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MACH I: AIRPORTS OF THE FUTURE

warp speed MACH I

© 2012 Woods Bagot

AIRPORTS OF THE FUTURE

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MACH I: AIRPORTS OF THE FUTURE

warp speed

‘ warp’ is an acronym for Woods Bagot Airport Research Program, and ‘speed’ is, well, speed. contents

i i.i i.ii i.iii

WARP Speed Contents Executive summary Introduction

by James Berry, Director – Transportation & Infrastructure

1 1.1 1.2 1.3 1.4

Future-gazing (Non) fiction Aerotropolis Property drawcard Development

by Matthew Lynch, Senior Consultant – Research & Consulting

2 2.1 2.2 2.3

Technology Mobility Social networking Pax tracking

by James Calder, Director – Research & Consulting

3 3.1 3.2 3.3

Pax experience Profiling Terminals Luggage

by James Berry, Director – Transportation & Infrastructure

4 4.1 4.2 4.3 4.4 4.5

Efficiency Governance Collaboration CUSS & CUPPS Planning Workplace

by Matthew Lynch, Senior Consultant – Research & Consulting

5

Expert panel

6

References

© 2012 Woods Bagot

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MACH I: AIRPORTS OF THE FUTURE

Š Woods Bagot 2012 All rights reserved. No material may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or any information storage and retrieval system, without prior permission in writing. While we have tried to ensure the accuracy of the information in this publication, the publisher accepts no responsibility or liability for any errors, omissions or resultant consequences including any loss or damage arising from reliance on information contained in this publication. Any opinions in this publication are solely those of the named author. The published, editorial panel, other contributors and Woods Bagot do not endorse such views and disclaim all liability arising from this publication. Published by Woods Bagot Research Press Podium Level 1 3 Southbank Avenue Southbank VIC 3000 Australia Telephone +61 3 8646 6600 Facsimile +61 3 9645 8787 Web www.woodsbagot.com Printed April 2012 Edited by James Berry and Matthew Lynch Designed by Matthew Lynch

Š 2012 Woods Bagot

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MACH I: AIRPORTS OF THE FUTURE

executive summary

A team of our senior experts have collaborated to produce WARP Speed: Mach I, which identifies emerging trends in the aviation industry that will be critical to the future success of airports. This report focuses on airports as well as their tenants – airline carriers, retailers and concessionaires. i i.i i.ii i.iii

WARP Speed Contents Executive summary Introduction

1 1.1 1.2 1.3 1.4

Future-gazing (Non) fiction Aerotropolis Property drawcard Development

2 2.1 2.2 2.3

Technology Mobility Social networking Pax tracking

3 3.1 3.2 3.3

Pax experience Profiling Terminals Luggage

4 4.1 4.2 4.3 4.4 4.5

Efficiency Governance Collaboration CUSS & CUPPS Planning Workplace

5

Expert panel

6

References

1. Future-gazing 1.1 (Non) fiction The aviation industry must tighten its focus on individual passengers and less on broad demographic cohorts. Taking the passenger as the driver of future changes, we can reasonably expect that self-managed travel, advanced technologies and sustainability will be central to the planning, design and operation of airports. 1.2 Aerotropolis Airports will continue to play a vital role as key infrastructure nodes to cities. While an aerotropolis is an exciting proposition, airports will likely remain functionally ancillary to cities. Airports can still derive revenue streams through non-aero businesses and develop their own economies that augment other urban markets. 1.3 Property drawcard Airports offer an ostensible advantage in providing multinational organisations with a well-located office – one that is conveniently located at the intersection of local, regional and international transport routes. Airports can use their ‘property drawcard’ as leverage to attract global businesses, which in itself brings substantial economic, social and cultural benefit. 1.4 Development On-airport office rents are consistently and substantially higher than the commensurate office rents that are found off-airport in cities. This phenomenon occurs because non-aero airport real estate development is financed largely by the revenues derived from aviation. However, other models are available to make non-aero airport property a much more financially-palatable choice for businesses.

2. Technology 2.1 Mobility Demand for mobile technologies is growing globally, with 5.9 billion discrete mobile connections in existence by the end of 2011. And passengers are clearly demonstrating that they want more integrated and more mobile technologies. Particularly, these increasingly mobile passengers demand of airports an approach that is more advanced and integrated. Mobile technologies will need to be developed to correspond with the areas in which airports and airline carriers can best leverage – procedures of security screening, baggage collection, and check-in 2.2 Social networking Social networking creates the bridge between demographic-based services and a fully-individualized product offering. Passengers are willing to share invaluable personal information that can be used to enhance their aviation experiences. Social networks can be used to facilitate communication, sell services, connect people, and reward customers. However, the adoption of social networks can be unexpected – take for example passengers that prefer to ask questions while in-flight to an airline’s Twitter account instead of approaching a flight attendant. 2.3 Pax tracking While still in its infancy, passenger tracking will play a key role in the operational efficiency of airports and to the engagement of passengers with airline carriers. The vast majority of passengers support passenger tracking, but an opt-in approach or anonymous tracking method is needed to circumvent legal restrictions. Tracking offers passengers an increased level of independence while optimizing airports operational procedures – a winning proposition.

© 2012 Woods Bagot

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MACH I: AIRPORTS OF THE FUTURE

3. Pax experience 3.1 Profiling Industry research reveals emerging demographic cohorts which can be used to shape an airport’s strategy to maximize customer engagement and enhance the passenger experience.

4. Efficiency 4.1 Governance A horizontal governance model that transcends the management of day-to-day activities and into longer-term strategic planning efforts benefits all airport stakeholders.

But customers are dynamic and they demand of service providers a deep understanding of their profile characteristics. The next level of profiling will augment this generalized demographic profiling technique with mechanisms designed to capture the particular preferences of individuals.

4.2 Collaboration Collaboration is critical to every part of the aviation industry; from procurement to design, from strategic planning to development, and from delivery to management. Collaboration enables better communication through its inherent interactivity, it expedites delivery through parallel processing, and it bolsters relationships through interfacing.

3.2 Terminals Airline carriers have long wanted to extend their influence on the passenger experience beyond the carrier lounge and the aircraft. Airports must take a co-ownership approach to the design, planning and operation of airport terminals. Airports and their airline carrier tenants need to work together to reconcile their needs. 3.3 Luggage Luggage represents an encumbrance to passengers wanting to spend time on discretionary activities. Alleviating passengers of their carry-on bags whilst in the airport will prove beneficial to airport operations, and could revenues from increased informaldiscretionary passenger activity – customers focussing more intently on retail offers, spending longer at concessionaires, staying at a cafe for two cups of coffee instead of one, and spending less time being processed through security screening.

© 2012 Woods Bagot

4.3 CUSS & CUPPS Common-use systems are the way forward. Based on a principal of collaboration, they drive passenger engagement, optimize airport efficiencies and raise airline carrier branding. 4.4 Planning Airports that engage their tenants in the planning process of a property decision can expect to be well-rewarded by a more sustainable model of operation and a more sustainable approach to the environment. This collaborative upfront planning ensures that the airport engenders the values, mission and vision of all stakeholders. 4.5 Workplace Airports and airline carriers operate as highly discerning, risk-averse, and efficiency-driven organisations. A significant opportunity exists for airports and airline carriers to leverage the operation of their workplaces as a key driver of organisational efficiency. Better still, workplaces can also be used to influence profits beyond the cost savings made through efficiency gains. Workplaces are tools that can be used to increase productivity, foster creativity, promote collaboration and stimulate innovation – the real drivers of revenue.

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MACH I: AIRPORTS OF THE FUTURE

introduction

i i.i i.ii i.iii

WARP Speed Contents Executive summary Introduction

1 1.1 1.2 1.3 1.4

Future-gazing (Non) fiction Aerotropolis Property drawcard Development

2 2.1 2.2 2.3

Technology Mobility Social networking Pax tracking

3 3.1 3.2 3.3

Pax experience Profiling Terminals Luggage

4 4.1 4.2 4.3 4.4 4.5

Efficiency Governance Collaboration CUSS & CUPPS Planning Workplace

5

Expert panel

6

References

Woods Bagot’s WARP Speed: Mach I is the first in a series of research investigations that identify emerging trends in the aviation industry that will be critical to the future success of airports. From wild science fiction to grounded realities, WARP Speed: Mach I makes forecasts by exploring the various wants, needs and aspirations of airports and their tenants. Most importantly, WARP Speed: Mach I recognizes that change – fast change – is the only constant in the aviation industry.

As asset owners and managers, Woods Bagot recognizes that airports would find it similarly useful to benchmark the priorities, wants, needs and aspirations of their tenants. In researching tenant preferences, we must also remember that many of the issues that we consider contemporary to today’s airports are not new. Future trends forecasting is helpful, but so too is looking to the past for lessons learned. Consider, for example, this excerpt:

Throughout WARP Speed: Mach I, we are taken on an exploration of the often-tenuous relationship that exists between airports and the airline carriers, retailers and concessionaires with which they share both dependence and competition.

There are many ways in which the movement of passengers can be expedited, for example, by removing check-in and other formalities to a downtown centre, by allowing passengers to proceed directly to the gate positions rather than congregating in the central area, by curbside or parking lot check-in procedures for Taking as its precedent a Woods Bagot baggage, by expediting clearance formalities research study commissioned by Brookfield generally. Greater use of 'pre-clearance' and the Office Properties, the global asset manager, this introduction of 'in-flight' clearance on highreport focuses on trends as they relate to airport capacity aircraft may be other possibilities. tenants – airline carriers, but also retailers, concessionaires and hotels. Sounds like it could have been taken from a recent publication, right? In fact, this excerpt The Brookfield study was a highly successful was sourced from a press release published by research initiative undertaken by Woods Bagot the International Civil Aviation Organization in which investigated a set of characteristics May 1968. common to the occupants of commercial buildings. As a company that specializes in Compare this with contemporary airport corporate real estate, Brookfield wanted to priorities, which also seek to expedite the better understand the priorities of its clientele – movement of passengers through introducing the occupiers of its buildings. off-site check-in procedures, decentralising congregations of people, and tweaking So, too, does this report demonstrate the clearance formalities. wants, needs and desires of airport tenants – now and into the future. Our WARP Speed: Mach I research identifies such insights that have long since been The Brookfield tenant research showed that all prioritized by airports and their tenants. It also corporate tenants prioritize rent, building quality delves into the exciting possibilities that will likely and location – fairly rational and expected emerge from technological innovations, demands. But a number of unanticipated results passenger demands, and innovations in were also revealed. operational efficiencies. For example, corporate occupiers that operate in the finance sector use a considerably different order of priority for their tenancies than James Berry occupiers within the legal sector. The study Director – Transportation & Infrastructure revealed that legal sector tenants no longer demand a location within close proximity to their competitors, while a building with a large floorplate will be a critical success factor for finance sector organisations in the future.

© 2012 Woods Bagot

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MACH I: AIRPORTS OF THE FUTURE

© 2012 Woods Bagot

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MACH I: AIRPORTS OF THE FUTURE

future-gazing

i i.i i.ii i.iii

WARP Speed Contents Executive summary Introduction

1 1.1 1.2 1.3 1.4

Future-gazing (Non) fiction Aerotropolis Property drawcard Development

2 2.1 2.2 2.3

Technology Mobility Social networking Pax tracking

3 3.1 3.2 3.3

Pax experience Profiling Terminals Luggage

4 4.1 4.2 4.3 4.4 4.5

Efficiency Governance Collaboration CUSS & CUPPS Planning Workplace

5

Expert panel

6

References

Why forecast future trends? As architects, we inhabit a world that is continually looking forward to a better, more sustainable future. At the same time, we must also be sufficiently grounded to deliver in the reality of today. This process of future casting and present-day application allows us to make incremental steps toward an improved world. It also generates the odd breakthrough that allows us to make leaps forward. (non) fiction

In 1966, the USSR launched the first lunar orbiter, Luna 10, while the U.S. Surveyor 1 performed the first soft lunar landing on Oceanus Procellarum. In September of the same year, Star Trek was first broadcast on NBC. rd

Set in a distant 23 century universe, Star Trek forecasted that people would talk to each other using wireless personal communication, have easy access to a vast database of information and spend hours gazing at a giant wall-mounted video screen. A world we now know well.

There are already a number of radical visions within the aviation industry that centre around the individual. Virgin Galactic, for example, is offering a journey to experience the thrill of weightlessness on ‘SpaceShipTwo’ and a glimpse from the outer edges of the earth’s atmosphere on ‘WhiteKnightTwo’, both of which will take off from Spaceport America in the U.S. state of New Mexico. And in 2013, the Spanish company Zero2infinity will be offering a flight in a small space pod that takes four passengers and two pilots to the unprecedented height of 36 kilometres to see the vast blackness of space and view the curvature of the earth’s surface. Secondly, the winning entries all focused on the city as central to future aviation. Pocket airports, which build upon the same principles as NASA’s Green Flight Challenge of economy and sort take-off, serve the needs of small communities by bringing the airport to the city.

It is also interesting that Star Trek, arguably one of the most culturally-influential media franchises now worth an estimated US$4 billion, went on to shape not only our vision of the future but also the design of current technologies. Michael Jones, chief technologist at Google Earth, has cited the ‘tricorder’ – a multifunctional device with mapping capabilities that was exhibited on Star Trek – as an inspiration in the development of Google Earth. And Rob Haitani, product design architect for Palm-One in the U.S., has said that ‘when I designed the user interface for the Palm OS back in ’93, my first sketches were influenced by the user interface of the Enterprise bridge panels’.

© Alexander Nevarez Figure 1.A: Figure 1.A: Winning entry for the ‘Airport of the Future’ competition showing a pocket airport atop a skyscraper.

Finally, there is also a strong sustainability theme that runs across most of the futurist visions of aviation. This is supported by initiatives such as Themes emerging from a recent ‘Airport of the NASA’s Green Flight Challenge, which was won Future’ student competition in the U.S. reveal by Team Pipistrel-USA.com’s 4-seat, electricthe kind of future-gazing that is common among powered aircraft that flew 200 miles non-stop today’s younger generations. Most significantly, and achieved 403.5 passenger MPG (compared the winning entries all suggest the use of with around 95 passenger MPG for an Airbus alternative airplane technology, from vertical A380). take-off, to the re-emergence of airships, to small commuter planes docking in ‘pocket Such future-gazing reveals the aspirations of the airports’. aviation industry. However, it is obvious that these kinds of developments will not be made This is a future that seems to favour two trends. overnight, so it is important to look for trends Firstly, the competition entries showed a that are more current, more implementable and human-scaled approach to aviation. Compare that will immediately drive revenues. this with the current approach to aviation, in which 525 passengers can fit into a single Image opposite: standard Airbus A380 and airport terminals are Virgin Galactic Spaceshiptwo / VSS Enterprise sized to over 1 million m² (10 million ft²). © Virgin Galactic © 2012 Woods Bagot

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MACH I: AIRPORTS OF THE FUTURE

From vertical take-off to the re-emergence of airships, to small commuter planes allowing passenger docking in ‘pocket airports’, the future of airports seems to be more human-scaled. At a more pragmatic level, a number of useful studies that have recently been conducted within the aviation industry can help us to better understand future trends and to better anticipate the drivers for change over the next two to five years.

passenger journey and give people more choice through self-service. The aim is to have 100 airlines and airports using at least three Fast Travel solutions by the end of 2012, which would ultimately save the industry up to US$2.2 billion annually.

SITA’s Airport IT Trends Survey 2011 provides a great insight into the future direction of the aviation industry. For example, the survey reveals that most airports expect to dedicate considerably more revenue toward IT in the coming years to improve customer service.

There are six Fast Travel projects that will allow passengers to undertake a range of self-service activities that include the issuance of boarding passes, tagging of hold bags, scanning of travel documents for ID checks, rebooking, scanning of boarding tokens and reporting of missing bags.

A significant amount of this expenditure will ensure that IT infrastructure is sufficiently advanced to support mobile services.

Looking even further ahead, IATA’s Vision 2050 anticipates that 16 billion passengers and 400 million tonnes of cargo will be transported by air in 2050, compared to 2.8 billion passengers and 46 million tonnes of air freight in 2011. This projection relies on the assumption that ‘governments and investors alike’ will have recognized the importance of the aviation industry as a driver of economic development.

In turn, this is expected to further drive the use of self-service equipment. Some 70% of airports will provide passengers with kiosks for self-scanning of documents by 2014, 78% of airports intend to increase the number of kiosks over the same period, and 42% of airports intend to implement e-gates. Social networks are considered to be the future building blocks for customer service platforms, which is evident from the 66% of airports that intend to invest in integrating social network functionality. And there is greater planned use of technology to monitor passenger flows, which will be used to target passengers for individualized retail promotions, monitor waiting times at processing points, and provide feedback to the airport’s property management team. Meanwhile, IATA’s Fast Travel initiative is a real, pragmatic undertaking to simplify the

© 2012 Woods Bagot

Vision 2050 also anticipates that just a dozen truly global hubs will service international transport, which will be fed by 50 to 75 secondary regional hubs. Planes, advanced by new technologies and ecologically-sustainable fuels, will be able to carry between 2 and 2,000 passengers. Airport concourses are designed for fast connections, short walking distances, and convenient arrangements of retailers and concessionaires. Whatever the future may bring, we can be certain that it will be customer-driven. This ordains that technologies, experiences, sustainability and efficiency will be key to delivering successful airports.

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MACH I: AIRPORTS OF THE FUTURE

aerotropolis

The latest buzzword being touted through the aviation industry media channels? Aerotropolis. i i.i i.ii i.iii

WARP Speed Contents Executive summary Introduction

1 1.1 1.2 1.3 1.4

Future-gazing (Non) fiction Aerotropolis Property drawcard Development

2 2.1 2.2 2.3

Technology Mobility Social networking Pax tracking

3 3.1 3.2 3.3

Pax experience Profiling Terminals Luggage

4 4.1 4.2 4.3 4.4 4.5

Efficiency Governance Collaboration CUSS & CUPPS Planning Workplace

5

Expert panel

6

References

The aerotropolis is an ‘airport city’, and its popularity has been rapidly gaining momentum over the globe. The term was coined fairly recently by John Kasarda, a professor of business at the University of North Carolina in the U.S., but the concept of the aerotropolis has been around for a while. Most notably, the development of Dubai since the mid-1980s coincided with the launch of Emirates when it took over Gulf Air’s routes. The parallel development of Dubai and Emirates epitomizes the growth of an aerotropolis, where an airline carrier and an airport have anchored the entire city’s charge toward prosperity and global recognition.

For example, most cities have a financial district and it is becoming increasingly common for cities to developing a distinct precinct that aggregates IT industry organisations. It is natural and expected that the airport can also become a nodal point to an existing city environment, especially considering its critical role as a domestic and international transport interchange. It is possible that the airport can extend beyond an existence as an aviation node to a city, and become a multimodal transport hub that offers myriad non-aviation commercial activities and a free trade zone.

However, the airport node is unlikely to compete with the raison-d’être of existing urban environments. For example, Woods Bagot’s design for China Southern Airport City in the Chinese city of Guangzhou uses the airport to stimulate other urban functions, but does not Beyond Dubai, many other cities have also been presume to replace the city itself. advancing toward aerotropolis status. Lindsay reminds us that the oil-rich city of Abu Dhabi followed in Dubai’s footsteps by creating its own airline through royal decree in 2003 and feeding it with US$51 billion worth of aircraft. Likewise, Doha International Airport (DOH), which is home to the state-owned Qatar Airways and which anchors Qatar’s capital city of Doha, has been expanding since 1993 and can now accommodate 15.7 million passengers per year. And most recently, Malaysia Airports Holdings Berhad has recently released its new ‘Indulge Till You Fly’ campaign, which locates the airport at the core of an entire lifestyle – both physically and metaphorically. The campaign, which was recently launched as a television commercial and as an iPad application, shows an entire lifestyle precinct consisting of leisure facilities and community amenities that are centred around the airport as its keystone piece of infrastructure. The success of airport cities will likely be contingent upon two factors. Firstly, global cities are becoming increasingly multinodal as they experience continued population growth. While cities are centralized in terms of their population, the composition of their areas is becoming decentralized.

© Woods Bagot Figure 1.A: China Southern Airport City. Secondly, airports exist as a piece of service infrastructure to cities – cities do not exist to service airports. This does not mean that airports are unable to sustain their own healthy set of support services – hotels, concessionaires, retail, etc. – it just means that airports will not likely replace the cities that they service as a destination. Airports need to offer services that augment the city instead of duplicating existing services. As the importance of cities grows in relation to national economies and national branding efforts, airports will increasingly need to engender the characteristics and dynamics of their surrounding urban/city environments.

Thanks to the jet engine, Dubai has been able to transform itself from a backwater into a perfectly positioned hub for half of the planet's population. From its beginning 25 years ago, the airline was seen as a strategic arm of the state, paying no taxes while importing the foreign labour that built the place. Using its airline, Dubai feverishly assembled a population from elsewhere – Indian entrepreneurs, British bankers, Russians buying condos with suitcases of cash – thus creating the ethnic enclaves and gated communities that define the place… ‘Cities of the Sky’, Wall Street Journal © 2012 Woods Bagot

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MACH I: AIRPORTS OF THE FUTURE

Songdo International Business District (Songdo IBD), for example, has been planned as a new annex to Seoul in South Korea, and is anchored with the new Incheon International Airport. Privately financed at a cost of US$35 billion, Songdo IBD is around the same size as downtown Boston, and is intended to attract multinational corporations and stimulate foreign investment.

© Diplomatic Courier Figure 1.B: Songdo International Business District, South Korea. But instead of anchoring a city on the airport, a strong argument exists to locate the airport as an ancillary function to the city. The airport continues to serve its primary function as the regional and international gateway to the city in which it exists. In this way, the airport can best manifest itself as the major transport node of the city. As such, airports need to be considered and coordinated in metropolitan plans as key pieces of transport infrastructure. This begs the question – can a city airport be developed into an airport city? The answer is yes, an airport can anchor an entire urban development. But an airport is unlikely to be able to exist solely as a city within itself – it relies on the consistency and investability of non-aeronautical activities to augment core aeronautical enterprises. Airport cities exploit their unique position as a transport hub to generate growth, to attract venture capital investment, to target equity investors, to stimulate further infrastructure development and to promote shopping, trading, business, leisure, recreation, and entertainment activities. As John Kasarda points out, the most successful examples of such diverse airport cities have been developed by Aéroports de Paris, BAA, Fraport, Schiphol Real Estate Group, Incheon International Airport Corporation and Ferrovial Group. As airports become increasingly central to the cities that they serve, other questions will surely arise. Is it possible to design an airport using place-making techniques instead of designing for a condition of limbo and anonymity? How can airports be included more centrally in metropolitan strategic plans? How can airports engender the characteristics and dynamics of their cities?

© Evolve Media Figure 1.C: John Kasarda’s vision for an aerotropolis. © 2012 Woods Bagot

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MACH I: AIRPORTS OF THE FUTURE

Woods Bagot will be answering these tough questions as it develops the masterplan for the China Southern Airport City – a city being planned in China’s province of Guangdong. i i.i i.ii i.iii

WARP Speed Contents Executive summary Introduction

1 1.1 1.2 1.3 1.4

Future-gazing (Non) fiction Aerotropolis Property drawcard Development

2 2.1 2.2 2.3

Technology Mobility Social networking Pax tracking

3 3.1 3.2 3.3

Pax experience Profiling Terminals Luggage

4 4.1 4.2 4.3 4.4 4.5

Efficiency Governance Collaboration CUSS & CUPPS Planning Workplace

5

Expert panel

6

References

Just 4km from Guangzhou Baiyun International Airport (CAN), China’s second busiest airport in terms of passenger traffic, Woods Bagot is planning 400 hectares with the headquarters of China Southern Airlines, a training university, residential accommodation, a media hub, aviation business hub, logistics facilities, warehousing, and manufacturing services. China Southern is currently the world’s sixth largest airline but expected to become the world’s largest within two decades. The site of China Southern Airport City is highly visible from the air, as arriving passengers approach the Guangzhou Baiyun International Airport. The planning principles, overall program and building zoning must therefore be conceived as if seen from the heavens.

These include business aviation town, cultural aviation town, urban aviation town, eco aviation town and intelligent aviation town. These five zones provide diversity within the Aviation Park, each with their own unique character. The eastern site features marketing and customer service buildings and the VIP club and five star hotel all centered around the main lake. Dramatic architectural forms relate to aerodynamics and landscape; when connected together they form the ‘Jade Ruyi’, a symbol of power and good fortune. These impressive buildings are brand defining and the signature of the Aviation Park. The western site is energetic and is the cultural heart of the Aviation Park. The media hub features entertainment, exhibition and hotel buildings, which are all supported with retail outlets that create day and night energy and the media experience.

A series of roundabouts are located around key functional clusters, which form a strong spine This requires a masterplan framework of epic which will be called ‘aviation avenue’. The key proportions on a macro scale. Water is culturally principle is to bring people and goods 'to the considered to be the life giving force of nature site' not 'through the site'. This will calm and both the Lui Xi River and the Pearl River automotive movement, thus ensuring vital Delta are vital conceptual drivers. When pedestrian links and open space within the combined with the branch structure of the masterplan. Kapok tree and distinctive blossom shaped functional clusters, the framework for the Woods Bagot design captures the spirit of traditional Chinese master paintings. The natural bend in the Lui Xe River helps determine a defined centre point for the project – a grand ring as seen from above. The China Southern HQ building is the central heart of the ring, which radiates the spirit of life towards the west and east sites. The sites are connected together by a gateway bridge & showcase gallery, which symbolizes the future of aviation innovation and serves as an important marquee for China Southern Airlines and the City of Guangzhou. The entire masterplan is held together by Chinese themed parks and natural landscape elements along the Lui Xi River and national highway; strong landscape gestures enhancing the power of architecture and the rhythm of nature. Fluidity, kinetic movement and aerodynamics are defining principles. Operational and functional requirements are allocated into five significant townships or zones, © Woods Bagot each corresponding to the five petals of the Figure 1.D: Airport City, where East meets West. kapok flower. © 2012 Woods Bagot

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MACH I: AIRPORTS OF THE FUTURE

© 2012 Woods Bagot

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MACH I: AIRPORTS OF THE FUTURE

property drawcard

i i.i i.ii i.iii

WARP Speed Contents Executive summary Introduction

1 1.1 1.2 1.3 1.4

Future-gazing (Non) fiction Aerotropolis Property drawcard Development

2 2.1 2.2 2.3

Technology Mobility Social networking Pax tracking

3 3.1 3.2 3.3

Pax experience Profiling Terminals Luggage

4 4.1 4.2 4.3 4.4 4.5

Efficiency Governance Collaboration CUSS & CUPPS Planning Workplace

5

Expert panel

6

References

Like a business district or an international financial centre, an airport is a lever that a city can pull to stimulate foreign investment, increase tourism revenues and to attract the best global airline carriers. Beyond offering a progressive regulatory framework, a high level of cost competitiveness, a well-educated workforce and a competitive tax environment, airports can leverage their property and real estate for considerable benefit. Airports are the international gateways to cities. They provide to leisure travellers and business visitors the first and the last impression of the city. They also provide cities with an opportunity to leverage the logistical and transport infrastructure inherent to an airport for the benefit of multinational corporations and global airline carriers. As such, developed cities and burgeoning urban centres face increasingly stiff competition in attracting and retaining air transport sector organisations. They must contend with other successful regional hubs, some of which are becoming bigger every year by aggressively pursuing the large air transport sector corporations by offering highly favourable and flexible accommodation options. Emirates' rise in Dubai has set off alarms in London, Paris and Frankfurt, where the chief executives of flagship air carriers worry that they are being cut out of new trade flows. Canada even triggered a nasty diplomatic spat with the United Arab Emirates over its refusal to let Emirates fly to Calgary and Vancouver. The aerotropolis is tailor-made for today's world, in which no nation reliably dominates and every nation must fight for its place in the global economy. It is at once a new model of urbanism and the newest weapon in the widening competition for wealth and security. ‘Cities of the Sky’, Wall Street Journal Because of the potential financial disbursements, competition to attract and retain legacy and low cost airline carriers is fierce. The competition between airline carriers is also fierce, and continues to intensify with the introduction of deregulation. But the motivation to create and maintain a successful centre for passenger and freight air transport is also driven by the myriad fiscal, social and political benefits that are disbursed to cities that accommodate globally-competitive airports.

© 2012 Woods Bagot

Take Singapore as an example of attracting finance sector organisations – the city has taken aggressive strategies to attract and retain many of the most profitable global banking brands, The Asia Square and Marina Bay developments, designed specifically to attract finance sector MNCs by offering large (3,250m²) floorplates, have alone been tenanted by Citi, Lloyd’s, Chartered Bank and Societe General. And in the UK, Jones Lang LaSalle reports that while the London Docklands used to be ‘chastised as a white elephant’, it has since ‘been heralded as the best quality space available to financial institutions in the London market and is now housing most of the global financial giants’. Similarly, Bloomberg reported a recent example of such international competitiveness in Beijing, which lured financial firms away from competing cities to its central business district by auctioning $3.4 billion worth of commercially-zoned land in late 2010. A buildable area of 1.1 million square metres was acquired by 24 companies including HSBC, China International Capital and Citic. Amsterdam Airport Schiphol (AMS) is a prime example of a city leveraging its primary airport to attract foreign investment. The Diplomatic Courier reports that 1,800 MNCs have offices within the boundaries of Schiphol. These include the global headquarters of ABN Amro, ING, SkyTeam, Martinair, Schiphol Group and Transavia.com, and the Netherlands head offices of Iran Air and Nippon Cargo Airlines. The World Trade Center Schiphol Airport alone has over 60,000 employees working at more than 540 global companies. Developing nations in particular are realising the competitive advantages associated with global airports. So, while the U.S. has targeted US$2 billion to spend on airports over the coming years, China will spend up to US$240 billion on 56 new airports and the Middle East plans to invest US$104 billion. India also plans to build 20 new airports and modernize another 58. Geographically decentralized from Europe and the U.S., these nations consider airports to be vital infrastructure for transportation, logistics and economies. Like they do with their business districts and financial centres, cities would be well advised to put in place strategies, incentives and programs that make their airports globally attractive. Image opposite: Amsterdam Airport Schiphol masterplan © KCAPArchitects&Planners

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MACH I: AIRPORTS OF THE FUTURE

development

The development of non-aero real estate at airports is a different ballgame than what is played in cities and urban centres. The development game at airports is played in accordance with a different set of rules – one that does not dovetail simply with the property game that is played in cities. It would be intuitive to argue that the rent for office space should correspond directly with proximity to a major CBD – this is where the action is. It also makes sense that office rents should drop commensurate with an increase in the distance from the city. It’s all about location, location, location. Right? Not necessarily so, according to a report published by Driver Jonas Deloitte, which shows that airports such as Gatwick Airport (LGW), London Heathrow Airport (LHR), Amsterdam Airport Schiphol (AMS) and Zurich Airport (ZRH) command a far higher premium for office space than their corresponding CBDs (see the graph below). In some cases, the average office rent for onairport space is more than double the average rent charged for CBD office space. This is an unusual anomaly, especially considering that an office location at an airport does not present developers and commercial tenants with an especially attractive proposition. Firstly, non-aero tenants such as technology institutes do not rely on the airport to conduct business. Technology institutes surrounding AMS, for example, attribute a 42% dependency rate on aviation compared with 88% for transport firms. Secondly, an

airport is a noisy place, where services and transport infrastructure are expensive, parking is limited, it is subject to strikes and the whims of labor unions, it is dangerous and it often has little sense of place or community. It also costs almost twice as much to construct a building at an airport, and the planning and security regulations are often higher. And compared with, say, an international financial district, the airport’s core activity invariably revolves around aviation, not the development, management and leasing of office space. So, why invest or develop at an airport? And what would drive a commercial tenant to take up a lease at an airport in the face of these myriad drawbacks? According to Christophe Petitjean, managing partner at Landside Partners, non-aero office tenants are prepared to pay for an opportunity cost that positions them in an internationally-favourable location, that has excellent options for local, regional and international transport, and that has been proven to attract and retain young talent. Petitjean argues that the opportunity for airports to leverage commercial real estate development is largely forfeited because offices are considered by airports to be part of the service infrastructure that they are obliged to provide and finance with their aviationbased activities. Consider, then, the probable rents that could be achieved by airports if the real estate development opportunity for office space was fully leveraged.

Airports are simply sophisticated railway stations with some guys playing with big flying toys, blocking development potential. Christophe Petitjean, Managing Partner, Landside Partners MAD Driver Jonas Deloitte reveals that on-airport office rents are BRU consistently and substantially higher than commensurate office ZRH Office rent off-airport rents that are found off-airport in CPH CBDs. This phenomenon occurs despite the somewhat exorbitant CDG rental premiums that are charged FRA in global cities. This occurs largely because the non-aero AMS airport real estate development is financed largely by the revenues LHR derived from aviation, unlike LGW cities where myriad other subsidies come into play. £100 £300 © 2012 Woods Bagot

Office rent on-airport

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technology

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WARP Speed Contents Executive summary Introduction

1 1.1 1.2 1.3 1.4

Future-gazing (Non) fiction Aerotropolis Property drawcard Development

2 2.1 2.2 2.3

Technology Mobility Social networking Pax tracking

3 3.1 3.2 3.3

Pax experience Profiling Terminals Luggage

4 4.1 4.2 4.3 4.4 4.5

Efficiency Governance Collaboration CUSS & CUPPS Planning Workplace

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Expert panel

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References

Advanced technologies are changing the face of the aviation industry. Technologies – particularly mobile-based technologies – are creating seamless pax experiences, opening up new sources of revenues, attracting new customers, providing sophisticated insights into consumer preferences, and tailoring what is a massive global industry to the needs of individual consumers. The coming years will provide the industry with an unique tool through which airports, airline carriers, and other aviation-related organisations can create genuine competitive differentiators. Julia Sattel, vice president of IT with Amadeus IT Group, confirms that ‘it is the next five years that offer the greatest opportunity’. mobility

Let us start with a disclaimer: the adoption and use of next-generation technologies is completely dependent upon user preferences. As will be explored later in this report, not all user groups exhibit a preference for advanced technologies to inform and guide their pax experience. Indeed, demographics play a large role in how airports and their partners should design, develop and manage these technologies. For example, the global 2010 JD Power ‘Global Airline Traveller Survey’ reveals that over 40% of passengers in Latin American countries still prefer to use check-in desks, while this figure drops to 10.8% in North America and 20.5% in Asian countries. Conversely, just 4.3% of passengers in Latin America check-in using a smartphone, compared with 7.5% in Asia. The same preferences differentiate passengers of different ages. While 24% of passengers aged between 18 and 34 use a smartphone to book a trip, the 2011 Amadeus U.S. Air Travel Survey shows that the average for all travellers is 16%. Beyond these demographic differentiators, there exist other obstacles that will likely retard an immediate worldwide implementation of mobile technologies. For example, one of these main challenges to the widespread adoption of near-field communication (NFC) technologies will likely arrive in the form of legal restrictions. This is particularly relevant to the tracking of passengers through an airport, where the legality of tracing the movement of individual passengers varies by country. © 2012 Woods Bagot

Cultural customs and societal expectations have also already started to define which countries lag in the adoption of advanced technologies.

40.3% Latin American pax that use check-in desks

10.8% North American pax that use check-in desks 2010 JD Power ‘Global Airline Traveller Survey’ But despite these possible demographic-based inhibitors, next-generation technologies provide the industry with a reason for great excitement. Firstly, we know that the demand for these consumer preferences exists. Consider the astounding adoption of mobile technologies all over the globe, which had grown to 5.9 billion discrete mobile connections by the end of 2011.

1.1

billion

Mobile phone connections worldwide in 2001

5.9

billion

Mobile phone connections worldwide in 2011 Casey Research ‘Converged Networks’ And secondly, passengers clearly demonstrate that they want more integrated and more mobile technologies. According to SITA’s most recent Airport IT Trends survey, passengers are desperate to change the procedures of security screening, baggage collection, and check-in – processes that can most readily be changed by exploiting available mobile technologies.

35.7% Pax that would use a service to receive airport navigation directions on their smartphone

36.7% Pax that would use a service to receive real-time baggage arrival information on their smartphone

39.9% Pax that would use a service to receive real-time flight status information on their smartphone 2010 JD Power ‘Global Airline Traveller Survey’ Page 15 | 36


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So, mobile devices now allow a significant proportion of travellers to talk, connect, search, do business, shop and navigate wherever and whenever. Clearly, this corresponds well to the areas in which airports and airline carriers can leverage – how people talk, connect, search, do business, shop and navigate. Consider the first key attribute – how mobile technologies allow people to talk wherever and whenever. In recognition of this, Emirates Airlines started to allow the use of mobile phones during flight on aircraft in 2008, which has been enabled by the installation of an on-board picocell. Qantas Airways, Malaysia Airlines, Saudi Arabian Airlines and TAM Airlines have all followed suit, with Air New Zealand, Cathay Pacific, Lufthansa Airlines, Singapore Airlines and Virgin Atlantic Airways also expected to soon allow the use of mobile phones on their own fleets. Similarly, Wi-Fi is becoming increasingly common on flights, with the Wall Street Journal estimating that there are now around 1,700 Wi-Fi enabled planes currently flying in the U.S. The adoption rate of passengers using in-flight Wi-Fi increased from 4% in 2010 to 8% in 2011, which is not as fast as expected. However, in some cases such as the Virgin America ‘nerd bird’ flights from San Francisco and Boston, usage is up to 26%. Virgin America is the also only airline to offer Wi-Fi on 100% of its fleet, while United Airlines offers only 2% of its fleet as Wi-Fi enabled. JetBlue, a latecomer to in-flight WiFi, plans to start installing the necessary equipment in late-2012.

© 2012 Woods Bagot

According to In-Stat, U.S. airlines collected US$155 million in charges for on-board WiFi in 2011, which was not enough to make the program profitable taking into account retrofit installation costs of US$100,000 per plane. Revenues in 2012 generated from on-board Wi-Fi are expected to be marginally higher and are projected to hit US$225 million. But while the adoption of in-flight Wi-Fi has been slower than expected, airports and airlines must realize that its general trajectory is up – to a point where passengers will eventually expect and demand fast, free Wi-Fi connectivity. Luckily, there are revenue models that can be used to pay for in-flight Wi-Fi. Airports and airlines can collaborate to provide a seamless wireless pax experience throughout the lifecycle of a trip. Crossselling would seem to offer the greatest potential, where customers can be offered in-flight upgrade opportunities while on the ground and destination-based offers while in-flight. But a fine line exists between informational overload and informational awareness – consider the difference between a business traveller that arrives at the airport frustrated with an over-inundation of electronic collateral from the airport and airline, and a passenger that arrives knowing that their flight is on time, that they are already checked-in and that the weather at their destination requires they keep a jacket at the top of their carry-on bag.

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social networking

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WARP Speed Contents Executive summary Introduction

1 1.1 1.2 1.3 1.4

Future-gazing (Non) fiction Aerotropolis Property drawcard Development

2 2.1 2.2 2.3

Technology Mobility Social networking Pax tracking

3 3.1 3.2 3.3

Pax experience Profiling Terminals Luggage

4 4.1 4.2 4.3 4.4 4.5

Efficiency Governance Collaboration CUSS & CUPPS Planning Workplace

5

Expert panel

6

References

Social networking and the aviation industry would seem to have a relationship that is simultaneously dichotomous and harmonious. Why? Aviation is an inherently social industry that obliges people to form spontaneous social contracts due to their physical proximity, yet it is also an industry that is supported by a privileged and wealthy level of society that places a high value on privacy and exclusivity. But as the demographic compositions of leisure and business travellers change, customers are becoming increasingly open to sharing personal information through social media channels. So it seems that the inherent dichotomy between the openness of social networks and the privacy of the aviation industry is slowly being resolved.

For example, a business customer might be offered a room that is easily configurable from a bedroom into a workspace. Or a leisure traveller might be approached with the offer of a winery tour based on the hotel’s knowledge of previous travel experiences and their penchant for wine. This immersion of hotels into a seamless integration between virtual and physical worlds is allowing hotels to continually refine their operations to suit the ever-changing wants and needs of their guests. These wants and needs might be seasonal, they might be fashionable, or they might even be generational, requiring hotels to adapt with the changing season, the changing fashion and the changing demographic.

Just like web pages cache information to target advertisements, just as retailers retain consumer This is validated by the 2011 North American preferences to target future sales, and just as Technographics Travel Online Study, which hotels retain guest profiles to enhance their offer shows that the proportion of leisure travellers of experience, so, too, can airports and their that participate in social media rose drastically partners use social networks to retain passenger from 58% in 2008 to 72% in 2010. information. This promises to equip airports with a deep level of knowledge of customer profiles, Some airports and airlines have already started preferences and priorities. Do passengers prefer to leverage the latent possibilities offered by to check-in while they are still airside? Do they social networks and mobile communication value constant interaction and guidance by platforms. Airtroductions.com, for example, airport staff or do they prefer a more low-touch, connects people that are scheduled to catch the on-call approach to airport services? Are they same flight, while Bluenity.com has been set up likely to be satisfied with airport-branded to promote communication between customers bathroom products or is a typical traveller profile travelling with Air France and KLM Royal Dutch more suited to a boutique range of Airlines. And yet other airline carriers are using merchandise? Would they be highly appreciative Facebook to sell tickets and Foursquare to of complimentary Wi-Fi access? reward loyal customers. So what is the next step? Perhaps most importantly, retailers are using social media to engage customers by providing Social media platforms offer airports the relevant content. And Steve Grout, chief possibility of one major advantage: the ability to executive at Targetbase Claydon Heeley (TBCH), leverage personal information that would reckons that a 1% increase in customer otherwise be forfeited. Social media gives engagement generates almost 3% increase in airports myriad profile characteristics of the positive effect on the value that customers passengers that can be used to great benefit. To deliver to a brand. understand how, airports would be well advised to look to other industries to preview the latent Consider the ostensible advantage that an airline opportunities available by gaining access to this could have, for example, over Google.com. detailed level of personal information of their While Google attempts to provide personalized customers. search results based entirely on web browsing The hotel sector, for example, is leveraging personal information gained through social media interaction to help them better understand their customers. In turn, they are able to ensure that customer experiences are highly tailored and specific. Hotels are using ‘cached’ guest information to effortlessly enhance a hotel’s operational performance through actively anticipating guest needs – a happy customer is a good customer. © 2012 Woods Bagot

history, an airline knows the demographic profile of each of their customers: their age, their location, their preferences and myriad other personal details have been garnered from a closed and firewalled network.

This suggests that airports and their partners are able to offer a high level of personalisation to customers. In turn, this drives engagement, brand value and cross-selling opportunities. Page 17 | 36


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The usage and preferences exhibited by passengers can sometimes be unexpected and surprising. The Wall Street Journal reveals that Virgin America passengers ‘have taken to contacting the airline in-flight through social media’. So, instead of asking an available flight attendant, some passengers send questions via Twitter about food and the location of power outlets, while ‘others zap questions to the airline’s office about flight delays or missed connections’. In some cases, the airline has even made flight attendants aware of previously unknown passenger problems via an information chain that is routed through the pilot.

pax tracking

Passenger tracking – far from being the Big Brother-type experience anticipated by Orwell – is being driven largely by consumers that realize its potential advantages. The Amadeus Future of Technology in Travel survey reveals that ‘cameras and sensors’ that ‘automatically recognize’ appeal to 62% of passengers. Tampa International Airport (TPA) has recognised the potential gains to the passenger experience and is currently trialling Bluetooth-enabled tracking after a survey passengers in airports to expedite the security and border control procedures conducted by the airport showed that 84% of its passengers would like to be provided with information on wait times.

A number of airports have similarly started to use advanced social media to engage passengers, who might want to ask a question, seek flight information, offer feedback, look for deals and offers, investigate destinations, or connect with fellow passengers. But the next generation of social media applications that is most appropriate for airports will be those that offer an augmented reality experience. Mobile devices that use NFC, RFID or geo-location technologies will be able to give a passenger valuable location-based information. Such information can include way-finding, directions, personalized retail offers, concessionaire deals, and flight-based alerts. Already, Google is planning to map major public buildings – airports, train stations, libraries – in the same way that it has provided ‘Street View’ on its Google Maps. Called Google Places, this initiative lends itself to a passenger being able to undertake reconnaissance of an airport prior to having physically visited the location. This type of augmented reality can be extended to passengers while inside the actual airport. The Amadeus Future of Technology in Travel survey, for example, shows that 61% of passengers would find useful an ‘application that overlays information about the physical world around you through your mobile device, for instance telling you where the nearest ATM or restaurant is’. Clearly, passengers are ready for the next level of engagement through technology. © 2012 Woods Bagot

The system anonymously recognizes the location of passengers through Bluetooth signals emitted from passenger mobile devices. Passengers are able to see queuing times on digital displays, and initial passenger responses have been positive. Likewise, an initiative that tracks passenger movements through Sydney Airport (SYD) will soon be trialled, possibly enabled through Bluetooth, heat sensor equipment or boarding pass handover – all of which conceal the passenger’s identity. Passenger tracking can offer to airport stakeholders myriad benefits. For the passenger, it offers an increased level of independence, who can confidently navigate such inconveniences as waiting times. For the airport and airline carriers, passenger tracking optimizes the operational procedures of check-in, baggage drop-off, boarding, and baggage collection. Page 18 | 36


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pax experience

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WARP Speed Contents Executive summary Introduction

1 1.1 1.2 1.3 1.4

Future-gazing (Non) fiction Aerotropolis Property drawcard Development

2 2.1 2.2 2.3

Technology Mobility Social networking Pax tracking

3 3.1 3.2 3.3

Pax experience Profiling Terminals Luggage

4 4.1 4.2 4.3 4.4 4.5

Efficiency Governance Collaboration CUSS & CUPPS Planning Workplace

5

Expert panel

6

References

Innovations abound in the aviation industry to improve, enhance, expand and enrich the passenger experience. Successful innovations can be targeted toward specific demographic groups, which are becoming increasingly discernible owed largely to the discrepancies that are being manifest through adoption rates of advanced technologies. However, it is likely that the most successful innovations will be those that are targeted toward individual passengers – again made possible through technological innovations. profiling

A considerable number of annual research reports within the aviation industry reveals the profile characteristics of business passengers and leisure travellers. Business travellers, for example, typically travel alone or with a single colleague. They arrive via car or taxi 45 minutes in advance of an international flight. They use remote options, kiosks and mobile devices to check-in. They spend little on retail, duty free and food, but are endowed with a considerable budget. Their main goal is to pass through the check-in, security and retail sequences as quickly as possible. Their destination is the airline carrier’s business lounge. Meanwhile, the leisure traveller typically rolls in a group of between 2 to 4 people, who arrive via train or bus at least 2 hours in advance of an international flight. Although they increasingly use kiosks and mobile devices to check-in, they mostly rely on counter-based check-in. For this traveller demographic, there is a high level of opportunity for retail and food offers. This research, however, reveals two major failings that continue to plague the aviation industry. Firstly, there has been little investigation that interrogates the demands that will be placed on airport operators and airline carriers by the significant demographic changes that are anticipated within the travel industry. As these demographics emerge, it is critically important to understand who these passengers are, what they want and how they are changing. Airports need to consider the implications that different demographic groups will have on airport planning, design and operation. For example, we know that the leisure traveller typically journeys with 2 to 4 people. What, then, are the implications of this on an airport’s seating arrangements, its check-in procedures and its © 2012 Woods Bagot

ability to process mid-sized groups of people through security? Similar questions could be asked of other emerging demographic clusters – Asian business travellers, Russian leisure tourists, aging European boomers, middle-class Indian passengers. Secondly, the aviation industry – unlike the retail sector – has lagged in designing initiatives and experiences that focus on individual customers. Demographic research reveals interesting findings applicable to large cohorts of people that exhibit similar profiles. However, demographic research is inherently generalized and it is unable to provide insight into the extraordinarily varied preferences of individual passengers. Customers are dynamic and they demand of service providers a deep understanding of their profile characteristics. Consider an analogy made by Christine Hill, Executive Vice President of the Phoenix-based ServiceElements: Customers are multidimensional, which means they do not come in standard packages and act the same way. They have different backgrounds, expectations and experiences. Further complicating the issue, a customer may be buying the same service at two different times for two totally different reasons. Consider a restaurant patron who arrives one day with a group of business associates, but visits on another day with a group of friends for a special occasion. The two situations are entirely different from this customer’s perspective, and so too are his expectations different for each situation. The customer’s expectations at the business meal include timeliness and limited presence by the waiter. Expectations for the social meal are more relaxed, and the party of friends may want the waiter to be friendly and talkative. The individuals attending the social outing are probably not as concerned about time as people attending an afternoon lunch break from work. While demographic profiling is necessary to understand the broader preferences of cohorts, individual profiling will be critical to the future of successful airport operations. Individual profiling is in its infancy, but we can be sure that social networks, passenger tracking mechanisms and the design of terminals will play central roles in helping airports to better understand and respond to individual preferences. Page 19 | 36


MACH I: AIRPORTS OF THE FUTURE

The U.S. is the only country where more passengers fly for business than for leisure. 2009 North American Technographics Travel & Auto Online Survey terminals

Airports have available to them a number of tools that can be leveraged in accordance with passenger demographics and individual passenger preferences. These tools have a substantial ability to affect the passenger experience. Most importantly, airlines and airports can work together to ensure that the passenger experience is jointly owned and jointly leveraged for maximum shared benefit. This is critically important. Passengers want – and need – a seamless travel experience. Differentiation between landside, airside and in-flight environments can confuse passengers and impair their perception of airport and airline carrier brands. For example, the image of an airline carrier can be degraded because of a poorly planned airport. Or, as the head of ground product at one of Australia’s leading LCCs concluded in an interview with Woods Bagot, even an unclean landside bathroom or a long wait for a taxi may be harmful to the branding of an airline. Continuing with this example, we know that LCCs are generally seeking to increase their share of the corporate market, which has been proven to be more lucrative and less susceptible to macroeconomic fluctuations. One such LCC, for example, reported to Woods Bagot that it wants to increase its share of Australia’s corporate market from 10% to 20%, which will also allow them to increase their loyalty programme and lounge

Membership. Central to this kind of strategic plan, such an airline carrier will need to reposition their airport presence to capture a market segment of passengers that has a different set of wants, needs and preferences than its core market. The aforementioned interview with the head of ground product at one of Australia’s leading LCCs revealed that airport retail provides a typical example of how an airline carrier can work with an airport to better position themselves for future revenue capture. As LCCs seek to drive corporate passenger patronage, retail needs to be provided to capture leisure travellers without creating a ‘lobster trap’ experience for regular business passengers that seek to move through procedural obligations as quickly as possible to maximize their time in the airline carrier lounge. This suggests that airports and their airline tenants need to work together to reconcile the need for retail spend optimization with minimized disruption and minimized travel distances for business passengers. The interview also exposed the need for airports to work with airlines and other airport tenants to ensure that the airport retail offer is consistent with the image and brand of the airlines. Such collaborative efforts between airports and airline carriers in the planning, design and operation of airports will maximize mutual benefit.

In 1950, the median age of developed countries was 29. By 2050 the median age will be 46. 2009 World Population Aging, U.S. Department of Economic & Social Affairs

© 2012 Woods Bagot

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luggage

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WARP Speed Contents Executive summary Introduction

1 1.1 1.2 1.3 1.4

Future-gazing (Non) fiction Aerotropolis Property drawcard Development

2 2.1 2.2 2.3

Technology Mobility Social networking Pax tracking

3 3.1 3.2 3.3

Pax experience Profiling Terminals Luggage

4 4.1 4.2 4.3 4.4 4.5

Efficiency Governance Collaboration CUSS & CUPPS Planning Workplace

5

Expert panel

6

References

Luggage presents passengers with a significant encumbrance during their activities within the airport terminal. This has been shown to dramatically affect revenues derived from retailers, concessionaires and carrier lounges. A passenger that is unencumbered by luggage has more time and more freedom to engage in the activities that drive revenues for airports and airport tenants. As explored in the research investigation ‘Towards Airport Passenger Experience Models’ by students at the Queensland University of Technology’s School of Design, passengers spend time on two activities when they are within an airport terminal: processing activities and discretionary activities. Both types of activities are plagued by the passenger’s encumbrance of luggage.

Various studies, including the paper ‘Towards Airport Passenger Experience Model’ indicate that a piece of luggage will define a passenger’s activities and will shape the passenger’s interactions with other people. Hand luggage affects a passenger’s ability to use concessionaires, retail, F&B and airline carrier lounges. For example, towing and carrying cumbersome hand luggage impairs the ability of a passenger to focus on products, it obstructs their ability to fully engage with customer service representatives and encumbers their ability to navigate and wayfind.

An apt analogy of this encumbrance can be made with a couple’s trip to the beach. This couple will take a bunch of possessions with them – a pair of sunglasses perhaps, a book, towels, sunscreen, a bottle of water, an MP3 player, a phone, maybe even an iPad – which A passenger that is engaged with processing they must leave on the beach during periods of activities (which include the formal interactions activity like walking, swimming, playing beach required throughout the airport journey) is volleyball. Assuming that the beach is a public slowed by the burden of luggage. The processes space, this ‘baggage’ severely limits the of checking-in, dropping off checked-in couple’s ability to concentrate fully on their baggage, being processed through security, discretionary activity. They must constantly shift clearing customs and boarding a plane are their gaze to their belongings, watching the bag slowed considerably by passengers with and monitoring the crowded beach for suspect luggage. activity. For example, luggage hinders the expedience and efficiency with which passengers enplane and deplane. Passengers have been observed to increasingly stow their hand luggage in the first overhead compartment that is available. A passenger sitting toward the rear of a plane will often stow their carry-on bag in an overhead compartment that is located toward the front of the plane. This particular passenger is motivated by finding the first available spot for their luggage that will allow them to quickly deplane. However, passengers that sit at the front of the plane are then posed with the difficulty of finding an unoccupied overhead compartment that is located behind their assigned seat. This causes significant blockage in enplanement and deplanement due to a large volume of passengers that are forced to navigate to an available overhead bin before returning to their assigned seat. Perhaps even more burdensome is the inconvenience caused to passengers by luggage during the time that they spend on discretionary activities within the airport, which describe everything else that a passenger does: shopping, eating, lounging and socialising. Not coincidentally, these are the activities that also drive revenues for airports and their tenants. © 2012 Woods Bagot

There are two ways in which airport operators and airline carriers can alleviate these problems caused by the encumbrances of hand luggage. The first, and most common, approach is to design the passenger experience around not only an individual, but an individual with a precious (albeit sometimes large and cumbersome) piece of hand luggage. The width of retail isles, the placement of advertising, the use of moving walkways and the heightened measures of security have all been designed specifically to accommodate a passenger that tows with them a piece of hand luggage. However, ‘Towards Airport Passenger Experience Models’ shows that hand luggage considerably slows down the procession of passengers through check-in, security screening and shopping sequences. The second approach is to treat carry-on luggage similar to checked-in luggage – except that instead of being stowed in the cargo bay of the aircraft, the hand luggage is delivered to the plane’s overhead compartments. Airline carrier lounges are particularly well positioned to capitalize on this value-add mechanism. Page 21 | 36


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Consider the issue of trust that was explored in the analogy of the couple’s trip to the beach. It is this issue of trust that is partially responsible for the success of an airline carrier lounge. Like other typologies of private clubs (golf clubs, city clubs and polo clubs) airline carrier lounges effectively screen out people that do not fall within a specific demographic. Within the airline carrier lounge, this creates a mutual feeling of trust. Airline carrier lounges are particularly successful because the feeling of trust that is fostered allows the passenger to leave their bag, which in turn allows them to spend more time on informal-discretionary activities (which are non travel-specific, as opposed to necessary-discretionary activities, which are travel-specific). More time spent on informal-discretionary activities is more enjoyable for passengers and allows them to better engage with brands. It is worth considering the potential for airline carriers and airports to invest in the mechanisms necessary to enable a passenger to divest of the significant encumbrances brought about by having to tow around hand luggage. Emirates has recently launched a concept that offers passengers a baggage delivery service at Dubai International Airport (DXB). Passengers pay a set fee to have a dedicated airline carrier agent collect their baggage, clear it through customs and deliver it to the passenger’s selected address. In designing this initiative, Mohammad Mattar, divisional senior vice president for Emirates, hopes to provide passengers with ‘a seamless and efficient travel experience’ that ensures ‘comfort and convenience’. However, the value-add benefits could potentially flow beyond the airline carrier lounge. This mechanism would likely help airports to recover greater revenues from increased informal-discretionary passenger activity – customers will likely focus more intently on retail offers, spend longer at concessionaires, stay at a cafe for two cups of coffee instead of one, and spend less time being processed through security screening. This is self-perpetuating. The alleviation of passenger stress from a simpler, quicker security process also puts passengers in a less flustered mood – a condition from which concessionaires, retailers and airline carriers can significantly benefit. © 2012 Woods Bagot

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efficiency

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WARP Speed Contents Executive summary Introduction

1 1.1 1.2 1.3 1.4

Future-gazing (Non) fiction Aerotropolis Property drawcard Development

2 2.1 2.2 2.3

Technology Mobility Social networking Pax tracking

3 3.1 3.2 3.3

Pax experience Profiling Terminals Luggage

4 4.1 4.2 4.3 4.4 4.5

Efficiency Governance Collaboration CUSS & CUPPS Planning Workplace

5

Expert panel

6

References

Collaboration, cooperation, co-location: these are the new buzzwords of a successful professional corporation. Organisations that service the insurance, resources, manufacturing, professional services and financial services sectors are using these attributes to increase efficiencies, intensify productivity, stimulate creativity and – ultimately – to drive revenue. These organisational characteristics have, however, received a mixed response from organisations within the aviation industry. For example, the use of such technologies as the common use self-service (CUSS) kiosk system – which has been proven to substantially drive efficiencies and potentially reduce time from check-in to arrival at the airline lounge to 4 minutes – has yet to gain widespread acceptance. But the same resistance was observed against the widespread adoption of common use terminal equipment (CUTE) some 20 years ago, so despite initial resistance, it is likely that air transport industry organisations will increasingly turn to collaborative, cooperative and co-locative models in the near future in an effort to increase efficiencies, intensify productivity, stimulate creativity and drive revenues. governance

Ideally, airports would embrace a shared model of governance with their airport tenants. This governance model would transcend the management of day-to-day activities and into longer-term strategic planning efforts. This governance would be horizontally arranged so that all stakeholders involved with the airport could help to inform the decisions that affect them. The concept of shared governance is not new. Some of the world’s most successful universities employ a model of shared governance, where participation among departments to the operation of the university is maximised, but accountability remains clear. This ensures that the university operates fairly and proportionally. Neither is the concept new within the aviation industry. Asian and Arab countries often integrate their national flag-carrying airport and airlines into a single entity for the sake of the state’s national competitiveness and economic development. And the industry itself has realized the importance of networked governance, with Boston Consulting Group (BCG) reporting in 2004 that airport operators needing to ‘work much more closely with the carriers to optimize © 2012 Woods Bagot

joint interfaces and to leverage cost and revenue synergies’. In countries such as the UK, Australia, Germany, South Africa and Argentina, where airport privatization is rife, a shared model of airport governance can be relatively simple to implement (assuming that the airline carriers and other stakeholders are willing and able to partake). However, in the U.S. and New Zealand, where airport privatization is uncommon, a networked governance model suggests a higher level of complexity. However, despite the level of regulation and privatization, all stakeholders within an aviation community would benefit from a more direct, more influential, more collaborative, more active and more participatory role in the governance structure of the system in which they operate. collaboration

Tony Tyler, director-general of IATA, recently spoke to attendees about the importance of collaboration at the Airports Council International’s (ACI) World Annual General Assembly in Marrakech, Morocco. He cited the example of London Heathrow Airport (LHR), where an ongoing dialogue between the airport and airlines is helping to drive capacity expansion, optimize existing capacity, take advantage of developing technology, mitigate noise and emissions, enhance surface access and improve operational resilience. More often than not, however, airline carriers and airports exist in an environment that is tenuous and stressed – a symptom of the competition that exists between these contingents. Airports contend for revenues that are derived from the same customer bases from which airlines generate their own revenues. Yet the airline and airport contingents rely heavily on each other to ensure that revenue is maximized and customers are engaged. The relationship between the airline carriers and airports needs to be co-generative and symbiotic, not tenuous and stressed. The primary impediment to collaboration between airports and their airline carrier tenants is an asymmetrical allocation of revenue. As passenger traffic slowly returns from the lows experienced during the global recession, airports are starting to realize profitable quarterly statements. Airline carriers, meanwhile, are not enjoying such profitability, which creates the cause for potential dispute. Page 23 | 36


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Unfortunately, airline carriers often exhibit reluctance to share proprietary passenger information with their airport hosts. There can be a severe consequence of this uncooperative behaviour: a passenger that will likely not experience any engagement with the airline carrier until the departure gate. This is becoming an increasingly common scenario, especially considering that over 50% of passengers now check-in remotely from their computer or smartphone (according to Amadeus).

© Wallpapers DiQ Figure 4.A: Terminal 2, Munich Airport (MUC). On the other hand, the potential benefits enabled by collaborative relationships can be considerable. At Munich Airport (MUC), Lufthansa has collaborated with Flughafen München GmbH in a model that offers both ventures a joint-ownership of Terminal-2-Betriebsgesellschaft (Terminal 2 Operating Company). This partnership transcends financial, operational and managerial characteristics, with Flughafen München GmbH owning 60% of the share and Lufthansa contributing the remaining 40%. ‘We basically put all our ideas into the construction phase of the terminal,’ said Stefan Kreuzpaintner, head of revenue management at Lufthansa, in an interview with Australian Business Traveller. ‘We run Terminal 2 jointly and we built it together.’

© JSK Architekten Figure 4.B: Terminal 2, Munich Airport (MUC). The benefits that have been derived from this collaborative ownership model have been astounding. Reporting from Terminal 2, Australian Business Traveller recorded a time of 4 minutes from the airport’s entrance to Lufthansa’s business class lounge. And compared with the 75 minute connection time common at Sydney Airport (SYD) and a 90 minute connection time at London Heathrow Airport (LHR), the 30 minute connection time from international to domestic flights at Munich Airport’s Terminal 2 is both welcome and without precedent. The collaboration between airport and airline carrier allows Lufthansa to expedite passenger movement by influencing the availability and number of security staff present in the airport. ‘If our customers are in queues less, they’re faster through the terminal,’ said Kreuzpaintner. © 2012 Woods Bagot

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cuss & cupps

i i.i i.ii i.iii

WARP Speed Contents Executive summary Introduction

1 1.1 1.2 1.3 1.4

Future-gazing (Non) fiction Aerotropolis Property drawcard Development

2 2.1 2.2 2.3

Technology Mobility Social networking Pax tracking

3 3.1 3.2 3.3

Pax experience Profiling Terminals Luggage

4 4.1 4.2 4.3 4.4 4.5

Efficiency Governance Collaboration CUSS & CUPPS Planning Workplace

5

Expert panel

6

References

A 2008 report published by the Airport Cooperative Research Program (ACRP) reckons that one reason for the optimistic outlook for common use self services (CUSS) implementation becoming more widespread, particularly in the U.S., is that it provides real financial benefit. IATA estimates that CUSS can generate an average cost savings of $2.50 per check-in and that a 40% market penetration of CUSS kiosks would save US$1 billion per year. Over the next 5 years, as airlines continue to face increasing fuel costs, this level of market penetration is not an unreasonable assumption, especially considering the massive cost savings available. SITA’s most recent ‘Airport IT Trends Survey’ shows that 44% of airports have already implemented self-service check-in kiosks. The majority of airports (53%) are still planning to increase the number of self-service check-in kiosks, with 47% also planning to implement common bag drop locations. Moreover, the rift in check-in procedures that had clearly characterized and separated LCCs from legacy carriers in the past is also in the process of being reduced through the adoption of CUSS systems. Check-in procedures are becoming increasingly process-based among both carrier types. ACRP’s paper ‘Innovations for Airport Terminal Facilities’ shows that terminals designed to be process-based and passenger-centric are highly efficient compared with traditional exclusive-use models.

In the past, this may have financially benefited the legacy carrier, but as airports increasingly seek to create collaborative arrangements, the increase of revenue due to a lack of competition may in the future be outweighed by the lost opportunities that can otherwise be created in the form of increased operational efficiency and new revenue streams. Part of the problem is the unpredictability in the long-term growth of LCCs. Compared with the more consistent growth of legacy carriers, LCCs are susceptible to volatility. In turn, this requires that LCCs demand from their physical assets a high level of flexibility and modularity. Fortunately, the introduction of common use passenger processing systems (CUPPS) – a more wholly-integrated system than CUTE or CUSS – may alleviate some of the tensions that have been building between LCCs and their legacy counterparts. CUPPS is also helping to fortify collaborative relationships between airline carriers and their airport landlords. Common use passenger processing systems (CUPPS) allow airline carriers to embrace collaborative relationships with other airline carriers to enhance business performance. But CUPPS also applies the same principle to the relationship that exists between airline carriers and their landlords – the airports themselves.

CUPPS uses a standardized platform that combines both CUSS and CUTE and can be used as a catalyst to form a more collaborative However, opposition to CUSS systems exists, model between airports and airline carriers, and which stems from the different models and which can be used to overcome any imbalances competitive differences that separate LCCs from that exist between these contingents. The legacy airlines. Based on their different financial industry is already starting to experience an models, a valid argument exists to physically and increase in the utilisation of CUPPS, which operationally separate LCCs from legacy points towards an acceptance of the formation carriers. Despite offering the same basic service, of more collaborative relationships that will exist the operations, logistics and revenue streams of on new models of sharing. LCCs are based on principles that are distinct from legacy carriers. CUPPS uses a singular integrated model that allows any CUPPS-Certified platform to be So, while operational efficiencies can be made implemented. This brings a new level of flexibility through sharing facilities and technologies, LCCs and scalability to the airport, where airlines can may not, for example, be able to financially justify expand and condense their area requirements, leasing space in the same terminal as a legacy technologies and processes in accordance with carrier, which might be substantially more their contemporary business needs. For expensive. Southwest Airlines (WN), for example, example, SITA and Swissport International have has resisted entering Dallas Fort Worth developed a common-use baggage drop off International (DFW) for years because of its system called PassengerBagrop. The system prohibitively high fee structure. was tested at Zurich Airport (ZRH) in 2011, where 11 Star Alliance carriers contributed to the Meanwhile, American Airlines (AA) and United common-use system. The result? A processing Airlines (UA) – both legacy carriers – have been time for baggage drop reduced to under 30 thought to resist the entry of LCCs into seconds per passenger. Chicago’s O’Hare International (ORD). © 2012 Woods Bagot

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Figure 4.C: Airlines that Meanwhile, Aéroports de Paris has designed its use common brag drop own automated baggage drop-off system and Amsterdam Airport Schiphol (AMS) is piloting is working with airline carrier tenants for commonuse bag tagging and drop off. Figure 3.C shows aviation organisations that already have implemented common bag drop facilities.

Vienna International is expected to roll out these CUPPS boarding gates by early 2013, and will closely monitor their performance with respect to operational efficiencies, airline carrier buy-in and the effects on passenger experiences.

In an interview conducted recently by Woods Bagot, the head of planning at one of Australia’s CUPPS is particularly well-suited to a primary domestic and international airports demographic set of passengers that are revealed that there may be other opportunities demanding of airports solutions that cater to their available to drive efficiencies for both the airport increasing independence and technological ability. and its tenant airline carriers through an alternate While most airlines currently perceive their own model of deploying modern CUPPS. Instead of software and informational technologies to be outsourcing this responsibility to a third party, superior to that of their competitors, CUPPS airports can offer airline carriers greater cost establishes a technological standard that is efficiencies by owning and maintaining the enabling competing airline carriers with varied CUPPS itself. software infrastructures to use common hardware. CUPPS has the potential to completely revolutionize the passenger experience. Firstly, Airports and airlines will be necessarily forced to passengers arriving at the terminal need no longer think about CUPPS over the coming years as worry about finding the check-in desk of the more sections of the passenger experience are airline carrier with which they have chosen to fly. converted to a model of self-service. Such is the In itself, this minimizes confusion and reduces case with the self-service boarding solutions that travel distances within the airport. are being introduced to a number of airports. A common-use self-service boarding process not This is a particularly revolutionary model of only expedites passenger processing, reduces CUPPS management for airports in the U.S., wait times and resolves staff resourcing issues, where legacy airline carriers have resisted the but also engages the passenger through their introduction of CUPPS due to strong union required active participation in the boarding contracts, possible disruption to legacy departure process. control systems (DCS), and, of course, a history of controlling their own gates, displays, terminals In late 2011, Vienna International Airport (VIE) and facilities. A model of CUPPS management announced that it will became the world’s first that places the airline as a direct client of the airport to introduce common-use self-boarding airport could help to mitigate risks, minimize gates, with SITA providing the necessary IT contractual circle-work and drive efficiency. infrastructure solutions.

One of our main strategies is to increase our service quality and passenger travel experience at Vienna International Airport. This new boarding solution will substantially contribute to our objectives. Julian Jäger, COO, Vienna International Airport

© Woods Bagot Figure 4.D: CUPPS in the Woods Bagot-designed Baku Airport (GYD) in Azerbaijan © 2012 Woods Bagot

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planning

i i.i i.ii i.iii

WARP Speed Contents Executive summary Introduction

1 1.1 1.2 1.3 1.4

Future-gazing (Non) fiction Aerotropolis Property drawcard Development

2 2.1 2.2 2.3

Technology Mobility Social networking Pax tracking

3 3.1 3.2 3.3

Pax experience Profiling Terminals Luggage

4 4.1 4.2 4.3 4.4 4.5

Efficiency Governance Collaboration CUSS & CUPPS Planning Workplace

5

Expert panel

6

References

Airports that engage their tenants in the planning process of a property decision can expect to be well-rewarded by a more sustainable model of operation and a more sustainable approach to the environment. This collaborative upfront planning ensures that the airport engenders the values, mission and vision of all stakeholders. Such engagement can also provide the airport with a wealth of information that would otherwise be forfeited. This is particularly true when airports involve airline carriers in the process of a repositioning, relocation, refurbishment or development effort, but also applies to an airport’s other tenants including retailers, concessionaires and hotels. On the other hand, failure to consider airport planning, design, management and operation through a collaborative model often leads to the forfeiture of an opportunity to drive substantial sustainability objectives, make gains in efficiencies and maximize operational revenues. Take, for example, the King Shaka International Airport (DUR) in La Mercy Airport outside of Durban, South Africa, which formally replaced Durban International Airport when it was decommissioned in 2010.

Allan Moore, chief executive officer at the Board of Airlines Representatives of South Africa, has commented that there is nothing at King Shaka that would have warranted the spend on the facility, saying, ‘the new facility was built with little or no consideration of the general aviation community and a number of operations in this sector in Durban are under threat’. On the other hand, there are many examples of urban innovation and sustainability that have been achieved through collaboration, one of which is the US$519 million redevelopment of Dallas Love Field (DAL) airport. This redevelopment initiative is being jointly sponsored and programmed by the City of Dallas (the airport’s owner) and Southwest Airlines (it’s anchor tenant). It may surprise Southwest, which maintains its headquarters at Love Field, is providing the bulk of the financing (over US$315 million) for the ‘Love Field Modernization Program’ in special facility bonds, with the remainder being raised through AIP funds, TSA funds and airport PFC and capital funds.

US $ 519 Cost of the redevelopment of DAL.

US $ 300

Originally budgeted at R3.15 billion (US$415 million), but coming in at R7.8 billion (US$1.03 Cost of redevelopment contributed by Southwest. billion), the new 102,000m² (1,100,000ft²) airport has been slammed as ‘over-extravagant’. The existing three-concourse facility designed in the 1950s will be replaced by a single T-shaped Jeff Poole, director of industry charges at IATA, terminal, which – among other things – will boast is critical of King Shaka International Airport, expanded retail and concessionaire facilities. This saying in an interview with Engineering News in is a novel example of an urban renewal program 2010 that, ‘quite simply, the extravagance that is enabled by leveraging the combined resources of King Shaka International Airport cannot be public and private sector organizations in their justified’. joint redevelopment of critical transportation infrastructure. Substantial benefits – both direct Poole said that ‘there is not sustainable business and indirect – are expected to be returned to the case underpinning its rushed development… airport, its users and the broader urban and it wants to pass the entire cost burden onto environment that the airport services. airlines and their customers’. Over the first two years of operation, Airports Company South Airport tenants will profit widely from the Africa (ACSA) is expected to increase tariffs by increased efficiencies that can be expected almost 90%, raising the cost to both airlines and through a 25% reduction in the footprint of Love passengers in the form of increased landing Field by the eradication of unused and inefficient fees, increase parking fees and increased space. Most notably, a single consolidated and passenger charges. centrally-located concourse is replacing three existing concourses in an effort to minimize Critics also suggest that the construction of the service duplication. airport may have been premature, while its operational capacity may be substandard. For But, like any highly-successful large-scale urban example, up to 5 planes were delayed at any project, the benefits of the modernization given time during the 2010 World Cup. program will extend far beyond the boundaries of Love Field and into the urban context in which the airport sits. © 2012 Woods Bagot

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MACH I: AIRPORTS OF THE FUTURE

workplace

i i.i i.ii i.iii

WARP Speed Contents Executive summary Introduction

1 1.1 1.2 1.3 1.4

Future-gazing (Non) fiction Aerotropolis Property drawcard Development

2 2.1 2.2 2.3

Technology Mobility Social networking Pax tracking

3 3.1 3.2 3.3

Pax experience Profiling Terminals Luggage

4 4.1 4.2 4.3 4.4 4.5

Efficiency Governance Collaboration CUSS & CUPPS Planning Workplace

5

Expert panel

6

References

Airports and airline carriers are efficiency-driven organisations that are discerning and averse to risk. However, the aviation industry generally lags behind the finance, insurance and professional services sectors in how they drive efficiencies through their headquartered operations – their workplaces. A significant opportunity exists for airports and airline carriers to leverage the operation of their workplaces as a key driver of organisational efficiency. Better still, workplaces can also be used to influence profit beyond the cost savings made through efficiency gains. Workplaces are tools that can be used to increase productivity, foster creativity, promote collaboration and stimulate innovation – these are the real drivers of revenue. So, what kind of future workplace will help aviation organisations to increase efficiencies and drive revenues? To confidently anticipate and understand these future workplace needs, it is first necessary to define how they are changing, to recognize the drivers of these changes, to appreciate the conditions that they currently face, and to identify their future challenges. In the past, changes in occupier requirements have been observed to outpace the advancement of ‘next generation’ office design. The open plan office, for example, has now been in widespread use for over half a century. While the open plan office satisfies the requirements of organisations that seek a high level of privacy, control and fixed use, this spatial arrangement is not meeting the objectives of other commercial property tenants. Large financial services sector organisations are facing a number of changes that are influencing their office selection criteria. These changes are being catalysed by: 1. increased post-global financial crisis (GFC) competitiveness; Other companies

2. an increasing awareness of virtual connectivity and physical collaboration; 3. the lifestyle choices and changing workplace requirements; and 4. technological advancements. Competitiveness is a function of productivity and cost – an organisation that offers a high output at a low price has a significant competitive advantage over its contemporaries. As the global economy emerges from a deep recession, organisations are undertaking self-evaluations to ensure that their competitiveness is optimized. In particular, they are looking at ways in which operational costs can be cut and efficiencies improved. Importantly, these are two areas that are significantly affected by physical accommodations. Broadly categorized, organisations are looking to increase competitiveness through savings and productivity. The optimisation of savings and productivity can include: savings in rent obligations through reduced area allocation per employee; savings in cleaning and maintenance through highly efficient building systems; savings in energy costs through environmentallystainable solutions; and increased productivity through employee performance and effectiveness. However, savings in operational efficiencies are outweighed by the extent to which profitability can be increased through developing new products and entering new markets. According to research conducted by IBM’s Institute for Business Value, ‘significantly outperforming’ organisations focus less on improving operational efficiencies than they do on expanding into new markets and creating new products (see chart below). The most successful commercial properties, therefore, need to accommodate processes that enable market expansion and product development. Companies that are rated ‘significant outperformers’ focus less on improving operational efficiency as they do on expanding into new markets and developing new products. 52%

Companies that significantly outperform Improving operational efficiency

32% greater by

18% Expanding into new markets / regions 29%

32%

77% greater by

48%

43% Developing new products / services © IBM Insititute for Business Value Figure 4.E: Companies that consistently and significantly outperform. © 2012 Woods Bagot

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Post-GFC competitiveness has changed the demands that occupiers place on their tenancies. Most significantly, tenants are working their spaces harder and are demanding more inherent flexibility be integrated into the base building. Organisational flexibility and mobility can be enabled through structural flexibility. Frequent churn within business units needs to be accommodated by the base building – technical services, fixtures, fittings and furnishings should not need retrofitting as a result of an organisational churn. Inherent flexibility that has been planned within a building also serves to reduce the initial capital expenditure (CAPEX) costs associated with a tenant fit out. Dedicated risers and knock-down panels for internal staircases and penetrations reduce the amount of infrastructural work required for a tenant fit out and reinstatement at the lease end. Due to the volatility of the industry, aviation sector organisations undertake frequent churn processes and may also necessarily undergo rapid expansion or contraction in services and personnel. Buildings must be of a sufficient scale, consistency and efficiency to provide finance organisations with assurance that the building will accommodate future churn and possible movements in business size – either expansion or consolidation.

This research, compiled by the British anthropologist Robin Dunbar, has revealed a cognitive limit of around 148 people, but other anthropologists have since extended the limit to somewhere between 150 and 300, depending on circumstance. The limit of meaningful relationships extends to interaction amongst workplace colleagues. As such, organisations are restructuring their workplaces in the realisation that employees are able to communicate and collaborate more effectively with a smaller number of colleagues. They hope that breaking down workplaces into smaller configurations will enable increased efficiency in collaboration and communication. However, organisations also realize that while physical and virtual interaction is limited to smaller communities, each employee needs to feel networked, connected and engaged to the greater organisational structure. This has profound implications on buildings, as the importance of floorplate size (horizontal) yields to the need for greater organisational connection (vertical).

Two- to three-floor ‘villages’ that are interconnected with stairs, atriums and voids, are being used to enable connectivity among immediate colleagues whilst also engaging employees in the larger organisational context through visual and emotional connections. A Whatever the size of the organisation or the floorplate of at least 2,000m² positions tenants frequency of churn, research suggests that there with a much better ability to configure the is a maximum number of people with whom workplace with these features. employees can sustain a meaningful relationship.

ONE HUNDRED AND FIFTY DUNBAR’S COLLEAGUES DUNBAR DUNBAR’S NUMBER

© 2012 Woods Bagot

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i i.i i.ii i.iii

WARP Speed Contents Executive summary Introduction

1 1.1 1.2 1.3 1.4

Future-gazing (Non) fiction Aerotropolis Property drawcard Development

2 2.1 2.2 2.3

Technology Mobility Social networking Pax tracking

3 3.1 3.2 3.3

Pax experience Profiling Terminals Luggage

4 4.1 4.2 4.3 4.4 4.5

Efficiency Governance Collaboration CUSS & CUPPS Planning Workplace

5

Expert panel

6

References

Central to the growth and success strategy of any modern business is the need to drive innovation. Buildings themselves, despite their effectiveness at driving innovation, are only part of the equation: innovation needs to be driven outside of the office environment as much as it is driven inside office buildings. The modern office itself is a place in transition. Whilst the organisational structures and technology systems of the modern ‘knowledge worker’ era have already been established, most existing offices use design principles derived from the industrial era: rows of desks are planned with ruthless efficiency, and a sprinkling of creative places are provided as a token for people to interact and undertake knowledge work is sometimes provided. However, the creation and sharing of knowledge is business critical for most organisations. And whilst much attention has been placed on individual workplaces, the design of urban spaces outside of the office building for knowledge sharing has yet to emerge as a recognized need. The most obvious of this kind of space is the café, which is rapidly becoming a ubiquitous component of the professional landscape. Cafés are being used to encourage chance encounters between employees and to facilitate the kind of personal exchanges that foster spontaneous ideas. Cafés are the perfect space in which people can exchange knowledge. And the best way that people know how to exchange knowledge is by telling stories.

All four phases of this spiral – socialisation, externalisation, combination and internalisation – demand somewhat different spaces. The physical implications of this model are profound and offer architects a window into the sophisticated world of the knowledge-based organisation, while at the same time highlighting the crudeness of our current design solutions and understanding. Providing places to stimulate conversations and create discussions, ideas exchange and sharing of stories, particularly across traditional disciplines, is extremely important. Opportunities for serendipitous encounters need to be created and designed for, whilst not making spurious diversion paths that tend to be ignored by users. Telling stories that become externalized (e.g. a presentation, or video) require special spaces that are designed for an audience. Experiments with forum-type spaces are few and results mixed, but this may be more due to poor location and poor design rather than a lack of need. These spaces are mostly non-existent in the modern city. Some examples were developed in the early 70s in the USA, and Japan in the 90s tried some slightly eclectic experiments.

The space that supports this type of work is similar to the legacy systems of process working. New layouts and models are still being developed but this is the quadrant that designers know the most about. Current urban design leaves too much to chance – a critical combination of two different pieces of knowledge could be business critical and it is highly possible to increase this This leads to a contemporary concept that offers occurrence through physical space. an extraordinarily exciting new paradigm to the Over the past decade, the question posed to design of the workplace and the evolution of knowledge workers, ‘where do you come up cities and airports. As a means of with your best ideas?’ has consistently communication and transferring knowledge, generated the same answer: ‘somewhere storytelling is an approach that has been vastly outside of the office’. This concept needs to be underestimated in the contemporary business embraced to provide private and public sector world. organisations with urban spaces that are appropriate for driving innovation. While explicit knowledge can easily be documented, Nonaka and Takeuk realized in Compare the richness of places for storytelling The Knowledge Creating Company that knowledge creation is a process that moves ever that occur without the office environment – the onwards and upwards between explicit and tacit pub, the garden, the park bench, the gallery – versus the desk, the conference room and the knowledge. Combining these different types of water cooler. knowledge is difficult to achieve, but is even more difficult to achieve virtually – it requires a Given the critical role that knowledge will play in place. Viewing knowledge in this way makes it easy to understand why storytelling as a medium the success of private sector organisations, it will be critical for the city to provide the infrastructure is such a powerful idea. The figure on the necessary for knowledge exchange. opposite page shows the knowledge spiral, as articulated by Nonaka and Takeuk. © 2012 Woods Bagot

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SOCIALISATION E

EXTERNALISATION E

I

I

I I

I

I I

G I

I

I

Creating tacit knowledge through sharing experiences

Articulating knowledge through dialogue and reflection

INTERNALISATION

COMBINATION

E

G

E I

G

G

O

G

O G Sharing and creating tacit knowledge through direct experience Figure 4.F: The knowledge spiral.

Creating explicit knowledge through systemising ideas © The Knowledge Creating Company

Storytelling method

Examples of ideal spaces

Storytelling for communication

Interactive communication where the story becomes imagined (and owned) by the listener

Café, restaurant, lounge, street, pub, corridor

Storytelling to capture tacit knowledge

Richly expressive storytelling to transfer sometimes complex ideas

Forum, multi-media space, lounge, public square

Storytelling to embody and transfer knowledge

Involves the listeners in the story

Round table, booth, bench, verandah, kitchen table

Users of stories for innovation

Connecting with seemingly disparate ideas

Multi-media space, interaction node, café, public space, open project area

Storytelling to build community

Stories that bring people together

Public square, forum, video conference

Storytelling to enhance technology

Simplifying complex ideas or ‘foreign language’ ideas

Meeting room, project room, lounge

Storytelling for individual growth

Encouraging the learning of skills to communicate effectively

Small meeting rooms, informal lounge, café, booth

Figure 4.G: Storytelling and the city.

© 2012 Woods Bagot

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expert panel

i i.i i.ii i.iii

WARP Speed Contents Executive summary Introduction

1 1.1 1.2 1.3 1.4

Future-gazing (Non) fiction Aerotropolis Property drawcard Development

2 2.1 2.2 2.3

Technology Mobility Social networking Pax tracking

3 3.1 3.2 3.3

Pax experience Profiling Terminals Luggage

4 4.1 4.2 4.3 4.4 4.5

Efficiency Governance Collaboration CUSS & CUPPS Planning Workplace

5

Expert panel

6

References

The Woods Bagot WARP Speed: Mach I team consists of a panel of experts that bring to the table a vast range of experiences – from airport planning to workplace design, and from retail projects to complex infrastructure delivery. They collaborate from across the globe – from London to Perth and from Beijing to Melbourne. Most importantly, they are all committed to excellence and innovation. James Berry, Director – Transportation & Infrastructure James has significant expertise in the design and management of major complex projects. He has designed award winning buildings, delivered two multi-billion pound projects and led design teams for one of the world’s largest construction companies. James has a proven track record in the efficient design and delivery of excellent, sustainable buildings that meet the needs of the stakeholders. He has achieved this through strong design leadership, a deep understanding of the technology and logistics of construction and integrated thinking across the supply chain. James.Berry@woodsbagot.com Mark Mitcheson-Low, Director – Lifestyle Mark has developed an expansive portfolio of major projects in all sectors of design across Australia the Middle East, Asia and Europe. These projects include mixed use developments of commercial, retail, hospitality and residential sectors and major projects in transportation, education and infrastructure developments. Mark has a comprehensive understanding of the development of major projects and is able to form and manage exceptional teams of highly skilled personnel in design, management and technical aspects to ensure that highly successful outcomes are delivered. Mark.Mitcheson-Low@woodsbagot.com Vince Pirrello, Director – Asia Vince’s creations are contemporary in nature, harmonising architecture and interior environments that reflect the local culture, stimulating the senses, imagination and intellect. With an eye to attaining an uncompromised solution to meet functionality, timing and budget considerations, Vince has a clear understanding of how to extract value from built facilities while still contributing to the excellence of their design. Vince’s creativity is balanced by a high degree of commercial acumen, strong financial and project management skills and a client-focused approach. Vince.Pirrello@woodsbagot.com James Calder, Director – Research & Consulting James has extensive experience with the world’s pre-eminent organisations across most business sectors. His work at the highest levels of management gives him a unique perspective on the opportunities for the future requirements of users, organisations and suppliers. James has undertaken research projects for clients including Fuji Xerox in Japan, ABN AMRO in Europe and GPT in Australia. James has also worked with many developers to ensure buildings are future-proofed for changing tenant demands, including Terminal 3 at Heathrow. James.Calder@woodsbagot.com Matthew Lynch, Senior Consultant – Research & Consulting Matthew delivers highly successful strategies that are both human-based and business-driven: a global tenant study for Brookfield Office Properties to ensure that its future skyscrapers are globally benchmarked but locally marketable; the repositioning of the retailer Borghese to invigorate sales; the consolidation of a petrochemical giant to strengthen corporate culture and drive operational efficiencies. Matthew leads Woods Bagot’s global research division and has taught post-graduate courses at Columbia University and at the University of Melbourne. Matthew.Lynch@woodsbagot.com © 2012 Woods Bagot

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MACH I: AIRPORTS OF THE FUTURE

references

Where possible, credit, citation and acknowledgement has been provided in the body of the text. Further references have been made from collateral provided by the following organisations. Their respective websites are provided below. i i.i i.ii i.iii

WARP Speed Contents Executive summary Introduction

1 1.1 1.2 1.3 1.4

Future-gazing (Non) fiction Aerotropolis Property drawcard Development

2 2.1 2.2 2.3

Technology Mobility Social networking Pax tracking

3 3.1 3.2 3.3

Pax experience Profiling Terminals Luggage

4 4.1 4.2 4.3 4.4 4.5

Efficiency Governance Collaboration CUSS & CUPPS Planning Workplace

5

Expert panel

6

References

blog.apex.aero www.aaronkoblin.com www.aci.aero www.aci-na.org www.aerotropolis.com www.airliners.net www.airlinetrends.com www.albawaba.com www.allbusiness.com www.airportmetropolis.qut.edu.au www.amadeus.com www.ausbt.com.au www.aviationpros.com www.baa.com www.bcsgroup.biz www.bloomberg.com www.brunozzi.com www.btimes.com www.caseyresearch.com www.cisco.com www.delta.com www.emirates.com www.evolvemedia.co.il www.facilitiesnet.com www.forbes.com www.futuretravelexperience.com www.gizmag.com www.gizmodo.com.au www.heathrowairport.com www.iata.org www.ifly.com www.infrastructureinvestor.com www.josefhoflehner.com www.kcap.eu www.lufthansa.com www.nowboarding.org www.nytimes.com www.qantas.com www.reutersrealestate.com www.sita.aero www.theage.com.au www.thinkstockphotos.com www.usatoday.com www.worldconstructionnetwork.com www.wsj.com

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