by Frost & Sullivan Asia Pacific
AIRPORT DIGITIZATION IN ASIA
by Frost & Sullivan Asia Pacific
Digitization has been the cornerstone for airport strategies across the globe for the last couple of years. However, the need and focus on digitization has only become even more prominent in the last few years where the only way for airports to operate efficiently and effectively during challenging times was to adopt digitization. Asia was no exception -- airports across the region including Tier 1, Tier 2, and Tier 3 deployed various types of digitization initiatives to reduce cost of operation.
Imperatives for Airport Digitization
- Airports are having to look at non-aeronautical revenues as a source of income as aeronautical revenues stagnate or even decline in some cases. Digitization offers airports an opportunity to further bolster existing and create new non-aero revenue streams.
- Airports are looking at reducing operation costs as digitization offers multiple ways in which costs can be brought down.
- Efficiency is key for airports and any errors especially linked to manual operation can lead to costly delays. Digitization offers the ability to increases performance and productivity, which directly affects revenue.
- Airports are looking at increasing their throughput and digitization offers airports the ability to do this without having to invest in expensive unfractured expansions.
- As passenger experience becomes key both to attract and retain passengers as well as airlines at the airport, digital solutions offer a seamless passenger journey and enhance the passenger’s experience while at the airport.
Changing Dynamics at Airports
- The focus on cargo and non-aeronautical (non-aero) revenues is increasing investments in technology that addresses improving efficiency and enhance lead times.
- Regional and city airports are gaining prominence due to increase in demand for point-to-point travel, which is resulting in these airports looking at digitization, which previously was very limited.
- Enhanced collaboration between stakeholders is driving investments in the digitization industry and is expected to continue at least for the next 5-10 years.
Although there is strong need and demand for digitization across the globe and especially in Asia, there exist a few challenges that hinder the growth of digitization efforts. A few of the key challenges are listed below:
- Airports are apprehensive about the challenges related to implementation costs, integration with existing airport infrastructure, uncertain technology lifespan, and quantifying the return on investment (ROI).
- The ownership and operating structure for airports involve multiple stakeholders. This in turn makes the decision-making process long. In some cases, it may also lead to cancellation as it may not benefit one of the stakeholders involved.
- Cultural and organizational barriers, such as resistance to change, are sometimes more challenging than cost barriers.
- Airports struggle to bring about integration through data partnerships with airlines, air traffic control, and ground handlers.
- The aviation industry lacks the necessary fail-safe procedures to ensure financial resilience during times of crises, disasters, and external shocks to the economic system.
While a few challenges exist, the benefits far outweigh them specifically in Asia where the industry is booming mainly due to increasing purchase of power and growing middle class. Digitization at airports will continue even more so now than ever, giving strong growth opportunities for stakeholders across the value chain.
Growth Opportunities & Outlook
- Multimodal solutions will attract airports’ interest in the future. Digitization solutions that provide end-to-end travel ownership of the passenger experience will drive growth in the region.
- Digital solutions (that combine online and offline sales channels) that will improve non-aero revenue and passenger experience are expected to attract higher investments.
- Airport management solutions that integrate stakeholders into a single value chain to drive predictive decision-making and holistic airport management including performance-based airport operations management are expected to generate increased demand.
- New companies (both small and big companies) offering innovative solutions at a competitive price point will be the game changer for airports in Asia.
- Airports in Asia will focus on customizable and scalable solutions as each airport has varying needs and budgets.