Airservices Australia - Presentation-1

7/24/2019 Airservices Australia - Presentation-1

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Braj Raj Sharma

Jatinderbir Singh

Keld Conradsen

Trevor Schumm

Gaurav Golash

Integrated Business ProjectPart B


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Outline of Presentation

Overview of ASA

Core Competencies of ASA

Market Analysis India

Market Analysis China

ASA and Airport Value Chain Analysis

Recommendations

Strategy # 1

Strategy # 2

Strategy # 3


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Capabilities Analysis Market Analysis

China IndiaCompetencies

ASA and Airport Value Chain Analysis

Strategy (existing competencies)

Final Recommendation

Strategy (possible competencies)

Methodology


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Overview of ASA

Government Business Enterprise

Engaged in aviation related services (ICAO and Air

Services Act, 1995)

Airspace management

Air traffic control

Traffic and flight informationNavigation services

Aeronautical information

Aviation rescue and fire fighting

Environmental regulation and monitoring

Manages Australian Flight Information Region 11%

of the worlds airspace


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Strategic

Staffing

Partnership

Learning

Organisational

Air Traffic

Management

Aviation

rescue and

firefighting

Training &

Consultancy

Air traffic

control

Air traffic

system

C

apabilities

Co

mpetencies

TAATS


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Air Traffic Management

Aviation related training and consultancy

Aviation rescue and firefighting

Air traffic control

Air traffic system


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Market Analysis India


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Encouraging forecast on GDP growth

Infrastructure development as one of the five major

priorities of economic development

Massive thrust on exports

Cargo by air accounts for 35% of the total value of

exports

Tourism is Indias second largest foreign exchange

earner. 97% of the countrys foreign tourists arrive

by air

Singapore plans to invest USD1 billion in airport and

port infrastructure in India

India Economic Scenario


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India Present Aviation Scenario

449 airports/airstrips in the country

The Airports Authority of India (AAI) owns and

manages 92 airports and 28 civil enclaves at defence

airfields

Top 5 international airports account for 74% of cargo

and passenger traffic

The AAI provides air traffic services over the entire

Indian airspace and adjoining oceanic areas


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Congestion in the international as well as domestic

airports

Limited terminal and apron capacity

Bunching of flights

Large element of sunk cost and long gestation period

Scarce resources with the government

India Imperatives of Privatisation


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India Market Forecast

ICAO forecasts predict worldwide growth in air traffic at

5% a year or doubling in the volume of traffic once in 14

years

The Asia Pacific region is set for higher than average

growth. According to an AUTC study, it might account for

more than 50% of the world air traffic by the year 2010

Domestic and international passenger traffic in India is

projected to grow annually at 12.5% and 7% respectively

over the next decade

By 2005, the Indian airports will handle 60 million

international passengers, 300,000 tonnes of domestic and

1.2 million tonnes of international cargo annually


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India Market Opportunities

The AAI has drawn up a USD1 billion dollar plan to

upgrade ATM and CNS systems

The AAI has announced airport upgrades at a

combined investment of USD4 billion in gateway

airports at Delhi, Mumbai, Chennai and Kolkata

Aircraft handling capabilities at 22 airports being

upgraded/expanded


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India Market Opportunities

Taj International Airport Approval of the new Taj

International Airport located 72 km from Delhi

International Airport. Cost is estimated to be USD1billion

New airports at Goa, Chackai, Ajmer

Privatisation of non-gateway airports at Ahmedabad,

Amritsar, Khajuraho, Gaya, Varanasi, Aurangabad,

Thiruvanthapuram, Kozhikode, Lucknow,

Tiruchirapalli, Madurai and Coimbatore


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Bangalore International Airport taken up for

construction by a consortium comprising the Siemens

consortium, Karnataka State Industrial Investmentsand Development Corporation and the AAI

Hyderabad Airport project taken up for construction

by a consortium comprising of Malaysia Airports

Holding Berhad, GMR, Andhra Pradesh Government

and the AAI

India Competition: Existing Players


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The Airports Authority of India Act, 1994 amended

Airport Restructuring Committee established to identify

airports for privatisation

Foreign equity participation permitted upto 74% with

automatic approvals and 100% with special permission

Fiscal incentives available for promoting investment in

airport development infrastructure

New civil aviation policy in pipeline

The AAI will continue to provide security and air traffic

control services, but approach and aerodrome control

services can be given to airport operators

India Regulatory Framework


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Market Analysis China


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Government spending, continuing strong inflows of

foreign investment, gains in exports and growth in

private consumption will jointly sustain GDP growth

between 7.5% and 8%

As the world emerges from a global travel slowdown,

China is emerging as a driving force for tourism growth

For aviation and tourism purposes, significantly, all 10

ASEAN Member States have Approved Destination Status

(ADS) with China, meaning that Chinese citizens can

travel reasonably freely for non-business purposes

Negotiations soon due with other large European

countries such as France

China Economic Scenario


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The Civil Aviation Authority of China (CAAC) has revised the

national airport charges structure, effective 1 September

2002, which will lead to an overall increase in airport

revenues

The CAAC is increasingly seeking outside investment to

fund Chinas massive airport requirement

Airport reform will gather pace in 2003 following the recent

establishment of the countrys first airport group, China

Capital Airport Group

Non-government investment will be encouraged by way of

airport leases and the build-operate-transfer method

Just under 90% of Chinas 143 airports reported losses

totalling RMB800 million system wide in 2001

China Privatisation and Foreign

Investment


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China Market Overview Aviation

The Chinese aviation industry is recording double-

digit growth in nearly every category

Increase in domestic passenger is most significant

and highlights the expansion into the west and the

increase of trade throughout the country


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Airport Sector Profile 2000 2001Total Airports 133 143

4E (B747) 23 23

4D (B767, B757) 34 34

4C (B737) 43 41

3C (Regional jets) 43 412C (General aviation) 12 18

International Airports - 31

Airports Managed by CAAC - 86

Airports managed by local governments/airlines, etc. - 57

Military/Civil operations - 125

Airports with scheduled domestic services - 133

Cities with 2 airports 7 9

Airports used by China United Airlines only 18 18

Loss Making Airports 106 127

Loss Making Airports% 79.7 88.8

Total Losses (CNY millions) 900 800Current construction projects - 22

Investment in Construction (CNY billions) 19 15

Investment by CAAC (CNY billions) 9.9 11.4

Investment by Local Departments (CNY billions) 9.1 3.6Centre for Asia Pacific Aviation, 2002, The Essential China Book 2002: Airports, Airlines & Tourism

China Airport Sector


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Legend: Aircraft movements (M), Passengers (P), Freight (F), PrivatelyOperated (PO)

Airport M P F PO

Beijing Municipality 1 1 1 Y

Luoyang Beijao 2 78 74

Guangzhou Baiyun International 3 2 2 Y

Shanghai Hongqiao International 4 3 3 Y

Shenzhen Huangtian International 5 4 5 Y

Shanghai Pudong 6 5 4 Y

Kunming Wujiaba International 7 6 7

Chengdu Shuangliu International 8 7 6

Xian Xianyang International 9 9 12

Haikou Meilan International 10 8 13 Y

Centre for Asia Pacific Aviation, 2002, The Essential China Book 2002:Airports, Airlines & Tourism

China Airport Rankings


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A policy priority is to stimulate expansion of regional

hubs in order to disseminate the benefits of aviation

around the country as well as to achieve a range of

political goals

The CAAC plans investment in airport infrastructure in

China of approximately CNY110 billion during the 5-year

plan period

The CAAC investment will be used in the development of

Chinas three main hubs, two trunkline airports will be

built, and 10 trunkline airports will be upgraded. 33 new

regional airports will be added to the system by 2005

China New Projects and Market

Development


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The most pressing issue for Chinas airports in 2003 is

funding airport expansion, particularly in the remote

western provinces

By 2005, the number of airports will rise from 143 in 2001

to 172 in 2003, and to 237 by 2010

China New Projects and Market

Development


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The regulation of foreign investment in Chinas civil

aviation industry is designed to further expand the opening

up of the industry, to promote reform and development of

the industry and to protect the legal rights and interests of

foreign investors

The spectrum of foreign investment in Chinas civil aviation

industry includes civil airports, public air transport

industries, general aviation enterprises and other items

related to the air transport industry, but excludes the air

traffic control system

Foreign investors who invest in and construct civil airports

in China have first choice of investing in the operation of

items related to the air transport industry

China Regulatory Framework


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China has experienced average growth of 20% in

passenger and cargo transport every year since 1980

The CAAC estimates that mainland passenger andcargo during the 10th 5-year plan (2001-2005) will

grow at 8% and 13% annually respectively

Furthermore, an additional 65 airports are planned

for construction between 2005 and 2010

Despite Chinas attractiveness, ASA is severely

limited by regulations set out by the CAAC, which

prevents foreign firms from providing ATM both

enroute and within aerodrome

China Summary


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Thus ASA will have to take up either training and

consultancy in the aviation related services or

develop new competencies and skills so as to be ableto penetrate the Chinese market

China Conclusion


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ASA and Airport Value ChainAirport Value Chain

Process

Facilities

Activities

Horizontal

Maintenance

Environmenta l Managem ent

Communicat ion

Security

Emergency Ma na gement

Functions

Vertical

Ground Transport

Catering Reta il & Re la ted Services

A ir Tra ffic Control G round Handling Passenger Processing

Tow er Runw ay Tax iw ays Apron A irbridge Lounge BaggageHal l

CustomsAre a

Departure,Arr iv a ls

Halls

PublicTransport,Car Parks

Land ing Taxi Park D isem bark Im m igration BaggageCollection

CustomsQuarant ine

Greeters Loca lTransport

Takeoff Taxi Push-out Em bark Lounge Im m igration Check-in

A ir s id e L a n d s id e

A r r iv a ls

D e p a r t u r e s

Terminal

LocalTransport


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ASA and Airport Value Chain

Environmental servicesEnvironmentalManagement

Aviation Rescue &

Firefighting

Emergency

Management

Communication systemsCommunication

Facilities management;Informationmanagement services

Maintenance

Aviation SystemsTower Air Traffic ControlAirspace management;

Air Traffic Control andnavigation services; Airtraffic control training;Aeronautical information

Air Traffic Control

InfrastructureSupport Services

Airport ServicesAir TrafficManagement

S

irport

Value Chain


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Strategy # 1 Existing Competencies

Training and Consultancy

Strategy # 2 Possible Competencies

Airport Certification Procedure

Strategy # 3 New Competencies

Passenger Management

Recommendations

St t # 1


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Consulting services in ATM

Consortia approach

India Bid for approach and aerodrome control

services

China Bid for airport development

Benefit Ease of entry based on existing

core competency

Risk Sporadic and inconsistent nature of

consultancy projects irregular revenue

stream

Strategy # 1

Training & Consultancy

St t # 2


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Overview

ICAOs universal safety oversight audit programme(USOAP) in the fields of personnel licensing, aircraft

operations and airworthiness

USOAP has been expanded to include airports and air

traffic services from the year 2004

ICAO has recommended certification of airports by

State authorities Airports Authority of India and

Civil Aviation Authority of China

Strategy # 2


St t # 2


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Opportunity

Growing number of airports may make it difficult forAAI and CAAC to undertake airport certification

procedure all by themselves. They may outsource

Opportunity exists for ASA to undertake airport

certification procedure on behalf of AAI and CAAC

Opportunity to become an ICAO auditor, as and when

such position arises

Strategy # 2


Strategy # 2


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Constraints / Competition

Airport certification by a foreign organisation is anuncommon practice

Competition from players who have experience in

building, owning and operating airports BAA (UK),

Alterra Partners (UK), Aena (Spain), etc.

Competition from aviation authorities in case of

absolute freedom to airport operators

Strategy # 2


Strategy # 2


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Costs / Benefits / Risks

Costs

Training of employees

Preparation / study of aerodrome manual

Benefits

Regular event, resulting in regular business

Large number of airports developed / developing in China

and India large market

Risks

High responsibility and accountability

Loss of employees trained for airport certification procedure

Strategy # 2


Strategy # 2


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Implementation

Set up separate division dedicated to guiding foreignairports on complying with ICAO guidelines

Government Business Enterprise status leverage it

to deal with government bodies in India and China.

Alliance with AAI is already in place

Start with certification of smaller airports, and then

graduate to larger airports

Partner with big players to expand its range of

products and services

Strategy # 2


Strategy # 3


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Rationale

Large Markets

Limited by Regulations

Need for Diversification

Need for Innovation

Analysis of Value Chain

Selection of Need

Strategy # 3

Passenger Management Systems

Strategy # 3


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Market Research Check-ins

Strategy # 3


Based on 103 customers, over 4 hours, across 4 service counters, 6 different employees, on aSaturday afternoon.

1min 56secondsStandard Deviation

34 instances# of times greater than 200sec

76 instances# of times greater than 100sec

3min 2secondsAverage

8min 58secondsRange

9min 43secondsMaximum Time

35secondsMinimum Time

Strategy # 3


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Passenger Benefits

Strategy # 3


Check-ins

BoardingDepartures

Security

Arrivals Baggage

+ +

+

+

++

Strategy # 3


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Airports / Airlines Benefits

Strategy # 3


Efficiency

FlightsRevenues

Staff

R & D Customers

+ +

+

+

++

Strategy # 3


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Costs Example

Strategy # 3


148,700,000Passengers Per Year

$24,783,340Wages Saved ($20/hour)

154,896 daysWorker Days Saved (8hr/day)

1,239,167 hoursTime Saved (30sec/passenger)

Strategy # 3


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Finding a Solution

Internal R&D

Airlines

Airport operators

Computer Consultants

Banks

Universities

Strategy # 3


Strategy # 3


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How about Q-Less?

New Product

New Patent (Australia)

In Process of Applying for International Patent

Research Assistance

Government incentives

Proven performance

Looking for vehicle to Launch

Strategy # 3


Strategy # 3


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allows excessive customer waiting to be preempted

and avoided

HOW?

By collecting true information on the current &

predicted state of the service system;

Rather than the state of the queue!

Strategy # 3


Strategy # 3


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For each new transaction, tellers estimate

the time the transaction will take to

complete & flag this estimate interval

Individual estimates are combined to

understand the service state of the entire

system

gy


Strategy # 3


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gy


Categorisation of Transactions

Service Times

Strategy # 3


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Targets system management

Better management of current resources

No increase in staff or reduction in customerservice

Proven Performance:

34% - Before Q-Less 85% - With Q-Less

5.2mins - Before Q-Less 1.5mins - With Q-Less

gy


Strategy # 3


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gy


Risks & Rewards

Risks

R&D Investment

Outside core

competencies

Contractual Risk

Intellectual Property

Dilution of ASA profits

Rewards

Mass market product

Benefits for passengers,

airlines, and airports

Development of

technology related tolandside operations

Final Recommendations


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Portfolio Approach

ATCTraining and Consultancy

Airport Certification

Passenger Management

Potential rewards far outweigh immediaterisks

Call today!

Final Recommendations


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Q & A

Documents

Airservices Australia - Presentation-1