Originally published on LinkedIn: https://www.linkedin.com/pulse/realizing-iot-value-aviation-industry-rob-sterpin
In its airline industry outlook for 2016, the International Air Transport Association (IATA) forecast a second consecutive year of profits, anticipating $33.0 billion USD in 2015 and $36.3 billion USD in 2016 (http://www.iata.org/publications/ceo-brief/dec-2015/Pages/economic-outlook.aspx). The numbers for 2016 were subsequently revised upward to $39.4 billion USD in the July 2016 update (http://www.iata.org/publications/ceo-brief/jul-2016/Pages/economic-outlook.aspx). Although such profit margins are exceptional for airlines, they are much more common in other industries. An expected 6.9% growth in air travel in 2016, which is well above the 5.5% growth trend which has been evident over the past 20 years, is expected to support this trend towards increasing profitability.
Although lower oil prices have helped the financial outlook for the airline industry, fuel price is not the only factor that is being reflected in the forecast. Operating margins are also being improved by extending the life of aircraft, increasing operational and maintenance efficiency, and providing additional services.
Tony Tyler, IATA’s Director General and CEO, said “Lower oil prices are certainly helping—though tempered by hedging and exchange rates. In fact, we are probably nearing the peak of the positive stimulus from lower prices. Performance, however, is being bolstered by the hard work of airlines. Load factors are at record levels. New value streams are increasing ancillary revenues. And joint ventures and other forms of cooperation are improving efficiency and increasing consumer choice while fostering robust competition. The result: consumers are getting a great deal and investors are finally beginning to see the rewards they deserve” (http://www.iata.org/pressroom/pr/Pages/2016-06-02-02.aspx).
The Impact of the Internet of Things
The number of airlines looking to the Internet of Things (IoT) for ways to improve the experience of flying for their passengers is increasing. Just over two thirds of the airlines that responded to SITA’s 2016 survey have committed funding to major projects or research and development initiatives over the next three years. Resolution 753 from the International Air Transport Association (IATA) is calling for end-to-end tracking of passenger baggage to become effective by June 2018. This is driving compliance initiatives at many airlines, although about 25% have not made any plans as yet (https://www.sita.aero/resources/type/surveys-reports/airline-it-trends-survey-2016).
Innovations in customer service are high on the priority list for many airlines, and this is one area where IoT technologies are playing a very big part. Bruce Harpham, Writer and Editor for CIO Magazine, in his article How the Internet of Things improves air travel (http://www.cio.com/article/3074125/internet-of-things/how-the-internet-of-things-improves-air-travel.html) notes that “[…] the industry is paying increasing attention to innovation and customer service, and Internet of Things (IoT) technologies are playing a big role in efforts to make aviation more efficient and improve the passenger experience.”
In February 2016, Miami International Airport introduced a mobile app designed to provide detailed information to passengers based on their location and needs. MIA Airport Official is available for both iOS and Android, and airport officials reported 3,000 downloads on the first day and positive feedback from travelers. In airports such as Miami International, high volumes of traffic create huge challenges to traditional productivity improvements. A network of 400 beacons supports the app by transmitting the necessary location data throughout the airport.
Smartphone applications such as mobile check-in are leading the way, but interest in developing similar applications for wearable devices is slowly increasing. Providing passengers with information such as how long it will take them to walk to the gate from their current location, how long the wait time is estimated to be when they get there, and what services there are around their current location is now possible as the cost of IoT devices and technologies, such as beacons, sensors, and networking equipment.
Still Significant Challenges
Although the cost of these technologies is becoming increasingly affordable, the up-front cost of implementation is seen as the biggest challenge to progress by more than half of the airlines that responded to the SITA survey.
There are other issues slowing the pace of progress, such as the development of machine-learning techniques and the perception of invading passenger privacy, but one of the biggest issues getting in the way of deploying all these new initiatives is not new at all. Challenges caused by the lack of standards for data exchange, collaboration, and interoperability have been around since the Internet first started.
The proliferation of interest in the value that can be derived from the Internet of Things is highlighting these roadblocks once again. flydubai and Quantas are two examples of airlines that have used IoT to optimize flight operations, and both are forecasting the development of more such systems. “However, all approaches are hampered by a common industry roadblock: a lack of rules defining Internet of Things (IoT) data ownership and data exchange between suppliers, OEMs, and airlines. This means that while Qantas can optimize flight paths, these optimums are set without using real-time in-flight data because Qantas cannot access the aircrafts’ in-flight data. Similarly, OEMs and suppliers cannot access airline data.” Dan Jacob, IoT in Commercial Aviation Requires a New Collaboration Standard (http://blog.lnsresearch.com/iot-in-commercial-aviation-requires-a-new-collaboration-standard) goes on to say that “IoT […] has the potential to improve reliability, quality, customer satisfaction and fuel efficiency in an industry that is projected to grow substantially in coming years.”
However, to realize the value from IoT, existing standards need to be updated and new standards need to be created or adopted. This kind of progress has been underway for a while in smart cities. New technologies and data collection techniques and capabilities provide real-time information for things such as traffic flow and electrical grids. Delivering the right information in the right way to the right people at the right time is a critical part of making a connected world work, and airports are no exception. The benefits are significant for both airlines and passengers.
In the article How IoT Is Transforming Aviation Industry (http://www.cxotoday.com/story/its-the-age-of-internet-of-aircraft-things/), Maneesh Jaikrishna, VP, India & Sub-continent, SITA states that “without a reliable and secure network connection to power the potentially large number of devices, IoT will fail to deliver value. Existing communication networks, such as cellular and Wi-Fi, either lack the wide coverage or are not cost effective for some airline use cases, where objects travel over long distances.”
But it can be done, and the proof is already in the air. The Boeing B787 Dreamliner, one of the newest passenger planes on the market, is also one of the most connected (http://787updates.newairplane.com/24-7-Customer-Support/Connected-Flight). The B787 has sensors that monitor the health of the airplane as well as sensors that respond to flight conditions and continually adjust for passenger comfort. Component engineering and onboard sensors and systems allow planes to be continually monitored, and notifications of any issues are sent to the appropriate personnel. This allows for rapid decision-making and for passengers to be back in the air with the shortest wait times possible if anything happens (http://www.getconnected.aero/2014/10/boeing-787-dreamliner-truly-e-enabled-aircraft/).
The B787 Dreamliner is also one of the most fuel-efficient aircraft in service today. As more efficient aircraft begin to replace older and less efficient models, airline profitability will continue to increase. Add to this the efficiencies and the value that can be gained through the implementation of IoT services and systems, and the future is looking very promising for the airline industry.