airservices australia - presentation-1
TRANSCRIPT
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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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Core Competencies of ASA
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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Core Competencies of ASA
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
Airport Certification Procedure
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
Airport Certification Procedure
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
Airport Certification Procedure
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
Airport Certification Procedure
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
Airport Certification Procedure
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
Passenger Management Systems
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
Passenger Management Systems
Check-ins
BoardingDepartures
Security
Arrivals Baggage
+ +
+
+
++
Strategy # 3
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Airports / Airlines Benefits
Strategy # 3
Passenger Management Systems
Efficiency
FlightsRevenues
Staff
R & D Customers
+ +
+
+
++
Strategy # 3
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Costs Example
Strategy # 3
Passenger Management Systems
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
Passenger Management Systems
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
Passenger Management Systems
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
Passenger Management Systems
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
Passenger Management Systems
Strategy # 3
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gy
Passenger Management Systems
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
Passenger Management Systems
Strategy # 3
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gy
Passenger Management Systems
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