit: Identify advanced digital capabilities that form the backbone for adaptive airport and nurture them as strategic enterprise assets.
An operating model for an adaptive airport
Ninja core and ecosystem orchestrators
The core business functions of an airport such as hyper logistics and resource management can be redesigned as highly proficient services categorized as the ninja core.
The components of an airport ninja core
The ninja core drives deep expertise in the respective areas, and it also derives its strength from cross-industry best practices. High impact ninjas for a typical airport consists of but is not limited to:
- Hyper logistics: End-to-end flow management of critical entities such as passenger, bag, cargo, and aircraft will now become a problem for hyper-logistics to solve in a smarter and predictive manner.
- Omni-channel retailing: All airport business-to-customer (b2c) functions will now be expertly handled in unified omni-channel retailing that provides consistent and continuous customer engagement.
- Uberized resource: Fixed and mobile resource management within airport, for e.g., wheelchair and boarding gates, will get greatly sophisticated, and will build on advanced information management and artificial intelligence to deliver a truly on-demand airport resource management.
Ecosystem orchestrators: The overarching agenda of driving superior consumer experience is achieved through ecosystem orchestrators. These orchestrators are functions that excel in empathetic service delivery and require robust integration across functions and ecosystem players. Orchestrators build value for end-customers on the foundation created by the ninja core. High-impact orchestrator functions for a typical airport could be as follows:
- Guest experience: Integrates all functions to foster an experience-centric airport. Guest concierge, core services monitoring, traveler loyalty, and coordinated disruption management are some of the key responsibilities under this area.
- Resilience: An evolutionary, collaborative decision-support environment powered by a digital command center, reinforced by better data management, analytics, and communication practices. This will realize the next-generation airport operations center and will be founded on enterprise digital twin for advanced decision management capabilities.
- Flow facilitation: Data-driven function that uses advanced information management techniques to facilitate seamless, low-latency flow management of passenger, bag, cargo, and aircraft.
- Oversee compliance: Accountable function to oversee airport performance against compliance goals.
- Commitment management: Airports must deliver on their environment and community commitments by being sustainable, affordable, financeable, and socially beneficial to local communities. This function will keep track of performance against an airport’s sustainability plan, as well as serve as a concierge for local communities to resolve issues and queries.
Digital foundation components
Enterprise functions of an airport can become more agile and efficient through digital technologies and cognitive solutions.
Agile airports will require real-time, responsive enterprise operations such as asset management, supply chain, corporate functions, and information technology. Digital technologies such as internet of things (IoT), artificial intelligence, and robotics provide reliable means to offer the first right of refusal to machines supported by diligent tech-savvy business users for specific situations.
Airports incur significant operating expense to cover personnel cost to fulfil organizational infrastructure functions such as finance, human resources, sourcing and procurement, and asset maintenance. There is significant headroom for a machine-first approach that provides cognitive automation capabilities to augment these functions, and this will have a tremendous impact on:
- Cognitive airport finance control business services
- Intelligent talent operations
- Digital sourcing and procurement services
- Digital command center for asset operations
Digital toolkit: A digital toolkit is a set of atomic, ready-to-use, technology-rich capabilities that provides the foundational platform for airport excellence.
- Enterprise digital twin: In silico, near real-time representation of airport operations to facilitate deep impact analysis, scenario playing, and advanced decision management.
- Digital spine: Information super-highway that provides reliable, low-latency access to events and integrated information models to boost performance of interacting teams.
- Marketplace: Multi-sided platform that reduces entry barrier for introducing new products and services to participate in airport retail and matches demand with supply.
The ninja core plus experience orchestrator interplay leverages advanced digital tools that provide the fabric for such interactions in a cognitive manner. This is made possible by digital advancements that enable granular measurement of interaction effectiveness in real-time, paving a viable mechanism for digitally governed feedback loops. The digital toolkit and enterprise functions components will truly lay the foundation for an adaptive airport enterprise.
Balaji Jagannathan, global head-strategic initiatives, Travel and Logistics, TCS, and Balasubramanian K, managing partner-advisory council, IoT and digital engineering, TCS, also contributed to this article.
