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A Time of Transformation Sita Group Activity Report 2016 a Time of Transformation

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A Time of Transformation Sita Group Activity Report 2016 a Time of Transformation A TIME OF TRANSFORMATION SITA GROUP ACTIVITY REPORT 2016 A TIME OF TRANSFORMATION SITA CONTINUED TO PROVE ITSELF AS AN INVALUABLE AIR TRANSPORT COMMUNITY PROVIDER, DELIVERING MAJOR PROGRAMS AND SOLUTIONS FOR THE COMMUNITY TO ‘TRANSFORM AIR TRAVEL THROUGH TECHNOLOGY’. 2 SITA | GROUP ACTIVITY REPORT 2016 SITA | GROUP ACTIVITY REPORT 2016 3 A TIME OF TRANSFORMATION SITA BOARD DIRECTORS 4 CHAIR’S STATEMENT 6 CHIEF EXECUTIVE OFFICER’S REPORT 12 COUNCIL PRESIDENT’S STATEMENT 18 SITA COUNCIL REPRESENTATIVES 26 OPERATING REVIEW 30 COMMUNICATIONS & INFRASTRUCTURE 31 AIRPORTS 36 GOVERNMENTS 42 SITAONAIR 46 PASSENGERS 50 CHAMP CARGOSYSTEMS 54 AVIARETO 58 SITA LAB 60 SITA GLOBAL SERVICES 66 OUR PEOPLE 70 CORPORATE SOCIAL RESPONSIBILITY 72 2 SITA | GROUP ACTIVITY REPORT 2016 SITA | GROUP ACTIVITY REPORT 2016 3 A TIME OF TRANSFORMATION Omar Jefri Matthew Billings Barbara Dalibard Klaus Goersch Chair Vice Chair SITA CEO Roland Schütz Damian Scokin A.T. Srinivasan 4 SITA | GROUP ACTIVITY REPORT 2016 SITA | GROUP ACTIVITY REPORT 2016 5 A TIME OF TRANSFORMATION THE SITA BOARD IS TASKED WITH SUPERVISING THE ACTIVITIES OF THE COMPANY AND ITS SUBSIDIARIES TO ENSURE THE EFFECTIVE OPERATION OF THE GROUP. Elizabeth Haun Laurent Jossart Patrick Naef Eash Sundaram Robert Webb Thomas Woldbye 4 SITA | GROUP ACTIVITY REPORT 2016 SITA | GROUP ACTIVITY REPORT 2016 5 A TIME OF TRANSFORMATION SITA'S COMMUNITY FOCUS The air transport industry ended future, with IATA forecasting 4.1% net 2016 strong and healthy, offering profit margin in 2017 on total revenues passengers greater choice and lower of US$ 736 billion. real costs, while reaping continuing benefits from a broad range of new Against this robust business technologies. IATA forecast record environment, SITA delivered a year global airline profits of US$ 35.6 billion of mixed results. As the CEO’s for the year, with Revenue Passenger Report explains, while air transport Kilometres (RPKs) growing 6.3% – well experienced growth in 2016, SITA’s above the 10-year average pace of 5.5% growth relative to the market was – and load factors averaging a record less than anticipated. Several parts of full-year high of 80.5%. the business delivered successfully on their results, while others faced There was significant passenger challenges in what proved to be a growth in all regions, forecast at year of transition for SITA, leading to the time of writing to be around an overall margin performance from 6%, totaling 3.78 billion passenger continuing operations which was lower departures. The Middle East and Asia than prior years and our expectations. recorded the most significant growth, The CEO Report goes into detail on DIGITIZATION IS with RPKs up almost 11% in the Middle page 14. TRANSFORMING THE East. Europe and North America both INDUSTRY AND SITA’S posted less than 4% RPK growth. THE CHANGING MARKET CUSTOMERS, AS THEY Freight was also expected to record MOVE TO OPEN DIGITAL an increase in tonnage of 3.8% (IATA The mixed results should be seen figures). in the context of the changing and TECHNOLOGIES THAT challenging operating environment IMPROVE THE END¦TO¦END Expectations are that air transport of the air transport industry, which is PASSENGER EXPERIENCE sector profits will be lower in 2017, subject to rapid competitive activity AND DRIVE OPERATIONAL though they should remain well as partnership and acquisition EFFICIENCIES. into positive territory even though activities continue, as well as a major the year began with considerable trend towards digitization. This is uncertainties, such as: rising fuel transforming the industry and SITA’s costs, the UK’s pending departure from customers, as they move to open the European Union, the change of US digital technologies that improve the administration, and key elections in end-to-end passenger experience and Europe, Africa and Asia. Nevertheless, drive operational efficiencies. 2016 provides a sound platform for the 6 SITA | GROUP ACTIVITY REPORT 20152016 SITA | GROUP ACTIVITY REPORT 2016 7 A TIME OF TRANSFORMATION The World Economic Forum’s Digital those of passengers but also of all For the first time, the Board called Transformation Initiative (DTI) stakeholders involved in executing upon the reserved powers granted recognizes that industry, consumer the journey. to the Council in 2015, following the and technology trends are together Governance Review of that year, to redefining markets, operating and Leading that process for SITA is our request approval for this initiative. business models across travel and new CEO, Barbara Dalibard, who The Board believes that this decision transportation, with digital technology officially started in her role on 1 July is in the best interest of the Members ‘shifting from being a driver of 2016. She was quick to meet customers and customers, and have included marginal efficiency to an enabler of and members, to understand and specific Member interest criteria in the fundamental innovation and disruption’. examine the trends impacting SITA and evaluation of partnership proposals. our markets, and to fully engage with Digitization makes possible more the challenges of greater competition, The consequences of this decision effective collaboration and asset- uncertain global conditions and SITA’s are reflected in this year’s financial sharing, while empowering employees own need to continuously adapt. statements. The view of the future with real-time information and value of the SITA PSS business results decision-making support. The DTI In October, the Board fully accepted in a write down which brings SITA into shares SITA’s own experience and changes she and her Executive Team a loss position overall, but does not anticipation, notably through traveler proposed to underpin the company’s impact future cash flows (see CEO centricity, the seamless customer ongoing transformation. The new Report, page 14). journey, end-to-end propositions, organization is already ensuring SITA takes full advantage of the ecosystem convergence and a next THE CONNECTED COMMUNITY generation workforce. This is a opportunities for simplification and powerful narrative and one that collaboration across the portfolio and Now let me turn to SITA’s role in lies at the heart of SITA’s forward platforms, increasing the speed and the process of digitization, and the looking strategies and plans, which agility with which it anticipates and changing market, that I mentioned are responding to industry trends responds to the needs of customers earlier. A prime example is SITA’s and are set to bring about SITA’s own (see the CEO Report, page 16). next generation communications transformation. program. This is evolving the industry’s Another major initiative resulting communications capabilities at over from the changing market was the In line with the World Economic 1,000 airports where SITA already decision to find a strategic partner for Forum’s digital transformation reports, provides around 20,000 connections. our Passenger business, to ensure its I noted last year how next generation In part this is being achieved through future growth in the highly competitive communications and airport SITA’s AirportHub™ program – passenger services system (PSS) connectivity are transforming the air which will cover 80% of all airline market. The Board spent considerable transport industry. With the continued destinations within three years. time evaluating options and, given adoption of mobile communications, AirportHub™ is an airport-wide shared the magnitude of the decision, we travel-related apps, e-aircraft and platform offering cost-effective, exceptionally created a Sub-Committee more, we are facing a new era in high quality communication services of the Board to support management. connectivity and expectations, not only to airlines, ground handlers and 6 SITA | GROUP ACTIVITY REPORT 2016 SITA | GROUP ACTIVITY REPORT 2016 7 A TIME OF TRANSFORMATION A STRONG RESPONSE TO THE TRENDS AND TECHNOLOGIES CHANGING AIR TRANSPORT IS A SET OF SITA COMMUNITY INNOVATIONS PROGRAMS ¯ EACH SELECTED BY THE SITA BOARD AND SITA COUNCIL AND EACH OF WHICH REPRESENTS A SIGNIFICANT INVESTMENT ABOVE AND BEYOND SITA’S USUAL R&D AND PRODUCT DEVELOPMENT PROGRAMS. maintenance companies based at COMMUNITY INNOVATION possibilities opened up through the airport. It simplifies how aviation blockchain technology. companies connect to their central Another strong response to the • Disruption warning – SITA is systems and applications from airport trends and technologies changing air exploring how information and destinations. transport is a set of SITA Community updates can be provided through a Innovation Programs – each selected global disruption warning system SITA will also continue to explore and by the SITA Board and SITA Council and accessible to SITA Members. Trials introduce new ways for technology each of which represents a significant are under way using flight data, to help solve some of today’s major investment above and beyond SITA’s weather, social media and other data challenges facing the industry. With usual R&D and product development – and further trials will continue a stronger focus, SITA will invest programs. SITA’s community-based during 2017. more than US$ 300 million over the approach to such innovation is an next three years in a go-to-market essential part of exploring the potential • The New Distribution Capability approach for the portfolio, research of new technologies. We are stronger (NDC) – SITA is supporting IATA’s and development, and service working together
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