“Intelligent Airports: From Friction To Flow”. Insights Into GHARAGE’s Latest Report. An Exclusive Interview With Amanda Mai Khuong-Duc.
11 minutes read
Introduction by: Peter Marshall
GHARAGE is the dedicated Vision & Venture Hub of the Heinemann Group. Co-founded and led by Lennard Niemann, the standalone entity works self-sufficiently with Heinemann, and even its partners, to innovate within travel retail through a unique blend of entrepreneurship, creativity, strategic foresight and venture capital. It’s a unique business, with offices in Hamburg, Berlin and Singapore, the business operates through two synergistic units. Vision: consulting on digitalisation and emerging consumer trends. And GHARAGE Ventures, the first dedicated VC investor within the industry, investing into groundbreaking startups within travel and retail technologies to drive collaboration in this ecosystem.
While GHARAGE’s scope is broad, today’s conversation focuses on the Vision side of the business with Amanda Mai Khuong-Duc, Head of Strategic Foresight and Innovation. Her work represents a crucial, forward-looking element of GHARAGE’s global innovation ecosystem. Lennard Niemann puts it simply: “By connecting strategic foresight with venture capital, venture building or partnerships, we cultivate the ground from which the future of travel retail will grow”.
It’s a fascinating, thought-provoking interview which deep dives into the thinking behind GHARAGE’s latest report: “Intelligent Airports: From Friction To Flow”. You can download the report here: https://gharage.io/intelligent-airports
Peter Marshall (PM): Amanda, good seeing you again, and welcome to TRunblocked.com. Here’s a big question to start this conversation. Can you explain how strategic foresight at GHARAGE works and why understanding foresight shifts is critical for the future of travel retail?
Amanda Mai Khuong-Duc (AMKD): It’s a very big question. Let me explain a little bit of what strategic foresight is. It’s a systematic approach to understand the future better and then be able to anticipate and prepare for future trends and shifts. What are passenger desires and human needs, and what technological developments and market dynamics are we experiencing? These factors majorly influence how passengers will behave and how they want to be treated.
The speed of changes and disruptions is constantly increasing. News is distributed in real time – not comparable to 10-20 years ago. For us it is about handling and filtering this high intensity, identifying signals, being aware of what can happen in the future and to create possible scenarios of the future to be able to not only react to them but rather anticipate them.
PM: I think it’s critical to plan for that change. You know how this industry generally tends to be reactive. It’s slow to adapt. It’s not agile enough. So, what you’re doing – and I’m taking this from what you’re saying – is that you effectively fast forward that and give the opportunity for Heinemann and others in this business to plan for change based on your strategic foresight.
AMKD: It’s not only to plan for change, but also to start envisioning a future. If we start drawing these ideas and images of how our future could look, we get a stronger engagement and involvement of all participants to not only be aware that we are in dire need of change, but also wanting to be part of that changing industry.
PM: Well, I admire the idea of reimagining travel retail because it is in desperate need of that – especially given what’s happening in the marketplace right now, where the average spend per head is going – it’s declining, and it’s a real concern.
AMKD: We also see it in the numbers. We know that up to 80% of travelers are not even shopping in travel retail. So, what are they doing instead?
PM: Well, it certainly appears to be walk past, not walk in.
AMKD: It’s on us to rethink how to catch their attention. We need to ask ourselves: how do we cater those who just passed through – whether they are on their phones or they were just looking for food and beverage, for example? How can we deal with these changing consumer behaviours?
PM: So,what’s behind the idea of this report?
AMKD: ‘Intelligent Airports: From Friction to Flow’ is the second in a series on the future of airports. To give you some background information: Probably everyone knows this stat from ACI – a 1% increase in customer satisfaction leads to a 1.5% increase in non-aeronautical revenue. Of course, this is a great insight, but we asked ourselves: what’s behind passenger satisfaction? Where does it all start?
This is why we decided to conduct a global study with over 6,000 travellers, covering 12 countries. We took a quantitative as well as qualitative approach, and included interviews with travellers and industry experts to gain a deeper understanding.
As mentioned, the report follows our first report in a series on airport futures. While our first report “From Function to Feeling” examines shifts in traveller behaviour and preferences and the drivers of traveller happiness, in “Intelligent Airports” we explore how we can apply emerging technologies to the airport experience to facilitate a seamless flow and positive feelings.
PM: What is it about the emotional state of the passenger? Why is this crucial for the future of airports?
AMKD: At the airport the traveler is always in an environment that’s mostly unknown. The average traveller does not necessarily know what to expect from airports. Your orientation must adjust to the environment and navigate all the respective touch points that airports represent, in very stressful circumstances – with many unpredictabilities such as delays, while having to take care of luggage, check-in, security, immigration, finding your gate etc. – and all within a certain timeframe. In our research we followed a socio-psychological approach and found that especially negative emotional states such as stress, frustration and boredom lead to travellers’ dissatisfaction, whereas satisfaction increases when travellers feel excited, optimistic and surprised.
The question is then: what stimulates these positive emotional states? The answer to this question brings complexity which is rooted where the actual beauty of our industry lies – the beauty of travel,the level of internationality. Tell me any other industry that brings together that many different nationalities at a physical touchpoint. However, internationality bears a huge complexity as preferences, habits and desires of travellers differ not only across demographics or travel occasions (e.g. solo, friends, couple, family trips, business travels) but even across nationalities. Furthermore, standardization on a global – not to say a national – scale is difficult to reach.
At GHARAGE we take a holistic approach and commit to find answers and solutions to enhance the overall traveller satisfaction along the traveller journey. And to do so, it’s important for us to address the travel ecosystem.
PM: You paint a picture of airports as spaces that deliver higher and low tech experiences. What key technologies do you believe will most help resolve these contradictions that are currently facing travellers, or will increasingly be facing travellers?
AMKD: First of all, it’s not about resolving these contradictions, but rather about holding the ambivalence between high and low tech. We are living through an innovation super cycle. Tech increasingly permeates and facilitates every aspect of our lives. Let’s not forget that travellers do not differentiate between domestic and travel zones. The expectations for valuable tech integration are given. High tech, such as AI, biometrics, robotics and automation is an essential part in making the journey more convenient for the traveller and to bring more ease to their experiences.
On the other hand, we see low tech and no tech such as simple digital information boards or human operated information counters have their reasons to exist. We must find solutions that allow the co-existence of high tech efficiency and human connections. Amid a blurred future of humans and machines, travellers desire technologies that are both simple and sophisticated, and integrate seamlessly into our journey. It’s now on us to think about ideas and solutions on how to leverage technology in an efficient way, so that the actual unique human capabilities are used intentionally at touchpoints and for services where human connection is most relevant.
PM: OK. So what are the other findings?
AMKD: We need to break the boredom of waiting for a flight by allowing for serendipity, discovery and surprise – to cater to passenger desires for elevated experiences. How can we leverage tech to introduce multi-platform concepts that provide communal and immersive pre-flight activities? We know that younger generations are especially seeking phygital experiences. How can we blend digital with our existing physical environment? An insight from our first report is to rethink airports as inclusive spaces, on all kinds of traveller groups. I mean, we are missing out on the huge potential of families. Families have a very high willingness to spend. Looking at airports nowadays, where do we see the needs of families being catered in a serious way?
PM: That’s right – they’re not adequately catered for. You have some children’s play areas, for sure, but they aren’t really family zones. And, interestingly, it’s true that the Chinese are now increasingly traveling as families, not as individuals. And when you talk about inclusivity, that does allow for the consideration of it being more of a community than anything else. The point is that passengers nowadays want something more and different from what they’ve had previously from their airport experiences. What you’re saying hits the nail on the head.
AMKD: Let’s imagine these micro moments of joy along the traveler journey that create playfulness and happiness at various touch points. Therefore, we must bring together different stakeholders from our industry to create spaces where we can experiment on these micro moments.
PM: Arguably we should also be looking at airports providing a holistic experience where they deliver macro moments, not just micro moments. Because that’s when airports can come alive. A place where dwell time can be extended resulting in measurable commercial benefits. Moving on, what are the tech-driven trends that you believe are driving change now and will affect the industry most in the next 3-5 years?
AMKD: We see a fast speed development in biometrics tech integrated into the journey to streamline passenger flow. Keeping the number of passengers, we expect by 2040 in mind this is a must have.
How will we apply biometrics in combination with AI, robotics and immigration? How about 3D whole body scanners at security? And just looking at the operational efficiency of airports – at least in terms of quicker and zero-defect processes as well as physically demanding work – we will certainly benefit from robotics, automation and autonomous technologies when talking about the handling of luggage, cleaning and ground vehicles.
PM: I think it’s true to say that security remains a real barrier. Travellers are stuck at security, the waiting time is stressful, and it continues to cannibalise valuable dwell time in departures and therefore reduce time to buy from all the retail to be discovered there.
AMKD: My bet is that emerging technologies with new generations of 3D scanners will lead to seamless security and airport journeys. We won’t need to fix these kinds of cannibalisation challenges as people will just walk through security as through their own house doors. We will be rather confronted with the challenge of how to make the airport experience full of discovery and serendipity so people want to spend extra time before departure and after arrival at the airport.
PM: That’s a pretty bold statement! And what about privacy – what’s the dividing line in terms of information available and personal privacy invasion when it comes to data? There are clear issues here, aren’t there?
AMKD: It’s a huge challenge to solve these issues on the global scale. The basis of every successful innovation is the positive impact it creates. This will be only given when serving a real need or desire. Given this, travellers will experience a true benefit, and it will be on us to not only create these desirable solutions, but also to guarantee data and information safety. If we manage this, travellers will be happy in adapting to these technologies.
PM: Developing this, from your perspective which areas in the airport journey are most in need of innovation and which technologies are closest to making a real difference?
AMKD: A simple, but also tricky one: Get the basics right. Everyone loves to talk about experiences and personalization. Beautiful words that need to be understood and filled with meaning. But to be very honest with you, it’s still all about getting the basic rights. Improving efficiency and convenience along the touch points of the traveller journey: check-in, security, customs, immigration, and boarding. Let’s leverage technology to get this right and enable a seamless and stressless journey – on a global scale. And let’s tackle the luggage issue. Frustration and stress level of travellers rise as you never know if your luggage has actually made it – until you see it, that is. Of course, there are airtags or similar gadgets, but shouldn’t airlines give this level of comfort to their passengers by sharing real time data? And how can we use robotics and autonomous vehicles to fasten and smoothen luggage processing.
PM: I see the importance of these basics. But beyond these, I want to get your thoughts on ‘these beautiful words of experience and personalisation’. What role will AI play? What are the necessary steps for us to use this technology? How can we genuinely reshape customer experiences across the industry?
AMKD: AI is in everyone’s mind driving innovation – but you cannot have AI without data. Data is not the gold but will be our oil to fuel personalisation and experience efforts. Where do we collect all the data from, who owns the data, how can we share and consolidate our data?
PM: That’s never really going to happen, not in our business. But it should happen, and at a far faster pace than we see today. There are too many, mutually exclusive silos. How much data is genuinely shared now? In today’s universe that is travel retail, we’ve got, maybe, less than a handful of players who are sharing data. That’s the problem.
AMKD: We must force change in this area. Every stakeholder in our industry needs data and technology to better cater to passenger needs. It’s a question on how to anonymize and aggregate certain data and how to utilize the data in a neutral way. There is a real necessity of data collaboration to enhance both the customer-facing perspective and the operational efficiency. For the first, to develop tailored, personalised offers and experiences, we must understand traveller needs, their preferences, what’s currently on their mind and their social media – and how best we are able to anticipate these needs. This comprehensive understanding can only be created by connecting various data sources. From an operational efficiency perspective, we can think about route optimization, revenue management of airlines and airports and training our floor staff.
PM: So, when it comes to future-proofing travel retail, how important is it for companies to invest in data-driven customer insights versus broader digital transformation projects? What should the top priorities be for companies?
AMKD: It’s a chicken and egg problem. Data driven consumer insights and digitalization projects – one is not possible without the other. If you want to generate data-driven consumer insights, you have to have the data infrastructure first. Otherwise, you would experience limitations in scope and effectiveness. It’s about how to create synergies, and to invest in both simultaneously
PM: It’s symbiotic.
AMDK: Exactly, we cannot talk about what to prioritize first.
PM: But, just developing this, and coming back to my very first point, we all know that average passenger spend is declining. How can this industry not think more seriously about sharing data right now?
AMKD: For the past few years, certain industry stakeholders such as Heinemann have been stressing this point: the strength of collaboration, which certainly encompasses data sharing. Retailers, positioned centrally in the value chain between suppliers and airports, can significantly contribute to this effort, relying on commitment and determination from all participants in the industry.
PM: The right statement at the right time, Amanda. Thank you and I am sure that ‘Intelligent Airports: From Friction To Flow’ will make for fascinating reading.
AMKD: Thank you, Peter
