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Airport of the Future: Roadmap to 2025

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Rohit Talwar
Rohit Talwar

Transforming airport profitability by rethinking the airport experience in an era of personalization

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Airport 2025 Workshop – Developing a Roadmap to the Future Rohit Talwar CEO – Fast Future rohit@fastfuture.com FTE Vancouver - September 4th 2012
Contents Presentation p 4 About Fast Future p 115 Background Notes p 126 Image Sources p 380
Key Themes • Macro Drivers – Major Trends – Customer Insights – Aviation Landscape • Designing the Airport Experience – Technology – Industry Strategies and Tactics – The Passenger Journey – Design Implications • Extending the Experience – Retail, Dining and Leisure – Ancillary Revenues – Customer Relationships • Embedding the Future
How do we get there from Here? Research & Innovation Understand the Drivers New Business Models
Discussion • What are the critical strategic challenges and choices your airport (or organisation) will face: – In the next year? – In the next five years? – To 2025 and beyond?
Emerging Trends and Developments • Which external trends and developments could create the biggest opportunities and challenges for your organisation? • How might they affect you?
Our Research suggests airports need to see themselves an as ecosystem - An integrated portfolio of models
‘Future Proofed’ Organisations Work on 3 Horizons in Parallel 4-10+ Years Creating the Future 1-3 Years Drive for Growth 1-12 Months Operational Excellence
Future Proofing the Business MasteryMarkets Models Magic Management Mindset Muscle Message
Markets – Where Will Future Business Come from?
Demographic Destinies 2 billion more people in 40 years – Demographics is Driving Economics 1998 448 691 729 5231 4216 740 1051 346 596 Source : United Nations2011 2050
Markets - Life Redefined Lifespans are Increasing Under 50’s have 90% chance of living to 100. Aubrey de Grey suggests we could live to 500 or 1000 What are the health, housing, consumption and resource implications? What kind of opportunities will be created?
Mastery – What do we Really Need to Understand?
The World in 2025
Length of time required to complete core activities from check-in to boarding Intrusive security procedures Thought of missing a flight Which features of the airport environment do you find to be most unpleasant or stressful?
Which factors contribute the most to your emotional wellbeing in the airport? Speed and simplicity of the check-in process Speed and convenience of the security process Speed of baggage delivery Reliability e.g. flight punctuality
Tomorrow’s Traveler - Demographics • Over 60’s in developed economies to rise from 22- 33% from 2009 and 2050. • In developing world, from 9 to 20% • Global retirement market 2010-2020 could grow from $28 - $46 Tn • Global middle class could rise from 430M to 1.2 Bn (2000 – 2030)
• By 2020, Asian consumers could account for over 40% of global middle class consumption • By 2030 Asian consumer spending could hit $32 trillion • By 2014 female wealth could reach $18 trillion • Females could control 70% of global consumer spending Tomorrow’s Traveler – Spending Patterns
Traveller Mindsets  Too Busy To Care  Complex Lives, Pressurised Finances  Craving Simplicity  Wealthy and Hard to Please
Buying Behaviour • Mobile • Low loyalty • Multiple searches and site visits • Word of mouth critical • Value conscious – price, offers, rewards • Shorter trips • Shorter notice
Traveler motivations will become increasingly fragmented and diverse and harder to segment into clearly definable customer groupings 604 Respondents
Very likely Likely Unlikely Very unlikely I will book the bulk of my travel online in 2015 64% 31% 3% 2% 74% - Will use Social Networks to Research and Find Deals
Airport Expansion by 2020 China from ~150 to 244 India from ~100 to 140 Today - US – 3 Seats per head / China 0.3 / India 0.1 Asia – a third of all flyers (2013) and travel spend (2020)
38% Believe there will be under 100 US Airports by 2015 39% think there will only be airports in Major European cities by 2015
Low Cost Carriers by 2015 64% think half will collapse 49% expect massive growth
62% think viable new business models and airlines will emerge by 2015
Industry Scenarios Passenger Price Sensitivity Low Low High High Business Model Innovation Uncharted Territory Paranoid Survive Back to the Future Crash and Burn
Possible Emergence of Asset-Free Virtual Airlines
The Ultimate in Collaboration? Sharing of Aviation Profit Pools
Core Technologies Used by Pioneers Now Pioneered by 2015 Pioneered by 2025 Personal Technology Mobile phones 3G / 4G smartphones Augmented reality Gesture recognition Intelligent software assistants Mind control headsets 3D displays (Glasses free) Intelligent interfaces Flexible screens Digital currency 5G phones Biologically embedded electronics Eyewear embedded screens Intelligent brain-computer interfaces Streamlining the Passenger Journey Biometrics –voice / facial / handprint recognition Quick-response (QR) codes RFID Interactive displays Near field communications (NFC) Temporary airports Biometric signature – heartbeat pattern Body language recognition Robotics and automated services Virtual airports NFC integrated into all travel documents and passports Use of human genomic profiles Enhancing the Passenger Experience Social media Passenger-polling systems Hybrid platforms (i.e. Google Wave) Interactive surfaces Virtual worlds Vertical farming (basic) Next generation cinematic experiences: 6D and beyond Real-time language translation Reality mining Wearable displays Immersive web 3D printing Biomimetic Design Haptics technology Touchable holograms Vertical farming (advanced) Information and Communications Technology (ICT) Infrastructure Wireless broadband Cloud computing Telepresence Big Data Machine learning Ambient / Embedded intelligence – the ‘Internet of Things’ Grid computing MANETS (Mobile Ad-hoc NETworks) Swarm intelligence Intelligent web Semantic web Machine vision Optical computers Collective intelligence
Telephony • Voice • Messaging • SIM card • Phonebook • Ring Tones • Security Connectivity • Cellular • Up to 14 bands • WLAN/BT • GPS • NFC • FM Data/ Enterprise • 100Mbps • Email • IMS • Browsing • VPN • PIM • Ecommerce • Payments Software • Protocols • Middleware • Applications • User Interface • Minimize fragmentation Multimedia • Camera 8-16M • Camcorder • 24M Color Display • Memory (160GB) • Multiformat A/V • HD Video/TV out • Games (50-100M Tps) • DRM TMT – Convergence and Immersion
Next Generation Smart Phones • Concierge / Schedule Management • Check in • Notifications / Directions • Route Management • UGC • Wallet • Location Based Offers • Dynamic Rerouting • Personal Networking
AR at Copenhagen Airport
Apps – What I Want, When I Want Source: Forrester 66-71% of travel management spenders say their travellers use mobile technologies
T-Rays and The VIRTUS Chipset 1.5 - 2 gigabit / sec (~1000 x Bluetooth) Enabling wireless display, mobile-distributed computing, live HD video streaming, and real-time interactive multi-user gaming
Mobile Technology Advances are Enabling Personalised Advertising
Muscle – Key Survival Capabilities
Rapid Decision Making
Speed of Execution e.g. Ultra-Quick Construction
Research at ‘cutting edge of technological media innovation’ e.g. human-computer interaction, augmented reality, online gaming, internet television and semantic text processing Rapid Innovation e.g. Naspers' New Media Lab (“Fail fast and cheaply” – Koos Bekker, CEO)
Emerging Trends and Developments • Which external trends and developments could create the biggest opportunities and challenges for your organisation? • How might they affect you?
Future Proofing the Business MasteryMarkets Models Magic Management Mindset Muscle Message
Magic – Creating the Wow Factor
Magic – Ideas that Delight E.g. Virtual Grocery Shopping – Tesco South Korea
Customer Centred Solutions e.g. Helsinki Lounge
Magic: Rethinking Service e.g. FacePort and InfoGate
Magic - Breakthrough Innovation e.g. 3D Printing $1Tn+ Market
Message Impact, Innovation and Ethics
Management Models for Tomorrow’s Airport System • Governing Concept • Infrastructure • Revenue Generation • Financing • Customer Engagement • Service Delivery
The Conceptual Model
Conceptual Model - The airport of 2025 will most resemble? A mini-city, separate from its local surroundings An extension of the local city A shopping mall with runways Bus Stop - A walkway to pass through security
What additional developments would you like to see in the airport experience by 2025? Sense of placeMake the airport/flying part of the experience Restore the sense of glamour w/ air travel Interesting activities to occupy you
Glocal To develop a distinct brand identity, airports will need to feel more like the city or location they serve selling local goods, food and beverages and providing information on the local area 785 respondents 0% 10% 20% 30% 40% 50%
Infrastructure Models - Sustainable, Fast Build, Flexible, Modular and Temporary Terminals
Infrastructure Financing – Access is Key ‘Usership’ vs. Ownership
By 2025, which of the following would you expect to be standard in the airport environment? Zero or low environmental and energy footprint, recycling all waste to create heat and power Tight integration of the airport with its local community Premium terminal facilities for first and business class travelers – distinct from frequent flyers
Revenue Models - Multiple Streams and Pre-emptive Solutions
Revenue Generation Models In an increasingly uncertain economic environment with volatile fuel prices, airports will be under constant pressure to reduce or eliminate landing charges for airlines and fund themselves through other commercial income such as retail and leisure. 781 respondents 0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Leveraging Customer Insight – What retail developments would most encourage you to do your shopping at the airport rather than elsewhere? Discount outlet stores Themed retail (e.g. reflecting local region) Greater use of discounts, sales and best price guarantees
Rethinking Airport Revenues
Online Brands Appearing Offline
How do you see technology being integrated into your airport shopping experience? Multichannel – search online, try in store, buy via mobile Personalized advertisements and discounts QR code store windows – purchase by mobile and collect on return / home delivery Collection on arrival of goods purchased from online-only retailers
Branding To encourage people to increase time spent at the airport, they will need to become an immersive space that enables interaction with multiple cultures and evokes the local culture, architecture, ecology, biology, commerce and worldviews. 786 respondents 0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Partner Tie-ins Pullman Bangkok King Power Hotel
Daily Social Media Offers e.g. Twitter
All Inclusive By 2025, to survive commercially, airports will increasingly try to be retail, dining and leisure destinations in their own right and seek to attract non- flying customers as well. 783 respondents 0% 5% 10% 15% 20% 25% 30% 35% 40%
Models - Continuous Innovation E.g. Auctions £3088 £8791.50 £81
Financing Models • Ecosystem • Community • Public-Private Partnership • Securitisation • Diaspora
Designing the Airport Experience • What would we like to see in place by 2025? – Experience – Core Processes – Service – Security – Enabling Technology – Physical Design
Customer Engagement – Deep Personalization
With airlines, airports, retailers and restaurants all wanting to communicate with customers via their mobile devices, how will customers respond? I will accept information and offers from everyone who I have authorized As the customer I will define the extent of the engagement each entity can have with me I will only accept critical information updates
Which technologies would you be most comfortable using to provide information to you in the airport environment? My mobile device (e.g. phone, tablet, laptop) Interactive computer displays and surfaces integrated into the airport architecture to reduce clutter and provide instant customer support Automatic language translation at all electronic contact points
Customer Engagement – What critical information and communications would you most like to receive to your mobile device? Important airport and flight info Notification of gate opening / flight boarding Offer alternate routing on flight cancellation Compensation offers and coupons
What are the key ways in which you would like airports to use social media? Providing important information to customers Listening to customer improvement ideas Rewards for frequent travelers / shoppers Providing real-time customer feedback to staff
How do you see your approach to using technology evolving over the period to 2025? I will be using fully intelligent interfaces to the web I will control the flow of digital information to me I will control who has access to my personal data
What key characteristics would you look for in leisure experiences offered at the airport? Spaces dedicated to local culture and reflecting the city / region Unique experiences Space for reflection Experiences that integrate education and entertainment
Which of the following entertainment experiences would you find most compelling and attractive in the airport environment? TV lounge /movie theatre Regularly updated temporary exhibits Art galleries and museums Music / live theatre performances
Which of the following physical leisure experiences would you find most compelling and attractive in the airport environment? Short stay hotels e.g. 2 hours Spa treatments Children’s Play Areas Space to re-connect with nature
What food and beverage options would encourage you to dine at the airport? Low cost options International food selection Locally sourced food
Service Delivery - Rethinking the Airport Experience
Service is the ‘Killer App’
Service Delivery Model – Start with Customer Journeys and Experiences  Stimulus / Search / Booking  Transport to and from the Airport  Check in to Flight Departure  Flight Arrival to Airport Exit  Flight Transfer - Arrival to Departure  Airport Experience  In Flight Experience  Relationship Management
<Plaza aankomst> <Picture> Sub process KPI Score Sub process KPI Score ▪ Traffic information ▪ Traffic jams ▪ Entering Plaza ▪ Clarity ▪ Off airport flight information ▪ Services; rental, parking ▪ Arrival at airport by car/train ▪ Accessibility ▪ Parking ▪ Price/Quality LT ▪ Departure from airport by bus/train ▪ Accessibility ▪ Transport from parking to Plaza ▪ Ease of wayfinding ▪ Retrieving car & Leaving airport 41%73% ▪ Leaving Plaza ▪ Clarity 91% / 90% 90% 90% / 80%77% 77% Mapping Customer Journeys & Experiences
• Number of mobile subscribers could rise from 4Bn to 5Bn 2009-2015 • Mobile data traffic to rise 300- fold by 2015 (Nokia). • By 2020 the range and nature of interaction technologies / customer ‘touch points’ will expand dramatically. • ‘Go nowhere’ gamers • Personal genetic profiles Tomorrow’s Traveler – Technology
What developments would you most like to see in your journey through the airport over the next five years? Use my mobile phone to check in and navigate me through all touchpoints e.g. boarding gates Remote check-in and bag collection Use my frequent flyer card as a permanent boarding pass Permanent electronic bag tags for frequent fliers
Airport Arrival
Which technologies would you be most comfortable using to identify you in the airport environment? Smart identity cards Electronic passports Location based services Electronic tags (e.g. built into my frequent flyer card)
Check In
Next Gen Qantas Check-In
Security
Are Biometrics the Answer?
Which of the following security and border (passport) control / immigration solutions would you most like to see? Improving security whilst lessening its impact on travelers Preferred / safe / secure passenger options i.e. pre- screening of frequent travelers for faster security checks Use of biometrics (e.g. finger print, iris or facial recognition)
Flight Departure
Catering, Lounge and Service Experiences
What kinds of personal and business services would you find attractive or valuable? Banking and financial services Conference and meetings facilities to rent by the hour Health and wellbeing e.g. rapid health checks
Minimising Journey Times and Aircraft Turnaround
Arrivals – Localizing the Experience?
As the airport becomes more of a leisure proposition, who is best positioned to manage the delivery of the total passenger experience? Airlines New groupings combining multiple players Airports
Designing the Airport Experience • What would we like to see in place by 2025? – Experience – Core Processes – Service – Security – Enabling Technology – Physical Design
Mindset - 3 Horizon Thinking • 12 Months • 1-3 Years • 4-10+ Years
Mindset – Foresight and Insight e.g. ‘Horizon Scanning’ and Timeline Development by Sector
Mindset – Broad Scans and Deep Dives
Mindset – Extending the Experience
Mindset – Uncertainty Tolerant, Experimental, Curious, Sticky and Magnetic
Management - So How Can we Respond?
Management - Lead or Follow?
Management – Celebrate Successes
Management - Make Time and Space for Change and Tackle Complexity • Customer Interface • Process • Organisation • Information / Systems • Regulatory • Human
The Journey to 2025 • Continuous research • Define change roadmaps – passenger journeys and experiences, operations and technology • Experiment • Develop uncertainty tolerant management
Conclusions • Huge untapped potential • Think about the ‘total business system’ • Technology is a key enabler • Encourage innovation and curiosity • Work with and for tomorrow’s passenger
Extending the Experience How could we evolve our ‘experience’ offering, deepen customer relationships and encourage them to spend more time (and money) at the airport? 1. Retail 2. Dining 3. Leisure 4. Experience 5. Social Media 6. What Additional Revenue Streams Could we Develop?
Thank You Rohit Talwar CEO Fast Future rohit@fastfuture.com Tel +44 (0)20 8830 0766 Mob +44 (0)7973 405145 Twitter http://twitter.com/fastfuture LinkedIn http://www.linkedin.com/in/talwar www.fastfuture.com www.convention-2020.com Blog http://widerhorizons.wordpress.com Signup for our newsletters / Download past editions at www.fastfuture.com Watch a short video of Rohit at http://www.travelmole.tv/watch_vdo.php?id=14300 Download the Hotels 2020: Beyond Segmentation Report at http://www.amadeus.com/hotelit/beyond-segmentation.html
About Fast Future 115
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Rohit Talwar • Global futurist and founder of Fast Future Research. • Award winning speaker on future insights and strategic innovation – addressing leadership audiences in 40 countries on 5 continents • Author of Designing Your Future • Profiled by UK’s Independent Newspaper as one of the Top 10 Global Future Thinkers • Led futures research, scenario planning and strategic consultancy projects for clients in telecommunications, technology, pharmaceuticals, banking, travel and tourism, environment, food and government sectors • Clients include 3M, BBC, BT, BAe, Bayer, Chloride, DTC De Beers, DHL, EADS, Electrolux, E&Y, GE, Hoover, Hyundai, IBM, ING, Intel, KPMG, M&S, Nakheel, Nokia, Nomura, Novartis, OECD, Orange, Panasonic, Pfizer, PwC, Samsung, Shell, Siemens, Symbian, Yell , numerous international associations and governments agencies in the US, UK, Finland, Dubai, Nigeria, Saudi Arabia and Singapore. • To receive Fast Future’s newsletters please email rohit@fastfuture.com
• 50 key trends • 100 emerging trends • 10 major patterns of change • Key challenges and choices for leaders • Strategic decision making framework • Scenarios for 2012 • Key futures tools and techniques • Published August 2008 • Price £49.95 / €54.95/ $69.95 • Email invoice request to rohit@fastfuture.com Designing Your Future Key Trends, Challenges and Choices
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Example Clients
Background Notes
Macro Drivers
Love is in the Air Road to Nowhere Suspicious Minds Dancing in the Dark GDP Growth India and China 8-10% 6-7% 1-2% Recession 0% 1-2% 2-3% GDP Growth Europe, the USA and Japan We need to Prepare for Alternative Scenarios
Derivatives – Market Value vs. Global GDP 760 700 605 69.8 14.2 4.33 0 100 200 300 400 500 600 700 800 Richard Duncan (June 2008) 2010 est Bankof International Settlements June 2009 est World GDP US GDP Chinese GDP US$Trillion Source: BIS, 2009 BIS - http://www.roubini.com/financemarkets-monitor/258502/___swap_tango________a_derivative_regulation_dance__part_1 2010 - http://www.newsmax.com/deBorchgrave/BankforInternationalSettlements-BIS-derivatives-MerrillLynch/2010/05/11/id/358672
Public debt in 2020 (% of GDP) Source: Deutsche Bank Research ‘Public debt in 2020’ March 2010 http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000255134.pdf
Economic Power Shifts GDP US$ The Top 20 in 2025? Source: IMF WEO 2009, PwC ‘the World in 2050 March 2008 edition
Reorientation of global markets • Some 647 million air travelers — more than a quarter of the 2.2 billion passengers who flew worldwide — took to the skies in Asia in 2009, compared to the 638 million air travelers in North America, hitherto the traditional leader in global aviation. • By 2013, an additional 217 million travelers are expected to fly within Asia to push the region’s aviation market share to about one-third of the world market. • In the U.S. there are three aircraft seats per year for each of the 300 million people who live here. • China’s population of 1.3 billion is served by only 0.3 seats per person and India’s 1.1 billion population has only 0.1 seats available per person. • When Asians reach the stage of traveling as frequently as people in the U.S., that alone will triple the size of today’s global aviation industry. Source: Bay Area Travel Writers ‘Travel Trends: Asia Eclipses America in Aviation Markets — by Lakshman Ratnapala,’ March 2010 http://www.batw.org/news/industry-news/travel-trends_mar-2010/
Future regions of multiple stress Source: Ministry of Defence ‘Strategic Trends Programme, Global Strategic Trends out to 2040,’ February 2010 http://www.mod.uk/NR/rdonlyres/D70F2CC7-5673-43AE-BA73-1F887801266C/0/20100202GST_4_Global_Strategic_Trends_Out_to_2040UDCDCStrat_Trends_4.pdf
Source: Tourism Futures http://www.tourismfutures.net/insights/demographic
Source: Tourism Futures http://www.tourismfutures.net/insights/demographic
Source: Ministry of Defence ‘Strategic Trends Programme, Global Strategic Trends out to 2040,’ February 2010 http://www.mod.uk/NR/rdonlyres/D70F2CC7-5673-43AE-BA73-1F887801266C/0/20100202GST_4_Global_Strategic_Trends_Out_to_2040UDCDCStrat_Trends_4.pdf
Climate Change http://static.tumblr.com/ammcsi9/OF7m1b7rz/3.jpg
The Climate Change Challenge • How fast can CO2 emissions be reduced per unit travel? • How can we move towards convergence on the most effective way to reduce aviation climate change impacts? • How can we best address non-CO2 climate impacts? • Where are carbon emissions owned? Source: Henley Centre Headlight Vision ‘Managing the environmental challenges of growth in aviation Draft report of stakeholder event, Cambridge’ October 2006
Travel Outlook
Travel in 2023 • A report by KPMG released in April 2008 ranked transport and tourism as the sectors least well prepared for climate change and among those most commercially exposed to the physical risks it presents. • Forum for the Future in its ‘Tourism 2023’ report of October 2009 partnered with companies like British Airways, Carnival UK, and Advantage Travel Centres to analyze the impact our ever-growing ecological footprint will have on travel. • The four scenarios under which we could progress: – 1) Boom and Burst – 2) Divided Disquiet – 3) Price and Privilege – 4) Carbon Clampdown Source: Forum for the Future ‘Tourism 2023,’ October 2009 http://www.forumforthefuture.org/files/Tourism_2023_full_report_web_version.pdf
Source: Forum for the Future ‘Tourism 2023,’ October 2009 http://www.forumforthefuture.org/files/Tourism_2023_full_report_web_version.pdf
Boom and Burst • A booming economy and high disposable incomes have fuelled a growth in travel worldwide. People travel further, more frequently, and at faster speeds than ever before. There are many new reasons to go abroad as global political stability and prospering economies have opened up the world to more commerce and visitors. • Rapid advances in technology have been crucial, such as the breakthrough in algae- based fuels. Dramatic improvements in efficiencies have allowed the transport sector just about to keep pace with new regulations and their impacts, such as the steadily rising global price of carbon. • Legally binding carbon targets are being met – but many are asking how long this can continue. Many destinations are suffering from serious overcrowding. Wilderness is perhaps the scarcest resource as road, rail, sea and air routes have brought mass tourism to the last corners of the planet. Source: Forum for the Future ‘Tourism 2023,’ October 2009 http://www.forumforthefuture.org/files/Tourism_2023_full_report_web_version.pdf
Boom and Burst highlights • Tourists flock to see the ancient shrines and archaeological treasures of Iraq. • Massive protests spoil the opening of the Mount Everest Theme Park. • Tourism puts huge strains on infrastructure in popular destinations like New York, Paris and London. Visitors are herded between attractions with timed tickets. • High-tech ‘carbon scrubbers’ installed on the ground ‘clean the air so you can travel’. • Overcrowding in popular destinations has led to the rise of glamorous ‘campsites’, ‘pop up’ hotels with stackable modules, and floating resorts. • Fastest growing destinations: the Democratic Republic of Burma, Yemen, Beyond Botswana Plc (Privatised Special Economic Zone), Somalia, Argentina, Brazil, Antarctica, Near space voyages, Papua New Guinea, Kazakhstan. Source: Forum for the Future ‘Tourism 2023,’ October 2009 http://www.forumforthefuture.org/files/Tourism_2023_full_report_web_version.pdf
Divided Disquiet • A toxic combination of devastating climate change impacts, violent wars over scarce resources and social unrest has created an unstable and fearful world. This has made travelling overseas an unattractive proposition. • Many destinations were unprepared for the impacts of a changing climate. More extreme weather events, rising sea levels, increased flooding and frequent droughts have battered some places, while food shortages and malnutrition, malaria, and conflict over resources like water and oil have wreaked havoc in others. • Visitors are highly selective in where and when they travel, cramming into a small number of destinations where overcrowding compounds the problems. • A breakthrough in affordable telepresence technology has proved surprisingly popular with businesses that are keen to cut costs. This resulted in drastically reduced numbers of certain air routes, closing them to many holidaymakers. Source: Forum for the Future ‘Tourism 2023,’ October 2009 http://www.forumforthefuture.org/files/Tourism_2023_full_report_web_version.pdf
Divided Disquiet Highlights • ‘One flight per year’ policy for major US company encourages executives to cut costs with telepresence technologies. • Tour guides with a military background hired as part of a holiday package for extra protection abroad. • Rising sea levels force Government of Maldives to step up relocation plans to India. • Latest ‘hot’ holiday craze is massive resorts offering golf and skiing across sand dunes. • Eiffel Tower auctioned off to a multinational corporation as part of sponsored heritage plan. • Fast growing destinations: Norway, Ireland, Latvia, UK, Greenland Doomsday Park, Canada, Denmark, France, Sweden, The Estonian Army Base Experience. Source: Forum for the Future ‘Tourism 2023,’ October 2009 http://www.forumforthefuture.org/files/Tourism_2023_full_report_web_version.pdf
Price and Privilege • A dramatically high oil price has made travel punitively expensive. Dwindling supplies and rising demand from the new economies of Asia have pushed energy prices into a series of sharp and unpredictable spikes. • The travel industry worldwide has been badly hit and aviation has shrunk dramatically. Fleet replacements have been slower than anticipated and the predicted efficiency gains could not keep pace. There have been mass redundancies across the travel industry and a period of dramatic consolidation across the world. • Although a small, elite market continues to fly regularly, the vast majority of people simply cannot afford the experience. The days of affordable travel are now just a nostalgic memory. • People who want to holiday abroad either save up for years and fly overseas or join the new mass market of overland connections. Pan-European rail, bus and sea networks offer the most cost-effective means of travel for most people. State-of-the- art super-hubs provide seamless connections between different parts of the comfortable and affordable system of overland travel. Source: Forum for the Future ‘Tourism 2023,’ October 2009 http://www.forumforthefuture.org/files/Tourism_2023_full_report_web_version.pdf
Price and Privilege Highlights • Demonstrators take to streets in cities across the world demanding the ‘right to fly’. • Ukraine positions itself as the ‘Gateway to the East’ with new Kiev bus-rail megahub plan. • ‘Absolutely no frills’ airline sector from some non-EU countries offers standing room only and no cabin crew. • Banks offer holiday credit schemes allowing family and friends to save together for the annual trip. • Fastest growing destinations: Montenegro, France, Lithuania, Portugal, Germany, Central Europe Lakelands, SailRail breaks to Greece, Morocco, The Tropical Island Experience (Jersey), Ukraine. Source: Forum for the Future ‘Tourism 2023,’ October 2009 http://www.forumforthefuture.org/files/Tourism_2023_full_report_web_version.pdf
Carbon Clampdown • Governments introduce tradable carbon quotas for all households as part bold plans to tackle climate change. Individual allowances are seen as the fairest way of allocating the ‘right to pollute’ equally. • The public has clamoured for tough action. Environmental impacts are increasingly felt. Although there has been no great shift in cultural values, support for regulation is high. • The economy is more localised, and disposable incomes are low. • Many holidaymakers are still keen to travel abroad, but perceptions of the purpose and real costs of travel have changed. Although distance is a key consideration, the reason for the holiday is crucial: what you are doing is more important than where you are. • Ethical travel is a new mass market, and the government encourages this with the carbon rebate for volunteering whilst abroad. Source: Forum for the Future ‘Tourism 2023,’ October 2009 http://www.forumforthefuture.org/files/Tourism_2023_full_report_web_version.pdf
Carbon Clampdown Highlights • Major travel firm goes bust after massive boycott coordinated by a popular website over its environmental policy. • Red Cross Swarm uses social networks to send volunteers to disaster zones faster than official agency staff. • Peer-to-peer holidaying allows people to ‘swap lives’ with another family and spend a year in another part of the world. • Fastest growing destinations: Cornwall, Ukraine, Sweden, Mozambique Special Volunteer Zone, Lithuania, Northumbria, Cork, France, Slow Boat Community (registered to Guyana), Liverpool. Source: Forum for the Future ‘Tourism 2023,’ October 2009 http://www.forumforthefuture.org/files/Tourism_2023_full_report_web_version.pdf
What does this mean? • Fast Company notes that ‘…the reality of vacationing in 2023 will probably be a combination of these scenarios, with high oil prices, disappearing wilderness, carbon quotas, and advances in air travel (i.e. biofuel-powered planes).’ Source: Fast Company ‘Tourism 2023 Imagines the Future of Vacations,’ October 2009 http://www.fastcompany.com/blog/ariel-schwartz/sustainability/tourism-2023-imagines-future-vacations
Future of Travel and Tourism • 1. Keeping it local. If trends in energy, economy, and environment continue, then traveling long distances for recreation will become more rare. In order for the resort community to maintain a market, they will need to cater more to a local clientele. This is captured in the concept of the 10-kilometer hotel, one whose prime customers come from the local area for a respite. • 2. Alternative transport. In 2009 a newspaper in Seattle featured a photo of a local organic farmer delivering his wares via sailboat to the docks in Seattle. He calls it the no-oil food. In the travel and tourism industry this kind of move will be and is being mirrored as people seek out non-motorized experiences like biking through France, or taking trips by sail. Over the longer term, again depending on how energy, environment, and economic trends play out, it is likely that tourists will seek out slower, less energy intensive, even zero-fossil fuel energy experiences. Source: Futurist ‘Future of Travel and Tourism ,’by Glen Hiemstra on 01/07/09 http://www.futurist.com/2009/07/01/future-of-travel-and-tourism/
Future of Travel and Tourism • 3. Destination evolution. This trend is underway, as destination resorts focus on becoming greener and more sustainable, more local in their attraction, more astute in their use of information technology for advertising and for management, and more knowledgeable of market trends via research. • 4. New whys of travel. It is said that there is graffiti from ancient tourists on the monuments in Egypt. People have always and will always travel to see new places and people, even if they have to walk or ride an animal to do so. That is not going to change. But, one more time depending on how the converging trends play out, we may see a return to the why of travel being for two primary purposes – to visit family, and to seek new adventure. Business travel may decline as 3D-net technologies become robust, and distance travel may decline as economic and environmental imperatives demand. Local travel may fill the need for reconnecting with yourself and recharging the batteries. In fact making that a focus of what you offer in the travel and tourism industry may be one key to the future. Source: Futurist ‘Future of Travel and Tourism,’ by Glen Hiemstra on 01/07/09 http://www.futurist.com/2009/07/01/future-of-travel-and-tourism/
Future Customers
Changing European Ethnicity www.brusselsjournal.com
Preference for Rail over Air 66% - Europe 18% - USA
Trends • Concierge services are set to make a rise across the mid market travel sector according to Euromonitor International, who released their results for the 2010 global travel trends at the World Travel Market in November 2009 • Kuoni are one company set to offer customers concierge options. Andrea Mueller, Communications Manager for Kuoni said; "Today people are overwhelmed by information on travel and tourism services and need more guidance. Concierge services will play and important role in helping them make intelligent choices based on their individual needs". Source: World Travel Guide, November 2009 http://www.worldtravelguide.net/news/3551/news/Global-travel-trends-2010.html
Simple identity • The Global Financial Crisis (GFC) plummeted the value of the High Net Worth population by US $32.8 trillion or 19.5% according to the World Wealth Report (2009) published by CapGemini and Merrill Lynch, so the rich are less rich. • Writing in the Harvard Business Review, Paul Flatters and Michael Wilmott argue that in most developed economies pre GFC, that the precession consumer behaviour was the product of 15 years of uninterrupted prosperity, driven by growth in real levels of disposal incomes, low inflation, stable employment and booming property prices. • As such, new consumer appetites emerged in which the consumer could afford to be curious about gadgets and technology, in which tourists shelled out for enriching and fun experiences on exotic locations. Where they could afford several holidays a year and rent premium experiences such as hiring a Ferrari for the weekend in exotic locations like Japan. • The GFC changed that, propelling tourist trends into slowdown, halting or even reserving the trajectory of growth in world tourism. Source: Tomorrow’s Tourist ‘Simple Identity,’ 2009 http://www.tomorrowstourist.com/simple_identity.php
Simple identity • So, is this a sample of the future, an era of the pension crisis, scarcity of oil, inflation and falling levels of disposal income in which tourism expenditure falls year on year? • If so, what will the future tourist look like? Rather than having a fluid identity it will be more akin to simplicity. • During an economic slowdown, tourists tend to travel less, stay nearer home (increase in domestic tourism) and seek simplicity such as exploreworldwide.com value based holidays focusing on basic facilities, meeting locals, lots of free time and cheap in exotic locations throughout the world. This trend is accelerated in a scenario of falling incomes as a simple and functional product that will suffice. A simple identity means that offering advice becomes extremely important, whether its website's farecast.com’s ,which advises travellers of the optimal time to purchase an airline ticket or price comparison technologies which are found on many online booking services. Source: Tomorrow’s Tourist ‘Simple Identity,’ 2009 http://www.tomorrowstourist.com/simple_identity.php
Simple identity • Research by the Trajectory Group highlights that affluent consumers have revealed mounting dissatisfaction with excessive consumption. Many desire a wholesome and less wasteful life. As such, there is a desire to get back to nature, something that is tranquil, basic, rooted, human and simple (Yeoman 2008). As a consequence, the desire for more authentic and simple luxury experiences accelerates. An example of simple luxury, are tree house hotels which offer a unique experience in a natural setting. A new experience which is not seen as conspicuous consumption, but overtly inconspicuous. • In a simple identity, ethical consumption declines as paying a premium for a Starbucks coffee falls by the wayside, even if they use organic coffee which supports children in a third world country. From a tourism perspective, many of the ethical tourism projects in third world countries such as Africa and India which depend on independent travellers will suffer. Source: Tomorrow’s Tourist ‘Simple Identity,’ 2009 http://www.tomorrowstourist.com/simple_identity.php
Simple identity • Tourists also have become canny at searching for bargains which economists call mercurial consumption, whether it is using price comparison software, or grabbing last minute offers from websites such as grabaseat.co.nz which offer last minute air travel deals to New Zealand consumers, or 5pm.co.uk which offers diners the chance of discounted meals after 5pm that evening. Technology and social media network enabling purchasing strategies, further accelerate this trend of mercurial consumption. • Attitudes to travel also change, as tourism has to compete with other forms of leisure expenditure, whether it is the latest technology gadgets or virtual holidays. There is a generation of Japan youth who prefer their X-Box than climbing Mt Fuji. The desire for new experiences is more about insperience, where technology provides a better experience than in which consumers desire to bring top level experiences into their domestic domain. • A simple identity is all about simplicity seeking, thrift, green yet mercurial tourists will hold tourism business and brands accountable. In a world of scarcity of resources this scenario becomes the norm. Source: Tomorrow’s Tourist ‘Simple Identity,’ 2009 http://www.tomorrowstourist.com/simple_identity.php
Market Pain Points http://keywordsblogger.com/images/online_market_research_find_your_markets_pain_points.jpg
Market Pain Points • Research on passenger dissatisfaction reflects the obvious issues that make air travel difficult. Three main areas represent the majority of passenger complaints: service disruptions, long check-in lines and baggage issues. Through the adoption of new communication techniques and internal systems that take advantage of advanced technology and shared information, airlines and airports can improve their delivery of services focusing on these three primary passenger pain points. • Airlines and airports are challenged with updating their operational systems to eliminate unnecessary manual step whilst interconnecting existing information silos to better manage the entire passenger experience. Integration between Departure Control Systems (DCS), Passenger Service Systems (PSS), Baggage Reconciliation Systems (BRS), and airport services can provide improved passenger processing. Delivering services on advanced mobile devices will help all entities be more efficient and operate with lower costs. Source: Amadeus, 2011 http://www.amadeus.com/airlineIT/navigating-the-airport-of-tomorrow/docs/Amadeus-Navigating-the-Airport-Of-Tomorrow-2011-EN.pdf
Market Pain Points
What Passengers Want • As a result of social media-inspired discussion, and with the assistance of London City Airport’s sales director, Bernard A. Lavelle, Future Travel Experience reveals the views of passengers themselves on what they really want from the airport of the future. • As outlined in the chart, the aspect that can most improve the passenger experience on the ground is high-quality signage, communications and staff, with almost a third of all respondents highlighting this as a vital passenger requirement. • The second most common request was free Wi-Fi in the terminal building, while improved facilities, processing and queues, and an enhanced security process are also prominent on the passenger wish list. Airport layout was also identified as an area that can make a telling difference to the overall passenger experience. Source: Future Travel Experience, May 2011 http://www.futuretravelexperience.com/2011/05/what-do-passengers-really-want/
What Passengers Want Source: Future Travel Experience , May 2011 http://www.futuretravelexperience.com/2011/05/what-do-passengers-really-want/
Emerging Customers
Tracking the rise of the middle class across the BRICs and N-11: Share of population with incomes between $6,000 and $30,000 in PPP terms (Goldman Sachs) 2009 (%) 2015 (%) 2025 (%) 2040 (%) Brazil 46 52 59 57 Russia 71 71 56 29 India 6 16 46 89 China 37 59 75 53 Korea 67 46 23 7 Bangladesh 0 1 5 38 Egypt 39 57 84 82 Indonesia 16 29 57 87 Iran 70 77 73 41 Mexico 61 65 65 49 Nigeria 6 9 18 42 Pakistan 9 13 22 49 Philippines 15 23 40 69 Turkey 79 81 70 35 Vietnam 7 21 51 84 Source: Goldman Sachs, August 2009 http://www2.goldmansachs.com/ideas/demographic-change/power-of-purse-doc.pdf
Primed for More Travel Source: Airbus Global Market Forecast 2010-2029, December 2010 http://www.airbus.com/fileadmin/media_gallery/files/brochures_publications/Global_Market_Forecast/Airbus_Global_Market_Forecast_-_2010-2029.pdf
Source: Airbus 2009 http://www.airbus.com/en/gmf2009/appli.htm?onglet=&page=
Online bookings in Asia-Pacific, 2008 and 2011 2008 2011 Australia / New Zealand $6.2B $10.9B China $6.9B $13B India $3.1B $5.5B Japan $11.5B $17.7B Source: PhocusWright cited by Travel Weekly ‘China, India will lead region's online bookings boom’ January 2010 http://www.travelweekly.com/article3_ektid209470.aspx Source: PhoCusWright
China consumer report • By the year 2020, China will have a population of more than 1.4 billion people that will make up a significant portion in the world's consumer market. • The annual disposable income of Chinese consumers is forecasted to increase to 65.4 billion Yuan (US$9.57 billion) by 2020 compared with 15 billion Yuan (US$2.19) in 2008. • The National Bureau of Statistics of China announced that the country would be considered a moderately affluent society by 2020, if development trends since the year 2000 continue. The estimate was made taking into account progress in the fields of the economy, social harmony, quality of life, democracy and law enforcement, culture and education, as well as resources and the environment. • Zheng Xinli, Vice-Minister of the Communist Party's central policy research office, said that taking price changes into account, 55% of the population will be middle class by 2020, with 78% of city dwellers and 30% of those in rural areas reaching that status. • Middle class is currently defined as having an annual household income of between RMB60,000 (US$8,700) and RMB200,000 (US$29,215). In 2008 prices, the annual disposable income per household will be RMB98,956 (US$14,900) in 2020. Source: Euromonitor 2009 http://www.euromonitor.com/Chinese_consumers_in_2020_A_look_into_the_future
China and India entering era of travel • Dun Jidong, spokesman for the China Travel Service notes that GDP per capita has hit $3,000 in China, ‘…a level that industry experts agree sends a signal that the country is entering a stage of explosive growth in travel consumption.’ (1) Source: (1) China Daily January 2010 http://www.chinadaily.com.cn/china/2010-01/15/content_9323567.htm 2009 (%) 2015 (%) 2025 (%) 2040 (%) Brazil 46 52 59 57 Russia 71 71 56 29 India 6 16 46 89 China 37 59 75 53 Share of population with incomes between $6,000 and $30,000 (PPP terms) (2) Source (2): Goldman Sachs, August 2009 http://www2.goldmansachs.com/ideas/demographic-change/power-of-purse-doc.pdf
Source: Goldman Sachs ‘Is this the ‘BRICs Decade’?’ May 2010 http://www2.goldmansachs.com/ideas/brics/brics-decade-doc.pdf
Aviation Industry Outlook
International Passengers in 2014 Source: IATA 2010, Markets in 2014 http://www.iata.org/ps/publications/Documents/Example%20-%20Projected%20Top%2010%20International%20Markets%20in%202014.pdf
Freight in 2014 Source: IATA 2010, Markets in 2014 http://www.iata.org/ps/publications/Documents/Example%20-%20Projected%20Top%2010%20International%20Markets%20in%202014.pdf
Aviation in 2029 Source: Airbus Global Market Forecast 2010-2029, December 2010 http://www.airbus.com/fileadmin/media_gallery/files/brochures_publications/Global_Market_Forecast/Airbus_Global_Market_Forecast_-_2010-2029.pdf
Future Demand • Passenger air traffic is forecast to double by 2030 as 12 billion of us take to the skies. So what will the massive airports of the future look like? • One theory being discussed is that the future city will be an “aerotropolis”, with the airport at its heart rather than stationed far away from the centre – important if the city is to connect effectively to the global economy. In much of the western world, airports were developed years ago, when air travel was a luxury form of transport for the privileged. Now, of course, it’s a mode of mass traffic, requiring different capacity solutions. • Songdo, South Korea, is an example of a city built from scratch at a cost of $40 billion with an airport in the centre. • Dubai is rapidly expanding its airport for A380 traffic, where first-class passengers on the building’s upper level will be able to transfer direct to the upper level of the A380 aircraft. Source: TTG Nordic, 2011 http://www.ttgnordic.com/news/item/429-a-look-at-the-super-airports-of-the-future
Future Demand • Nearby in Dubai, another gigantic airport, Al-Maktoum International, will eventually have five runways and enough capacity to make it double the size of the biggest airport around today. The first runway is already operational for cargo and passengers will be able to fly there by the end of 2011. • But developers are wary of building a future airport that is too big, creating long distances for passengers to walk between flights and concerns over the logistics and security of having large numbers of people crammed together. The key to this is to arrange connecting transport links such as trains or cars to be as close as possible to the plane. • In the Middle East there seems to be an airport capacity race. In Europe, it’s the contrary; it is extremely difficult for many airports to develop enough capacity to handle the forthcoming explosion in air travel. Projects like Berlin Brandenburg Airport, due to open in 2012, are few and far between. China, by contrast, plans to build 78 new airports by 2020. In Europe, there are plans for five new airports by 2030. Source: TTG Nordic, 2011 http://www.ttgnordic.com/news/item/429-a-look-at-the-super-airports-of-the-future
IATA Launches Vision 2050 • The International Air Transport Association (IATA) called on industry leaders to look beyond the crisis that buffeted the air transport industry over the last decade and to strategically define a sustainable future. • Giovanni Bisignani, IATA’s Director General and CEO, outlined his vision for aviation in 2050. “We will be very near to zero accidents. We will emit half the carbon. We will have eliminated queues with integrated systems ensuring security as we process more passengers. We will operate with almost no delays in globally united skies. We will share costs and profits equitably across the value chain. We will be a consolidated industry of a dozen global brands supported by regional and niche players. And we will deliver value to investors.” Source: IATA, June 2010 http://www.iata.org/pressroom/pr/pages/2010-06-07-02.aspx
IATA Launches Vision 2050 • “In just over a decade, I can see $100 billion in industry profits on revenues of $1 trillion. As we move towards 2050, this 10% margin will become even more robust. This is not just a crazy dream. Before the recession, at least a dozen IATA members already had 10% margins. We must make this a much broader reality. Change in all areas is possible. This vision—including sustainable profitability—can be our future,” said Bisignani. • Bisignani’s vision for 2050 rests on four cornerstones of change: – Profitability – Infrastructure – Powering the industry – Customer Source: IATA, June 2010 http://www.iata.org/pressroom/pr/pages/2010-06-07-02.aspx
IATA Launches Vision 2050 • Profitability: “Efficiency gains never make it to the bottom line because airlines are deprived of the commercial freedom to operate their businesses like a normal business. Our poor profitability makes every shock a fight for survival,” said Bisignani. He laid the blame on the industry’s hyper fragmentation with 1061 airlines as a result of the bilateral system which regulates the global aviation industry. The restrictions on international capital prevent consolidation across borders. “The restrictions of the bilateral system are a dam that holds us back. It is time for that dam to burst. Governments must act responsibly to ensure safety, security, and a level playing field. And airlines need the freedom to build efficiencies across borders, better serve their customers, and achieve sustainable profits to fund growth and innovation,” said Bisignani. Source: IATA, June 2010 http://www.iata.org/pressroom/pr/pages/2010-06-07-02.aspx
IATA Launches Vision 2050 • Infrastructure: “Infrastructure must be reshaped around the needs of airlines—the core of the industry’s value chain. Airports should compete for airline business based on efficiency. Commercial revenues will drive their business. I can see airports paying airlines to bring shoppers and airport revenues funding the air traffic management system,” said Bisignani. • Air traffic management must also change. “I can see ten global air navigation service providers (ANSPs) replacing the current 180 at half the cost,” said Bisignani. The Single European Sky (SES) would be the first of the ten global ANSPs. “But we need real leadership to replace the uncoordinated bureaucratic mess that Europe is today,” said Bisignani, pleading for a date to achieve the $6.5 billion (EUR 5 billion) cost savings that the SES promises. “After 20 years of waiting, we are fed up. Heads of governments must set a date and deliver,” said Bisignani. Source: IATA, June 2010 http://www.iata.org/pressroom/pr/pages/2010-06-07-02.aspx
IATA Launches Vision 2050 • Powering the Industry: “Today’s jet fuel cannot sustain air transport in the long-term. We must find a sustainable alternative and our most promising opportunity is bio fuels, which have the potential to reduce our carbon footprint by up to 80%,” said Bisignani. After successful testing by airlines, certification is expected within a year. Bisignani urged greater support from governments. “Too often governments are only committed to environment when it means grabbing cash. Governments should be investing in biofuels and green technologies. Local production with jatropha, camelina, algae, or even urban waste will open up economic opportunities in virtually any location. Not only will this secure a future power source for our industry, this will also break the tyranny of oil and drive economic development in all parts of the world. Source: IATA, June 2010 http://www.iata.org/pressroom/pr/pages/2010-06-07-02.aspx
IATA Launches Vision 2050 • The Customer: “The customer is at the center of our future vision. By 2050, we will have 16 billion travelers and handle 400 million tonnes of cargo. In just a couple of decades, we will see the middle class nearly triple from the 1.3 billion today to 3.5 billion people—a quarter of which will be in India and China. Accommodating that growth efficiently will be a challenge for all parts of the value chain—airports, air navigation service providers, manufacturers and governments. The solution must be strategic and aligned,” said Bisignani. • Bisignani noted that the air transport industry must engage its 2.4 billion passengers to change government’s “over-regulate and under-appreciate” attitude. “To turn our customers into industry activists, we must improve the value proposition of price, speed, and quality. We have reduced the price of flying by 40% since deregulation. But as we made travel more accessible, speed and quality suffered. The infrastructure has not kept pace, resulting in delays both in the air and on the ground. New security procedures created new hassles. Our challenge is to gain the support of customers in demanding change from the governments,” said Bisignani. Source: IATA, June 2010 http://www.iata.org/pressroom/pr/pages/2010-06-07-02.aspx
EUROCONTROL: Long Term Forecast • Future air traffic will be limited by capacity at the airports, 0.7-5.0 million flights will not be accommodated in 2030, 5%-19% of the demand. The congestion is now lower than in the forecast two years ago. The recent drop in traffic has given the system some extra years to react and adapt but once the limits are reached the number of unaccommodated flights increases quickly. Congested airports create pressure on the flow of operations in the network and will exacerbate delays. • Even with airport capacity restrictions airports will grow. In 2030, there will be 13-34 airports as big as the top 7 are now. Some of the faster growing East-European airports will join the top 25. European hubs will be faced with competition from hubs outside Europe, primarily in the Middle-East. Source: EuroControl, 2010 http://www.eurocontrol.int/statfor/gallery/content/public/forecasts/Doc415-LTF10-Report-Vol1.pdf
EUROCONTROL: Long Term Forecast Source: Eurocontrol, 2010 http://www.eurocontrol.int/statfor/gallery/content/public/forecasts/Doc415-LTF10-Report-Vol1.pdf
EUROCONTROL: Long Term Forecast Source: EuroControl, 2010 http://www.eurocontrol.int/statfor/gallery/content/public/forecasts/Doc415-LTF10-Report-Vol1.pdf
Source: EuroControl, 2010 http://www.eurocontrol.int/statfor/gallery/content/public/forecasts/Doc415-LTF10-Report-Vol1.pdf
Visions of Tomorrow’s Airport
Exploring the Airport of 2030 • The importance of generating non-aeronautical revenue streams has also had a major impact on the recent developments in the aviation sector, and Alan Lamond, aviation director, Pascall + Watson Architects, explained that this will continue to impact on future airport models. He said: “We are seeing increased commercialisation of airports and a realisation that you have to exploit the opportunities presented, and this is done in Western airports through very intensive retailing. What is increasingly becoming clear is that, for businesses, there’s a distinct commercial advantage in being based near an international airport. This means that the space around the airport becomes far more valuable.” Source: Airport Business, July 2010 http://www.airport-business.com/2010/07/exploring-the-airport-of-2030/
http://info.industry.siemens.com/data/presse/pics/12054891.jpg
Siemens Airport Lab • Inside Siemens airy, 90,000-square-foot glass and steel structure in Germany is an entire infrastructure of an airport, minus only the planes, runways and control tower. • Nearly every aspect of airport operations is tested and developed here, from high-tech baggage handling and fleet-management systems to wireless passenger check-in and 3-D security. • The airport center, built in 2005, houses real-time, check-in counters, a parking guidance system, a control center and a luggage conveyor with belt and tray conveyors stretching more than 6,000 feet. The baggage system can handle 30 million pieces of luggage per year. (In Germany, only Munich and Frankfurt airports have larger systems.) • On the passenger side of the terminal, a prototype system is being fine- tuned that would allow travelers to check in using only their mobile phones. Once a passenger makes a phone call to check in, the system then sends back a bar code that displays on the mobile phones screen. Special readers at the airport then scan and print out boarding passes. Source: ABC News, May 2010 http://abcnews.go.com/Travel/siemens-dreams-airport-future-germany/story?id=10629236
Siemens Airport Lab • Also being tested in the lab are new fingerprint and facial-recognition systems as Siemens targets the ever-expanding need for better security at airports everywhere. • Iris scans, fingerprint-based IDs and 3-D face digitization are all being tested here as part of the company's development of cutting-edge recognition and security systems. • One area developed by Siemens that is already being employed at airports from Seoul to Denver is a baggage system that employs radio-frequency identification or RFID technology. • The RFID tags are applied directly to baggage and are a much more efficient way of identification and tracking luggage using radio waves. • More than 3.1 million missing baggage reports were filed in the United States alone in 2009, according to the Air Travel Consumer Report produced by the U.S. Department of Transportation. Source: ABC News, May 2010 http://abcnews.go.com/Travel/siemens-dreams-airport-future-germany/story?id=10629236
Siemens Airport Lab • Siemens says the radio wave technology will eventually replace bar-code tracking systems now employed at many airports because it allows bags to be instantly updated with changes to a passengers flight or security status. That should drastically lower the risk of the dreaded lost luggage nightmare. • From check-in to loading on an aircraft it allows more useful data to travel along with the bag. • Airport systems make up about 2 percent of the company's $100.7 billion annual revenue. But that number is expected to rise as the need for better airport technology surges along with the number of air travelers. Source: ABC News, May 2010 http://abcnews.go.com/Travel/siemens-dreams-airport-future-germany/story?id=10629236
Visions of the Future • EADS Innovation Works (IW), the corporate network of research centres of EADS, and Altran, an international advanced engineering and innovation consulting group, are jointly working on projects supporting the long-term evolution of the air transport industry. • The goal of a recent study was to create revolutionary airport concepts. EADS IW and Altran organised workshops with representatives of airlines, airports, air traffic management and aircraft manufacturers as well as representatives of other transport sectors. • It was recognised that, for short and medium flights, future passengers' experience will play a significant role in the competition between aviation and high-speed rail transport. • This research contributes to the goals set forth in the European Commission's report 'Flightpath 2050 - Europe's Vision for Aviation', whose target is for 90% of travellers in Europe to be able to complete their journey, door to door, within four hours. Source: Airport Business, June 2011
Visions of the Future • Intermodal transfers will be seamless and final destinations are to be reached smoothly, predictably and on time while accommodating the increasing demand for air travel. 'These concepts put passengers at the heart of the air transport system. The result is a passenger-friendly experience and lean processes which we have labeled 'Friend- Lean Airport of the Future',' said Guy Gallic, head of the Technical Capability Centre 'Innovative Concepts and Scenarios' at EADS IW. 'In future, we will speak not only about infrastructure but about an 'extended door-to door experience'. • The airport terminal will become a lean step in the journey towards co-modal and connected travel,' explained Sebastien Renouard, Executive Director AeroSpace & Defence International at Altran. • On an average day in 2010, 6.5 million passengers flew an average of 2,000km on one of 14,000 commercial jets. • By 2050, the number of passengers per day will increase to roughly 44 million globally. Beyond 2040, the study aimed to find revolutionary airport concepts capable of handling 25-100 million passengers per year. Source: Airport Business, June 2011 http://www.airportbusiness.com/online/article.jsp?siteSection=1&id=45675
Eye to the Sky http://sleeplessandtired.com/wp-content/uploads/2010/07/eye-in-the-sky.jpg
Visions of the Future • The following three concept from EADSs were selected and elaborated in more detail. • The 'Eye to the Sky' concept. • The aircraft traffic area is located above the terminals, while the flow of passengers through the terminals to their planes is vertical. From arriving at the airport to reaching their seats on the plane, passengers use spiral ramps that link every level of the airport. This concept focuses not only on infrastructural design but also on solutions for guiding passengers through an augmented reality information system. A mobile device would connect to the airport network and act as a portable personal guide to help people find their way at the airport. Lean security systems based on new technologies would also be embedded. Source: Airport Business, June 2011 http://www.airportbusiness.com/online/article.jsp?siteSection=1&id=45675
Visions of the Future • The 'Passenger Airport Shuttles (PAS)' concept. • With a predicted time of at most seven minutes to get from anywhere in the airport to any Skygate, passengers can choose to spend more time at the airport's central terminal facilities or they can arrive at the airport less than 10 minutes before departure and still catch their flight. • In this decentralised approach, passengers are moved in Passenger Airport Shuttle vehicles which are guided by an automated central airport control system. An identification function ensures that passengers and their travel data are recognised by the control system as soon as they board, and the vehicle then offers them a transportation and information service dedicated to their specific needs. Aircraft will be docked to a 'Skygate', a minimal building that forms the interface between the aircraft and the PAS. Baggage will be handled at the Skygate, reducing the baggage deposition and retrieval times to a minimum. Source: Airport Business, June 2011 http://www.airportbusiness.com/online/article.jsp?siteSection=1&id=45675
Visions of the Future • The 'Extended Airport' concept • The Extended Airport concept addresses the vision of providing a door-to- door travel service in the literal sense by extending the transportation service so that passengers (or just their luggage) are picked up at their home or office. In this vision, air transport and airports are fully integrated with other transport modes. The proper competition and collaboration between modes of transport are ensured by a transport planner on the user interface where passengers can plan their trips. It will take many revolutions in the air transport sector to create solutions that deliver on the ambitious objectives set forth by the European Commission's FlightPath 2050. Source: Airport Business, June 2011 http://www.airportbusiness.com/online/article.jsp?siteSection=1&id=45675
User Friendly Terminals • Munich Airport’s new InfoGates allow passengers to obtain quick and detailed information to help them navigate around the terminal. • Passengers using the InfoGate can simply push a button, which connects them immediately to an information service representative via videoconference. • Six InfoGates are already operational in the public and non-public areas of the airport, and 17 Interactive InfoGates are positioned at key crossroads throughout the terminals. • These consist of touch-screens mounted on pillars, offering a full range of information on services, shopping and dining at the airport. Source: Future Travel Experience, June 2011 http://www.futuretravelexperience.com/2011/06/munich-airports-infogates-offer-improved-wayfinding/
Future of Airports • David Holm, Principal Architect, Woodhead, explained that retail, commercial, advertising and other forms of revenue generation will be crucial within the development of terminals of the future. Not only do these forms of commerce provide funding incomes, they also play a key role in crafting the unique character of the place and in enhancing the “total journey experience”. “It is our design view that retail and commercial developments and strategies must be incorporated at the earliest phases of project planning. In this way, the form of a new project is designed from the inside out in harmony with the outside in pressure applied by the equally crucial requirements of exterior aircraft planning,” he said. • At the Check-In 2010 Conference in Las Vegas, Holm referred to four key themes: Source: Future Travel Experience, March 2011 http://www.futuretravelexperience.com/2011/03/the-airport-of-the-future-2020-thinking/
Future of Airports • Urban Catalyst – “Innovative civic and transport leaders are now seeing airports and their surrounding and supporting infrastructure, often referred to as airport cities, as the catalysts of urban growth and often regeneration; a key part of the ‘c21st polycity concept’.” • Civic Buildings – “The contemporary airport within the ‘c21st polycity’ is today’s crossroads celebrating trade and community gathering. As such the urban structure and the built forms of the airport must stand as civic buildings respected by the community and designed with a sense of community, flexibility and longevity.” Source: Future Travel Experience, March 2011 http://www.futuretravelexperience.com/2011/03/the-airport-of-the-future-2020-thinking/
Future of Airports • Sense of Place – “Our design projects endeavour to make the subtle connection between context, place making and built form in order to weave our built form into the community within which it exists.” • Total Journey Experience – “The transport node, whether it be a domestic or international airport or multi-modal station, has existed as an evolutionary control at the edges of regions or borders. As such the node has performed a variety of functions, ranging from service industries to authority procedures. This variety of stakeholders has many functions to address, though all conjoined represent the overall brand and experience of the transport node.” • It appears clear that a consistent approach towards design provides the passenger with a coherent total journey experience throughout their incoming and outgoing experiences as a traveller. Source: Future Travel Experience, March 2011 http://www.futuretravelexperience.com/2011/03/the-airport-of-the-future-2020-thinking/
Exploring the Airport of 2030 • The impact of a master plan, which often outlines a blueprint for the airport with a vision for the next two decades or more, is the most integral part of the planning process and can often provide an idea of how airports will continue to develop in the mid-to-long-term. • Curtis Fentress, principal-in-charge of design, Fentress Architects, said: “With master plans you almost need a crystal ball. You have to design for flexibility, which can accommodate for future needs even though you don’t know what these will be. Flexibility really is key and I think that because of this, you will see more airports with column-free buildings. At LAX we’ve designed large, column-free buildings so that we’re completely flexible for any future developments. This is even something that you can see in the design of Denver International Airport, which has just celebrated its 15th birthday.” Source: Airport Business, July 2010 http://www.airport-business.com/2010/07/exploring-the-airport-of-2030/
The Intelligent Networked Airport • A passenger-sensing, self-organising unified network to track the location of every passenger and bag in the terminal will feature in future airports. • It’s not much fun sitting in an airport waiting for a plane. But might it be less of a chore if you could download your in-flight films in the departure lounge? Might you even pay for the service? If you find that airport bars usually serve the best antidotes to tedium, would you be glad to know that a nearby display can detect your presence, prompt you when your gate number changes and provide clear directions to it at drinking-up-and-boarding time? • It’s being developed by scientists from the University of Cambridge, University College London, and the University of Leeds. The idea is to tidy up the tangle of wired and wireless networks used in most modern airports by installing a single infrastructure that can handle GSM, 3G, Wi-Fi and RFID communications, as well as locating every person and piece of baggage in the building. Source: The Institution of Engineering and Technology, July 6th 2009 http://www.nytimes.com/2009/06/14/magazine/14searchgrimshawside-t.html
The Intelligent Networked Airport • TINA - The intelligent networked airport • “For instance, can we solve problems like bags being in one place but the passenger not showing up, or a passenger being on an airplane and not knowing where their bags are?” asks Jon Crowcroft, Marconi professor of communications systems at the Cambridge University Computer Laboratory. • Organising a building’s network infrastructure in this way could also create opportunities for airport operators to generate money. • “In an airport environment, where in-building communications systems [such as Wi- Fi] are often used to generate revenue for the airport operator, the adoption of such a technology could lead to some interesting innovation with regard to the commercial models under which airports operate,” says Justin Trevan, a consultant at the communications division of Arup - an engineering consultancy well known for its work on airports, including Heathrow’s Terminal 5 and Dubai International Airport. Source: The Institution of Engineering and Technology, July 6th 2009 http://www.nytimes.com/2009/06/14/magazine/14searchgrimshawside-t.html
The Intelligent Networked Airport • To track people and assets, researchers are looking at both active and passive RFID tags, locating the active tags by comparing the different time delays of the transmitted signals as they arrive at neighbouring antenna units, which are typically positioned tens of metres apart. • Being battery-powered and expensive, active RFID tags would only be suitable where they could be re-used and recharged, such as when issued to members of staff or applied to airport vehicles. In contrast, passive RFID tags could be printed cheaply on disposable paper boarding cards or luggage labels, given to every passenger and attached to each of their bags. In Hong Kong airport, luggage is already labelled with bar-coded passive RFID tags that are read (by conventional short-range means) with two antennas placed either side of the luggage conveyer belt. Source: The Institution of Engineering and Technology, July 6th 2009 http://www.nytimes.com/2009/06/14/magazine/14searchgrimshawside-t.html
The Intelligent Networked Airport • Zinwave application • A ‘long-range’ passive RFID sensing scheme is novel and technically difficult. • However, Sithamparanathan Sabesan, Michael Crisp, Richard Penty and Ian White at the University of Cambridge’s department of engineering, have found a way to reduce the fading and improve the accuracy of RSSI techniques, using an optimised Zinwave radio-over-fibre hub with multiple antennas. • “The first challenge was getting the range up to 20m. The second, which we’re still working on, is the resolution at that range. We’ve got the location accuracy down to around 2m, but we’d like to do better,” said Professor White, head of photonics research in the electrical division of the department of engineering at Cambridge. • Tracking every single passenger anywhere in the building all the time may not be feasible with passive RFID tags. But the technology could indicate if a passenger has moved from one space to another, maybe from a lounge to a bar, which is enough to target a message to a nearby display, page them, or send someone to find them. Source: The Institution of Engineering and Technology, July 6th 2009 http://www.nytimes.com/2009/06/14/magazine/14searchgrimshawside-t.html
The Intelligent Networked Airport • Network architecture specifications • The basic TINA network architecture is being designed to support a terminal with typically 1,000 fixed and 500 mobile video cameras (demanding 10Gbit/s of bandwidth); 500 displays (10Gbit/s); 500 biometric scanners (10Gbit/s); private and public fixed and wireless LAN (20Gbit/s); cellular services (10Gbit/s); TETRA and private radio (500Mbit/s); as well as passive RFID (300Gbit/s) and active RFID (5Gbit/s). These figures, which include projections for future demand, are based on input from BAA and other companies involved with the network installations in Heathrow Terminals 4 and 5. • The software tool can model and simulate passenger flow, radio propagation delays, optimum antenna position, and bandwidth requirements to give a top-down picture of how the network might perform under various circumstances. • In this way, designers can better understand how the flow of people in indoor spaces, traffic demands and energy consumption constraints might influence different architectures. Source: The Institution of Engineering and Technology, July 6th 2009 http://www.nytimes.com/2009/06/14/magazine/14searchgrimshawside-t.html
TINA – Key Facts The network will support: • 1,000 Fixed and 500 Mobile Video Cameras - 10 Gb/s • 500 Displays - 10 Gb/s • 500 Biometric Scanners - 10 Gb/s • Private and Public Fixed and Wireless LAN - 20 Gb/s • Cellular services - 10 Gb/s • TETRA and private radio - 0.5 Gb/s • Passive RFID - 0.2 Gb/s • Active locatable RFID - 5 Gb/s • Aggregate Mean Rate 65.7 Gb/s; assumed Aggregate Peak Rate 100 Gb/s
Flexible Terminals http://cms.ukintpress.com/UserFiles/Image/PTT/Geneva%20mobile%20terminal.jpg
Flexible Terminals • An Austrian company, TMT, has installed a mobile passenger terminal at Switzerland’s Geneva Airport. It is designed as a flexible structure, to expand and contract airport capacity, depending on demand. With a growing number of companies providing such facilities – driven by the increasing seasonality of flight operations and the continuing lack of available finance – is the future going to be "temporary and mobile"? Could this be the ultimate low-cost terminal? • TMT’s management stated the terminal can be installed and dismantled within a week. Source: Centre for Aviation, February 2011 http://www.centreforaviation.com/news/2011/02/14/upwardly-mobile--airport-terminals-that-match-the-seasonal-nature-of-the-airline-business/page1
Flexible Terminals • Thomas Melcher, managing director and inventor of TMT The Mobile Terminal - Melcher has ambitious plans for TMT The Mobile Terminal, particularly in emerging markets in Eastern Europe, Asia and Latin America. “In the next three years, we are targeting 20 to 25 mobile terminals worldwide,” he said. • Indeed, the effectiveness of the terminal solution during major events in an airport’s catchment area means discussions are already underway with the Russian market with regards to the 2014 Winter Olympics, which take place in Sochi, and the 2012 European Football Championships in Poland and Ukraine. TMT The Mobile Terminal is also exploring the possibility of renting its terminal solutions for short-term periods. Source: Airport Business, April 2011 http://www.airport-business.com/2011/04/first-tmt-the-mobile-terminal-opened-at-geneva-
The ‘Airport City’ • This geographical advantage has led to the rapid rise of the ‘airport city’ and, according to Curtis Fentress, principal-in-charge of design, Fentress Architects, this is likely to become an increasing trend in years to come. • “I think you will see more of the ‘airport city’,” he explained. “In the Middle East, you see a tremendous surge in passenger numbers and there is then a need for hotels and other services and this is something that we may see elsewhere in the next 20 years. Airports will become more multi-modal and the construction of office buildings, conference buildings, air freight facilities, and even the likes of beauty salons within the actual airport are things that are already becoming more widespread.” • With environmental sustainability now firmly established toward the very top of the list of priorities within the field of airport architecture, the need to explore the use of ‘green’ energy is more evident than ever before. Source: Airport Business, July 2010 http://www.airport-business.com/2010/07/exploring-the-airport-of-2030/
Airport Cities: Manchester http://www.manchesterairportez.co.uk/about-the-enterprise-zone
Airport Cities: Manchester • More than 10,000 jobs could be created around Manchester Airport when it is turned into a ‘mini city’. • The £400m Airport City project was given the green light after the government named it as one of its first Enterprise Zones. • It is one of 21 designated areas nationwide that will offer tax breaks for businesses, simplified planning rules and super-fast broadband as part of plans to grow local economies and jobs by removing barriers for new companies. • Money raised from discounted business rates in the area will be available to re-invest in Greater Manchester’s redevelopment. • Airport bosses say the Enterprise Zone status means they can start immediately on Airport City, which is expected to bring 10,500 full time jobs – 13,000 in total – over the next 10 to 15 years. A 60-acre site, centred around Manchester Business Park to the north of the airport, will introduce new offices, hotels, shops and manufacturing space. Source: Manchester Evening News, March 2011 http://menmedia.co.uk/manchestereveningnews/news/s/1416306_manchester-airport- enterprise-zone-will-generate-mini-city-with-10500-jobs
Airlines and Aircraft Futures
Impact of Consolidation Top left: http://www.nationalturk.com/en/wp-content/uploads/2009/11/iberia-british.jpg
• The airline industry continues its consolidation trend: in Europe things started with the Air France-KLM merger in 2004, soon followed by Lufthansa-Swiss. • The action continues with SN Brussels, BMI and Austrian taken over by Lufthansa, Air France-KLM buying a significant stake in Alitalia and getting full control of the Dutch leisure and cargo airline Martinair and FlyVLM. • British Airways and Iberia have completed a merger. • Airlines are likely to continue consolidating aligning their products for their passengers: pricing, loyalty programs, joint check-in areas. Impact of Consolidation
Shifting the Goalposts http://chairblog.eu/wp-content/uploads/2008/02/singapore-airline-seats-00.jpg
Shifting the Goalposts • Booz suggests ,that ‘…airlines must take an objective, data-driven look at their business models and cost structures, challenge existing assumptions, and provide CEOs and program managers with the analysis they need to take decisive, innovative, and informed action. • One measurement whose validity should be actively questioned is the ubiquitous metric of the airline industry, cost per available seat mile (CASM). Although it is an interesting data point, CASM is not the most relevant gauge for determining the success of an airline’s business model because it focuses solely on the cost of supply and not on demand. We believe that a better metric would be cost per passenger seat mile, which would calculate the expense of operating the seats that travelers are actually willing to purchase. Source: Booz & Co, 2008 http://www.booz.com/media/uploads/Future_of_Green_Aviation.pdf
Shifting the Goalposts • Examining operating costs through the prism of demand, and augmenting that data with CASM, would reveal the routes and schedules, types of travelers, and overall markets worth serving, as well as what types of aircraft to put into service. • One result of this approach could very well be a rethinking of the hub-and- spoke business model, a sharp rejection of the status quo that could produce vastly improved results for the industry. Source: Booz & Co, 2008 http://www.booz.com/media/uploads/Future_of_Green_Aviation.pdf
What if…? • The aviation industry now uses 5 million barrels of jet fuel every day. • The Air Transport Action Group predicts the biofuel share for aviation will be 15% in 2020, and 30% in 2030. • If this is either optimistic or insufficient, the industry could be in trouble. Source: Associated Content: Is there a future after peak oil? May 2010 http://www.associatedcontent.com/article/3018604/aviation_after_peak_oil_is_there_a.html?cat=15
Weight Reduction – a Core Priority http://www.inhabitat.com/wp-content/uploads/bordbar2.jpg http://www.jaunted.com/files/14943/ddairlineseats.jpg
Future Scenarios for the European Airline Industry (2015) Source: Leipzig Graduate School of Management: Center for Scenario Planning ‘Future Scenarios for the European Airline Industry.’ 2010
Future Scenarios for the European Airline Industry (2015) • Network Fortress describes a future, in which the European network carriers have regained a strong competitive position in both the long-haul and the intra-European market. The recession of 2008 and 2009 was followed by a quick economic recovery, which increased corporate travel budgets again in 2012. In turn, the demand for low-cost travel stagnated in favor of high quality and convenient travel, which led to growth in the more profitable business and first class segments. The growing long-haul market connecting Europe with the booming ASEAN region and China is dominated by European airlines, which can operate from a largely protected European market to which competition from Asia and the Middle East had only limited access to due to restrictive traffic rights legislation. Source: Leipzig Graduate School of Management: Center for Scenario Planning ‘Future Scenarios for the European Airline Industry.’ 2010
Future Scenarios for the European Airline Industry (2015) • Europe under Siege describes a world in which Asian and Middle Eastern competitors dominate the future of European network carriers. Despite growing business travel based on solid economic growth in Europe, the industry faces severe competition, also in its home market. However, low- cost carrier have not been able to continue their growth seen in the first decade of the new millennium as customers became increasingly aware of the total cost of flying low-cost. "New World", a new alliance by Middle Eastern and Asian airlines was formed in 2012 focusing on capturing the growing demand for high quality air travel around the world. The alliance also partners with a major European airline to gain easier access to the attractive European market. With their new fleet and superior service offering, the alliance has quickly gained market share and is expected to continue its growth. Source: Leipzig Graduate School of Management: Center for Scenario Planning ‘Future Scenarios for the European Airline Industry.’ 2010
Future Scenarios for the European Airline Industry (2015) • Decline of Champions describes a world that is characterized by declining European network carriers struggling to survive the intense local and global competition. While Europe and the United States of America are again in the middle of an economic crisis, Asia is flourishing. The recession in the western world has led to a shift in the mindsets of business and private customers towards a strong price orientation. European network carriers therefore are under heavy pressure from both European low-cost rivals and strong Asian and Middle Eastern competitors on long-haul routes. These companies have grown significantly in recent years due to favorable cost position, innovative product and high client recognition. Source: Leipzig Graduate School of Management: Center for Scenario Planning ‘Future Scenarios for the European Airline Industry.’ 2010
Future Scenarios for the European Airline Industry (2015) • New Horizons refers to a world in which Europe is still struggling with the aftermaths of the financial crisis, which originated in 2008 and 2009. Thus, business travel has been cut to a minimum as companies face severe cost pressure. In addition, an increasing market share of this shrinking segment is captured by low-cost airlines. While Europe is still faced with the aftermaths of an economic crisis, the ASEAN region together with China has developed into the most vibrant business area worldwide, which has increased the demand for long-haul flights to and from Asia tremendously over the last 5 years. These traffic flows are dominated by European carriers, which benefit from political protection of the sector in Europe and a growing customer sentiment to buy 'European'. Source: Leipzig Graduate School of Management: Center for Scenario Planning ‘Future Scenarios for the European Airline Industry.’ 2010
Cost Comparison of Carriers Source: Leipzig Graduate School of Management: Center for Scenario Planning ‘Future Scenarios for the European Airline Industry.’ 2010
Future Scenarios for European Airline Industry Source: Leipzig Graduate School of Management: Center for Scenario Planning ‘Future Scenarios for the European Airline Industry.’ 2010
Scenario: Network Fortress Source: Leipzig Graduate School of Management: Center for Scenario Planning ‘Future Scenarios for the European Airline Industry.’ 2010
Scenario: Europe Under Siege Source: Leipzig Graduate School of Management: Center for Scenario Planning ‘Future Scenarios for the European Airline Industry.’ 2010
Scenario: Decline of Champions Source: Leipzig Graduate School of Management: Center for Scenario Planning ‘Future Scenarios for the European Airline Industry.’ 2010
Scenario: New Horizons Source: Leipzig Graduate School of Management: Center for Scenario Planning ‘Future Scenarios for the European Airline Industry.’ 2010
Impact/Uncertainty Grid for European Airlines Source: Leipzig Graduate School of Management: Center for Scenario Planning ‘Future Scenarios for the European Airline Industry.’ 2010
Training Needs • Boeing predicts that nearly half-a-million new pilots and almost 600,000 in support-staff will need to be trained by 2030 years to accommodate higher travel demand – up from about 233,000 pilots and 100,000 mechanics/engineers who are currently employed by airlines worldwide. • About 40 percent of this increased demand will come from the Asia-Pacific region. China alone will need 70,600 new pilots over the next 20 years. • Boeing also forecast that on the whole airlines will buy 30,900 aircraft valued at $3.6 trillion between 2010 and 2029, with more than two-thirds of that demand for smaller single-aisle jets such as Boeing's 737 and Airbus' A320. Source: IB Times, September 2010 http://www.ibtimes.com/articles/63951/20100920/airlines-recession-pilots-boeing.htm
Political/Market Pressures http://www.american.com/archive/2008/december-12-08/should-we-privatize-airports/FeaturedImage
Airport of the Future: Roadmap to 2025
Airport of the Future: Roadmap to 2025
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Airport of the Future: Roadmap to 2025
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Airport of the Future: Roadmap to 2025
Airport of the Future: Roadmap to 2025
Airport of the Future: Roadmap to 2025
Airport of the Future: Roadmap to 2025

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Airport of the Future: Roadmap to 2025

  • 1.
  • 2. Airport 2025 Workshop – Developing a Roadmap to the Future Rohit Talwar CEO – Fast Future rohit@fastfuture.com FTE Vancouver - September 4th 2012
  • 3. Contents Presentation p 4 About Fast Future p 115 Background Notes p 126 Image Sources p 380
  • 4. Key Themes • Macro Drivers – Major Trends – Customer Insights – Aviation Landscape • Designing the Airport Experience – Technology – Industry Strategies and Tactics – The Passenger Journey – Design Implications • Extending the Experience – Retail, Dining and Leisure – Ancillary Revenues – Customer Relationships • Embedding the Future
  • 5. How do we get there from Here? Research & Innovation Understand the Drivers New Business Models
  • 6. Discussion • What are the critical strategic challenges and choices your airport (or organisation) will face: – In the next year? – In the next five years? – To 2025 and beyond?
  • 7. Emerging Trends and Developments • Which external trends and developments could create the biggest opportunities and challenges for your organisation? • How might they affect you?
  • 8. Our Research suggests airports need to see themselves an as ecosystem - An integrated portfolio of models
  • 9. ‘Future Proofed’ Organisations Work on 3 Horizons in Parallel 4-10+ Years Creating the Future 1-3 Years Drive for Growth 1-12 Months Operational Excellence
  • 10. Future Proofing the Business MasteryMarkets Models Magic Management Mindset Muscle Message
  • 11. Markets – Where Will Future Business Come from?
  • 12. Demographic Destinies 2 billion more people in 40 years – Demographics is Driving Economics 1998 448 691 729 5231 4216 740 1051 346 596 Source : United Nations2011 2050
  • 13. Markets - Life Redefined Lifespans are Increasing Under 50’s have 90% chance of living to 100. Aubrey de Grey suggests we could live to 500 or 1000 What are the health, housing, consumption and resource implications? What kind of opportunities will be created?
  • 14. Mastery – What do we Really Need to Understand?
  • 15. The World in 2025
  • 16. Length of time required to complete core activities from check-in to boarding Intrusive security procedures Thought of missing a flight Which features of the airport environment do you find to be most unpleasant or stressful?
  • 17. Which factors contribute the most to your emotional wellbeing in the airport? Speed and simplicity of the check-in process Speed and convenience of the security process Speed of baggage delivery Reliability e.g. flight punctuality
  • 18. Tomorrow’s Traveler - Demographics • Over 60’s in developed economies to rise from 22- 33% from 2009 and 2050. • In developing world, from 9 to 20% • Global retirement market 2010-2020 could grow from $28 - $46 Tn • Global middle class could rise from 430M to 1.2 Bn (2000 – 2030)
  • 19. • By 2020, Asian consumers could account for over 40% of global middle class consumption • By 2030 Asian consumer spending could hit $32 trillion • By 2014 female wealth could reach $18 trillion • Females could control 70% of global consumer spending Tomorrow’s Traveler – Spending Patterns
  • 20. Traveller Mindsets  Too Busy To Care  Complex Lives, Pressurised Finances  Craving Simplicity  Wealthy and Hard to Please
  • 21. Buying Behaviour • Mobile • Low loyalty • Multiple searches and site visits • Word of mouth critical • Value conscious – price, offers, rewards • Shorter trips • Shorter notice
  • 22. Traveler motivations will become increasingly fragmented and diverse and harder to segment into clearly definable customer groupings 604 Respondents
  • 23. Very likely Likely Unlikely Very unlikely I will book the bulk of my travel online in 2015 64% 31% 3% 2% 74% - Will use Social Networks to Research and Find Deals
  • 24. Airport Expansion by 2020 China from ~150 to 244 India from ~100 to 140 Today - US – 3 Seats per head / China 0.3 / India 0.1 Asia – a third of all flyers (2013) and travel spend (2020)
  • 25. 38% Believe there will be under 100 US Airports by 2015 39% think there will only be airports in Major European cities by 2015
  • 26. Low Cost Carriers by 2015 64% think half will collapse 49% expect massive growth
  • 27. 62% think viable new business models and airlines will emerge by 2015
  • 28. Industry Scenarios Passenger Price Sensitivity Low Low High High Business Model Innovation Uncharted Territory Paranoid Survive Back to the Future Crash and Burn
  • 29. Possible Emergence of Asset-Free Virtual Airlines
  • 30. The Ultimate in Collaboration? Sharing of Aviation Profit Pools
  • 31. Core Technologies Used by Pioneers Now Pioneered by 2015 Pioneered by 2025 Personal Technology Mobile phones 3G / 4G smartphones Augmented reality Gesture recognition Intelligent software assistants Mind control headsets 3D displays (Glasses free) Intelligent interfaces Flexible screens Digital currency 5G phones Biologically embedded electronics Eyewear embedded screens Intelligent brain-computer interfaces Streamlining the Passenger Journey Biometrics –voice / facial / handprint recognition Quick-response (QR) codes RFID Interactive displays Near field communications (NFC) Temporary airports Biometric signature – heartbeat pattern Body language recognition Robotics and automated services Virtual airports NFC integrated into all travel documents and passports Use of human genomic profiles Enhancing the Passenger Experience Social media Passenger-polling systems Hybrid platforms (i.e. Google Wave) Interactive surfaces Virtual worlds Vertical farming (basic) Next generation cinematic experiences: 6D and beyond Real-time language translation Reality mining Wearable displays Immersive web 3D printing Biomimetic Design Haptics technology Touchable holograms Vertical farming (advanced) Information and Communications Technology (ICT) Infrastructure Wireless broadband Cloud computing Telepresence Big Data Machine learning Ambient / Embedded intelligence – the ‘Internet of Things’ Grid computing MANETS (Mobile Ad-hoc NETworks) Swarm intelligence Intelligent web Semantic web Machine vision Optical computers Collective intelligence
  • 32. Telephony • Voice • Messaging • SIM card • Phonebook • Ring Tones • Security Connectivity • Cellular • Up to 14 bands • WLAN/BT • GPS • NFC • FM Data/ Enterprise • 100Mbps • Email • IMS • Browsing • VPN • PIM • Ecommerce • Payments Software • Protocols • Middleware • Applications • User Interface • Minimize fragmentation Multimedia • Camera 8-16M • Camcorder • 24M Color Display • Memory (160GB) • Multiformat A/V • HD Video/TV out • Games (50-100M Tps) • DRM TMT – Convergence and Immersion
  • 33. Next Generation Smart Phones • Concierge / Schedule Management • Check in • Notifications / Directions • Route Management • UGC • Wallet • Location Based Offers • Dynamic Rerouting • Personal Networking
  • 34. AR at Copenhagen Airport
  • 35. Apps – What I Want, When I Want Source: Forrester 66-71% of travel management spenders say their travellers use mobile technologies
  • 36. T-Rays and The VIRTUS Chipset 1.5 - 2 gigabit / sec (~1000 x Bluetooth) Enabling wireless display, mobile-distributed computing, live HD video streaming, and real-time interactive multi-user gaming
  • 37. Mobile Technology Advances are Enabling Personalised Advertising
  • 38. Muscle – Key Survival Capabilities
  • 40. Speed of Execution e.g. Ultra-Quick Construction
  • 41. Research at ‘cutting edge of technological media innovation’ e.g. human-computer interaction, augmented reality, online gaming, internet television and semantic text processing Rapid Innovation e.g. Naspers' New Media Lab (“Fail fast and cheaply” – Koos Bekker, CEO)
  • 42. Emerging Trends and Developments • Which external trends and developments could create the biggest opportunities and challenges for your organisation? • How might they affect you?
  • 43. Future Proofing the Business MasteryMarkets Models Magic Management Mindset Muscle Message
  • 44. Magic – Creating the Wow Factor
  • 45. Magic – Ideas that Delight E.g. Virtual Grocery Shopping – Tesco South Korea
  • 47. Magic: Rethinking Service e.g. FacePort and InfoGate
  • 50. Management Models for Tomorrow’s Airport System • Governing Concept • Infrastructure • Revenue Generation • Financing • Customer Engagement • Service Delivery
  • 52. Conceptual Model - The airport of 2025 will most resemble? A mini-city, separate from its local surroundings An extension of the local city A shopping mall with runways Bus Stop - A walkway to pass through security
  • 53. What additional developments would you like to see in the airport experience by 2025? Sense of placeMake the airport/flying part of the experience Restore the sense of glamour w/ air travel Interesting activities to occupy you
  • 54. Glocal To develop a distinct brand identity, airports will need to feel more like the city or location they serve selling local goods, food and beverages and providing information on the local area 785 respondents 0% 10% 20% 30% 40% 50%
  • 55. Infrastructure Models - Sustainable, Fast Build, Flexible, Modular and Temporary Terminals
  • 56. Infrastructure Financing – Access is Key ‘Usership’ vs. Ownership
  • 57. By 2025, which of the following would you expect to be standard in the airport environment? Zero or low environmental and energy footprint, recycling all waste to create heat and power Tight integration of the airport with its local community Premium terminal facilities for first and business class travelers – distinct from frequent flyers
  • 58. Revenue Models - Multiple Streams and Pre-emptive Solutions
  • 59. Revenue Generation Models In an increasingly uncertain economic environment with volatile fuel prices, airports will be under constant pressure to reduce or eliminate landing charges for airlines and fund themselves through other commercial income such as retail and leisure. 781 respondents 0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
  • 60. Leveraging Customer Insight – What retail developments would most encourage you to do your shopping at the airport rather than elsewhere? Discount outlet stores Themed retail (e.g. reflecting local region) Greater use of discounts, sales and best price guarantees
  • 63. How do you see technology being integrated into your airport shopping experience? Multichannel – search online, try in store, buy via mobile Personalized advertisements and discounts QR code store windows – purchase by mobile and collect on return / home delivery Collection on arrival of goods purchased from online-only retailers
  • 64. Branding To encourage people to increase time spent at the airport, they will need to become an immersive space that enables interaction with multiple cultures and evokes the local culture, architecture, ecology, biology, commerce and worldviews. 786 respondents 0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
  • 66. Daily Social Media Offers e.g. Twitter
  • 67. All Inclusive By 2025, to survive commercially, airports will increasingly try to be retail, dining and leisure destinations in their own right and seek to attract non- flying customers as well. 783 respondents 0% 5% 10% 15% 20% 25% 30% 35% 40%
  • 68. Models - Continuous Innovation E.g. Auctions £3088 £8791.50 £81
  • 69. Financing Models • Ecosystem • Community • Public-Private Partnership • Securitisation • Diaspora
  • 70. Designing the Airport Experience • What would we like to see in place by 2025? – Experience – Core Processes – Service – Security – Enabling Technology – Physical Design
  • 71. Customer Engagement – Deep Personalization
  • 72. With airlines, airports, retailers and restaurants all wanting to communicate with customers via their mobile devices, how will customers respond? I will accept information and offers from everyone who I have authorized As the customer I will define the extent of the engagement each entity can have with me I will only accept critical information updates
  • 73. Which technologies would you be most comfortable using to provide information to you in the airport environment? My mobile device (e.g. phone, tablet, laptop) Interactive computer displays and surfaces integrated into the airport architecture to reduce clutter and provide instant customer support Automatic language translation at all electronic contact points
  • 74. Customer Engagement – What critical information and communications would you most like to receive to your mobile device? Important airport and flight info Notification of gate opening / flight boarding Offer alternate routing on flight cancellation Compensation offers and coupons
  • 75. What are the key ways in which you would like airports to use social media? Providing important information to customers Listening to customer improvement ideas Rewards for frequent travelers / shoppers Providing real-time customer feedback to staff
  • 76. How do you see your approach to using technology evolving over the period to 2025? I will be using fully intelligent interfaces to the web I will control the flow of digital information to me I will control who has access to my personal data
  • 77. What key characteristics would you look for in leisure experiences offered at the airport? Spaces dedicated to local culture and reflecting the city / region Unique experiences Space for reflection Experiences that integrate education and entertainment
  • 78. Which of the following entertainment experiences would you find most compelling and attractive in the airport environment? TV lounge /movie theatre Regularly updated temporary exhibits Art galleries and museums Music / live theatre performances
  • 79. Which of the following physical leisure experiences would you find most compelling and attractive in the airport environment? Short stay hotels e.g. 2 hours Spa treatments Children’s Play Areas Space to re-connect with nature
  • 80. What food and beverage options would encourage you to dine at the airport? Low cost options International food selection Locally sourced food
  • 81. Service Delivery - Rethinking the Airport Experience
  • 82. Service is the ‘Killer App’
  • 83.
  • 84. Service Delivery Model – Start with Customer Journeys and Experiences  Stimulus / Search / Booking  Transport to and from the Airport  Check in to Flight Departure  Flight Arrival to Airport Exit  Flight Transfer - Arrival to Departure  Airport Experience  In Flight Experience  Relationship Management
  • 85. <Plaza aankomst> <Picture> Sub process KPI Score Sub process KPI Score ▪ Traffic information ▪ Traffic jams ▪ Entering Plaza ▪ Clarity ▪ Off airport flight information ▪ Services; rental, parking ▪ Arrival at airport by car/train ▪ Accessibility ▪ Parking ▪ Price/Quality LT ▪ Departure from airport by bus/train ▪ Accessibility ▪ Transport from parking to Plaza ▪ Ease of wayfinding ▪ Retrieving car & Leaving airport 41%73% ▪ Leaving Plaza ▪ Clarity 91% / 90% 90% 90% / 80%77% 77% Mapping Customer Journeys & Experiences
  • 86. • Number of mobile subscribers could rise from 4Bn to 5Bn 2009-2015 • Mobile data traffic to rise 300- fold by 2015 (Nokia). • By 2020 the range and nature of interaction technologies / customer ‘touch points’ will expand dramatically. • ‘Go nowhere’ gamers • Personal genetic profiles Tomorrow’s Traveler – Technology
  • 87. What developments would you most like to see in your journey through the airport over the next five years? Use my mobile phone to check in and navigate me through all touchpoints e.g. boarding gates Remote check-in and bag collection Use my frequent flyer card as a permanent boarding pass Permanent electronic bag tags for frequent fliers
  • 89. Which technologies would you be most comfortable using to identify you in the airport environment? Smart identity cards Electronic passports Location based services Electronic tags (e.g. built into my frequent flyer card)
  • 91. Next Gen Qantas Check-In
  • 94. Which of the following security and border (passport) control / immigration solutions would you most like to see? Improving security whilst lessening its impact on travelers Preferred / safe / secure passenger options i.e. pre- screening of frequent travelers for faster security checks Use of biometrics (e.g. finger print, iris or facial recognition)
  • 96. Catering, Lounge and Service Experiences
  • 97. What kinds of personal and business services would you find attractive or valuable? Banking and financial services Conference and meetings facilities to rent by the hour Health and wellbeing e.g. rapid health checks
  • 98. Minimising Journey Times and Aircraft Turnaround
  • 100. As the airport becomes more of a leisure proposition, who is best positioned to manage the delivery of the total passenger experience? Airlines New groupings combining multiple players Airports
  • 101. Designing the Airport Experience • What would we like to see in place by 2025? – Experience – Core Processes – Service – Security – Enabling Technology – Physical Design
  • 102. Mindset - 3 Horizon Thinking • 12 Months • 1-3 Years • 4-10+ Years
  • 103. Mindset – Foresight and Insight e.g. ‘Horizon Scanning’ and Timeline Development by Sector
  • 104. Mindset – Broad Scans and Deep Dives
  • 105. Mindset – Extending the Experience
  • 106. Mindset – Uncertainty Tolerant, Experimental, Curious, Sticky and Magnetic
  • 107. Management - So How Can we Respond?
  • 108. Management - Lead or Follow?
  • 110. Management - Make Time and Space for Change and Tackle Complexity • Customer Interface • Process • Organisation • Information / Systems • Regulatory • Human
  • 111. The Journey to 2025 • Continuous research • Define change roadmaps – passenger journeys and experiences, operations and technology • Experiment • Develop uncertainty tolerant management
  • 112. Conclusions • Huge untapped potential • Think about the ‘total business system’ • Technology is a key enabler • Encourage innovation and curiosity • Work with and for tomorrow’s passenger
  • 113. Extending the Experience How could we evolve our ‘experience’ offering, deepen customer relationships and encourage them to spend more time (and money) at the airport? 1. Retail 2. Dining 3. Leisure 4. Experience 5. Social Media 6. What Additional Revenue Streams Could we Develop?
  • 114. Thank You Rohit Talwar CEO Fast Future rohit@fastfuture.com Tel +44 (0)20 8830 0766 Mob +44 (0)7973 405145 Twitter http://twitter.com/fastfuture LinkedIn http://www.linkedin.com/in/talwar www.fastfuture.com www.convention-2020.com Blog http://widerhorizons.wordpress.com Signup for our newsletters / Download past editions at www.fastfuture.com Watch a short video of Rohit at http://www.travelmole.tv/watch_vdo.php?id=14300 Download the Hotels 2020: Beyond Segmentation Report at http://www.amadeus.com/hotelit/beyond-segmentation.html
  • 116. Fast Future – Aviation and Travel Industry Services • Live Events - Speeches, briefings and workshops for executive management and boards of airlines, airports, hotels, venues, CVB’s and associations • Future Insights - Customised research on emerging trends, future scenarios, technologies and new markets • Immersion - ‘Deep dives’ on future trends, market developments, emerging issues and technology advances • Strategy - Development of strategies and business plans • Innovation - Creation of business models and innovation plans • Engagement - Consultancy and workshop facilitation
  • 117. Fast Future • Research, consulting, speaking, leadership • 5-20 year horizon - focus on ideas, developments, people, trends and forces shaping the future • Clients – Airports - Aeroports de Paris / Schiphol Group – Vancouver Airport Services – Industry Associations – ICCA, ASAE, PCMA, MPI – Corporates - GE, Nokia, Pepsi, IBM, Intel, Orange, O2, Siemens, Samsung, GSK, SAPE&Y, KPMG, Amadeus, Sabre, Travelport, Travelex, ING, Santander, Barclays, Citibank, DeutscheBank – Governments - Dubai, Finland, Nigeria, Singapore, UK, US – Convention Bureaus – Seoul, Sydney, London, San Francisco, Toronto, Abu Dhabi, Durban, Athens, Slovenia, Copenhagen – Convention Centres – Melbourne, Adelaide, Qatar, QEIICC – Hotels - Accor Group, Preferred, – Intercontinental – PCO’s - Congrex, Kenes
  • 118. Hotels 2020 – Objectives • Identify key drivers of change for the globally branded hotel sector over the next decade • Examine the implications for:  Hotel strategy  Brand portfolio  Business models  Customer targeting  Innovation
  • 119. • Global strategic foresight study to help the meetings industry prepare for the decade ahead - Industry-wide sponsors • Multiple outputs Nov 2009 – December 2011 • Current studies on future strategies for venues and destinations Convention 2020
  • 120. Future Convention Cities Initiative • Members - Cities aiming to be global leaders in delivery of business events • Focus - Maximising long term economic benefit of events • Core Activities - Research, sharing of expertise and best practices • Engagement Model - Meet four time a year prior to major industry events • Management - Initiated and co-ordinated by Fast Future
  • 121. Rohit Talwar • Global futurist and founder of Fast Future Research. • Award winning speaker on future insights and strategic innovation – addressing leadership audiences in 40 countries on 5 continents • Author of Designing Your Future • Profiled by UK’s Independent Newspaper as one of the Top 10 Global Future Thinkers • Led futures research, scenario planning and strategic consultancy projects for clients in telecommunications, technology, pharmaceuticals, banking, travel and tourism, environment, food and government sectors • Clients include 3M, BBC, BT, BAe, Bayer, Chloride, DTC De Beers, DHL, EADS, Electrolux, E&Y, GE, Hoover, Hyundai, IBM, ING, Intel, KPMG, M&S, Nakheel, Nokia, Nomura, Novartis, OECD, Orange, Panasonic, Pfizer, PwC, Samsung, Shell, Siemens, Symbian, Yell , numerous international associations and governments agencies in the US, UK, Finland, Dubai, Nigeria, Saudi Arabia and Singapore. • To receive Fast Future’s newsletters please email rohit@fastfuture.com
  • 122. • 50 key trends • 100 emerging trends • 10 major patterns of change • Key challenges and choices for leaders • Strategic decision making framework • Scenarios for 2012 • Key futures tools and techniques • Published August 2008 • Price £49.95 / €54.95/ $69.95 • Email invoice request to rohit@fastfuture.com Designing Your Future Key Trends, Challenges and Choices
  • 123. Our Services Bespoke research; Identification & Analysis of Future Trends, Drivers & Shocks Accelerated Scenario Planning, Timelining & Future Mapping Identification of Opportunities for Innovation and Strategic InvestmentStrategy Creation & Development of Implementation Roadmaps Design & Facilitation of Innovation, Incubation & Venturing Programmes Expert Consultations & Futures Think Tanks Personal Futuring for Leaders and Leadership Teams Public Speaking, In- Company Briefings, Seminars and Workshops
  • 124. Example Projects • Public and private client research e.g. : – Reinventing the Airport Ecosystem – Development of Market Scenarios, emerging trends and strategies for key clients – Government and OECD Scenario Projects – e.g. Migration 2030, Future of Narcotics, Chemical Sector, Family 2030 – Scenarios for the global economy for 2030 and the implications for migration – Designing Your Future (Published August 2008) – book written for the American Society of Association Executives & The Center for Association Leadership – Global Economies – e.g. The Future of China – the Path to 2020 – The Shape of Jobs to Come – Emerging Science and Technology Sectors and Careers – Winning in India and China – The Future of Human Resources – Exploiting the Future Potential of Social Media in UK Small to Medium Enterprises – Convention 2020 – the Future of Business Events – Future Convention Cities Initiative – Maximising Long-term Economic Impact of Events – One Step Beyond – Future trends and challenges for the events industry – Hotels 2020: Beyond Segmentation – Future Hotel Strategies – The Future of Travel and Tourism in the Middle East – a Vision to 2020 – Future of Travel and Tourism Investment in Saudi Arabia
  • 128. Love is in the Air Road to Nowhere Suspicious Minds Dancing in the Dark GDP Growth India and China 8-10% 6-7% 1-2% Recession 0% 1-2% 2-3% GDP Growth Europe, the USA and Japan We need to Prepare for Alternative Scenarios
  • 129. Derivatives – Market Value vs. Global GDP 760 700 605 69.8 14.2 4.33 0 100 200 300 400 500 600 700 800 Richard Duncan (June 2008) 2010 est Bankof International Settlements June 2009 est World GDP US GDP Chinese GDP US$Trillion Source: BIS, 2009 BIS - http://www.roubini.com/financemarkets-monitor/258502/___swap_tango________a_derivative_regulation_dance__part_1 2010 - http://www.newsmax.com/deBorchgrave/BankforInternationalSettlements-BIS-derivatives-MerrillLynch/2010/05/11/id/358672
  • 130. Public debt in 2020 (% of GDP) Source: Deutsche Bank Research ‘Public debt in 2020’ March 2010 http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000255134.pdf
  • 131. Economic Power Shifts GDP US$ The Top 20 in 2025? Source: IMF WEO 2009, PwC ‘the World in 2050 March 2008 edition
  • 132. Reorientation of global markets • Some 647 million air travelers — more than a quarter of the 2.2 billion passengers who flew worldwide — took to the skies in Asia in 2009, compared to the 638 million air travelers in North America, hitherto the traditional leader in global aviation. • By 2013, an additional 217 million travelers are expected to fly within Asia to push the region’s aviation market share to about one-third of the world market. • In the U.S. there are three aircraft seats per year for each of the 300 million people who live here. • China’s population of 1.3 billion is served by only 0.3 seats per person and India’s 1.1 billion population has only 0.1 seats available per person. • When Asians reach the stage of traveling as frequently as people in the U.S., that alone will triple the size of today’s global aviation industry. Source: Bay Area Travel Writers ‘Travel Trends: Asia Eclipses America in Aviation Markets — by Lakshman Ratnapala,’ March 2010 http://www.batw.org/news/industry-news/travel-trends_mar-2010/
  • 133. Future regions of multiple stress Source: Ministry of Defence ‘Strategic Trends Programme, Global Strategic Trends out to 2040,’ February 2010 http://www.mod.uk/NR/rdonlyres/D70F2CC7-5673-43AE-BA73-1F887801266C/0/20100202GST_4_Global_Strategic_Trends_Out_to_2040UDCDCStrat_Trends_4.pdf
  • 134. Source: Tourism Futures http://www.tourismfutures.net/insights/demographic
  • 135. Source: Tourism Futures http://www.tourismfutures.net/insights/demographic
  • 136. Source: Ministry of Defence ‘Strategic Trends Programme, Global Strategic Trends out to 2040,’ February 2010 http://www.mod.uk/NR/rdonlyres/D70F2CC7-5673-43AE-BA73-1F887801266C/0/20100202GST_4_Global_Strategic_Trends_Out_to_2040UDCDCStrat_Trends_4.pdf
  • 138. The Climate Change Challenge • How fast can CO2 emissions be reduced per unit travel? • How can we move towards convergence on the most effective way to reduce aviation climate change impacts? • How can we best address non-CO2 climate impacts? • Where are carbon emissions owned? Source: Henley Centre Headlight Vision ‘Managing the environmental challenges of growth in aviation Draft report of stakeholder event, Cambridge’ October 2006
  • 140. Travel in 2023 • A report by KPMG released in April 2008 ranked transport and tourism as the sectors least well prepared for climate change and among those most commercially exposed to the physical risks it presents. • Forum for the Future in its ‘Tourism 2023’ report of October 2009 partnered with companies like British Airways, Carnival UK, and Advantage Travel Centres to analyze the impact our ever-growing ecological footprint will have on travel. • The four scenarios under which we could progress: – 1) Boom and Burst – 2) Divided Disquiet – 3) Price and Privilege – 4) Carbon Clampdown Source: Forum for the Future ‘Tourism 2023,’ October 2009 http://www.forumforthefuture.org/files/Tourism_2023_full_report_web_version.pdf
  • 141. Source: Forum for the Future ‘Tourism 2023,’ October 2009 http://www.forumforthefuture.org/files/Tourism_2023_full_report_web_version.pdf
  • 142. Boom and Burst • A booming economy and high disposable incomes have fuelled a growth in travel worldwide. People travel further, more frequently, and at faster speeds than ever before. There are many new reasons to go abroad as global political stability and prospering economies have opened up the world to more commerce and visitors. • Rapid advances in technology have been crucial, such as the breakthrough in algae- based fuels. Dramatic improvements in efficiencies have allowed the transport sector just about to keep pace with new regulations and their impacts, such as the steadily rising global price of carbon. • Legally binding carbon targets are being met – but many are asking how long this can continue. Many destinations are suffering from serious overcrowding. Wilderness is perhaps the scarcest resource as road, rail, sea and air routes have brought mass tourism to the last corners of the planet. Source: Forum for the Future ‘Tourism 2023,’ October 2009 http://www.forumforthefuture.org/files/Tourism_2023_full_report_web_version.pdf
  • 143. Boom and Burst highlights • Tourists flock to see the ancient shrines and archaeological treasures of Iraq. • Massive protests spoil the opening of the Mount Everest Theme Park. • Tourism puts huge strains on infrastructure in popular destinations like New York, Paris and London. Visitors are herded between attractions with timed tickets. • High-tech ‘carbon scrubbers’ installed on the ground ‘clean the air so you can travel’. • Overcrowding in popular destinations has led to the rise of glamorous ‘campsites’, ‘pop up’ hotels with stackable modules, and floating resorts. • Fastest growing destinations: the Democratic Republic of Burma, Yemen, Beyond Botswana Plc (Privatised Special Economic Zone), Somalia, Argentina, Brazil, Antarctica, Near space voyages, Papua New Guinea, Kazakhstan. Source: Forum for the Future ‘Tourism 2023,’ October 2009 http://www.forumforthefuture.org/files/Tourism_2023_full_report_web_version.pdf
  • 144. Divided Disquiet • A toxic combination of devastating climate change impacts, violent wars over scarce resources and social unrest has created an unstable and fearful world. This has made travelling overseas an unattractive proposition. • Many destinations were unprepared for the impacts of a changing climate. More extreme weather events, rising sea levels, increased flooding and frequent droughts have battered some places, while food shortages and malnutrition, malaria, and conflict over resources like water and oil have wreaked havoc in others. • Visitors are highly selective in where and when they travel, cramming into a small number of destinations where overcrowding compounds the problems. • A breakthrough in affordable telepresence technology has proved surprisingly popular with businesses that are keen to cut costs. This resulted in drastically reduced numbers of certain air routes, closing them to many holidaymakers. Source: Forum for the Future ‘Tourism 2023,’ October 2009 http://www.forumforthefuture.org/files/Tourism_2023_full_report_web_version.pdf
  • 145. Divided Disquiet Highlights • ‘One flight per year’ policy for major US company encourages executives to cut costs with telepresence technologies. • Tour guides with a military background hired as part of a holiday package for extra protection abroad. • Rising sea levels force Government of Maldives to step up relocation plans to India. • Latest ‘hot’ holiday craze is massive resorts offering golf and skiing across sand dunes. • Eiffel Tower auctioned off to a multinational corporation as part of sponsored heritage plan. • Fast growing destinations: Norway, Ireland, Latvia, UK, Greenland Doomsday Park, Canada, Denmark, France, Sweden, The Estonian Army Base Experience. Source: Forum for the Future ‘Tourism 2023,’ October 2009 http://www.forumforthefuture.org/files/Tourism_2023_full_report_web_version.pdf
  • 146. Price and Privilege • A dramatically high oil price has made travel punitively expensive. Dwindling supplies and rising demand from the new economies of Asia have pushed energy prices into a series of sharp and unpredictable spikes. • The travel industry worldwide has been badly hit and aviation has shrunk dramatically. Fleet replacements have been slower than anticipated and the predicted efficiency gains could not keep pace. There have been mass redundancies across the travel industry and a period of dramatic consolidation across the world. • Although a small, elite market continues to fly regularly, the vast majority of people simply cannot afford the experience. The days of affordable travel are now just a nostalgic memory. • People who want to holiday abroad either save up for years and fly overseas or join the new mass market of overland connections. Pan-European rail, bus and sea networks offer the most cost-effective means of travel for most people. State-of-the- art super-hubs provide seamless connections between different parts of the comfortable and affordable system of overland travel. Source: Forum for the Future ‘Tourism 2023,’ October 2009 http://www.forumforthefuture.org/files/Tourism_2023_full_report_web_version.pdf
  • 147. Price and Privilege Highlights • Demonstrators take to streets in cities across the world demanding the ‘right to fly’. • Ukraine positions itself as the ‘Gateway to the East’ with new Kiev bus-rail megahub plan. • ‘Absolutely no frills’ airline sector from some non-EU countries offers standing room only and no cabin crew. • Banks offer holiday credit schemes allowing family and friends to save together for the annual trip. • Fastest growing destinations: Montenegro, France, Lithuania, Portugal, Germany, Central Europe Lakelands, SailRail breaks to Greece, Morocco, The Tropical Island Experience (Jersey), Ukraine. Source: Forum for the Future ‘Tourism 2023,’ October 2009 http://www.forumforthefuture.org/files/Tourism_2023_full_report_web_version.pdf
  • 148. Carbon Clampdown • Governments introduce tradable carbon quotas for all households as part bold plans to tackle climate change. Individual allowances are seen as the fairest way of allocating the ‘right to pollute’ equally. • The public has clamoured for tough action. Environmental impacts are increasingly felt. Although there has been no great shift in cultural values, support for regulation is high. • The economy is more localised, and disposable incomes are low. • Many holidaymakers are still keen to travel abroad, but perceptions of the purpose and real costs of travel have changed. Although distance is a key consideration, the reason for the holiday is crucial: what you are doing is more important than where you are. • Ethical travel is a new mass market, and the government encourages this with the carbon rebate for volunteering whilst abroad. Source: Forum for the Future ‘Tourism 2023,’ October 2009 http://www.forumforthefuture.org/files/Tourism_2023_full_report_web_version.pdf
  • 149. Carbon Clampdown Highlights • Major travel firm goes bust after massive boycott coordinated by a popular website over its environmental policy. • Red Cross Swarm uses social networks to send volunteers to disaster zones faster than official agency staff. • Peer-to-peer holidaying allows people to ‘swap lives’ with another family and spend a year in another part of the world. • Fastest growing destinations: Cornwall, Ukraine, Sweden, Mozambique Special Volunteer Zone, Lithuania, Northumbria, Cork, France, Slow Boat Community (registered to Guyana), Liverpool. Source: Forum for the Future ‘Tourism 2023,’ October 2009 http://www.forumforthefuture.org/files/Tourism_2023_full_report_web_version.pdf
  • 150. What does this mean? • Fast Company notes that ‘…the reality of vacationing in 2023 will probably be a combination of these scenarios, with high oil prices, disappearing wilderness, carbon quotas, and advances in air travel (i.e. biofuel-powered planes).’ Source: Fast Company ‘Tourism 2023 Imagines the Future of Vacations,’ October 2009 http://www.fastcompany.com/blog/ariel-schwartz/sustainability/tourism-2023-imagines-future-vacations
  • 151. Future of Travel and Tourism • 1. Keeping it local. If trends in energy, economy, and environment continue, then traveling long distances for recreation will become more rare. In order for the resort community to maintain a market, they will need to cater more to a local clientele. This is captured in the concept of the 10-kilometer hotel, one whose prime customers come from the local area for a respite. • 2. Alternative transport. In 2009 a newspaper in Seattle featured a photo of a local organic farmer delivering his wares via sailboat to the docks in Seattle. He calls it the no-oil food. In the travel and tourism industry this kind of move will be and is being mirrored as people seek out non-motorized experiences like biking through France, or taking trips by sail. Over the longer term, again depending on how energy, environment, and economic trends play out, it is likely that tourists will seek out slower, less energy intensive, even zero-fossil fuel energy experiences. Source: Futurist ‘Future of Travel and Tourism ,’by Glen Hiemstra on 01/07/09 http://www.futurist.com/2009/07/01/future-of-travel-and-tourism/
  • 152. Future of Travel and Tourism • 3. Destination evolution. This trend is underway, as destination resorts focus on becoming greener and more sustainable, more local in their attraction, more astute in their use of information technology for advertising and for management, and more knowledgeable of market trends via research. • 4. New whys of travel. It is said that there is graffiti from ancient tourists on the monuments in Egypt. People have always and will always travel to see new places and people, even if they have to walk or ride an animal to do so. That is not going to change. But, one more time depending on how the converging trends play out, we may see a return to the why of travel being for two primary purposes – to visit family, and to seek new adventure. Business travel may decline as 3D-net technologies become robust, and distance travel may decline as economic and environmental imperatives demand. Local travel may fill the need for reconnecting with yourself and recharging the batteries. In fact making that a focus of what you offer in the travel and tourism industry may be one key to the future. Source: Futurist ‘Future of Travel and Tourism,’ by Glen Hiemstra on 01/07/09 http://www.futurist.com/2009/07/01/future-of-travel-and-tourism/
  • 155.
  • 156. Preference for Rail over Air 66% - Europe 18% - USA
  • 157. Trends • Concierge services are set to make a rise across the mid market travel sector according to Euromonitor International, who released their results for the 2010 global travel trends at the World Travel Market in November 2009 • Kuoni are one company set to offer customers concierge options. Andrea Mueller, Communications Manager for Kuoni said; "Today people are overwhelmed by information on travel and tourism services and need more guidance. Concierge services will play and important role in helping them make intelligent choices based on their individual needs". Source: World Travel Guide, November 2009 http://www.worldtravelguide.net/news/3551/news/Global-travel-trends-2010.html
  • 158. Simple identity • The Global Financial Crisis (GFC) plummeted the value of the High Net Worth population by US $32.8 trillion or 19.5% according to the World Wealth Report (2009) published by CapGemini and Merrill Lynch, so the rich are less rich. • Writing in the Harvard Business Review, Paul Flatters and Michael Wilmott argue that in most developed economies pre GFC, that the precession consumer behaviour was the product of 15 years of uninterrupted prosperity, driven by growth in real levels of disposal incomes, low inflation, stable employment and booming property prices. • As such, new consumer appetites emerged in which the consumer could afford to be curious about gadgets and technology, in which tourists shelled out for enriching and fun experiences on exotic locations. Where they could afford several holidays a year and rent premium experiences such as hiring a Ferrari for the weekend in exotic locations like Japan. • The GFC changed that, propelling tourist trends into slowdown, halting or even reserving the trajectory of growth in world tourism. Source: Tomorrow’s Tourist ‘Simple Identity,’ 2009 http://www.tomorrowstourist.com/simple_identity.php
  • 159. Simple identity • So, is this a sample of the future, an era of the pension crisis, scarcity of oil, inflation and falling levels of disposal income in which tourism expenditure falls year on year? • If so, what will the future tourist look like? Rather than having a fluid identity it will be more akin to simplicity. • During an economic slowdown, tourists tend to travel less, stay nearer home (increase in domestic tourism) and seek simplicity such as exploreworldwide.com value based holidays focusing on basic facilities, meeting locals, lots of free time and cheap in exotic locations throughout the world. This trend is accelerated in a scenario of falling incomes as a simple and functional product that will suffice. A simple identity means that offering advice becomes extremely important, whether its website's farecast.com’s ,which advises travellers of the optimal time to purchase an airline ticket or price comparison technologies which are found on many online booking services. Source: Tomorrow’s Tourist ‘Simple Identity,’ 2009 http://www.tomorrowstourist.com/simple_identity.php
  • 160. Simple identity • Research by the Trajectory Group highlights that affluent consumers have revealed mounting dissatisfaction with excessive consumption. Many desire a wholesome and less wasteful life. As such, there is a desire to get back to nature, something that is tranquil, basic, rooted, human and simple (Yeoman 2008). As a consequence, the desire for more authentic and simple luxury experiences accelerates. An example of simple luxury, are tree house hotels which offer a unique experience in a natural setting. A new experience which is not seen as conspicuous consumption, but overtly inconspicuous. • In a simple identity, ethical consumption declines as paying a premium for a Starbucks coffee falls by the wayside, even if they use organic coffee which supports children in a third world country. From a tourism perspective, many of the ethical tourism projects in third world countries such as Africa and India which depend on independent travellers will suffer. Source: Tomorrow’s Tourist ‘Simple Identity,’ 2009 http://www.tomorrowstourist.com/simple_identity.php
  • 161. Simple identity • Tourists also have become canny at searching for bargains which economists call mercurial consumption, whether it is using price comparison software, or grabbing last minute offers from websites such as grabaseat.co.nz which offer last minute air travel deals to New Zealand consumers, or 5pm.co.uk which offers diners the chance of discounted meals after 5pm that evening. Technology and social media network enabling purchasing strategies, further accelerate this trend of mercurial consumption. • Attitudes to travel also change, as tourism has to compete with other forms of leisure expenditure, whether it is the latest technology gadgets or virtual holidays. There is a generation of Japan youth who prefer their X-Box than climbing Mt Fuji. The desire for new experiences is more about insperience, where technology provides a better experience than in which consumers desire to bring top level experiences into their domestic domain. • A simple identity is all about simplicity seeking, thrift, green yet mercurial tourists will hold tourism business and brands accountable. In a world of scarcity of resources this scenario becomes the norm. Source: Tomorrow’s Tourist ‘Simple Identity,’ 2009 http://www.tomorrowstourist.com/simple_identity.php
  • 163. Market Pain Points • Research on passenger dissatisfaction reflects the obvious issues that make air travel difficult. Three main areas represent the majority of passenger complaints: service disruptions, long check-in lines and baggage issues. Through the adoption of new communication techniques and internal systems that take advantage of advanced technology and shared information, airlines and airports can improve their delivery of services focusing on these three primary passenger pain points. • Airlines and airports are challenged with updating their operational systems to eliminate unnecessary manual step whilst interconnecting existing information silos to better manage the entire passenger experience. Integration between Departure Control Systems (DCS), Passenger Service Systems (PSS), Baggage Reconciliation Systems (BRS), and airport services can provide improved passenger processing. Delivering services on advanced mobile devices will help all entities be more efficient and operate with lower costs. Source: Amadeus, 2011 http://www.amadeus.com/airlineIT/navigating-the-airport-of-tomorrow/docs/Amadeus-Navigating-the-Airport-Of-Tomorrow-2011-EN.pdf
  • 165. What Passengers Want • As a result of social media-inspired discussion, and with the assistance of London City Airport’s sales director, Bernard A. Lavelle, Future Travel Experience reveals the views of passengers themselves on what they really want from the airport of the future. • As outlined in the chart, the aspect that can most improve the passenger experience on the ground is high-quality signage, communications and staff, with almost a third of all respondents highlighting this as a vital passenger requirement. • The second most common request was free Wi-Fi in the terminal building, while improved facilities, processing and queues, and an enhanced security process are also prominent on the passenger wish list. Airport layout was also identified as an area that can make a telling difference to the overall passenger experience. Source: Future Travel Experience, May 2011 http://www.futuretravelexperience.com/2011/05/what-do-passengers-really-want/
  • 166. What Passengers Want Source: Future Travel Experience , May 2011 http://www.futuretravelexperience.com/2011/05/what-do-passengers-really-want/
  • 168. Tracking the rise of the middle class across the BRICs and N-11: Share of population with incomes between $6,000 and $30,000 in PPP terms (Goldman Sachs) 2009 (%) 2015 (%) 2025 (%) 2040 (%) Brazil 46 52 59 57 Russia 71 71 56 29 India 6 16 46 89 China 37 59 75 53 Korea 67 46 23 7 Bangladesh 0 1 5 38 Egypt 39 57 84 82 Indonesia 16 29 57 87 Iran 70 77 73 41 Mexico 61 65 65 49 Nigeria 6 9 18 42 Pakistan 9 13 22 49 Philippines 15 23 40 69 Turkey 79 81 70 35 Vietnam 7 21 51 84 Source: Goldman Sachs, August 2009 http://www2.goldmansachs.com/ideas/demographic-change/power-of-purse-doc.pdf
  • 169. Primed for More Travel Source: Airbus Global Market Forecast 2010-2029, December 2010 http://www.airbus.com/fileadmin/media_gallery/files/brochures_publications/Global_Market_Forecast/Airbus_Global_Market_Forecast_-_2010-2029.pdf
  • 170. Source: Airbus 2009 http://www.airbus.com/en/gmf2009/appli.htm?onglet=&page=
  • 171. Online bookings in Asia-Pacific, 2008 and 2011 2008 2011 Australia / New Zealand $6.2B $10.9B China $6.9B $13B India $3.1B $5.5B Japan $11.5B $17.7B Source: PhocusWright cited by Travel Weekly ‘China, India will lead region's online bookings boom’ January 2010 http://www.travelweekly.com/article3_ektid209470.aspx Source: PhoCusWright
  • 172. China consumer report • By the year 2020, China will have a population of more than 1.4 billion people that will make up a significant portion in the world's consumer market. • The annual disposable income of Chinese consumers is forecasted to increase to 65.4 billion Yuan (US$9.57 billion) by 2020 compared with 15 billion Yuan (US$2.19) in 2008. • The National Bureau of Statistics of China announced that the country would be considered a moderately affluent society by 2020, if development trends since the year 2000 continue. The estimate was made taking into account progress in the fields of the economy, social harmony, quality of life, democracy and law enforcement, culture and education, as well as resources and the environment. • Zheng Xinli, Vice-Minister of the Communist Party's central policy research office, said that taking price changes into account, 55% of the population will be middle class by 2020, with 78% of city dwellers and 30% of those in rural areas reaching that status. • Middle class is currently defined as having an annual household income of between RMB60,000 (US$8,700) and RMB200,000 (US$29,215). In 2008 prices, the annual disposable income per household will be RMB98,956 (US$14,900) in 2020. Source: Euromonitor 2009 http://www.euromonitor.com/Chinese_consumers_in_2020_A_look_into_the_future
  • 173. China and India entering era of travel • Dun Jidong, spokesman for the China Travel Service notes that GDP per capita has hit $3,000 in China, ‘…a level that industry experts agree sends a signal that the country is entering a stage of explosive growth in travel consumption.’ (1) Source: (1) China Daily January 2010 http://www.chinadaily.com.cn/china/2010-01/15/content_9323567.htm 2009 (%) 2015 (%) 2025 (%) 2040 (%) Brazil 46 52 59 57 Russia 71 71 56 29 India 6 16 46 89 China 37 59 75 53 Share of population with incomes between $6,000 and $30,000 (PPP terms) (2) Source (2): Goldman Sachs, August 2009 http://www2.goldmansachs.com/ideas/demographic-change/power-of-purse-doc.pdf
  • 174. Source: Goldman Sachs ‘Is this the ‘BRICs Decade’?’ May 2010 http://www2.goldmansachs.com/ideas/brics/brics-decade-doc.pdf
  • 176. International Passengers in 2014 Source: IATA 2010, Markets in 2014 http://www.iata.org/ps/publications/Documents/Example%20-%20Projected%20Top%2010%20International%20Markets%20in%202014.pdf
  • 177. Freight in 2014 Source: IATA 2010, Markets in 2014 http://www.iata.org/ps/publications/Documents/Example%20-%20Projected%20Top%2010%20International%20Markets%20in%202014.pdf
  • 178. Aviation in 2029 Source: Airbus Global Market Forecast 2010-2029, December 2010 http://www.airbus.com/fileadmin/media_gallery/files/brochures_publications/Global_Market_Forecast/Airbus_Global_Market_Forecast_-_2010-2029.pdf
  • 179. Future Demand • Passenger air traffic is forecast to double by 2030 as 12 billion of us take to the skies. So what will the massive airports of the future look like? • One theory being discussed is that the future city will be an “aerotropolis”, with the airport at its heart rather than stationed far away from the centre – important if the city is to connect effectively to the global economy. In much of the western world, airports were developed years ago, when air travel was a luxury form of transport for the privileged. Now, of course, it’s a mode of mass traffic, requiring different capacity solutions. • Songdo, South Korea, is an example of a city built from scratch at a cost of $40 billion with an airport in the centre. • Dubai is rapidly expanding its airport for A380 traffic, where first-class passengers on the building’s upper level will be able to transfer direct to the upper level of the A380 aircraft. Source: TTG Nordic, 2011 http://www.ttgnordic.com/news/item/429-a-look-at-the-super-airports-of-the-future
  • 180. Future Demand • Nearby in Dubai, another gigantic airport, Al-Maktoum International, will eventually have five runways and enough capacity to make it double the size of the biggest airport around today. The first runway is already operational for cargo and passengers will be able to fly there by the end of 2011. • But developers are wary of building a future airport that is too big, creating long distances for passengers to walk between flights and concerns over the logistics and security of having large numbers of people crammed together. The key to this is to arrange connecting transport links such as trains or cars to be as close as possible to the plane. • In the Middle East there seems to be an airport capacity race. In Europe, it’s the contrary; it is extremely difficult for many airports to develop enough capacity to handle the forthcoming explosion in air travel. Projects like Berlin Brandenburg Airport, due to open in 2012, are few and far between. China, by contrast, plans to build 78 new airports by 2020. In Europe, there are plans for five new airports by 2030. Source: TTG Nordic, 2011 http://www.ttgnordic.com/news/item/429-a-look-at-the-super-airports-of-the-future
  • 181. IATA Launches Vision 2050 • The International Air Transport Association (IATA) called on industry leaders to look beyond the crisis that buffeted the air transport industry over the last decade and to strategically define a sustainable future. • Giovanni Bisignani, IATA’s Director General and CEO, outlined his vision for aviation in 2050. “We will be very near to zero accidents. We will emit half the carbon. We will have eliminated queues with integrated systems ensuring security as we process more passengers. We will operate with almost no delays in globally united skies. We will share costs and profits equitably across the value chain. We will be a consolidated industry of a dozen global brands supported by regional and niche players. And we will deliver value to investors.” Source: IATA, June 2010 http://www.iata.org/pressroom/pr/pages/2010-06-07-02.aspx
  • 182. IATA Launches Vision 2050 • “In just over a decade, I can see $100 billion in industry profits on revenues of $1 trillion. As we move towards 2050, this 10% margin will become even more robust. This is not just a crazy dream. Before the recession, at least a dozen IATA members already had 10% margins. We must make this a much broader reality. Change in all areas is possible. This vision—including sustainable profitability—can be our future,” said Bisignani. • Bisignani’s vision for 2050 rests on four cornerstones of change: – Profitability – Infrastructure – Powering the industry – Customer Source: IATA, June 2010 http://www.iata.org/pressroom/pr/pages/2010-06-07-02.aspx
  • 183. IATA Launches Vision 2050 • Profitability: “Efficiency gains never make it to the bottom line because airlines are deprived of the commercial freedom to operate their businesses like a normal business. Our poor profitability makes every shock a fight for survival,” said Bisignani. He laid the blame on the industry’s hyper fragmentation with 1061 airlines as a result of the bilateral system which regulates the global aviation industry. The restrictions on international capital prevent consolidation across borders. “The restrictions of the bilateral system are a dam that holds us back. It is time for that dam to burst. Governments must act responsibly to ensure safety, security, and a level playing field. And airlines need the freedom to build efficiencies across borders, better serve their customers, and achieve sustainable profits to fund growth and innovation,” said Bisignani. Source: IATA, June 2010 http://www.iata.org/pressroom/pr/pages/2010-06-07-02.aspx
  • 184. IATA Launches Vision 2050 • Infrastructure: “Infrastructure must be reshaped around the needs of airlines—the core of the industry’s value chain. Airports should compete for airline business based on efficiency. Commercial revenues will drive their business. I can see airports paying airlines to bring shoppers and airport revenues funding the air traffic management system,” said Bisignani. • Air traffic management must also change. “I can see ten global air navigation service providers (ANSPs) replacing the current 180 at half the cost,” said Bisignani. The Single European Sky (SES) would be the first of the ten global ANSPs. “But we need real leadership to replace the uncoordinated bureaucratic mess that Europe is today,” said Bisignani, pleading for a date to achieve the $6.5 billion (EUR 5 billion) cost savings that the SES promises. “After 20 years of waiting, we are fed up. Heads of governments must set a date and deliver,” said Bisignani. Source: IATA, June 2010 http://www.iata.org/pressroom/pr/pages/2010-06-07-02.aspx
  • 185. IATA Launches Vision 2050 • Powering the Industry: “Today’s jet fuel cannot sustain air transport in the long-term. We must find a sustainable alternative and our most promising opportunity is bio fuels, which have the potential to reduce our carbon footprint by up to 80%,” said Bisignani. After successful testing by airlines, certification is expected within a year. Bisignani urged greater support from governments. “Too often governments are only committed to environment when it means grabbing cash. Governments should be investing in biofuels and green technologies. Local production with jatropha, camelina, algae, or even urban waste will open up economic opportunities in virtually any location. Not only will this secure a future power source for our industry, this will also break the tyranny of oil and drive economic development in all parts of the world. Source: IATA, June 2010 http://www.iata.org/pressroom/pr/pages/2010-06-07-02.aspx
  • 186. IATA Launches Vision 2050 • The Customer: “The customer is at the center of our future vision. By 2050, we will have 16 billion travelers and handle 400 million tonnes of cargo. In just a couple of decades, we will see the middle class nearly triple from the 1.3 billion today to 3.5 billion people—a quarter of which will be in India and China. Accommodating that growth efficiently will be a challenge for all parts of the value chain—airports, air navigation service providers, manufacturers and governments. The solution must be strategic and aligned,” said Bisignani. • Bisignani noted that the air transport industry must engage its 2.4 billion passengers to change government’s “over-regulate and under-appreciate” attitude. “To turn our customers into industry activists, we must improve the value proposition of price, speed, and quality. We have reduced the price of flying by 40% since deregulation. But as we made travel more accessible, speed and quality suffered. The infrastructure has not kept pace, resulting in delays both in the air and on the ground. New security procedures created new hassles. Our challenge is to gain the support of customers in demanding change from the governments,” said Bisignani. Source: IATA, June 2010 http://www.iata.org/pressroom/pr/pages/2010-06-07-02.aspx
  • 187. EUROCONTROL: Long Term Forecast • Future air traffic will be limited by capacity at the airports, 0.7-5.0 million flights will not be accommodated in 2030, 5%-19% of the demand. The congestion is now lower than in the forecast two years ago. The recent drop in traffic has given the system some extra years to react and adapt but once the limits are reached the number of unaccommodated flights increases quickly. Congested airports create pressure on the flow of operations in the network and will exacerbate delays. • Even with airport capacity restrictions airports will grow. In 2030, there will be 13-34 airports as big as the top 7 are now. Some of the faster growing East-European airports will join the top 25. European hubs will be faced with competition from hubs outside Europe, primarily in the Middle-East. Source: EuroControl, 2010 http://www.eurocontrol.int/statfor/gallery/content/public/forecasts/Doc415-LTF10-Report-Vol1.pdf
  • 188. EUROCONTROL: Long Term Forecast Source: Eurocontrol, 2010 http://www.eurocontrol.int/statfor/gallery/content/public/forecasts/Doc415-LTF10-Report-Vol1.pdf
  • 189. EUROCONTROL: Long Term Forecast Source: EuroControl, 2010 http://www.eurocontrol.int/statfor/gallery/content/public/forecasts/Doc415-LTF10-Report-Vol1.pdf
  • 190. Source: EuroControl, 2010 http://www.eurocontrol.int/statfor/gallery/content/public/forecasts/Doc415-LTF10-Report-Vol1.pdf
  • 192. Exploring the Airport of 2030 • The importance of generating non-aeronautical revenue streams has also had a major impact on the recent developments in the aviation sector, and Alan Lamond, aviation director, Pascall + Watson Architects, explained that this will continue to impact on future airport models. He said: “We are seeing increased commercialisation of airports and a realisation that you have to exploit the opportunities presented, and this is done in Western airports through very intensive retailing. What is increasingly becoming clear is that, for businesses, there’s a distinct commercial advantage in being based near an international airport. This means that the space around the airport becomes far more valuable.” Source: Airport Business, July 2010 http://www.airport-business.com/2010/07/exploring-the-airport-of-2030/
  • 194. Siemens Airport Lab • Inside Siemens airy, 90,000-square-foot glass and steel structure in Germany is an entire infrastructure of an airport, minus only the planes, runways and control tower. • Nearly every aspect of airport operations is tested and developed here, from high-tech baggage handling and fleet-management systems to wireless passenger check-in and 3-D security. • The airport center, built in 2005, houses real-time, check-in counters, a parking guidance system, a control center and a luggage conveyor with belt and tray conveyors stretching more than 6,000 feet. The baggage system can handle 30 million pieces of luggage per year. (In Germany, only Munich and Frankfurt airports have larger systems.) • On the passenger side of the terminal, a prototype system is being fine- tuned that would allow travelers to check in using only their mobile phones. Once a passenger makes a phone call to check in, the system then sends back a bar code that displays on the mobile phones screen. Special readers at the airport then scan and print out boarding passes. Source: ABC News, May 2010 http://abcnews.go.com/Travel/siemens-dreams-airport-future-germany/story?id=10629236
  • 195. Siemens Airport Lab • Also being tested in the lab are new fingerprint and facial-recognition systems as Siemens targets the ever-expanding need for better security at airports everywhere. • Iris scans, fingerprint-based IDs and 3-D face digitization are all being tested here as part of the company's development of cutting-edge recognition and security systems. • One area developed by Siemens that is already being employed at airports from Seoul to Denver is a baggage system that employs radio-frequency identification or RFID technology. • The RFID tags are applied directly to baggage and are a much more efficient way of identification and tracking luggage using radio waves. • More than 3.1 million missing baggage reports were filed in the United States alone in 2009, according to the Air Travel Consumer Report produced by the U.S. Department of Transportation. Source: ABC News, May 2010 http://abcnews.go.com/Travel/siemens-dreams-airport-future-germany/story?id=10629236
  • 196. Siemens Airport Lab • Siemens says the radio wave technology will eventually replace bar-code tracking systems now employed at many airports because it allows bags to be instantly updated with changes to a passengers flight or security status. That should drastically lower the risk of the dreaded lost luggage nightmare. • From check-in to loading on an aircraft it allows more useful data to travel along with the bag. • Airport systems make up about 2 percent of the company's $100.7 billion annual revenue. But that number is expected to rise as the need for better airport technology surges along with the number of air travelers. Source: ABC News, May 2010 http://abcnews.go.com/Travel/siemens-dreams-airport-future-germany/story?id=10629236
  • 197. Visions of the Future • EADS Innovation Works (IW), the corporate network of research centres of EADS, and Altran, an international advanced engineering and innovation consulting group, are jointly working on projects supporting the long-term evolution of the air transport industry. • The goal of a recent study was to create revolutionary airport concepts. EADS IW and Altran organised workshops with representatives of airlines, airports, air traffic management and aircraft manufacturers as well as representatives of other transport sectors. • It was recognised that, for short and medium flights, future passengers' experience will play a significant role in the competition between aviation and high-speed rail transport. • This research contributes to the goals set forth in the European Commission's report 'Flightpath 2050 - Europe's Vision for Aviation', whose target is for 90% of travellers in Europe to be able to complete their journey, door to door, within four hours. Source: Airport Business, June 2011
  • 198. Visions of the Future • Intermodal transfers will be seamless and final destinations are to be reached smoothly, predictably and on time while accommodating the increasing demand for air travel. 'These concepts put passengers at the heart of the air transport system. The result is a passenger-friendly experience and lean processes which we have labeled 'Friend- Lean Airport of the Future',' said Guy Gallic, head of the Technical Capability Centre 'Innovative Concepts and Scenarios' at EADS IW. 'In future, we will speak not only about infrastructure but about an 'extended door-to door experience'. • The airport terminal will become a lean step in the journey towards co-modal and connected travel,' explained Sebastien Renouard, Executive Director AeroSpace & Defence International at Altran. • On an average day in 2010, 6.5 million passengers flew an average of 2,000km on one of 14,000 commercial jets. • By 2050, the number of passengers per day will increase to roughly 44 million globally. Beyond 2040, the study aimed to find revolutionary airport concepts capable of handling 25-100 million passengers per year. Source: Airport Business, June 2011 http://www.airportbusiness.com/online/article.jsp?siteSection=1&id=45675
  • 199. Eye to the Sky http://sleeplessandtired.com/wp-content/uploads/2010/07/eye-in-the-sky.jpg
  • 200. Visions of the Future • The following three concept from EADSs were selected and elaborated in more detail. • The 'Eye to the Sky' concept. • The aircraft traffic area is located above the terminals, while the flow of passengers through the terminals to their planes is vertical. From arriving at the airport to reaching their seats on the plane, passengers use spiral ramps that link every level of the airport. This concept focuses not only on infrastructural design but also on solutions for guiding passengers through an augmented reality information system. A mobile device would connect to the airport network and act as a portable personal guide to help people find their way at the airport. Lean security systems based on new technologies would also be embedded. Source: Airport Business, June 2011 http://www.airportbusiness.com/online/article.jsp?siteSection=1&id=45675
  • 201. Visions of the Future • The 'Passenger Airport Shuttles (PAS)' concept. • With a predicted time of at most seven minutes to get from anywhere in the airport to any Skygate, passengers can choose to spend more time at the airport's central terminal facilities or they can arrive at the airport less than 10 minutes before departure and still catch their flight. • In this decentralised approach, passengers are moved in Passenger Airport Shuttle vehicles which are guided by an automated central airport control system. An identification function ensures that passengers and their travel data are recognised by the control system as soon as they board, and the vehicle then offers them a transportation and information service dedicated to their specific needs. Aircraft will be docked to a 'Skygate', a minimal building that forms the interface between the aircraft and the PAS. Baggage will be handled at the Skygate, reducing the baggage deposition and retrieval times to a minimum. Source: Airport Business, June 2011 http://www.airportbusiness.com/online/article.jsp?siteSection=1&id=45675
  • 202. Visions of the Future • The 'Extended Airport' concept • The Extended Airport concept addresses the vision of providing a door-to- door travel service in the literal sense by extending the transportation service so that passengers (or just their luggage) are picked up at their home or office. In this vision, air transport and airports are fully integrated with other transport modes. The proper competition and collaboration between modes of transport are ensured by a transport planner on the user interface where passengers can plan their trips. It will take many revolutions in the air transport sector to create solutions that deliver on the ambitious objectives set forth by the European Commission's FlightPath 2050. Source: Airport Business, June 2011 http://www.airportbusiness.com/online/article.jsp?siteSection=1&id=45675
  • 203. User Friendly Terminals • Munich Airport’s new InfoGates allow passengers to obtain quick and detailed information to help them navigate around the terminal. • Passengers using the InfoGate can simply push a button, which connects them immediately to an information service representative via videoconference. • Six InfoGates are already operational in the public and non-public areas of the airport, and 17 Interactive InfoGates are positioned at key crossroads throughout the terminals. • These consist of touch-screens mounted on pillars, offering a full range of information on services, shopping and dining at the airport. Source: Future Travel Experience, June 2011 http://www.futuretravelexperience.com/2011/06/munich-airports-infogates-offer-improved-wayfinding/
  • 204. Future of Airports • David Holm, Principal Architect, Woodhead, explained that retail, commercial, advertising and other forms of revenue generation will be crucial within the development of terminals of the future. Not only do these forms of commerce provide funding incomes, they also play a key role in crafting the unique character of the place and in enhancing the “total journey experience”. “It is our design view that retail and commercial developments and strategies must be incorporated at the earliest phases of project planning. In this way, the form of a new project is designed from the inside out in harmony with the outside in pressure applied by the equally crucial requirements of exterior aircraft planning,” he said. • At the Check-In 2010 Conference in Las Vegas, Holm referred to four key themes: Source: Future Travel Experience, March 2011 http://www.futuretravelexperience.com/2011/03/the-airport-of-the-future-2020-thinking/
  • 205. Future of Airports • Urban Catalyst – “Innovative civic and transport leaders are now seeing airports and their surrounding and supporting infrastructure, often referred to as airport cities, as the catalysts of urban growth and often regeneration; a key part of the ‘c21st polycity concept’.” • Civic Buildings – “The contemporary airport within the ‘c21st polycity’ is today’s crossroads celebrating trade and community gathering. As such the urban structure and the built forms of the airport must stand as civic buildings respected by the community and designed with a sense of community, flexibility and longevity.” Source: Future Travel Experience, March 2011 http://www.futuretravelexperience.com/2011/03/the-airport-of-the-future-2020-thinking/
  • 206. Future of Airports • Sense of Place – “Our design projects endeavour to make the subtle connection between context, place making and built form in order to weave our built form into the community within which it exists.” • Total Journey Experience – “The transport node, whether it be a domestic or international airport or multi-modal station, has existed as an evolutionary control at the edges of regions or borders. As such the node has performed a variety of functions, ranging from service industries to authority procedures. This variety of stakeholders has many functions to address, though all conjoined represent the overall brand and experience of the transport node.” • It appears clear that a consistent approach towards design provides the passenger with a coherent total journey experience throughout their incoming and outgoing experiences as a traveller. Source: Future Travel Experience, March 2011 http://www.futuretravelexperience.com/2011/03/the-airport-of-the-future-2020-thinking/
  • 207. Exploring the Airport of 2030 • The impact of a master plan, which often outlines a blueprint for the airport with a vision for the next two decades or more, is the most integral part of the planning process and can often provide an idea of how airports will continue to develop in the mid-to-long-term. • Curtis Fentress, principal-in-charge of design, Fentress Architects, said: “With master plans you almost need a crystal ball. You have to design for flexibility, which can accommodate for future needs even though you don’t know what these will be. Flexibility really is key and I think that because of this, you will see more airports with column-free buildings. At LAX we’ve designed large, column-free buildings so that we’re completely flexible for any future developments. This is even something that you can see in the design of Denver International Airport, which has just celebrated its 15th birthday.” Source: Airport Business, July 2010 http://www.airport-business.com/2010/07/exploring-the-airport-of-2030/
  • 208. The Intelligent Networked Airport • A passenger-sensing, self-organising unified network to track the location of every passenger and bag in the terminal will feature in future airports. • It’s not much fun sitting in an airport waiting for a plane. But might it be less of a chore if you could download your in-flight films in the departure lounge? Might you even pay for the service? If you find that airport bars usually serve the best antidotes to tedium, would you be glad to know that a nearby display can detect your presence, prompt you when your gate number changes and provide clear directions to it at drinking-up-and-boarding time? • It’s being developed by scientists from the University of Cambridge, University College London, and the University of Leeds. The idea is to tidy up the tangle of wired and wireless networks used in most modern airports by installing a single infrastructure that can handle GSM, 3G, Wi-Fi and RFID communications, as well as locating every person and piece of baggage in the building. Source: The Institution of Engineering and Technology, July 6th 2009 http://www.nytimes.com/2009/06/14/magazine/14searchgrimshawside-t.html
  • 209. The Intelligent Networked Airport • TINA - The intelligent networked airport • “For instance, can we solve problems like bags being in one place but the passenger not showing up, or a passenger being on an airplane and not knowing where their bags are?” asks Jon Crowcroft, Marconi professor of communications systems at the Cambridge University Computer Laboratory. • Organising a building’s network infrastructure in this way could also create opportunities for airport operators to generate money. • “In an airport environment, where in-building communications systems [such as Wi- Fi] are often used to generate revenue for the airport operator, the adoption of such a technology could lead to some interesting innovation with regard to the commercial models under which airports operate,” says Justin Trevan, a consultant at the communications division of Arup - an engineering consultancy well known for its work on airports, including Heathrow’s Terminal 5 and Dubai International Airport. Source: The Institution of Engineering and Technology, July 6th 2009 http://www.nytimes.com/2009/06/14/magazine/14searchgrimshawside-t.html
  • 210. The Intelligent Networked Airport • To track people and assets, researchers are looking at both active and passive RFID tags, locating the active tags by comparing the different time delays of the transmitted signals as they arrive at neighbouring antenna units, which are typically positioned tens of metres apart. • Being battery-powered and expensive, active RFID tags would only be suitable where they could be re-used and recharged, such as when issued to members of staff or applied to airport vehicles. In contrast, passive RFID tags could be printed cheaply on disposable paper boarding cards or luggage labels, given to every passenger and attached to each of their bags. In Hong Kong airport, luggage is already labelled with bar-coded passive RFID tags that are read (by conventional short-range means) with two antennas placed either side of the luggage conveyer belt. Source: The Institution of Engineering and Technology, July 6th 2009 http://www.nytimes.com/2009/06/14/magazine/14searchgrimshawside-t.html
  • 211. The Intelligent Networked Airport • Zinwave application • A ‘long-range’ passive RFID sensing scheme is novel and technically difficult. • However, Sithamparanathan Sabesan, Michael Crisp, Richard Penty and Ian White at the University of Cambridge’s department of engineering, have found a way to reduce the fading and improve the accuracy of RSSI techniques, using an optimised Zinwave radio-over-fibre hub with multiple antennas. • “The first challenge was getting the range up to 20m. The second, which we’re still working on, is the resolution at that range. We’ve got the location accuracy down to around 2m, but we’d like to do better,” said Professor White, head of photonics research in the electrical division of the department of engineering at Cambridge. • Tracking every single passenger anywhere in the building all the time may not be feasible with passive RFID tags. But the technology could indicate if a passenger has moved from one space to another, maybe from a lounge to a bar, which is enough to target a message to a nearby display, page them, or send someone to find them. Source: The Institution of Engineering and Technology, July 6th 2009 http://www.nytimes.com/2009/06/14/magazine/14searchgrimshawside-t.html
  • 212. The Intelligent Networked Airport • Network architecture specifications • The basic TINA network architecture is being designed to support a terminal with typically 1,000 fixed and 500 mobile video cameras (demanding 10Gbit/s of bandwidth); 500 displays (10Gbit/s); 500 biometric scanners (10Gbit/s); private and public fixed and wireless LAN (20Gbit/s); cellular services (10Gbit/s); TETRA and private radio (500Mbit/s); as well as passive RFID (300Gbit/s) and active RFID (5Gbit/s). These figures, which include projections for future demand, are based on input from BAA and other companies involved with the network installations in Heathrow Terminals 4 and 5. • The software tool can model and simulate passenger flow, radio propagation delays, optimum antenna position, and bandwidth requirements to give a top-down picture of how the network might perform under various circumstances. • In this way, designers can better understand how the flow of people in indoor spaces, traffic demands and energy consumption constraints might influence different architectures. Source: The Institution of Engineering and Technology, July 6th 2009 http://www.nytimes.com/2009/06/14/magazine/14searchgrimshawside-t.html
  • 213. TINA – Key Facts The network will support: • 1,000 Fixed and 500 Mobile Video Cameras - 10 Gb/s • 500 Displays - 10 Gb/s • 500 Biometric Scanners - 10 Gb/s • Private and Public Fixed and Wireless LAN - 20 Gb/s • Cellular services - 10 Gb/s • TETRA and private radio - 0.5 Gb/s • Passive RFID - 0.2 Gb/s • Active locatable RFID - 5 Gb/s • Aggregate Mean Rate 65.7 Gb/s; assumed Aggregate Peak Rate 100 Gb/s
  • 215. Flexible Terminals • An Austrian company, TMT, has installed a mobile passenger terminal at Switzerland’s Geneva Airport. It is designed as a flexible structure, to expand and contract airport capacity, depending on demand. With a growing number of companies providing such facilities – driven by the increasing seasonality of flight operations and the continuing lack of available finance – is the future going to be "temporary and mobile"? Could this be the ultimate low-cost terminal? • TMT’s management stated the terminal can be installed and dismantled within a week. Source: Centre for Aviation, February 2011 http://www.centreforaviation.com/news/2011/02/14/upwardly-mobile--airport-terminals-that-match-the-seasonal-nature-of-the-airline-business/page1
  • 216. Flexible Terminals • Thomas Melcher, managing director and inventor of TMT The Mobile Terminal - Melcher has ambitious plans for TMT The Mobile Terminal, particularly in emerging markets in Eastern Europe, Asia and Latin America. “In the next three years, we are targeting 20 to 25 mobile terminals worldwide,” he said. • Indeed, the effectiveness of the terminal solution during major events in an airport’s catchment area means discussions are already underway with the Russian market with regards to the 2014 Winter Olympics, which take place in Sochi, and the 2012 European Football Championships in Poland and Ukraine. TMT The Mobile Terminal is also exploring the possibility of renting its terminal solutions for short-term periods. Source: Airport Business, April 2011 http://www.airport-business.com/2011/04/first-tmt-the-mobile-terminal-opened-at-geneva-
  • 217. The ‘Airport City’ • This geographical advantage has led to the rapid rise of the ‘airport city’ and, according to Curtis Fentress, principal-in-charge of design, Fentress Architects, this is likely to become an increasing trend in years to come. • “I think you will see more of the ‘airport city’,” he explained. “In the Middle East, you see a tremendous surge in passenger numbers and there is then a need for hotels and other services and this is something that we may see elsewhere in the next 20 years. Airports will become more multi-modal and the construction of office buildings, conference buildings, air freight facilities, and even the likes of beauty salons within the actual airport are things that are already becoming more widespread.” • With environmental sustainability now firmly established toward the very top of the list of priorities within the field of airport architecture, the need to explore the use of ‘green’ energy is more evident than ever before. Source: Airport Business, July 2010 http://www.airport-business.com/2010/07/exploring-the-airport-of-2030/
  • 219. Airport Cities: Manchester • More than 10,000 jobs could be created around Manchester Airport when it is turned into a ‘mini city’. • The £400m Airport City project was given the green light after the government named it as one of its first Enterprise Zones. • It is one of 21 designated areas nationwide that will offer tax breaks for businesses, simplified planning rules and super-fast broadband as part of plans to grow local economies and jobs by removing barriers for new companies. • Money raised from discounted business rates in the area will be available to re-invest in Greater Manchester’s redevelopment. • Airport bosses say the Enterprise Zone status means they can start immediately on Airport City, which is expected to bring 10,500 full time jobs – 13,000 in total – over the next 10 to 15 years. A 60-acre site, centred around Manchester Business Park to the north of the airport, will introduce new offices, hotels, shops and manufacturing space. Source: Manchester Evening News, March 2011 http://menmedia.co.uk/manchestereveningnews/news/s/1416306_manchester-airport- enterprise-zone-will-generate-mini-city-with-10500-jobs
  • 221. Impact of Consolidation Top left: http://www.nationalturk.com/en/wp-content/uploads/2009/11/iberia-british.jpg
  • 222. • The airline industry continues its consolidation trend: in Europe things started with the Air France-KLM merger in 2004, soon followed by Lufthansa-Swiss. • The action continues with SN Brussels, BMI and Austrian taken over by Lufthansa, Air France-KLM buying a significant stake in Alitalia and getting full control of the Dutch leisure and cargo airline Martinair and FlyVLM. • British Airways and Iberia have completed a merger. • Airlines are likely to continue consolidating aligning their products for their passengers: pricing, loyalty programs, joint check-in areas. Impact of Consolidation
  • 224. Shifting the Goalposts • Booz suggests ,that ‘…airlines must take an objective, data-driven look at their business models and cost structures, challenge existing assumptions, and provide CEOs and program managers with the analysis they need to take decisive, innovative, and informed action. • One measurement whose validity should be actively questioned is the ubiquitous metric of the airline industry, cost per available seat mile (CASM). Although it is an interesting data point, CASM is not the most relevant gauge for determining the success of an airline’s business model because it focuses solely on the cost of supply and not on demand. We believe that a better metric would be cost per passenger seat mile, which would calculate the expense of operating the seats that travelers are actually willing to purchase. Source: Booz & Co, 2008 http://www.booz.com/media/uploads/Future_of_Green_Aviation.pdf
  • 225. Shifting the Goalposts • Examining operating costs through the prism of demand, and augmenting that data with CASM, would reveal the routes and schedules, types of travelers, and overall markets worth serving, as well as what types of aircraft to put into service. • One result of this approach could very well be a rethinking of the hub-and- spoke business model, a sharp rejection of the status quo that could produce vastly improved results for the industry. Source: Booz & Co, 2008 http://www.booz.com/media/uploads/Future_of_Green_Aviation.pdf
  • 226. What if…? • The aviation industry now uses 5 million barrels of jet fuel every day. • The Air Transport Action Group predicts the biofuel share for aviation will be 15% in 2020, and 30% in 2030. • If this is either optimistic or insufficient, the industry could be in trouble. Source: Associated Content: Is there a future after peak oil? May 2010 http://www.associatedcontent.com/article/3018604/aviation_after_peak_oil_is_there_a.html?cat=15
  • 227. Weight Reduction – a Core Priority http://www.inhabitat.com/wp-content/uploads/bordbar2.jpg http://www.jaunted.com/files/14943/ddairlineseats.jpg
  • 228. Future Scenarios for the European Airline Industry (2015) Source: Leipzig Graduate School of Management: Center for Scenario Planning ‘Future Scenarios for the European Airline Industry.’ 2010
  • 229. Future Scenarios for the European Airline Industry (2015) • Network Fortress describes a future, in which the European network carriers have regained a strong competitive position in both the long-haul and the intra-European market. The recession of 2008 and 2009 was followed by a quick economic recovery, which increased corporate travel budgets again in 2012. In turn, the demand for low-cost travel stagnated in favor of high quality and convenient travel, which led to growth in the more profitable business and first class segments. The growing long-haul market connecting Europe with the booming ASEAN region and China is dominated by European airlines, which can operate from a largely protected European market to which competition from Asia and the Middle East had only limited access to due to restrictive traffic rights legislation. Source: Leipzig Graduate School of Management: Center for Scenario Planning ‘Future Scenarios for the European Airline Industry.’ 2010
  • 230. Future Scenarios for the European Airline Industry (2015) • Europe under Siege describes a world in which Asian and Middle Eastern competitors dominate the future of European network carriers. Despite growing business travel based on solid economic growth in Europe, the industry faces severe competition, also in its home market. However, low- cost carrier have not been able to continue their growth seen in the first decade of the new millennium as customers became increasingly aware of the total cost of flying low-cost. "New World", a new alliance by Middle Eastern and Asian airlines was formed in 2012 focusing on capturing the growing demand for high quality air travel around the world. The alliance also partners with a major European airline to gain easier access to the attractive European market. With their new fleet and superior service offering, the alliance has quickly gained market share and is expected to continue its growth. Source: Leipzig Graduate School of Management: Center for Scenario Planning ‘Future Scenarios for the European Airline Industry.’ 2010
  • 231. Future Scenarios for the European Airline Industry (2015) • Decline of Champions describes a world that is characterized by declining European network carriers struggling to survive the intense local and global competition. While Europe and the United States of America are again in the middle of an economic crisis, Asia is flourishing. The recession in the western world has led to a shift in the mindsets of business and private customers towards a strong price orientation. European network carriers therefore are under heavy pressure from both European low-cost rivals and strong Asian and Middle Eastern competitors on long-haul routes. These companies have grown significantly in recent years due to favorable cost position, innovative product and high client recognition. Source: Leipzig Graduate School of Management: Center for Scenario Planning ‘Future Scenarios for the European Airline Industry.’ 2010
  • 232. Future Scenarios for the European Airline Industry (2015) • New Horizons refers to a world in which Europe is still struggling with the aftermaths of the financial crisis, which originated in 2008 and 2009. Thus, business travel has been cut to a minimum as companies face severe cost pressure. In addition, an increasing market share of this shrinking segment is captured by low-cost airlines. While Europe is still faced with the aftermaths of an economic crisis, the ASEAN region together with China has developed into the most vibrant business area worldwide, which has increased the demand for long-haul flights to and from Asia tremendously over the last 5 years. These traffic flows are dominated by European carriers, which benefit from political protection of the sector in Europe and a growing customer sentiment to buy 'European'. Source: Leipzig Graduate School of Management: Center for Scenario Planning ‘Future Scenarios for the European Airline Industry.’ 2010
  • 233. Cost Comparison of Carriers Source: Leipzig Graduate School of Management: Center for Scenario Planning ‘Future Scenarios for the European Airline Industry.’ 2010
  • 234. Future Scenarios for European Airline Industry Source: Leipzig Graduate School of Management: Center for Scenario Planning ‘Future Scenarios for the European Airline Industry.’ 2010
  • 235. Scenario: Network Fortress Source: Leipzig Graduate School of Management: Center for Scenario Planning ‘Future Scenarios for the European Airline Industry.’ 2010
  • 236. Scenario: Europe Under Siege Source: Leipzig Graduate School of Management: Center for Scenario Planning ‘Future Scenarios for the European Airline Industry.’ 2010
  • 237. Scenario: Decline of Champions Source: Leipzig Graduate School of Management: Center for Scenario Planning ‘Future Scenarios for the European Airline Industry.’ 2010
  • 238. Scenario: New Horizons Source: Leipzig Graduate School of Management: Center for Scenario Planning ‘Future Scenarios for the European Airline Industry.’ 2010
  • 239. Impact/Uncertainty Grid for European Airlines Source: Leipzig Graduate School of Management: Center for Scenario Planning ‘Future Scenarios for the European Airline Industry.’ 2010
  • 240. Training Needs • Boeing predicts that nearly half-a-million new pilots and almost 600,000 in support-staff will need to be trained by 2030 years to accommodate higher travel demand – up from about 233,000 pilots and 100,000 mechanics/engineers who are currently employed by airlines worldwide. • About 40 percent of this increased demand will come from the Asia-Pacific region. China alone will need 70,600 new pilots over the next 20 years. • Boeing also forecast that on the whole airlines will buy 30,900 aircraft valued at $3.6 trillion between 2010 and 2029, with more than two-thirds of that demand for smaller single-aisle jets such as Boeing's 737 and Airbus' A320. Source: IB Times, September 2010 http://www.ibtimes.com/articles/63951/20100920/airlines-recession-pilots-boeing.htm