PULLQUOTES:
From retail concessions to fuel farms and parking garages to maximum take-off weight taxes, airports need to reckon for every financial exchange that happens within their perimeters.
The IT challenge involves integrating the many different systems that airport departments operate, thereby reducing overall operating costs and ensuring that operational, financial, resource and facilities data is available for use to maximize the overall return.
The de-regulation of the aviation industry and the resulting proliferation of competitive airlines has seen air travel commoditized over the past two decades. Access to landing slots and gate rights are now the targets of intense competition. Airport facilities are commonly stretched to the breaking point by the sheer volume of travelers using them. Yet the industry’s infrastructure has changed little from two decades ago, when it was designed to cope with demands that were entirely different.
With clogged facilities, many modern airports struggle against the challenge of managing and maximizing income from the broad array of revenue streams that fall within their compass. For readers unfamiliar with the industry, make no mistake about the diversity. From retail concessions to fuel farms and parking garages to maximum take-off weight taxes, airports need to reckon for every financial exchange that happens within their perimeters. And it’s safe to say that most struggle to do that accurately and effectively.
The challenge doesn’t stop there, either. Although intense regulatory oversight of the aviation industry remains, modern airports are highly competitive entities, and they engage in multi-million-dollar investment programs to significantly expand and assure both their aeronautical and non-aeronautical income streams. In short, do nothing, and the problem – far from going away – is only going to get bigger as airlines strive to compete. How much bigger? The annual airport revenue for the International Civil Aviation Authority (ICAO) contracting states is already in excess of $13 billion, and similar to large, modern-day corporate enterprises, many airports face the need for continued IT investment to support their growing and increasingly complex infrastructures. Part of the requirement involves expanding their use of IT to maximize ancillary revenues from passengers.
The IT challenge involves integrating the many different systems that airport departments operate, thereby reducing overall operating costs and ensuring that operational, financial, resource and facilities data is available for use to maximize the overall return. Among the systems involved, integrating solutions to facilitate accurate and timely billing is paramount; an integrated systems approach to billing enables reliability, enforces common processes, and assures accurate data capture while also providing seamless access to information for multiple departments and airlines.
This challenge is a new one, and identifying the right IT infrastructure to automate processes and financial models for greater accuracy and transparency is something of a work in progress. Still, it is certain that an innovative approach to monetizing the relationships with customers, partners and suppliers that lies at the heart of the airport’s commercial engine is prerequisite. Its axiomatic that the IT solution needs to be open, scalable, component-based and adaptable so it can easily, quickly and cost-effectively be configured to support and charge for any service, no matter how diverse and including both aeronautical and non-aeronautical airport services. Simple or spreadsheet accounting will no longer be enough. Furthermore, the new airport IT infrastructure must be able to adapt and configure any type of business model, including residual-cost, compensation and hybrid models, all of which are in play at different airports around the globe.
Ask the Right Questions
Ultimately, there a few are key objectives and questions airport chief information officers (CIOs) should consider as they tackle the challenge of maximizing revenues and ensuring financial accuracy through IT. They’re in many ways the same objectives and questions the CIO in any other organization should consider as similar challenges are faced by other industries:
- I need a system to offer flexibility, adaptability and support for innovation.Can I quickly introduce new charging models and new services? Can I innovate on pricing contracts for new airlines? Does my approach support continued growth of non-aeronautical and ancillary revenue streams? Can I quickly develop new business operating models?
- I need a system to deliver real-time revenue recognition. Does my approach provide real-time visibility of amounts owed to airport management and other systems? Does it integrate directly into airline accounts payable systems to automate payments? Does it allow airlines to view their invoiced and un-invoiced amounts in real-time via the Internet with summary/detail charges and the ability to drill-down into each individual charge? Does it facilitate increased cash flow through regular and timely billing?
- I need a system to improve auditing and billing accuracy and reduce operational risk. Does it eliminate manual update processes for invoice generation, thereby reducing errors and time-to-invoice preparation? Does it improve revenue through the reduction of leakage as all data entered into the billing system, for example landing charges, is audited to ensure every charge is invoiced? Does it provide Sarbanes-Oxley-compliant best practices for auditing purposes?
- I need a system to reduce operating costs. Does my approach significantly reduce operating costs through use of commodity software and hardware? Does it eliminate manual billing processes and reduce manpower requirements for operating and running the billing process?
Finding the right answers will pay off. The CIO who finds a platform from which to reach them will gain a significant financial and competitive advantage. In the aviation and other verticals today, this issue is taking center stage.
BIO: Scott Swartz is the founder, president and CEO of MetraTech. Swartz founded MetraTech in 1998, after spending time at NetCentric, where he created the industry’s first SGML/XML billing protocol. Prior to NetCentric, Swartz was a director at Cambridge Technology Partners, where he led the deployment of complex customer care, billing and logistics solutions for Fortune 100 and 500 companies.
