Design of core airport functions needs to evolve
Global uncertainty in the last couple of years exposed airports to financial viability risks.
As they teetered under the impact of the severe economic blow, airports were made acutely aware of the need to build resilience and deliver enhanced customer experience. They realized that to achieve this objective, they will have to expand their role from being an infrastructure provider to an ecosystem enabler. This approach would not only provide an effective platform for rebuilding and sustaining traveler experience, but also create new revenue opportunities and optimize operational expenses.
However, the design of core airport functions—such as operations and commercial—has not evolved enough to support this progression. Now, with smart digital technologies having matured immensely to support collaborative organizational design, it is time for airports to reimagine the operating model.
Traditional airport operating models have many inherent challenges.
Traditionally, the operating model for airports has relied on vertical decomposition of different functions (Figure 1) to form accountable business units. This approach provides a view of ’who’ is ultimately accountable for a functional output. However, due to siloed functioning, this model suffers from a couple of key shortfalls:
These inherent inflexibilities in the current operating model hinder efficient cross-functional integration, affecting the readiness to take advantage of emerging opportunities and significantly delaying return on investments.
Reimagining the airport operating model
By adopting the traditional model, airports have developed into special purpose travel infrastructure hubs.
They should, however, draw lessons from other mature industries that have used smart techniques for mass customization, such as Nissan’s Car Configurator, to reimagine an enterprise. These techniques transform business operations by turning core functions into a configurable set of highly digitalized special-purpose capabilities for greater agility, speed, and variety in dealing with business uncertainties.
Extending this paradigm further, it is useful to model an airport as an industry of industries and map it to several industries from which it can derive inspirations and best practices. For instance, modeling the passenger flow management function as an integrated logistics chain problem will help map best practices from the logistics business and adopt concepts such as elastic logistics that ensure resilient supply chains by dynamically responding to demand-supply variations. Such a capability will enhance resilience, given that the core resources an airport needs to sustain its business are constantly subject to dynamicity in demand and supply.
Similarly, to enhance non-aeronautical revenues from travelers, airports can replicate retail industry’s idea of customer personalization to drive loyalty and enhance wallet share of loyal customers.
This approach of mapping airport functions to cross-industry best practices will result in deeply specialized capabilities focused on efficiency and excellence.
Airports should also drive holistic value across their wide-ranging commitments:
Driving holistic outcomes often requires coordinating outputs from various functions to ensure progression towards a common purpose. There is, therefore, a need to nurture and develop capabilities in the form of ’experience orchestrators’. These orchestrators are functions that excel in delivering empathetic services that require robust integration across functions, and across ecosystem players.
This reimagination of airport capabilities to drive purpose-led ecosystem convergence will help develop adaptability and resilience to evolving business circumstances. These capabilities will form the building blocks of an adaptive airport operating model.
Adaptive airport operating model
An adaptive operating model will help airports overcome challenges posed by the traditional models and make them resilient.
The adaptive model has two primary functional components supported by digital foundational components.
The primary functional components are:
The digital foundational components are:
Ninja core and ecosystem orchestrators
The core business functions of an airport such as hyper logistics and resource management can be redesigned as highly proficient services categorized as the ninja core.
The ninja core drives deep expertise in the respective areas, and it also derives its strength from cross-industry best practices. High impact ninjas for a typical airport consists of but is not limited to:
Ecosystem orchestrators: The overarching agenda of driving superior consumer experience is achieved through ecosystem orchestrators. These orchestrators are functions that excel in empathetic service delivery and require robust integration across functions and ecosystem players. Orchestrators build value for end-customers on the foundation created by the ninja core. High-impact orchestrator functions for a typical airport could be as follows: