a time of transformation...2 sita | group activity report 2016 sita | group activity report 2016 3 a...

A TIME OF TRANSFORMATIONSITA GROUP ACTIVITY REPORT 2016

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’.

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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



Klaus GoerschOmar JefriChair

Matthew BillingsVice Chair

Barbara DalibardSITA CEO

Roland Schütz A.T. Srinivasan Damian Scokin



Elizabeth Haun

Eash Sundaram Robert Webb Thomas Woldbye

Laurent Jossart Patrick Naef

THE SITA BOARD IS TASKED WITH SUPERVISING THE ACTIVITIES OF THE COMPANY AND ITS SUBSIDIARIES TO ENSURE THE EFFECTIVE OPERATION OF THE GROUP.



SITA'S COMMUNITY FOCUS

The air transport industry ended 2016 strong and healthy, offering passengers greater choice and lower real costs, while reaping continuing benefits from a broad range of new technologies. IATA forecast record global airline profits of US$ 35.6 billion for the year, with Revenue Passenger Kilometres (RPKs) growing 6.3% – well above the 10-year average pace of 5.5% – and load factors averaging a record full-year high of 80.5%.

There was significant passenger growth in all regions, forecast at the time of writing to be around 6%, totaling 3.78 billion passenger departures. The Middle East and Asia recorded the most significant growth, with RPKs up almost 11% in the Middle East. Europe and North America both posted less than 4% RPK growth. Freight was also expected to record an increase in tonnage of 3.8% (IATA figures).

Expectations are that air transport sector profits will be lower in 2017, though they should remain well into positive territory even though the year began with considerable uncertainties, such as: rising fuel costs, the UK’s pending departure from the European Union, the change of US administration, and key elections in Europe, Africa and Asia. Nevertheless, 2016 provides a sound platform for the

future, with IATA forecasting 4.1% net profit margin in 2017 on total revenues of US$ 736 billion.

Against this robust business environment, SITA delivered a year of mixed results. As the CEO’s Report explains, while air transport experienced growth in 2016, SITA’s growth relative to the market was less than anticipated. Several parts of the business delivered successfully on their results, while others faced challenges in what proved to be a year of transition for SITA, leading to an overall margin performance from continuing operations which was lower than prior years and our expectations. The CEO Report goes into detail on page 14.

THE CHANGING MARKETThe mixed results should be seen in the context of the changing and challenging operating environment of the air transport industry, which is subject to rapid competitive activity as partnership and acquisition activities continue, as well as a major trend towards digitization. This is transforming the industry and SITA’s customers, as they move to open digital technologies that improve the end-to-end passenger experience and drive operational efficiencies.

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DIGITIZATION IS TRANSFORMING THE INDUSTRY AND SITA’S CUSTOMERS, AS THEY MOVE TO OPEN DIGITAL TECHNOLOGIES THAT IMPROVE THE END-TO-END PASSENGER EXPERIENCE AND DRIVE OPERATIONAL EFFICIENCIES.



The World Economic Forum’s Digital Transformation Initiative (DTI) recognizes that industry, consumer and technology trends are together redefining markets, operating and business models across travel and transportation, with digital technology ‘shifting from being a driver of marginal efficiency to an enabler of fundamental innovation and disruption’.

Digitization makes possible more effective collaboration and asset-sharing, while empowering employees with real-time information and decision-making support. The DTI shares SITA’s own experience and anticipation, notably through traveler centricity, the seamless customer journey, end-to-end propositions, ecosystem convergence and a next generation workforce. This is a powerful narrative and one that lies at the heart of SITA’s forward looking strategies and plans, which are responding to industry trends and are set to bring about SITA’s own transformation.

In line with the World Economic Forum’s digital transformation reports, I noted last year how next generation communications and airport connectivity are transforming the air transport industry. With the continued adoption of mobile communications, travel-related apps, e-aircraft and more, we are facing a new era in connectivity and expectations, not only

those of passengers but also of all stakeholders involved in executing the journey.

Leading that process for SITA is our new CEO, Barbara Dalibard, who officially started in her role on 1 July 2016. She was quick to meet customers and members, to understand and examine the trends impacting SITA and our markets, and to fully engage with the challenges of greater competition, uncertain global conditions and SITA’s own need to continuously adapt.

In October, the Board fully accepted changes she and her Executive Team proposed to underpin the company’s ongoing transformation. The new organization is already ensuring SITA takes full advantage of the opportunities for simplification and collaboration across the portfolio and platforms, increasing the speed and agility with which it anticipates and responds to the needs of customers (see the CEO Report, page 16).

Another major initiative resulting from the changing market was the decision to find a strategic partner for our Passenger business, to ensure its future growth in the highly competitive passenger services system (PSS) market. The Board spent considerable time evaluating options and, given the magnitude of the decision, we exceptionally created a Sub-Committee of the Board to support management.

For the first time, the Board called upon the reserved powers granted to the Council in 2015, following the Governance Review of that year, to request approval for this initiative. The Board believes that this decision is in the best interest of the Members and customers, and have included specific Member interest criteria in the evaluation of partnership proposals.

The consequences of this decision are reflected in this year’s financial statements. The view of the future value of the SITA PSS business results in a write down which brings SITA into a loss position overall, but does not impact future cash flows (see CEO Report, page 14).

THE CONNECTED COMMUNITYNow let me turn to SITA’s role in the process of digitization, and the changing market, that I mentioned earlier. A prime example is SITA’s next generation communications program. This is evolving the industry’s communications capabilities at over 1,000 airports where SITA already provides around 20,000 connections. In part this is being achieved through SITA’s AirportHub™ program – which will cover 80% of all airline destinations within three years. AirportHub™ is an airport-wide shared platform offering cost-effective, high quality communication services to airlines, ground handlers and



maintenance companies based at the airport. It simplifies how aviation companies connect to their central systems and applications from airport destinations.

SITA will also continue to explore and introduce new ways for technology to help solve some of today’s major challenges facing the industry. With a stronger focus, SITA will invest more than US$ 300 million over the next three years in a go-to-market approach for the portfolio, research and development, and service management.

As the CEO Report comments, a mix of innovation and portfolio development is critical to SITA’s leading role in transforming air travel through technology for our 400 members and 2,400 customers – be it for airlines, at airports, or on aircraft. Of course, this has been the company’s core purpose since it was founded by 11 airlines in 1949. But the mandate today is as strong as ever, to leverage the business transformation potential that new digital technologies offer.

COMMUNITY INNOVATIONAnother strong response to the trends and technologies changing air transport is a set of SITA Community Innovation 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. SITA’s community-based approach to such innovation is an essential part of exploring the potential of new technologies. We are stronger working together as a community in areas where co-operation delivers better results than competition.

In 2016, the Community Innovation Programs included five projects to tackle air transport industry issues that are of particular concern to our members:

• Baggage tracking – how existing and new technologies can be used to allow airlines, airports and ground handlers track baggage every step of the way, in conformity with IATA Resolution 753, due to take effect in 2018.

• Identity management – not only helping airports and governments improve security, but at the same time streamline the immigration process. SITA is trialing various versions of the ‘single travel token’ concept in airports worldwide, aligned to IATA’s ‘One Identity’ program, and including the

possibilities opened up through blockchain technology.

• Disruption warning – SITA is exploring how information and updates can be provided through a global disruption warning system accessible to SITA Members. Trials are under way using flight data, weather, social media and other data – and further trials will continue during 2017.

• The New Distribution Capability (NDC) – SITA is supporting IATA’s NDC standard, which has a particular emphasis on helping indirect channels offer customers richer, more engaging digital flight shopping experiences. After a successful ‘proof-of-concept’ exercise, work is being progressed towards a Community NDC Exchange Service.

• Cybersecurity – following a highly successful CyberSecurity Symposium held in May 2016 and the subsequent formation of a working group of Members, SITA has developed a platform to support increased exchange of contextualized cyber threat intelligence, derived from its own network, open source intelligence and other external sources, some privileged. SITA’s Cyber Threat Center was launched in February 2017. Indeed, cybersecurity is now a major focus of SITA’s business. It was good to see SITA’s

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.



operations and management of its airport solutions and services at Singapore’s Changi Airport as the first to achieve ISO27K certification – the specification for a framework of practices for an organization to manage its cybersecurity risks.

Meanwhile, the SITA Lab continues to be fully engaged with resolving core challenges and exploring opportunities faced by the industry as a result of evolving technologies. This includes ground-breaking work in big data, analytics, artificial intelligence (AI) and robotics. One highly visible result was the trial of ‘Leo’ at Geneva Airport – a fully autonomous, self-propelling baggage robot with the capacity to check in, print bag tags and transport up to two suitcases with a maximum weight of 32kg. Leo subsequently toured the world appearing at several major events from Barcelona and Amsterdam, to Marrakech, Casablanca, Singapore, Hong Kong, and on to several locations across America.

Another area of work is the definition of use cases for drones. SITA hosted the first European Unmanned Traffic Management conference to discuss regulations for the interoperability of drones and aircraft. The Lab has also been investigating opportunities for ‘smart city’ style sensing in airport environments.

Under the Lab’s lead, specialists and the community of developers who work with SITA through the developer.aero portal are also exploring, investigating and when possible embracing new, radical ideas that will deliver improved services and add value to SITA Members and the community at large. The Innovation Day held in November 2016 exemplified that approach, with discussions ranging across areas as diverse as solar energy, near-space, and the blockchain.

ALWAYS-ON AVIATIONThe impact of digital technologies makes it essential for the air transport industry to strive for the ‘always-on’ availability of their technology-driven services for passengers and operations. With almost every airline and airport in the world entrusting some or all of their mission critical communication and technology needs to SITA, service availability and quality remain business imperatives. The scale and complexity of SITA’s operations – which extend to almost every inhabitable part of the world – are massive.

In 2016 the company delivered: 99.999% mission critical network availability; robust applications to simplify the passenger journey, boost productivity and add value; strong performance in its data centers; achievement on SLAs, with a high level of responsiveness;

and leadership on developing and innovating future technologies.

How well the company delivers these services remains a key differentiator and strong progress was made during the year. Enhanced availability targets were met for 22 out of 24 core applications. There was also a 30% reduction in the number of major incidents. All of this driven by continued investment in lifecycle management of hardware and software.

Measuring SITA’s performance on its service promises is, of course, an essential part of the process. The Customer Satisfaction Index score for the year, based on 482 customer surveys, reached a record 4.17, compared with 4.16 target (101.2%) and 4.15 in 2015. The company’s Net Promoter Score (NPS) remains above those of our key competitors, reaching 67.2%, above the 64% and comparing to 58.6% two years ago. This metric is being recalibrated in 2017 to provide an external anonymized benchmark against peer companies.

Our independently run Community Value Index (CVI) – an online survey of all SITA customers and Council representatives – once again focused on value drivers and overall value, as noted in the President’s Statement, with a further improvement over the 2015 results.



The CVI is based on 10 questions relating to the value SITA adds to the air transport community covering areas such as active engagement to deliver change, meeting the ICT needs of the community, creating a more price competitive market environment, reducing the total cost of ownership, collaborating over the development of global standards, delivering targeted innovation, and supporting the community ‘beyond business as usual’.

The three areas of community value most strongly realized were collaboration, engagement and SITA’s people. Other values reflected well on the organization, and they will remain areas for continuous improvement.

FUTURE SUCCESSOver its long life, SITA has demonstrated the ability to adapt and change, to transform itself as the needs and opportunities of the air transport community evolve. The organization’s last transformation, during the past 10 years, saw the move from being a network provider only, to a much broader business solutions provider. During that period, in a time of overall growth, SITA’s applications businesses also grew, with their combined revenues exceeding network revenues. Core network services

represented over 40% of the company’s revenues in 2006, whereas by 2016 that figure was 17%, with 14% anticipated for 2019.

But SITA is now at its next stage of transformation, ready to evolve with a focus on marketplace requirements for the next 10 years and beyond, responding to the challenging operating environment and competitive landscape. Defining the long-term strategy to get there is the remit given by the SITA Board to our new CEO Barbara Dalibard – to review the existing business and its long-term strategy and to re-energize SITA with a new vision and purpose.

One of SITA’s strongest assets is its unique community of member-owners. The task ahead is to leverage this community asset through SITA’s three year business plan and longer term transformation plans, in order to best serve the difficult air transport market. This process began in 2016 and progressed swiftly through the first months of 2017. The conclusions of Barbara Dalibard’s review and detailed plans for the next three years will be considered and approval sought at the Board meeting in July.

ONE OF SITA’S STRONGEST ASSETS IS ITS UNIQUE COMMUNITY OF MEMBER-OWNERS. THE TASK AHEAD IS TO LEVERAGE THIS COMMUNITY ASSET THROUGH SITA’S THREE YEAR BUSINESS PLAN AND LONGER TERM TRANSFORMATION PLANS, IN ORDER TO BEST SERVE THE DIFFICULT AIR TRANSPORT MARKET.



THANK YOUOne of the benefits that flows from SITA’s governance is the nature and composition of the Board. I thank them for their invaluable support and guidance in 2016. Last year, as always, we saw some Board changes including those of Hera Siu (Other Director) and Lianne Stein (Member Director) who left the Board as of SITA’s Annual General Assembly (AGA) in May 2016. In June, Joe Locandro (Member Director) stepped down due to his departure from Cathay Pacific, while in July former SITA CEO Francesco Violante left the Board at the time of leaving SITA. Following the July Board meeting, Paul Coby (Other Director) also left as his term on the Board ended.

The following were appointed to the Board as of SITA’s AGA in May 2016: Barbara Dalibard, who became SITA CEO as of 1 July; Klaus Goersch, Air Canada (Member Director); Damian Scokin, formerly with Ultrapetrol and now Despegar (Other Director) and Thomas Woldbye, Copenhagen Airports (Member Director). In June 2016, we were pleased to be joined by Elizabeth Haun of International Airlines Group.

My thanks also to the senior management team – and again to our CEO Barbara Dalibard, who has provided fresh perspectives, a strength of purpose and focus, and a

determination to drive SITA to stronger success. Finally, I would like to thank all of SITA’s people. Their industry know-how and commitment are extraordinary, and critical to the future of SITA.

Air transport, like many industries, is in the midst of a far-reaching technological transformation. As a community player, representing air transport organizations the world over, SITA is central to that process and indeed, as the CEO Report outlines, it has embarked on its own transformation plan. The SITA

Board is playing a driving role, having established a sub-committee to undertake a long-term strategy review of SITA with consultants McKinsey & Company, to identify opportunities where SITA can be relevant and deliver value to customers and the market. This is an exciting initiative to position SITA for the future, and I remain confident that we will progress from strength to strength in the years ahead.

Dr Omar Jefri Chair of the SITA Board


A TIME OF TRANSFORMATION AND OPPORTUNITY

This is my first report as SITA’s CEO since joining the organization in July last year. It has been my pleasure to meet my new colleagues at SITA and on the SITA Board and Council. We are all at the heart of a deep transformation within the air transport industry and I used my initial months to gain a full understanding of the challenges and opportunities ahead of us.

MARKET TRENDS It is clear that there are powerful market trends shaping the future of air transport. They include the rise of technologies such as biometrics, big data, analytics, robotics and artificial intelligence – all of which will radically improve industry processes and the passenger experience, while providing further efficiencies. We are seeing the impact of digitization across the industry, driven by travelers as consumers and end users, with increasing real-time expectations about the use of mobile, self-service and other technologies at every stage of the journey.

As one of the biggest disruptions impacting the industry, digitization is leading air transport organizations to establish digital platforms on

which to build their entire operations, develop the passenger experience and determine the journeys of the future. SITA is deeply involved in this industry transformation, driven by our purpose to ‘transform air travel through technology for airlines, at airports, on aircraft and at borders’. These digital platforms will also play an important role in helping the industry to deal with the growing security (and cybersecurity) threat. To facilitate smooth travel, the industry is turning to IT systems and intelligence to counter the risks and alleviate inconvenience to passengers.

Digitization, while presenting SITA with significant opportunities, is also driving the rapidly changing competitive landscape within air transport. The market has become increasingly attractive due to higher spend on air transport IT: SITA’s 2016 Airline IT Trends Survey predicted airline IT spending rising as a percentage of revenues to 3.0% in 2016, with future projections considerably more positive than in previous surveys. SITA’s Airport IT Trends Survey also shows that over the last three years, airport CIOs have seen their budgets grow at a compound annual growth rate (CAGR) of 8.41%, compared to a revenue

SITA IS DEEPLY INVOLVED IN THE AIR TRANSPORT INDUSTRY'S DIGITAL TRANSFORMATION, DRIVEN BY OUR PURPOSE TO ‘TRANSFORM AIR TRAVEL THROUGH TECHNOLOGY FOR AIRLINES, AT AIRPORTS, ON AIRCRAFT AND AT BORDERS'.



growth of 6.36% over the same period. These figures correspond closely to leading analysts’ forecasts for growth in air transportation spend on IT and telecoms. This explains why, in the last two years, we have seen a high level of consolidation and investment in our industry.

STRENGTHS AND OPPORTUNITIESIn close cooperation with the SITA Board and SITA Council, we are working with a leading consultancy on an ongoing strategic assessment of our business and the industry environment to determine SITA’s direction and evolution over the next five and more years, and to leverage these opportunities. SITA will continue to build on its unique strengths in the marketplace. Our customers value our global physical footprint in many airports – enabling local access to global solutions – and our ability to support the air transport community’s mission critical operations with a high level of reliability. Along with our industry-specific expertise and trusted relationships, these major business assets present substantial future opportunities.

But there are many more opportunities that will come from building on SITA’s strengths in integrating stakeholders across the journey, while being the

natural interface between industry players and systems – providing real-time interoperability. With these characteristics, and as a neutral community player, SITA will further explore industry solutions that target operations at the airport, the passenger journey, aircraft connectivity and community-wide applications. Our unique capability to bridge these players will enable us to continue to address industry pain-points, with more solutions in areas such as disruption management and prediction, baggage processing, passenger flow and many others.

OUR DNA – SHARING AND BRIDGING I am excited by these opportunities. They will drive us forward in the markets where we are growing and leading, such as airports, borders and aircraft. The capture, facilitation, aggregation and interpretation of data will be a vital focus. As air transport sees an ever greater reliance on growing amounts of data – powering new business models for up-to-the-second intelligence and analysis, available across the Internet of Things (IoT) both on the ground and in the air – ‘data is becoming the new oil’.

SITA’s natural and trusted access to large volumes of air transport data – as well as our experience in handling

it through APIs, airline and airport systems – makes us the logical choice for new operational and business intelligence solutions. Today, we enable as much as 60% of the air transport industry’s data exchange among airlines, airports, aircraft and border agencies.

Our long-time role of sharing and bridging within the air transport community – a part of SITA’s DNA since its inception – has never been so important. We are building on this foundation as the air transport industry’s digital transformation accelerates, looking to further explore advances in data mining and analytics, while connecting stakeholders at the airport. Being standards-based, our solutions enable the interoperability of the air transport community in all parts of the world, available to all customer segments on a true, unique, global basis. Ultimately, we will deepen the understanding of the interconnections and operations of our industry, enabling change for all low cost, hybrid and full service carriers, as well as for airports of all sizes.

Among these considerable opportunities, we are focusing on those that are most meaningful to our Members and customers, delivering technologies and introducing innovations that continue to improve cross-industry processes along the



entire journey. We articulate this in our vision of ‘Easy air travel every step of the way’.

OUR BUSINESSTurning to 2016’s business results, the operating environment for SITA during the year was challenging. With revenue of US$ 1.51 billion1, we were 2.4% above the prior year’s figure, but had mixed results across our solution lines. We successfully delivered growth in our Airports business, our CHAMP Cargosystems subsidiary, and our SITAONAIR connected aircraft business. This compensated for almost flat growth in our Communications & Infrastructure (CIS) business and a decrease in our Government Solution Line due to lower revenue from one large contract and the extended implementation schedules of some of our customers. Collectively, these businesses have achieved CAGR of around 2.2% over the past five years (2012-2016), and they continue to drive up the economic value of SITA.

The margin for the year included non-recurring items that negatively impacted the result compared to prior year. The decrease was due to some exceptional items plus significant restructuring costs incurred and provisioned in 2016, reduced margin from lower than expected sales and delivery delays and increased scope on some key government projects.

Our Passenger Solution Line (PSL), which was negatively impacted in 2016 by the bankruptcy of a large customer but has seen growth over many years, continues to deliver excellent service to numerous customers. Aligning with our long-term strategy and in the light of intensified competition, we formed the view that a strategic partnership would secure its future, enabling the continued delivery of a strong passenger services offering to SITA customers, our Members and the wider air transport community. In consultation with the SITA Board and SITA Council in 2016 we decided to seek a strategic partner to consolidate our Passenger Services System (PSS) business, and we expect to include the agreement in 2017. This decision triggered a specific accounting treatment which had a significant negative impact on SITA’s overall performance and level of profitability.

Our commercial entity, SITA N.V., absorbed this loss within its retained earnings. SITA SCRL, our cooperative, has generated an over recovery to Members close to target. This is a good level of performance for the year, given the prevailing business environment. Critically, thanks to our effective cash management, we maintained a strong balance sheet, with a healthy free cash flow of US$ 167 million, a net cash surplus of US$ 295.8 million and a low level of bank debt.

OUR LONG-TIME ROLE OF SHARING AND BRIDGING WITHIN THE AIR TRANSPORT COMMUNITY – A PART OF SITA’S DNA SINCE ITS INCEPTION – HAS NEVER BEEN SO IMPORTANT. WE ARE BUILDING ON THIS FOUNDATION AS THE AIR TRANSPORT INDUSTRY’S DIGITAL TRANSFORMATION ACCELERATES.

1 excluding our Passenger Solution Line14 SITA | GROUP ACTIVITY REPORT 2016 15SITA | GROUP ACTIVITY REPORT 2016


AT THE AIRPORT Our Airports, CIS and Government businesses provide industry-leading solutions at airports across the world, being positioned strongly to achieve growth and deliver a strengthening portfolio for the future. SITA’s strategy of leading in ICT provision in our chosen markets centers on the airport, with SITA technologies and services helping to enable an end-to-end passenger experience at more than 1,000 airports worldwide. These technologies and services meet the requirements of industry programs from IATA and ACI, such as Simplifying the Business, Smart Security and Baggage Services.

Looking at 2016’s performance, our Airports Solution Line increased its revenue by 3.9% over prior year. Examples of contracts during the year include the provision of Airport Management Solutions across the global network of VINCI Airports – a top five airport operator in the international sector. We also supported Miami International Airport in becoming the first to adopt Day of Operations and Day of Travel business intelligence services, designed to ensure optimized passenger services and airport operations.

In the meantime, as a mainstay of SITA’s business, CIS provides a unique portfolio connecting industry

players at the airport, representing some US$ 600 million a year of SITA’s business. Indeed, the CIS AirportHub™ program lies at the heart of airport communications, aiming to cover 80% of all airline international destinations at 700 airports by 2020. In addition, SITA Connect, a new generation of communications services, provides in excess of 20,000 channels to more than 1,000 airports.

On the performance front, a positive achievement came as CIS reached a milestone in 2016. CIS has been managing a shift in revenues to new high value-added services, as they replace legacy services. For the first time in several years, CIS revenues stabilized, coming in on budget and providing a solid platform for further evolution. At the same time, CIS delivered significant cost reductions to our customers. The strength of this core business was demonstrated by the successful retention of large network contracts worldwide, including Hapag Lloyd, Alitalia, Air China, LAN Airlines and the World Bank. We also saw an important renewal of network management services with IAG and a Network Guardian contract with Air India.

In our Government Solution Line, growth fell below expectations due to the slippage of key contracts into 2017. But this remains a promising part of our business, as a market where

SITA is well ahead in the provision of technologies to keep borders secure. Our border solutions optimize passenger processing at the airport without compromising security, with automated border kiosks “dramatically increasing” the number of travelers processed per minute, according to one of our first customers, Orlando International Airport. Highlights for our Government business included 2016 contracts and renewals for iBorders®

with governments in the Middle East and Latin America, as well as new contracts for Automated Border Control Gates in Europe and Automated Passport Control Kiosks in the US.

ON THE AIRCRAFT Another strong SITA business for the future is SITAONAIR, which operates in the highly promising and competitive connected aircraft marketplace. While its growth is not yet reaching the double-digit growth ambition we have in this domain, SITAONAIR again demonstrated its potential, recording 6.6% revenue growth during 2016. As in-flight connectivity becomes an expectation and nose-to-tail connectivity moves up high on airline agendas, SITAONAIR is well positioned to meet industry needs and to continue to develop. In 2016, it saw a 21% year-on-year increase in activated aircraft (for cabin connectivity).



OUR TRANSFORMATIONOur review of SITA’s business and strategy led us in late 2016 to embark on an all-pervasive structural transformation program. The program will enable SITA to evolve in order to capture more growth within the air transport IT marketplace, through a better focus on customers and increased agility, which is precisely what our Members and customers have asked us to do.

As part of the program, we are building on our strengths in market sectors where we can deliver value to our customers and maintain or achieve leadership. And we will move towards a simpler, more efficient operating model that will make us more competitive, while growing faster than the market in a sustainable and profitable way in the years ahead.

Our transformation plan, called EVOLVE, addresses four main pillars: customer centricity, growth, operational excellence and strengthening our people. It is backed up by metrics monitoring progress and gauging our success.

Let me briefly describe these four pillars. By strengthening our customer centricity we are developing a customer mindset everywhere across the organization, concentrating investments in portfolio areas where we can add the greatest value for them, and further empowering our geographies to work more closely and in a more agile way with customers to meet requirements. We will develop stronger relationships with the air transport community to ensure we meet evolving needs. Corporate objective metrics for Net Promoter Score and Community Value Index will drive us towards our goals.

We plan to achieve profitable and sustainable growth by targeting market segments where we can lead, add value and deliver, while resolving problems that the industry faces. One immediate action was to introduce structural change to the company late in 2016, creating an Air Travel Solutions (ATS) division that brings our Airports, Governments and CIS businesses under one roof. The resulting synergies and agility that we anticipate will play an important part in driving future growth. Additionally, through a new corporate objective, we will measure our success in delivering transformational solutions that generate growth, with a business

SITA IS A CORE PART OF TWO GROWING AND GLOBAL SECTORS – AIR TRANSPORT AND DIGITALLY-ENABLED TECHNOLOGIES – BOTH OF WHICH ARE SEEING MAJOR SHIFTS IN TRENDS AND ARE EVOLVING RAPIDLY. COMPLEMENTED BY OUR LONG-TERM STRATEGY, I BELIEVE OUR TRANSFORMATION WILL POSITION US FOR THE ROAD AHEAD.


model focused on delivering complex solutions and transformational products to the industry – reducing reliance on legacy products.

SITA already has many such solutions, including AirportHub™, as well as solutions for airport operations, kiosks, a digital cockpit, cabin services and borders. We have also seen the recent launch of solutions for aircraft data, Airport Operations Control Centers (AOCC) and Day of Operations. By speeding up development and the transition of innovations to our portfolio, we will quickly build on our transformational solutions in response to the opportunities offered by advances in areas such as the IoT, artificial intelligence, always-on connectivity, mobile, and industry data and security.

Striving for operational excellencedemands that we optimize our operating model to improve customer experience at a lower cost, addressing the overheads of our global operations. The creation of ATS is a step forward, but we will continue to focus on simplification and agility, as well as new, leaner digital and collaborative ways of working. We will re-engineer our delivery processes – as requested by our members and customers – and define two business models for standard and complex delivery. With corporate delivery metrics in place,

we will focus strongly on SITA Global Services teams and the right delivery first time.

Last but not least, our EVOLVE transformation plan places critical emphasis on strengthening our people, which includes upgrading staff skills and expertise to meet the needs of customers, both today and tomorrow. We are optimizing our location strategy and bringing in new skills in key locations. We are entering partnerships with universities to acquire and nurture skills. And we are developing our people to become subject matter experts in areas that will drive growth and innovation, ensuring that their skills and expertise are integral to our organization’s transformation.

THE ROAD AHEADSITA is a core part of two growing and global sectors – air transport and digitally-enabled technologies – both of which are seeing major shifts in trends and are evolving rapidly. Complemented by our long-term strategy, I believe our transformation will position us for the road ahead. We are financially sound – with a strong balance sheet and little debt – and we are well placed with the potential to further explore new technology solutions and ideas, as a

crucial component of the air transport industry’s critical infrastructure.

Our goals are clear: to strengthen our market relevance and build a long-term, sustainable, leading market position in our chosen areas of activity. Our strategy draws on the skills and talents of staff from across the company. I commend their knowledge and commitment to our company and I am grateful to them for their continued hard work and loyalty during 2016, a year of transition. Finally, with the commitment of our staff, the continuing support of the SITA Board, SITA Council and our Members, I am confident, ambitious and excited about SITA’s future.

Barbara DalibardChief Executive Officer, SITA


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THE VOICE OF MEMBERS

I am pleased to report on a further year of progress for the SITA Council, in its role of contributing to the strategic direction of the business, providing guidance and expertise on air transport community needs, and championing the interests of SITA Members.

Comprising up to 32 representatives from across the Membership, the Council continued to prove itself as a crucial pillar in the overall governance of SITA. For the record, the Council’s role includes recommending SITA Board Directors, as well as the SITA Council President and Deputy President, for appointment by the Annual General Assembly (AGA). The Council has the right of final approval over key matters relating to the high-level direction of SITA and must be consulted on other issues that have a material impact on services – a matter that for the first time, in 2016, called for the Council’s attention. It is concerned with membership policy and rules, as well as member admissions and expulsions. And it is a channel for community opinions.

Following the review of SITA’s governance structure and its approval in 2015, the two-tier Board and Council approach was further embedded during 2016. It remains fundamentally sound and appropriate for SITA’s Membership.

The relationship between the organization and its Members has been further enhanced through several engagement initiatives, from the appointment of SITA’s Membership and Community Director, to communication through ‘Air Transport IT Review Member Supplements’, a range of Community Innovation projects and specific Membership benefits.

COMMUNITY-DRIVENAll businesses must, by definition, create value. For SITA, that means both economic value and value delivered to the community. As mentioned in the Chair and CEO statements, 2016 was a difficult year for SITA as a business and while the financial results were mixed it did not deter the organization from its remit to generate value not just for the benefit of individual customers but also for SITA’s global Membership and the wider community. The organization was, after all, created by the air transport industry to provide communications and information technology services that every player in that industry requires in order to be able to operate.

That remit underlines the importance of the SITA Council as the representative body of Members, ensuring that SITA maintains a

THE SITA COUNCIL IS THE REPRESENTATIVE BODY OF MEMBERS, ENSURING THAT SITA MAINTAINS A DEEP UNDERSTANDING OF THE NEEDS AND CHALLENGES OF THE AIR TRANSPORT COMMUNITY – FOR BOTH THE LONG AND SHORT-TERM.



deep understanding of the needs and challenges of the air transport community – for both the long and short-term. Hence the introduction of five Community Innovation initiatives, identified by the Council and the Board in 2015, as priorities for the future. The Chair goes into more detail on these in his Statement on page 8, but suffice to say, the initiatives cover areas where our Members and the community at large have significant and rapidly evolving requirements – such as cybersecurity, disruption management, identity management and baggage tracking.

Of course, these Community Innovation initiatives are not the only areas where a community response is being delivered. SITA is constantly innovating and developing across many vital areas for the community. The enthusiasm with which airports have embraced beacons, for example, has underlined the value of the decision in 2015 to turn over the common-use Beacon Registry – developed by the SITA Lab – to IATA and ACI. SITA continues to work closely with air transport industry associations in global, regional and national forums, including in the development of essential new community and technology standards.

The response of the Council was also sought by the Board with regard to the future of SITA’s Passenger

business, calling upon the reserved powers granted to the Council in 2015. The process began during that year, when the Council was consulted about a strategic partnership for SITA’s Passenger Solution Line, a new direction for SITA’s Passenger business which the Council advised upon and fully endorsed. During 2016 plans took shape and discussions continued, with 2017 being the year in which the partnership is planned to be launched.

COMMUNITY VALUEA key tool in measuring how successfully SITA is creating and adding value to Members’ own businesses and the industry as a whole is the Community Value Index (CVI), introduced in 2015 and based on 10 community value drivers and an overall value question (see ‘SITA Community Value Index: community value drivers’, page 23). The index is updated annually, when SITA surveys Members and customers to determine how SITA is performing against these drivers. The outcome of the survey is based 50% on input from the SITA Council and 50% from all customers, forming a core element within SITA’s annual corporate objectives.

A KEY TOOL IN MEASURING HOW SUCCESSFULLY SITA IS CREATING AND ADDING VALUE TO MEMBERS’ OWN BUSINESSES AND THE INDUSTRY AS A WHOLE IS THE COMMUNITY VALUE INDEX.



The 2016 end of year survey was based on results from more than 900 customers and 25 SITA Council Representatives, balanced geographically. At 3.56, the CVI score showed a marginal improvement on 2015 (3.55), being just short of our demanding target of 3.60. The Council Representatives Index score was 3.59, with customers at 3.53. The areas showing most favourable improvement related to innovation and cost of ownership.

The overall results suggest SITA is performing well but there is clearly room for improvement – something that the Executive Team under new CEO Barbara Dalibard is addressing as a key priority within the organization’s transformation agenda.

A new Brand Health Index was introduced in 2016. This is designed not only to assess the strength of the brand, but also to obtain a wider stakeholder view and competitive measure to understand SITA’s value to the community. More than 1,200 customers, Council Representatives and prospects answered the first survey, with 87% agreeing that SITA is an admired brand and 41% absolutely or strongly agreeing. The index score was 3.43 out of 5.

This placed SITA above the competition – both IT companies as well as telecom providers. Importantly, higher than average scores were recorded for three drivers in particular:

• Adds value to the air transport community (3.65).

• Enables transformation through technology that helps provide better customer service (3.50).

• Will continue to be relevant in the future (3.64).

However, the Index also suggested areas for improvement, which are the focus of senior management during 2017.

COMMUNITY FOUNDATIONCommunity comes to the fore with the work of the SITA Air Transport Community Foundation – an initiative fully supported and governed by the SITA Council. In its second year of operation, the Foundation continued to provide opportunities for young people in Africa to access IT and education.

Foundation work in Ethiopia, Uganda and South Africa during 2016 delivered a number of programs, including the building of four brand new ICT suites at secondary schools. They involved equipping 25 primary schools with IT equipment, piloting and deploying

SITA HAS ALWAYS HELPED THE AIR TRANSPORT INDUSTRY TRANSFORM IN THE FACE OF SIGNIFICANT CHALLENGES, INCLUDING ADVANCES IN TECHNOLOGY AND SUBSTANTIAL AND GROWING DEMAND FROM PASSENGERS.



Raspberry Pi devices loaded with educational content, providing computer training for teachers, and funding for students and young people. A new project that started during the year saw 100 women university students in Zimbabwe receive dedicated computer training with the International Computer Driving Licence (ICDL) qualification, while seven computer rooms were created and equipped in the female halls of residence – enabling access to ICT 24/7. Also during the year, the Council approved a set of principles that enabled partners to contribute to the Foundation, and in May we accepted our first partner – Mindtree.

The results have been impressive. Since the program started, over 700 PCs have been provided across 43 computer labs, 200-plus teachers have received ICT training, and 46 students have received funding support for their tertiary studies. To date, around 15,000 students have been positively impacted. Regular monitoring and evaluation ensures that the projects continue to meet their KPIs, and that aims of the Foundation remain at the core of the projects. In 2017, work will continue in the current countries, and a new initiative will start in Zambia to build and equip two brand new ICT labs.

THE IMPORTANCE OF MEMBERSHIPSITA has always helped the air transport industry transform in the face of significant challenges, including advances in technology and substantial and growing demand from passengers. Members guide SITA’s direction and strategy. They help to ensure that SITA continues to invest in the technology needed by the industry today and tomorrow.

Membership helps air transport companies to tap into the knowledge and understanding of the best brains in the sector, not least through the AGA and the Air Transport IT Summit. Members also gain exclusive access to the detail of SITA’s three IT Trends surveys – airline, airport and passenger as well as exclusive access to SITA Lab innovation webinars. Regionally, there is a wide range of activity – such as the Sub-Sahara Africa Innovation Day run in 2016 and regular regional newsletters, highlighting issues of concern. And because of SITA’s co-operative status, membership ensures that money spent through SITA remains in the industry for reinvestment in improved services and advances in technology, again for the benefit of Members.

Additional benefits are now also a part of the picture. For example, there are preferential Member-only offers on a range of SITA products and services. Recent offers have included free trials of new products, discounted consulting, workshops and free access to Application Programming Interfaces (APIs). Seven new offers on products and services were introduced in early 2016, taking the total to 16. These include three offers available to new Members in their first 12 months as SITA Members. Details of current offers can be found at www.sita.aero/membership.

During 2017, SITA has committed to leveraging Community Innovation projects to demonstrate how SITA continues to provide value and to promote the real value-add potential offered by the work of the Cybersecurity Work Group forum. Initiatives in 2016 included a successful Aviation Cybersecurity Symposium, the first of its kind, which brought together air transport Chief Information Security Officers from across the world, along with experts from other walks of security and industry. The Symposium offered a unique opportunity to orchestrate a community-wide response to sharing and understanding common cybersecurity challenges faced in air



transport. The Cybersecurity Work Group worked proactively towards greater collaboration and data sharing leading to the February 2017 launch of the SITA Cyber Threat Centre.

There will be more targeted content for specific member groups – for example by further engagement with airline Members about resolving baggage challenges and with airport Members around issues relating to identity management and cybersecurity. Work is also being pursued to create a hub where members can interact with each other and SITA, supported and managed by the Membership director, perhaps through a discrete Linked In group.

REPRESENTING MEMBERS In 2017, your SITA Council and SITA will continue to explore new ways to engage with Members, to provide additional value and exclusive opportunities.

The Council is an evolving body involving a broad range of committed individuals. Our thanks are due to those who have moved on and to new representatives who have taken their place. During 2016, there were a number of changes to the Council’s composition. In May, Joseph Locandro was replaced by Mark Griffith of Cathay Pacific Airways, who was then replaced in June by Kerry Peirse also of Cathay; Philip Hawker of British Airways resigned as Deputy President on the

Council; Abe Dev of Etihad Airways replaced Rob Putter; Hazem Khalil of Egyptair replaced Osama Anwar Elsisi to represent Middle East & North Africa Group 2; and Aleksey Sladkov was appointed to represent Aeroflot, to be subsequently replaced by Giorgio Callegari of Aeroflot. Other changes in the month were the appointment of Angie Tinsay of Philippine Airlines to represent South Asia and India Group, and the resignation of Sang Man Lee of Korean Air Lines.

In June and July we saw the resignation of Lawrence Chai of Malaysian Airline System and the appointment of Tan Kok Meng to represent Malaysia Airlines; that was followed a little later in the year with the departures from the Council of Jay Fredericks of Delta Air Lines, Luc Hennekens of Qantas Airways, and Nelson Tapia of LATAM representing the Latin America & Caribbean Group. The final change came in December with the replacement of Philip Hawker by Elizabeth Haun to represent British Airways.

Our congratulations also to long-standing Members: in particular, to those marking significant anniversaries as Members. There were many, ranging from 10 years of membership right through to 60 years. Those reaching 60 years were Air Serbia, Middle East Airlines - Air Liban, Pakistan International Airlines and Qantas Airways. Those reaching

50 years of membership were Adria Airways, Libyan Arab Airlines, Meridiana fly, Saudi Arabian Airlines and United Airlines (see page 25 for all Member anniversaries).

SITA’s new vision is ‘Easy air travel every step of the way’ while its purpose remains to transform air travel through technology. The role of the SITA Council is central to that process – creating an open and busy channel between SITA and its Members to the benefit of all.

We face many challenges in the next few years – but we are strongest when we work together around shared aims and objectives. For its part, the SITA Council will continue to reflect the ambitions and concerns of SITA Members to create a strong and successful sector in all parts of the world.

Jappe Blaauw President, SITA Council



DELIVERING VALUE TO THE AIR TRANSPORT INDUSTRY IS A CORE ATTRIBUTE FOR SITA. THE ORGANIZATION IS DEDICATED TO PROVIDING THE COMMUNITY WITH SOLUTIONS THAT ENHANCE PROCESSES AND SERVICES, DRIVE INNOVATION AND IMPROVE PROFITABILITY. SITA's recently introduced Community Value Index (CVI) measures the value SITA provides to the air transport community. It is determined by the responses of the SITA Council, customers and members to the following 10 community value drivers.

1. Actively engaging with the air transport industry to bring about positive change.

2. Delivering ICT solutions to meet the needs of the community.

3. Creating a more price competitive market environment that results in greater customer choice.

4. Collaborating with the industry to develop and implement global standards.

5. Delivering innovation which directly responds to air transport industry challenges.

6. Reducing the total cost of ownership through delivery of shared infrastructure and community solutions.

7. Ensuring presence with staff and infrastructure wherever airlines fly.

8. The skills, experience and contribution of its employees.

9. Supporting and servicing the community beyond what would be seen as business as usual.

10. Being owned and governed by the air transport community.

SITA COMMUNITY

VALUE INDEX: COMMUNITY

VALUE DRIVERS



WELCOME TO OUR NEW MEMBERS IN 2016Name Entry Date Country SectorARIVL INC July 2016 USA ICTAble2Fly Limited July 2016 UK ICTBlue Air - Airline Management Solutions Srl November 2016 Romania AIRLINEComlux Aruba NV November 2016 Aruba AIRLINEHebei Airlines Company November 2016 China AIRLINEMalta International Airport p/c November 2016 Malta AIRPORTWest Air Company Limited November 2016 China AIRLINE



MEMBER MILESTONES Member name YearsAir Serbia 60Middle East Airlines - Air Liban 60Pakistan International Airlines 60Qantas Airways 60Adria Airways 50Libyan Arab Airlines 50Meridiana fly S.p.A. 50Saudi Arabian Airlines 50United Airlines 50Air Niugini 40Hawaiian Airlines, Inc. 40Air Europa 30Air Koryo 30Air Tahiti 30Astar 30HOP! - BRIT AIR 30TACA International Airlines 30Aéroports de Paris 25Air Dolomiti 25Bangkok Airways 25Croatia Airlines 25easyJet 25Goodrich Control Systems 25Manchester Airport 25Mandarin Airlines 25Panalpina Management 25Satair Group 25Schenker International 25Shaheen Air International 25

Member name YearsSwiss Int. Air Lines 25Thomas Cook Airlines Limited 25Travelport 25AirAsia Berhad 20Airports Company South Africa 20Avinor 20Avio S.p.A. 20Avio-Diepen 20Beograd Airport 20Fokker Services BV 20His Majesty the Sultan's Flight 20Hong Kong Aircraft Engineering 20Iran Aseman Airlines 20KL Airport Services 20Koltsovo Airport 20Riga International Airport 20RusAero 20Siberia Airlines, PJSC 20The Thomas Cook Group 20TunisAir Express 20Xiamen Airlines 20Zagreb Airport Air Transport Service 20Airports of Thailand 10Saman Air Services 10Sichuan Airlines 10TUI Airlines Belgium dba Jetairfly 10Cameroon Airlines Corporation Camair-Co 5Mauritanian Airlines International 5



Matthew Billings(Virgin Atlantic Airways) Representing the Northern Europe Group

Jappe BlaauwKLM President

Elizabeth HaunBritish Airways

Abe DevEtihad Airways

Radin Asrul Adza(Malaysia Airports) Representing the Airport Group

Giorgio CallegariAeroflot

Kelly CunninghamUnited Airlines

Omar JefriSaudi Arabian Airlines

Jassim Haji(Gulf Air) Representing the Middle East & North Africa Group 1

Daniel HoQatar Airways

Laurent Jossart(Luxair) Representing the Southern Europe Group

Kerry PeirseCathay Pacific Airways

Roland SchützLufthansa

Brant VeniceUnited Parcel Service Deputy President



Karamu FordAmerican Airlines

Eash Sundaram(JetBlue Airways) Representing the North America Group

Phinda NcalaSouth African Airways

Richard ForsonCargolux

Laeke Tadesse(Ethiopian Airlines) Representing the Sub-Saharan Africa Group

Angie Tinsay(Philippine Airlines) Representing the South Asia and India Group

Greg Gilchrist(Sabre) Representing the ICT Group

Takayuki Fujiwara(All Nippon Airways) Representing the North Asia Pacific Group

Jean-Christophe LalanneAir France

Hazem Khalil(Egyptair) Representing the Middle East and North Africa Group 2

Tan Kok MengMalaysia Airlines

Sunita MarwahAir India

George WangSingapore Airlines

Arnaud van RietschotenEmirates

Anton Eremin(Siberia Airlines) Representing the CIS & Russia Group



OPERATINGREVIEWIn 2016, SITA created a single business unit called Air Travel Solutions (ATS). It brings together Communication & Infrastructure Services, Airport and Government solutions – which are all areas where SITA leads the industry. With ATS, SITA will explore every opportunity for simplification, synergies and collaboration across our portfolio and platforms, increasing the speed and agility with which we respond to the changing needs of our air transport customers.

EASY AIR TRAVEL EVERY STEP OF THE WAYAlong with our other businesses – including SITAONAIR and CHAMP Cargosystems – SITA not only provides one of the broadest portfolios in air transport, but also offers a depth of knowledge that is unrivalled in the industry today. As this Operating review shows, from our operating units to the SITA Lab, and from our SITA Global Services organization to our Human Resources team, SITA is united in making our vision of ‘Easy air travel every step of the way’ a reality.

We are doing this from our unique position at the heart of the air transport industry, and our ability to span the businesses and operations of airlines, airports, aircraft and border agencies. As the industry evolves, ‘connecting the dots’ across such organizations and operations within the

travel chain is imperative, making air transport practices and processes, as well as each step of the journey, more intelligent, responsive and efficient.

A CONNECTED COMMUNITYTo achieve this, the industry is turning to technology, as we see from SITA’s Airline, Airport and Passenger IT Trends Surveys. IT investments will lay the groundwork for a more connected community in the future, as the majority of airlines and airports focus on business intelligence and cloud computing platforms to make greater use of data, while preparing for the Internet of Things.

As an air transport community provider and innovator, SITA’s remit is to help the community to manage and embrace these technologies, trends and innovations – to deploy the right IT in the right way to deliver benefits, and to bridge the divides among industry stakeholders. We express this in our purpose of 'Transforming air travel through technology for Airlines, at Airports, on Aircraft and at Borders.'

IT COMPANY OF THE YEAR For the second year in a row, the Air Transport News (ATN) Awards recognized SITA as the ‘IT Company of the Year’. The 2016 award was based on SITA’s significant leadership and innovation in developing solutions that transform air travel through technology.

ASIA PACIFIC AIRPORT IT SOLUTIONS COMPANY OF THE YEARFrost & Sullivan recognized SITA as the Airport IT Solutions Company of the Year in the Asia Pacific region (APAC) for the third time in seven years. The award highlights SITA’s leading role in the air transport industry across APAC, where it provides solutions to 70% of the region’s top 20 airports.

SITA WON TWO MAJOR

INDUSTRY AWARDS IN 2016



LEADING THE INDUSTRYAs the world’s leading provider to air transport, after almost 70 years SITA’s Communication Infrastructure Solutions (CIS) business continues to be unique in its provision of network services across 220 countries and territories. SITA also remains the world’s leading air transport messaging provider, handling 30 billion messages a year for the mission critical and everyday operations that keep the wheels of the industry in motion. CIS services are used by 100% of Tier 1 airlines, while the network, SITA Connect, provides in excess of 20,000 channels to more than 1,000 airports.

With new digital technologies taking the place of legacy systems and driving new digital ways of working, SITA is transforming communications across the sector – collaborating and delivering enhanced services to the benefit of passengers, airlines, airports and the myriad other stakeholders across this US$ 2.7 trillion global industry.

The number of passengers continues to grow. To meet capacity constraints, airports are changing the way they operate – existing airports will see their capacity grow by over 40% by 2030. By 2030, it is estimated that there will be 500 new airports operating. Both airlines and airports

are adapting their communication infrastructures. And all parties are driving further change in response to passenger expectations of real time and accurate data providing them with the opportunity to control their journeys. Everyone is seeking reliable, secure and high performance connectivity.

At the same time, the industry is becoming more competitive. One result is an increase in airlines’ expectations for agility – an ability to change and adapt at a moment’s notice, whether severe weather or seasonal demand spikes.

One consequence of the period of change and readjustment - as the market has replaced legacy services such as Type B Messaging Service and IP VPN with digital and IP-based services - has been a sustained period of decline in the sales of CIS generic services, while SITA and CIS have remodeled themselves. In 2016, the market began to stabilize and in a landmark year CIS succeeded in stabilizing revenues as declining services are increasingly off-set by growing revenues from new generation value-added communications and infrastructure solutions. These include the continued rollout of AirportHub™, SITA’s shared connectivity platform at airports (see ‘At the Heart of the Airport’), as well as data management activities and a new portfolio to tackle the growing threat of cyber attacks.

COLLABORATE, COMMUNICATECIS offers two main portfolios, underpinned by a global services organization and the ATI Cloud. First, the ATI (Air Transport Industry) Data Collaboration portfolio includes SITA Community Messaging (the community’s single largest access point to exchange operational data); encompassing message distribution, operational mail, middleware integration, transformation as well as intelligence services; and NDC Exchange, IATA’s New Distribution Capability (NDC) enablement program.

The second portfolio, ATI Communications, includes the global hybrid Wide Area Network (WAN) in partnership with Orange Business Services, as well as airport communications and shared infrastructure, focused around AirportHub™. Further developments continue to take place with application assurance and cybersecurity, in addition to device management and unified communications.

NEW GENERATION NETWORKSSITA is now operating fully as an integrator of communications and infrastructure solutions worldwide. During 2016 the roll-out of the new operating model with Orange Business Services met major milestones, as



“SITA AirportHub™ makes opening new routes much quicker and easier. When airlines are connecting their systems at an airport they can now do so within a matter of weeks not months. This streamlined approach is efficient and cost-effective. Many airlines are keen to work with their airport partners who don’t already have SITA AirportHub™ in place to consider its adoption.”Matthew Billings, Chair of Membership Committee, SITA

did interconnection with the four regional partners – Cable & Wireless (Caribbean), CMC (Africa), PCCW Group (Asia) and Etisalat (Middle East). Services are now delivered through a One SITA Network Services Delivery and Operational Center. At the end of 2016, 90% of customer connections requiring migration were processed and 99% of local network operations transferred into the target model.

Orange Business Services was named a leader in the ‘Gartner Magic Quadrant for Network Services, Global’. The 2016 report evaluated 12 network service providers on their ability to execute, and the competence of their vision. Orange Business Services was positioned highest along the ‘ability to execute’ axis.

Following the launch of SITA Connect in 2015, new products and functionalities were introduced during 2016. They included:

• CorporateConnect Reach – the Orange Cloud Galerie provides secure access to applications such as Office365, Salesforce, WebEx, Amazon Web Services, Equinix and more.

• SwiftConnect – provision of a 3G/4G temporary connection (where available) and a temporary internet connection.

• CorporateConnect@Airports Light – a ‘lighter’ version of CorporateConnect@Airports IP connectivity services delivered on SITA’s AirportHub™ platform at regional airports.

• InternetConnect Edge – ideal for small offices to build internet VPN using IPSec, with firewall to safely breakout over the Internet.

• CommunityConnect Internet – a footprint increase of 40 airports a year in 2016 and 2017.

In 2017, a new service will be introduced allowing high availability internet-based connectivity with enhanced support level options, compared to the standard offering.

AT THE HEART OF THE AIRPORT SITA kicked off its AirportHub™ program in 2014 – a unique, shared infrastructure network platform that allows SITA to relieve airlines of the burden of dealing with local telecommunications providers at each airport on their route network. This makes it considerably faster for airlines to link to their IT systems and provides a single supplier approach in a language of their choice, regardless of geographic location.

AirportHub™ is designed to provide security, reliability and resilience by using hardware and connectivity diversity to avoid single points of failure. This redundancy ensures high availability and reduces the risk of any disruption to airline schedules from airport operations as a result of network access issues. When an AirportHub™ is first deployed at an airport, connections are pre-installed making it considerably faster for airlines to link to their IT systems. The infrastructure is then securely shared across all customers, delivering economies of scale. A large portfolio of communication services is provided and a new internet service has been recently launched.

The goal is to cover 80% of all airline international destinations by enabling AirportHub™ at 700 airports by 2020. To meet this goal SITA designed two new infrastructures to answer the needs of T3 and T4 airports. As of the end of 2016, 350 AirportHub™ were running in 120 countries, 90 of which were deployed in 2016. Increasing numbers of requests from airlines are being received as word spreads about this ambitious project to bring quick, simple and resilient connectivity to airports all around the globe.



OTHER DEVELOPMENTSLooking at some of the 2016 data collaboration developments in further detail, the SITATEX portfolio returned to growth during the year – with volumes increasing 5% year on year – and reinforced its market position with small and medium sized customers. This is a first increase since 2008 and is the result of the successful adoption of SITATEX Online (up by 30%), the introduction of SITATEX IP V9, with enhanced resilience capability, as well as a number of new industry vertical options, such as CargoForm and AOS Forms. Additional benefits included a new member pricing offer and the inclusion of SITATEX in SITA's digital store for purchasing cloud-enabled applications and services – marketplace.aero.

Also, in late 2016, MessageIntelligence was introduced – a self-service web platform providing insight into airlines’ Type B Messaging traffic activity. The service consolidates disparate data across the whole customer organization in a single self-service application, helping airlines better understand usage, uncover potential gaps and fix operational issues.

Other data collaboration activity included work to explore the potential for community services related to New Distribution Capability (NDC) and other emerging distribution methods. After a

successful proof-of-concept (IATA NDC Level 3 certified) in 2016, the company progressed with the industrialization process for a Community NDC Exchange Service, in partnership with ATPCO. The pilot version was launched in early 2017. SITA continues to collaborate with IATA, airlines and sellers to explore further opportunities for industry solutions in this area.

In the meantime, the End User Computing portfolio completed a significant renewal over the past three years. This has enhanced the offering, market relevance, delivery and operational model of the range, including an upgrade of the technical solution to state-of-the-art standards, a reshaped service offering to match changing market requirements, improved delivery and operations, and a strengthened pre-sales engagement team. As a result, several new contracts were signed in 2016, including one to support hundreds of kiosks in over 50 locations for JetBlue, as well as a number of contracts for low cost and full service carriers in Asia Pacific and the Middle East.

An exciting new development took place late in 2016 with the launch of SITA DigitalMedia – a self-service entertainment platform that can deliver any kind of content, through multiple passenger touchpoints directly to a passenger’s smart device, no matter where they are.

This is a new source of ancillary revenues for airports and airlines – backed by the 2016 SITA Passenger IT Trends Survey, which revealed that for every 100 travelers, 65 would access entertainment services on their own device and 46 would watch a movie on-board using mobile devices. It also helps airlines reduce the volume (and therefore weight) of newspapers and magazines carried per flight. DigitalMedia features a large catalog of content including newspapers and magazines as well as movies and games. It provides an international and varied selection of content, to target a variety of passengers. The product was seen “as a major innovation” by SWISS, meeting “a genuine need for customers”.

CYBERSECURITYOther portfolio developments include a focus on industry cybersecurity. This has steadily progressed to become a key topic on companies' risk agendas. For example, according to the 2016 Airline IT Trends Survey, 63% of respondents indicated that cybersecurity is a board level responsibility at their airline, while 72% of CIOs are investing in major cybersecurity projects, with a further 19% engaged in cybersecurity R&D projects. The air transport industry, like so many others, has seen a dramatic change as security

“Having been a long-standing technology partner in aviation, SITA is able to fulfil the vision of passenger experience by identifying appropriate innovations covering network and communications that can help the airline to become more efficient and cost effective. This will help us benefit from the opportunities in the fast-growing Indian aviation market while elevating our international competitiveness.”Ashwani Lohani, Chairman and MD, Air India



researchers, hackers, criminal organizations and nation-states target the vast expanse of global air transportation. Cybersecurity is expected to become a significant part of CIS activities in the years ahead.

Stakeholders from across the industry are calling for joint actions and increased collaboration to actively combat the cybersecurity threat. The ability to share threat information relating to cybersecurity incidents affecting the industry has become paramount. With such information the industry will increasingly be able to search for those attackers deeply nested into the infrastructure and provide a coordinated response to those who seek to take advantage of temporary security lapses.

During 2016, SITA launched a community-wide initiative for a response where cyber threat information can be shared with members to counter the common threats. SITA has already shared a

number of alerts with members of its Cybersecurity Work Group. These were actionable warnings enabling direct response by those affected.

Becoming available during 2017, a new SITA CyberSecurity solution is articulated around four pillars: audit, detection, response and protection. SITA is leveraging expertise from high profile cybersecurity actors such as Airbus, who embrace the worlds of both cybersecurity and air transport.

SHARING IDEASThe Communications & Infrastructure Advisory Board (CIAB) is a forum organized by CIS, consisting of 23 member representatives including American Airlines, British Airways, Emirates, Saudi Arabian Airlines and Singapore Airlines. Through peer to peer discussions and workshops, the CIAB gives member customers and guests the opportunity to share what is currently driving them from an IT perspective, and to provide feedback

on SITA's solutions portfolio, product roadmap, partnerships and processes.

In 2016 the CIAB took place in London and was attended by 19 senior airline representatives including American Airlines, Cathay Pacific, Ethiopian airlines, Japan Airlines, Ryanair, Saudi Arabian, Scandinavian Airlines and United Airlines. Major topics discussed included tackling cyber threats, disruption management and Software Defined Networking. Also covered were new use cases related to data exchange across multiple stakeholders to enable a more effective handling of disruptions, extracted areas of improvement related to billing, validated drivers for adopting Software Defined Networking, and most importantly, mapping of the greatest ICT challenges and priorities for the next two years.

“As we continue to expand our network across the globe, we needed a world-class reservation center that could assist our passengers across our network 24/7. SITA was able to quickly provide us with a global presence with a fully-trained team. It also ensured that the center was able to accommodate our future growth as our network and operation continues to expand.” Osama Al Sadr, CEO, Iraqi Airways



No.1 air transport network provider with more than 20,000 connections in more than 1,000 airports. AirportHubTM to offer greater flexibility for seasonal routes. Enables airlines to order seasonal Community Connect DCS and Community-Connect Internet connections at locations where shared infrastructure is available.

Connecting the air transport industry through the Internet of Things. 350 airports in 2016 used AirportHubTM.

90 additional airports to introduce AirportHubTM in 2017.

700 airports will have AirportHubTM by 2020.

471 CommunityConnect DCS sites.

95% of all international destinations covered by SITA’s network. SITA operates global WANs for 100% of the top 30 airlines and around 25% of domestic networks. 13,500 air transport sites connected by SITA’s VPN Networks.

400 airports pre-connected by SITA’s ATI Cloud infrastructure, as well as 17,000 air transport sites and 15,000 commercial aircraft.

2,400+ air transport companies use SITA Messaging. 100m Type B messages sent every day.

No.1 Provider of air transport communication and infrastructure services. Unique in providing network services across 220 countries and territories.

30 billion messages in 2016 making SITA the world’s No.1 industry messaging provider.

2,500 new generation aircraft to be in operation within the next 5 years.

By 2025, we expect that more than 50% of commercial aircraft will be connected.

400,000 parameters to be monitored on an Airbus A350 and 1,400 software parts on a Boeing 787.

87 AirportHubTM

wireless sites to provide Gatelink and wireless services.

Orange Business Services main network partner and integrator.

4 regional partners (CMC, PCCW Group, Etisalat and Cable & Wireless). Together SITA and Orange Business Services operate a new One SITA Network Services Delivery and Operations Center to deliver a best in class service that is exclusively designed for, and dedicated to, the global air transport industry. Run by industry specialists, it operates 24/7 to deliver, integrate, manage and support all of SITA's network services globally. One-stop shop: One premium ordering service desk.

60% network market share with full-service carriers.

THE AIR TRANSPORTCOMMUNITY’SNETWORK

WORLD’SLEADER

THIS CHANGINGWORLD OFCOMMUNICATIONS

CONNECTIVITY FOR AIRLINES AT AIRPORTS

A NEW ERA IN NETWORK COMMUNICATIONS

170081 Activity Report - CIS

No.1



THE PROVIDER OF CHOICEAgainst the backdrop of ever-increasing complexity within the airport ecosystem, rising passenger expectations and robust growth in demand for travel, airports are undergoing a profound transformation. It is a transformation that demands the digitization of airport processes, touchpoints and interactions, a task for which SITA’s Airport Solution Line is well positioned, as market leader and provider of the broadest airport solutions portfolio across the entire ecosystem.

Recording another solid year’s progress in 2016, SITA’s Airport Solution Line continues to strive towards its vision as the provider of choice for airports. This is founded on the company’s expertise across the core airport ecosystem, its global presence and constantly increasing capabilities across the key operational areas of flows – which provide the necessary data for SITA to drive collaboration and furnish critical intelligence at airports.

To that end, SITA’s Airport Solution Line works closely with the world’s airports, airlines and ground handlers – as well as governments – to improve the passenger experience and operational processes, while enhancing collaborative decision-making, financial performance and security

through end-to-end integration, information and intelligence.

LANDSIDE TO AIRSIDE The strong performance of SITA’s Airport Solution Line is helped by the company’s leading position in end-to-end self-service passenger processing solutions, as the industry looks increasingly towards the achievement of a seamless landside to airside passenger experience. These solutions continue to play a vital role in the realization of industry programs that aim to simplify travel for passengers. For this reason, as part of its dedication to air transport community requirements and initiatives, SITA remained fully involved throughout the year in programs from IATA and ACI, including Simplifying the Business, Smart Security, Fast Travel, Passenger Facilitation and Baggage Services (including helping airlines to meet IATA Resolution 753).

Further evidence of SITA’s involvement in industry programs came with the launch of SITA Smart Path™ at Passenger Terminal Expo in 2016, exemplifying SITA’s steps towards self-service security which integrates biometric technologies into stages of the journey. Smart Path™ is a new solution that allows passengers to move through the airport and board the aircraft simply by presenting themselves for a biometric check.

Once verified there is no need for the passenger to present a boarding pass, a passport or travel documents again.

As an evolutionary solution linked to IATA’s Fast Travel and Smart Security programs, Smart Path™ is modular, allowing airports to augment new self-service touchpoints as required. It has been trialed in a major Middle Eastern airport and a multi-touchpoint proof of concept has been developed with Brisbane Airport and Air New Zealand. Developments continue apace, including work using biometrics as the single travel token for digital identification for travelers at the various journey control points.

INTELLIGENCEA lynchpin in the delivery of a smooth end-to-end passenger experience and efficient airport operations is the ready availability of intelligence, both business and operational. SITA’s Airport IT Trends Survey 2016 shows airports’ high level of commitment to business intelligence initiatives – current and planned (end of 2019) – particularly in the areas of passenger flow management (77%), airport operations (73%), airport security (71%) and baggage operations (70%). The survey highlights equal vigor among airports in implementing or planning operational intelligence services, including operational and business intelligence (BI) dashboards

airports



for airport staff (87%); ground, vehicle tracking systems and Moving Maps (73%); and flight updates through Aviation Information Data Exchange (68%).

SITA’s increasing capabilities in harnessing data throughout the airport enables the provision of such intelligence. This remained a major focus in 2016. Back-end data management can create significant value by delivering actionable up-to-the-minute insights for airports, key stakeholders and passengers through user-friendly tools such as operational dashboards and mobile apps. Launched in late 2015, the Business Intelligence portfolio saw further evolution through 2016 and adoption by customers. It includes:

• Day of Operations BI. This provides situational awareness to enhance operational efficiency and collaboration by allowing airports and stakeholders to monitor real-time conditions more efficiently. Early adopters include Adelaide and Orlando International Airports.

• Day of Travel Services. Leveraging beacons and sensor technology, Day of Travel Services are able to push out relevant contextual information and content to passengers on smartphones through mobile apps, augmenting their experience with real-time situational awareness as they progress through the airport.

Among other activity, the year saw the launch of Miami International Airport’s ground-breaking mobile app designed for passengers and all airport users – described by the airport as ‘Your Personal Travel Assistant’. As a clear indication of the kind of services to expect from the Internet of Things, this became the first airport app in the US to use latest technologies, such as Bluetooth Beacons, to give travelers personalized updates, directions and tips based on their location and needs – all through a highly intuitive interface. “Our app can guide you from driveway to runway with personalized, user-friendly instructions,” commented Miami-Dade Aviation Director Emilio T. González.

AIRPORT OPERATIONSResults from the Airport IT Trends Survey in 2016 also show that airport operations are one of the industry’s top three priorities for IT investment. In response, SITA’s comprehensive Airport Management Solution (AMS) – an integrated system that supports and enhances airport operations from landside to airside, from landing to take off – expanded its capabilities to include Cloud and Software-as-a-Service (SaaS) models. This work is ongoing, embracing airports of any size, as additional airport operational models are explored in more depth.

Enhanced offerings include Airport Collaborative Decision-Making (A-CDM) capabilities, leveraging SITA’s acquisition of delair Air Traffic Systems in 2015. The acquisition reinforces SITA’s leadership position in AMS by offering a suite of modules enabling A-CDM that is in increasing demand by airports around the world. It was pivotal in aligning for and delivering A-CDM consultancy for Toronto Airport.

A major contract for airport operations in 2016 came with the decision by VINCI Airports – a top five global player in the international airport sector operating more than 35 airports in Europe, Asia and Latin America – to implement SITA’s AMS across its global network. This operational unification will help the group deliver new efficiencies and synergies across its network. Another operations contract of note was Orlando International Airport’s work to set a new standard in airport displays with a new display that spans the length of five football fields – creating a fun and interactive check-in experience for the 42 million passengers who travel to and from the airport every year.

A further 2016 landmark was laying the groundwork for a new integrated solution for airport control centers, launched in early 2017 and called SITA ControlBridge. Bringing together a blend of professional services and a

“The system from SITA supports us by providing all the information we need to decide on how best to deploy our resources while enabling our operations teams to respond proactively to changes in our operating environment.”Steve Rick, SVP Support Services, Menzies



AIRPORT THOUGHT

LEADERSHIP

SITA’S AIRPORT SOLUTION LINE PLAYS A KEY ROLE AS INNOVATOR AND THOUGHT LEADER IN THE GLOBAL AIR TRANSPORT COMMUNITY, AS EVIDENCED BY WHITE PAPERS DEVELOPED IN THE YEAR INCLUDED:

RFID for Baggage Tracking New research shows that the air transport industry could save US$ 3 billion and dramatically reduce mishandled baggage with the use of Radio Frequency Identification (RFID) technology. This paper by SITA and IATA outlines the benefits that highly accurate tracking using RFID technology can provide through a better record of baggage across all steps of the journey.

The Impact of ICT on Indian Aviation Where is technology taking the Indian aviation industry? Produced jointly by SITA and KPMG, this paper examines the impact technology will have on Indian aviation over the next two decades. It highlights various trends that are prevalent globally and contrasts them with the Indian reality, offering a panoramic view of the aviation industry in India today and into the future.


technology platform, ControlBridge – as with SITA’s other airport operations solutions – aims to improve airport operational efficiency, increase collaboration among stakeholders, and reduce delays and costs for airports and airlines. Yangon Aerodrome Company Limited, in Myanmar, will be the launch customer of SITA’s ControlBridge solution.

In fact, delays and disruption remained issues high on the year’s agenda for SITA. Airlines worldwide achieve an average on-time performance of 77%, with flight delays resulting in an estimated direct cost amounting to as much as 4% of global airline revenues (US$ 28 billion in 2016) leading to a loss of competitiveness and passenger loyalty. To improve resilience, Airline Operations Control Centers (AOCC) and Hub Control Centers (HCC) need to collaborate and make decisions more effectively. SITA worked hard during the year on the development of an innovative disruption management solution for launch in 2017, a unique market-leading capability that will address this costly issue. This is on top of SITA’s current real-time flight performance tool that provides end-users with critical flight information through 3D visualizations, Gantt charts and dashboards.

END-TO-END BAGGAGESITA’s baggage portfolio centers on the provision of an end-to-end baggage tracking and management solution to reduce mishandled baggage volumes, improve passenger satisfaction and comply with IATA Resolution 753. But it is also exploring deeper services around the baggage process – directing, tracking and tracing baggage throughout the passenger journey, from check-in to final destination.

Once again, the unlocking of critical data is vital. IATA Resolution 753 requires that by June 2018 airlines keep track of every item of baggage from departure to arrival. This is key to decreasing the number of mishandled bags while reducing the costs for airlines. Through a strong collaboration between SITA’s Airport Solution Line and SITA Lab, the company is investigating and developing cost-effective technology that will allow airlines to track bags across their journey. This includes smart tags, scanning infrastructure and common back-end systems as well as new bag tracking technologies.

An early proof-of-concept is providing APIs and smartphone apps to enable airlines to track bags at remote airports; and to confirm that delayed bags arrive at the destination airport and are handed over to couriers to be

“Given that we operate in airports that are geographically spread out and diverse in terms of size and markets served, we needed a solution that brought some commonality in the operational systems used by our airports yet was able to accommodate the unique requirements in each location. SITA understood our requirements and provides a fit-for-purpose solution.”Nicolas Notebaert, CEO VINCI Concessions and Chairman, VINCI Airports

SITA’S INCREASING CAPABILITIES IN HARNESSING DATA THROUGHOUT THE AIRPORT ENABLES THE PROVISION OF CRITICAL UP-TO-THE-MINUTE INTELLIGENCE. SITA IS COMMITED TO BUSINESS AND OPERATIONAL INTELLIGENCE INITIATIVES ACROSS A RANGE OF AREAS, FROM PASSENGER FLOW MANAGEMENT AND AIRPORT OPERATIONS, TO DASHBOARDS FOR AIRPORT STAFF, AND MORE.



delivered to their final destination. APIs offer huge potential in the airport no matter what the platform, offering the potential to unlock data and advance technology-driven services. SITA’s BagJourney, for instance, harnesses the 3.1 billion baggage information messages (BIMs) a year that SITA manages for the global airline and airport community through its message distribution service, BagMessage.

More than 250 airports and 550 airlines around the world use BagMessage to exchange information on the location of passengers’ baggage. BagJourney frees up this immense amount of data created about baggage, making it available and creating value for the air transport community.

In another growing area, SITA launched its complete modular SITA BagDrop solution in 2016, strengthening the company’s position as a leading provider of end-to-end technology solutions that enhance the passenger experience. The solution is at the forefront of the market, helped by SITA’s strategic acquisition in 2015 of Type22, the Dutch market innovator with an established customer base in Europe and Asia. Its two core products, Scan&Fly and Drop&Fly, complement

SITA’s suite of intelligent solutions within the Passenger Processing and SITA BagDrop portfolios.

SITA’s BagDrop either leverages existing check-in desks or can be installed as a new-fit solution for new terminals. Passengers can opt for self-service bag-drop or a mix of self-service and agent-assisted approaches. An innovative mobile app gives operational staff a complete overview of the live status of all SITA BagDrop units and sends push-notifications about passengers who may need extra assistance.

Among a broad range of new contracts, Adelaide Airport announced late in the year that it had signed a new five-year contract with SITA including a move to common-use self-service (CUSS), with the installation of 32 check-in kiosks and 14 bag-drop units. Not long after, Mumbai International Airport announced the introduction of Scan&Fly at Chhatrapati Shivaji International Airport, the country's second busiest. The units are available to passengers of Air India, Jet Airways, SpiceJet, Go and Indigo.

Other key developments in 2016 included extending solutions to support baggage delivery companies,

partnering with SITA Lab on SITA’s Baggage Community Program (see page 61), and trialing an automated baggage robot, ‘Leo’, again with the SITA Lab. Leo provides a glimpse into the future where robots can make a real difference in managing baggage at every step from check-in to delivery at the destination. Starting its trial at Geneva Airport, Leo subsequently toured the world during 2016, attracting global headlines and making appearances at multiple airports and industry events.

CONTINUOUS EVOLUTIONSITA’s ongoing developments and innovations are focused sharply on professional services, service operations and management, airport master systems, information security management, and airport IT outsourcing – an area which saw a SITA agreement in 2016 with Malta International Airport to take over the airport’s day-to-day ICT operations. As the airport business forges ahead with the evolution of its capabilities, it continues to strongly differentiate SITA in the industry.

“Abu Dhabi International Airport continues to experience double-digit passenger growth and therefore we are investing in new airport facilities that will allow us to accommodate the forecast future increase in passengers. In order to achieve this we require a trusted technology partner, such as SITA, to provide one-stop, integrated IT solutions across the airport.” Eng. Ahmad Al Haddabi, Chief Operations Officer, Abu Dhabi Airports



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Using SITA AirportResource Manager, dispatching functions can be cut by 50% and labor costs can be cut by up to 25%.

Self-boarding gates can reduce the number of agents required by 50%.

OPERATIONS

Since 2008, SITA has played a major role in the 50% reduction of mishandled baggage.

44 airlines and 27 airports worldwide deploy almost 320 units of SITA’s bag drop solutions.

40% reduction in operational costs and improved efficiency with 60 passengers an hour processed by a self-bag drop unit, versus 24 using desks.

The bag drop process can be completed in as little as 60 seconds for a passenger with one self-tagged bag.

WorldTracer, the No.1 baggage tracing network, is used at over 2,800 airport locations with 460 customers worldwide.

WorldTracer Kiosks typically save up to 40 minutes in reporting lost baggage compared to queuing to speak to an agent.

BagConnect can resolve almost 100% of baggage handling issues caused by transfer baggage that has no associated baggage information message.

BAGGAGE HANDLING

Leading common use provider, with 45,000 workstations worldwide tracking more than 70% of the world’s luggage.

More than 1.3 billion passengers checked in using SITA’s CUTE (Common Use Terminal Equipment). SITA has installed 5,500+ kiosks at 400+ common-use airports.

COMMON USE



WORLD LEADERS IN BORDER MANAGEMENT The imperative for safe and secure borders is a fact of life worldwide – but global air borders are under increasing pressure. The Global Terrorism Index shows an 89% increase in terrorism year on year, with nine attacks on air transport targets since mid-2015. Of 30,000 people leaving home to fight wars in other lands, 25% have returned and are creating fresh concerns over risk. As a consequence, a growing number of governments are placing tighter restrictions on immigration.

The negative economic impact of these events on air transport is significant. For example, as a result of the attacks in Paris in November 2015 and Brussels in March 2016, Air France-KLM estimated the cost to be around €70m in lost revenues, easyJet reckoned a 7% decline in revenue per seat, and Lufthansa saw a marked decline in long-haul services to Europe. Of course, the consequences run more deeply as well, having a direct impact on the affected nations’ image, trade and tourism.

Increased security measures implemented to provide a safe environment inevitably affect passengers, airlines and airports alike – which helps explain why passengers’ negative sentiments about air travel are highest with regard to security and border control. Meanwhile, widespread

governmental budget constraints add a further strain on capabilities.

SITA has been successfully addressing this requirement through an evolving portfolio for more than 20 years. In 2016 the company maintained its position as world leader in the provision of a complete set of capabilities to transform border security and facilitate travel. These include information, intelligence, optimized interactions with travelers and comprehensive insights to enhance every aspect of border operations.

Positioned at the center of air transport’s IT infrastructure, SITA is uniquely placed to help governments respond to their border challenges. SITA’s iBorders® portfolio provides government agencies with the information they need to make informed decisions. At the same time SITA is using technology to simplify, speed up and facilitate the processing of legitimate passengers without compromising security.

A YEAR OF CONSOLIDATION Following record results in 2015, SITA’s Government business faced pressure on growth in 2016, in part due to contract delays. However, the business remains robust, with a strong pipeline of new opportunities, together with renewals of and enhancements to existing business. This included a new iBorders® contract for a Middle

Eastern government, along with a range of renewals with governments in the Middle East and South America, including Brazil.

In the significant US market, an extra 177 Automated Passport Control (APC) kiosks were deployed, bringing the total in that country to some 550. New US airports were added to the scheme – including Honolulu, Kona and Southwest Florida International Airport at Fort Myers. More kiosks are being implemented in 2017 as US Customs & Border Protection continues to expand the APC program, particularly to overseas pre-clearance sites.

In Europe, 27 self-service iBorders® BorderAutomation ABCGates were added in Italy (doubling the installed base), including for the first time at Bologna Airport. Replacement gates were installed in Rome’s Leonardo da Vinci-Fiumicino Airport, following major damage as a result of a fire that swept through Terminal 3 in May 2016. Elsewhere, significant enhancements were delivered to United Arab Emirates and New Zealand customers. The major iBorders® project for the Government of Oman achieved a milestone during the year, while, as noted in the Airports report, a Smart Path™ pilot was completed at a major Middle Eastern airport, which is set to become an important reference point for SITA in demonstrating a simple, fast, secure whole journey



identity management solution. The multi-government Passenger Name Record (PNR) system went live with three government services: the system now processes PNR data from multiple airlines to the US, Romanian and Turkish Governments, helping airlines bridge the gap between their legacy systems and government data requirements.

In April, Australia’s Department of Immigration and Border Protection introduced an Advance Passenger Processing (APP) program using iBorders® for departing travelers. Airlines are required to provide data for all travelers leaving Australia, in advance of their flight. Passengers pre-cleared for departure through this process are allowed to quickly self-process through immigration control by using the SmartGate in Australia’s international airports. Implementation coincided with the commencement of the Government’s Foreign Fighters legislation amendments. The Outward APP program includes all airlines and all flights out of Australia. In total, 47 airlines are now fully certified and running around two million transactions a month through the Australian Outward APP program powered by iBorders®.

A significant APP service in South East Asia has now been implemented, including facilitating airline engagement and data submission, providing consulting services to

government stakeholders and coordinating local suppliers.

PORTFOLIO EVOLUTION SITA’s iBorders® Border Management solution delivers effective border security by identifying high-risk travelers and reducing document and identity fraud. It lowers the cost of dealing with unwanted and inadmissible travelers by preventing them from arriving at the border. It simplifies and speeds up the processing of low-risk passengers – freeing immigration officers to focus on high-risk travelers.

iBorders® also combines available information from multiple agencies to provide real-time insights into the border operation and complete situational awareness. Advanced reporting and performance analysis tools ensure efficient and risk-based resource allocation.

The portfolio works according to a four-layered approach:

• Information — comprehensive traveler information from airlines and other carriers, as well as integration with external data sources such as government databases.

• Intelligence — powerful risk assessment tools combined with travel document and identity verification to transform traveler data into actionable intelligence.

• Interaction — pre-clearance for passengers in advance, secure risk-assessed self-service border clearance for travelers holding biometric travel documents.

• Insight — comprehensive metrics on border performance combined with predictive analytics to enable risk-based allocation of resources and management of border operations.

“The new (SITA) technology has helped improve the passenger experience at Naples Airport by speeding passengers through immigration while ensuring that we meet the highest security standards at Italy’s borders. The ABCGates are really a win-win technology for airports.”Alessandro Fidato, Director of Infrastructure & Operations, Naples International Airport


Also introduced were the Multi-PNR Gateway – an enhancement to the iBorders® TravelerData product designed to make it easier for airlines to comply with government data requirements by providing a central location through which to send data to multiple governments. This enhancement will also lower delivery and deployment costs for government customers.

MARKET GROWTHThe focus on innovation will continue in 2017 and beyond, with the additional aim of diversifying SITA’s Government business into adjacent markets.

The business is strongly positioned to meet ever developing market trends. Within existing areas of the border sector, for example, the automated border control market continues to expand with more than a 20% market growth a year. The US has been one of the primary growth countries with more than 1,400 Automated Passport Control kiosks and it is expected that an increasing proportion of countries worldwide will be implementing automated border control programs over the coming years.

Governments are also demanding more sophisticated tools for risk assessment of traveler data, from

watch-list checks (to identify known undesirables) and profiling (to identify potential high-risk unknowns) to sophisticated business analytics tools that allow the data to be viewed and manipulated dynamically. The goal is to mine the data to identify and act on patterns that correspond to threats, including uncovering networks of individuals involved in a criminal or terrorist enterprise.

In addition, governments are demonstrating a greater interest in end-to-end Advanced Passenger Information (API) and/or PNR solutions. These entail not only data transmission but also risk management tools: carrier portal, reporting, visualization, storage, and integration with external systems such as Interpol and government watch-lists.

New market opportunities are opening up. For example, a growing number of airports worldwide are also showing interest in end-to-end identity management. The much sought after prize is to improve the experience of the traveler by shortening the processing required to undergo airline check-in, security control, immigration control and aircraft boarding. Biometric technology will make end-to-end identity management a reality and it will become a natural extension of a nation’s border security objectives.

Mobile border control is another natural growth extension to border security. Mobile applications will enhance the traveler’s experience and further enhance the efficiency of border patrol agencies at ports of entry and exit. Mobile technology will not replace other self-service border control solutions (such as gates and kiosks) or border management systems. However it will become an important technology complement.

Finally, security enhancements achieved within the air transport sector – such as advance border security systems and border automation – are now sought after for land border crossings and sea ports. Governments are increasingly enquiring about integrated solutions that integrate all three border sectors – air, land and sea.

Overall, the twin challenges of global security and passenger facilitation will continue to drive strong growth for SITA’s Government business, which has now set ambitious targets for its growth and scope in the future.

“We needed seamless passenger processing and to be able to get new airlines up and running quickly. SITA’s common-use self-service kiosks and workstations make it easy for us to welcome new international airlines to this great facility and make this unique border crossing smooth and fast for all travelers.”Juan Francisco Martinez, CIO, Grupo Aeroportuario del Pacífico (Tijuana Airport)



15 secondsAverage time it takes for SITA biometric gates to process travelers at the Irish Naturalisation & Immigration Service (INIS) at Dublin Airport.

89%satisfaction with automated immigration gates. (2015 IATA Global Passenger Survey)

Up to 60%reduction in wait times at border crossing for users of SITA iBorders® BorderAutomation ABCKiosks.

1.5 millionDuring the 2010 FIFA World Cup, South Africa used SITA iBorders® TravelerData to swiftly process more than 1.5 million passengers.

60%of G20 members and all Gulf Cooperation Countries (GCC) use SITA iBorders®.

100+airlines are connected to SITAiBorders® to supply traveler data to border agencies globally.

192 milliontravelers per year are processed by governments using SITA iBorders® Intelligence.

500+ milliontraveler data records per year are processed using SITA iBorders® Information products.

300 millionpassengers handled throughSITA iBorders®.

10+ countrieshave a comprehensive view of border operations with SITA iBorders® BorderOperations; powering collaborative decision-making and risk-based targeting of resources.

30 millionannual border crossings in a Middle Eastern country are managed using SITA iBorders® Insight. 1:5

One border officer can manage up to five iBorders® BorderAutomation ABCKiosksfrom an immigration counter.

92%of eligible travelers successfully processed in less than 10 seconds with no operator intervention using SITA iBorders® BorderAutomation ABCGates. (SITA e-gates trial)

20 millionNumber of unique biometric identities handled by SITA iBorders® ldentityAssurance to verify the true identity of travelers in one Far East nation.

50,000A European government uses SITA iBorders® Intelligence products to identify more than 50,000 high-risk travelers per year.

170081 Activity Report - GSL GOV

PROFILE IDENTIFIED

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SPEED UP FACILITATION

OPTIMIZERESOURCES

PROTECT THE

BORDER

TRUSTED PARTNER

SITUATIONALAWARENESS



PIONEERING CONNECTED AIRCRAFT SOLUTIONS Set up to help airlines realize the full potential of the connected aircraft, SITAONAIR is a successful and growing part of the SITA business. As leader in its field, SITAONAIR is pursuing the mission to address the strategic imperatives airlines face in ground and inflight connectivity; cockpit data services and air traffic management solutions; aircraft communications and infrastructure solutions; and application development for passengers and crew.

SITAONAIR has long been a pioneer in inflight connectivity, with OnAir set up in 2005 as a joint venture with Airbus, who then sold their 33% stake to SITA in February 2013. In January 2015, SITA and OnAir formed SITAONAIR as part of the SITA Group, combining, SITA’s global experience of airline cockpit communications and IT, and OnAir’s expertise in supplying inflight connectivity.

SITAONAIR grew across its two lines of business in 2016, recording solid organic growth for its aircraft and cockpit business, while seeing for inflight connectivity an increase in the number of activated aircraft (780 by year-end, an increase of 25% over 2015), as well as higher average revenue per aircraft helping to drive strong revenue growth in this part of the business.

INFLIGHT REVOLUTIONInflight connectivity is increasingly seen as an integral part of airline travel. For example, while 37% of airlines currently operate connected aircraft, this figure is expected to increase to 66% by 2019, when 60% of airlines plan to offer mobile device services inflight, compared to 21% today. According to SITA’s 2016 Airline IT Trends Survey, 92% of airlines are focusing on smartphone applications to interact with passengers.

Today the principal driver for upgrading to a connected aircraft is improvements to the passenger experience (46%), followed by maintenance and aircraft health monitoring (15%), benefits for pilots (12%) and improvements for cabin crew activities, such as tablet apps and credit card payments (7%).

One major game-changer for the airline industry has been the move to ‘bring your own device’, which brings the potential not only to deliver better inflight connectivity and a more tailored passenger experience, but also to consider removing seat-back screens altogether – saving weight and fuel costs.

NOSE-TO-TAILWithin this dynamic, rapidly-changing environment, SITAONAIR’s unique combination of airline cockpit communications and IT and connectivity expertise places it in the best possible position to provide connected aircraft solutions to enable connected aircraft for every airline in the world. By the end of 2016, SITAONAIR served over 400 airline customers operating more than 16,000 aircraft overall.

SITAONAIR solutions include technology, applications and services created in partnership with airlines, original equipment manufacturers (OEMs) and airframers, to address the challenges and value-generating opportunities of the air travel industry. Regardless of fleet size, route structure or aircraft type, ‘nose-to-tail’ connectivity solutions aim to help airlines grow ancillary revenues, improve customer experience, enhance airline and passenger safety, and increase operational efficiency.

This unique approach enables the digital transformation of aircraft, bringing the airline IT department closer than ever to the aircraft, and providing complete connectivity on a nose-to-tail basis, with a full service to passengers, crew, cockpit, aircraft, flight operations and air traffic control. The use of apps and Application Programming Interfaces (APIs) brings

SITAONAIR

46 SITA | GROUP ACTIVITY REPORT 2016 47SITA | GROUP ACTIVITY REPORT 201646 SITA | GROUP ACTIVITY REPORT 2016 47SITA | GROUP ACTIVITY REPORT 2016


integration and a consistent experience across the function of the airline, while enabling airlines to unlock and handle vast amounts of aircraft data.

IFE AND EFBSITAONAIR recorded several significant successes during the year. August saw the announcement of a partnership with AeroMod International – an industry leader in avionics and aircraft structural modification and repairs – to install SITAONAIR wireless inflight entertainment (IFE) services on Philippine Airlines aircraft. The adaptation was achieved swiftly, with one wireless IFE-installed aircraft returned to service every day.

The decision by the airline was supported by evidence from SITA’s annual Passenger IT Trends Survey: two thirds of passengers would be happy to access entertainment services via Wi-Fi on their own device.

Earlier in the year, Royal Brunei Airlines adopted SITAONAIR’s Electronic Flight Bag (EFB) solution, delivering paperless operational information to pilots onboard its Airbus A320-200 fleet, and as backup on the airline’s Boeing 787-8 fleet. The move to EFBs was part of the airline’s digital transformation – having already initiated flight planning, datalink services and flight tracking in partnership with SITAONAIR. As a result, the integration of this digital

solution to the airline’s fleet will be easily implemented.

SITAONAIR’s EFB is fully cloud-hosted, comes with full back-end integration, allows the integration of/switching to third party applications and has a highly intuitive pilot interface that simplifies workflows during briefings and while in flight. It is the market’s only EFB to include all of these features.

TRACKING One critical area of need in the industry is aircraft tracking. With ICAO’s Global Aeronautical Distress and Safety System (GADSS) Concept of Operations mandating automatic flight tracking from November 2018, airlines now need to incorporate this technology into legacy fleets to meet upcoming tracking requirements.

SITAONAIR has worked closely with airlines to understand the challenges presented by this enormous task, and has developed its ground-breaking AIRCOM® FlightTracker in response, in operation with 50 airlines by year end.

SITAONAIR has also been focused on the evolution of cockpit communications, working closely with key partners such as Inmarsat to ensure SITAONAIR is at the forefront in this core area. With this in mind, SITAONAIR put in place a new Memorandum of Understanding with

Inmarsat that confirms SITAONAIR’s position as a distribution partner for Inmarsat’s SwiftBroadband-Safety (SB-S) service. We will be ready to provide this innovative cockpit broadband IP service to our customers, enabling future applications enhancing flight tracking such as “black box” data streaming.

In November, SITAONAIR announced a new partnership with US companies AireonSM and FlightAware to provide its airline customers with Aireon’s space-based automatic dependent surveillance-broadcast (ADS-B) data. Launch customer was Malaysia Airlines, announced in early 2017. Starting in 2018, SITAONAIR airline customers with ADS-B Out equipped aircraft will have access to 100% global flight tracking data, in real time, through SITAONAIR’s AIRCOM® FlightTracker product.

In July, it was announced that Rolls-Royce had selected SITAONAIR’s AIRCOM® FlightMessenger to collate and distribute Engine Health Monitoring (EHM) data from its engines, which fly on over 6,000 aircraft and collectively operate for over 100-million hours per year, generating thousands of messages a day. The EHM data is used to anticipate maintenance needs and maximize the operational life of engines.

Finally, in April, Polish Air Navigation Services Agency (PANSA) selected

“Indian aviation has an immense growth potential. This will be one of the world’s largest aviation markets within the next five years and Vistara has a prominent role to play in that expansion. We are putting all the right tools in place to make sure we are best positioned to leverage the growth opportunity. The efficient communication and network technology that SITA and SITAONAIR have delivered are both essential for smooth operations and facilitating our expansion.”Phee Teik Yeoh, CEO, Vistara




SET UP TO HELP AIRLINES REALIZE THE FULL POTENTIAL OF THE CONNECTED AIRCRAFT, SITAONAIR IS A SUCCESSFUL AND GROWING PART OF THE SITA BUSINESS.

SITAONAIR to supply the data link service required to comply with EU Data Link Regulations for the Single European Sky – mandating that European air navigation service providers and airlines implement Controller Pilot Data Link Communication (CPDLC). This enables the exchange of text messages between pilots and air traffic controllers, supplementing voice with the more reliable datalink. Today, SITAONAIR enables CPDLC for more than 14 air navigation service providers (ANSPs) in Europe, which together manage 90% of air traffic across the EU.

INDUSTRY ENDORSEMENTAwards are valued as an expression of significant achievement in the industry – and in 2016 SITAONAIR received a number of them through the year. Two accolades were given at the 2016 InFlight IFEC Awards – Best Global Connectivity Provider and Best Innovation in Commercial Airline Cabins.

In April, SITAONAIR and partner, network policy controls solution provider Sandvine, were named the ‘Most Innovative Policy-Enabled Project or Application’ at the 2016 Policy Control Awards, a deployment which ultimately delivers a high quality Internet experience in the sky for our airline customers’ passenger. Also, SITAONAIR featured strongly

in the 2016 independent analysis by Routehappy – the first of its kind merchandising content platform for flight shopping – on the state of inflight Wi-Fi. Eleven SITAONAIR customers were placed in the world’s top 20 for long-haul flights, measured by available seat miles.

THINKING AHEADThe inflight connectivity revolution is well advanced, with airlines investing heavily in the latest satellite broadband and connectivity technologies. However, many airlines are struggling to fully realize the opportunities for development. Current operational limitations across platforms, technologies, fleets and service providers make integration, innovation and unifying the passenger portfolio and experience, complex, time consuming, and cost ineffective for airlines.

Fulfilling its role as innovator and thought leader, SITAONAIR set out an agenda for radical change in October, calling for services to be provided consistently on every broadband communication technology with an open architecture – ushering in the second inflight connectivity revolution.

For the future, SITAONAIR is focused on what it sees as the four strategic imperatives of airlines – and its responses:

• Grow ancillary revenues: key to this will be to offer a mobile, social, and local experience that the passenger values.

• Improve the passenger experience: the passenger experience of the future will be personalized and updated in real time for each customer.

• Enhance airline and passenger safety: digitization of the cockpit will empower the airline’s technical crew with more applications, which will lead to new connectivity requirements.

• Increase operational efficiency: the effective, real-time transfer and utilization of aircraft data can provide airlines with the ability to enhance operations, lower maintenance costs and improve turnaround time.

The connected aircraft is a fast changing market with very active players and stiff competition. As a global leader in this market, SITAONAIR will continue to build a sustainable business for the future – by providing services, IP connectivity and data management across cabin, cockpit and aircraft to empower the air transport industry through tailored nose-to-tail connectivity solutions that deliver true connected aircraft value.



280,000passengers served

1,300connected flights

35,000internet sessions

85,000hits on the hotspot

(DAI

LY)

CABI

N

16024 Activity Report - ON AIR

400 airline customers operating more than

16,000 aircraft

1,500aircraft / flights actively tracked per day

Over 6,000flight plans generated per day

+10,000ADS-B stations

COCK

PIT

37% of airlines currently operate connected aircraft

Expected to rapidly increase to

66% in the next 3 years

CON

NEC

TIVI

TY

Best Global Connectivity Provider Inflight IFEC Awards 2016

Best Innovation in Commercial Airline Cabins Inflight IFEC Awards 2016

LEAD

ERSH

IP

SITAONAIR was involved in the Solar Impulse project from its earliest stages and joins prestigious industrial and scientific partners including Schindler, Omega, ABB, Google, Bayer, Altran, Moët-Hennessy and Swisscom.

In July 2016, Solar Impulse completed the first round-the-world flight by a solar-powered aircraft, reflecting SITAONAIR's spirit of innovation through their support for this project.

SITAONAIR provided broadband satellite technology for real-time pilot voice and data communications, and a specially-designed ground infrastructure to assure global air-to-ground communications for the aircraft. This connectivity allowed the Solar Impulse team to track and monitor the aircraft in real time, giving them access to real-time weather updates, as well as providing access to real-time biometrics data.

ON AN IMPULSE



THE NEXT GENERATION OF PASSENGER SERVICESIn today’s connected world, passengers’ experience of air travel is increasingly impacted by how much they have choice and control over their journey. SITA’s 2016 Passenger IT Trends Survey, for example, reports that 93% of passengers reported an enjoyable experience when booking, which they can do online, using their smartphones, or talking with an agent.

More than half of all passengers already use some self-service technology during their journey and they prefer interacting with technology for travel tasks rather than people. This is particularly true if they own – and therefore control – that technology in the shape of a smart mobile device, an approach understood by Air India through their launch in October of SITA’s iTravel® state-of-the art mobile platform to its more than 18 million passengers.

Within a rapidly evolving environment, SITA’s next generation Horizon Passenger Management and Distribution portfolio offers one of the most comprehensive ranges of passenger management services available in the market, with an infrastructure built on a flexible platform of core systems including reservations, ticketing, inventory, check-in, departure control and weight and balance.

UNIQUE IN THE MARKETThe portfolio includes a self-administered code-share package that is unique in the market and enables airlines to self-manage configuration, processes, parameters, business rules, workflows and product definitions. It addresses business objectives as well as technical and functional requirements. Another unique for SITA is its sole focus on the airlines' objectives, as unlike Global Distribution Service (GDS) providers of Passenger Services Systems (PSS), SITA has no third-party distribution system to protect.

In 2016, more than 100 airlines and ground handling agents used Horizon® to board over 123 million passengers and check in 158 million, though the figures were lower than 2015 as a result of the demise of SITA customer Transaero Airlines in late 2015.

New customers included Bhutan Airways, Charlie Airways, Egyptair, Eva Air, Air Europa, Mid Africa Aviation Company Limited, Sky Prime Charter, Taban Airline Company and Tehran Airways. Renewals included Air Bagan, Fly Jamaica, Iraqi Airways, TAAG and TACV.

Existing customers also increased their usage of the portfolio. Domestic Russian airline S7, for example, recorded a 22% volume increase in passengers boarded in 2016 over 2015.

And customers such as Air Seoul and SAGAT are now generating close to 100% of their load sheets using Horizon® Weight & Balance.

MOMENTUMThe year was characterized by growing momentum towards major product launches in 2017. First, next generation Horizon® Departure Control Services was successfully beta-tested in November with an SAS flight out of Funchal Airport in Madeira. Testing continued with a weekly Norwegian Air charter flight.

By the end of the year, product performance fulfilled the major functions of check-in, baggage processing, printing of bag tags and boarding passes, seating, boarding, interline through check-in and close-out. Deployment of the first production customer, Air Arabia, is scheduled for 2017.

Second, the first beta test of Horizon® Consumer – designed to provide an optimal user experience irrespective of whether the customer uses a desktop, smartphone or tablet – was launched in December with RwandAir. This first release of Horizon® Consumer allows customers to search, shop and make bookings, view and print completed bookings on a fully responsive site. A further release includes additional



payment options and support for RwandAir’s new A330 Premium Economy cabin.

Subsequent releases will add features such as Integrated Check-In, Manage My Booking, Sales of Ancillary services, Multiple Payment Options (including via mobile) and greater language support, including right to left reading.

A new development program has been introduced with Horizon® Consumer that moves the product from a ‘thick client’ application, to a ‘thin user interface’ approach. The aim is to leverage the technology stack being implemented and deployed as part of the Horizon Next Generation Transformation program along with a new Content Management System (CMS), enabling a reduced time to market with simplified configuration requirements.

Meanwhile, a growing number of customers are integrating Horizon® Merchandising to offer ancillary services through consumer-facing channels, including lounge access, extra bags, in-flight meals and entertainment, and seat selection. This is a solution based on Horizon® Service Fees, which provides ancillary pricing to call centers and airport agents and is also available through SITA’s e-commerce and mobile applications, making it easy for travelers to buy services directly.

In 2016, a centralized channel-agnostic Horizon® Merchandising API was launched, paired with the responsively designed Merchandising App.

INTELLIGENCE AND HEALTH CHECKSBusiness intelligence tools are no longer a luxury. According to SITA’s 2016 Airline IT Trends Survey, every airline is looking to analytical capabilities to improve their performance and gain a competitive edge. However, there are many challenges in extracting meaningful and actionable insights from the millions of megabytes of data that airlines hold. It takes expertise to manage, integrate, analyze and report data in ways that contribute to fast, well-informed decision making.

Horizon® Business Intelligence removes that complexity. Airlines can clearly and quickly see what their data is telling them – they can identify, evaluate and take action on trends, challenges and opportunities. It monitors the business 24/7 – taking each passenger journey into account from booking to arrival.

At the heart of Horizon Business Intelligence (BI) is next generation technology, accessible by the web, the cloud and via any desktop or mobile device. The dashboards provide a holistic view of data, enabling the

airline to make better-informed decisions and improve business planning. In 2016 the number of BI licenses had more than doubled, with nine airlines and 55 licensed users by year end.

Strong intelligence depends on an optimal working environment and a healthy system based on prevention rather than cure. Horizon health checks and consultative support are increasingly in demand, with 60 delivered in 2016 – three times the number commissioned in 2015. A further increase is anticipated in 2017.

NDC IATA’s New Distribution Capability (NDC) is a communications protocol that allows a richer dialog between airlines and distribution partners, based on the exchange of XML messages. It supports the ability to respond in real time to a request from a seller with a specific, priced offer of services, including flight seats on the airline and its interline and code share partners as well as ancillary services. It also supports airline merchandising initiatives as well as personalization and the use of rich media, such as graphics and video in the sales process.

Thanks to a rapid development program, in 2016 IATA awarded SITA the ‘NDC Capable’ Level 2 and 3 status

“As Saudi Arabia’s leading private aviation operator, we have customers that demand the very best experience from the moment they make their booking to when they leave the aircraft. SITA has recognized our unique requirements and through the Horizon® platform are able to provide a solution that positions Sky Prime as the best aviation services company in the region.”Salem Abaid Al Muzaini, CEO, Sky Prime



52

for Horizon PSS. Level 3 is the highest status available to providers and means that SITA can support airlines whenever they are ready.

WORKING AND LEARNINGThe Horizon Working Group is a vital part of a collaborative approach to future PSS solutions and a cornerstone of SITA’s Customer Community Model. The 10th meeting of the Group took place at the end of 2016 in Greece, attended by 47 customers from 20 airlines and ground handlers. Subjects covered included a general product roadmap overview, a demonstration of Horizon® Consumer – including feedback from beta customer RwandAir – and a broad range of product demonstrations, interactive discussions and forward-looking discussions.

Earlier in the year, an Airfare Insight Sub Working Group meeting included 24 participants from 13 airlines. Subjects covered included how industry trends are affecting the fares management practice and the implications for Airfare Insight, as well as an update on the product roadmap and planned enhancements. Working together and learning together is a constant theme within the passenger arena. SITA University supports the learning process for SITA’s passenger solutions, providing product-specific training for customers primarily via e-learning and classroom. It has expanded both in terms of users and courses, with more than 7,600 students registered, 216 active courses available and over 1,000 sub-modules released.

In 2016, the University’s scope was extended to all of SITA’s solution lines, providing a single interface for all customer training and reducing costs across the business.

LOOKING FORWARD The past couple of years have seen unprecedented competitive activity in the passenger services market, which has changed the landscape for SITA’s next generation Horizon portfolio.

The intensified competition and rapidly changing Passenger Services Systems market led SITA to embark on a search for strategic partners to accelerate and achieve further growth and development (see CEO Report, page 14).

With the support of and the key partner evaluation criteria set by the SITA Board and Council, the process is ongoing and expected to conclude in 2017.

“Today the market for airfares is extremely competitive and can change rapidly. SITA’s Airfare Insight gives us an immediate and clear view of what is happening in the market, allowing us to make informed and timely changes to our pricing, providing our passengers with the most competitive airfares available.”Tomi Hänninen, VP Revenue Management & Pricing, Finnair

16024 Activity Report - PSL

123 millionPassengers Boarded

60%increase in Electronic Miscellaneous Documents

158 millionPassengers checked in

71Participants at Horizon Working Groups

60customer health checks

7,600 students of SITA University

ENGAGINGWITHCUSTOMERS

POPULARPASSENGERSERVICES

Level 2&3achieved for

‘NDC Capable’ status

1stairline to check in using

Horizon® Departure Control

17Weight & Balance

deployments

DELIVERINGNEW TECHNOLOGY

SOLUTIONS



16024 Activity Report - PSL

123 millionPassengers Boarded

60%increase in Electronic Miscellaneous Documents

158 millionPassengers checked in

71Participants at Horizon Working Groups

60customer health checks

7,600 students of SITA University

ENGAGINGWITHCUSTOMERS

POPULARPASSENGERSERVICES

Level 2&3achieved for

‘NDC Capable’ status

1stairline to check in using

Horizon® Departure Control

17Weight & Balance

deployments

DELIVERINGNEW TECHNOLOGY

SOLUTIONS



CONNECTING THE CARGO COMMUNITY The air transport sector now carries more than 35% of global trade by value – equivalent to US$ 6.8 trillion a year. This is driven by the evolution of Global Value Chains (GVCs), which is a complex web of trade links resulting in component production, assembly, or research and development, producing finished goods such as cars, computers, cellular phones, and even aircraft. According to an IATA report on GVCs at the end of 2016, the World Trade Organization estimates that almost half of global trade now takes place within GVCs.

At a time of global volatility, it is more important than ever that all those involved in the air cargo business – whether they are shippers, forwarders, Ground Handling Agents (GHAs), General Sales Agents (GSAs), airlines, customs, legislators or IT service providers – are able to coordinate seamlessly to facilitate the secure and time sensitive transport of freight. Timely and accurate flow of information parallel to the physical flow of goods is essential for successful, cost effective processes and customer satisfaction.

To this end, CHAMP Cargosystems connects the cargo community. As a leader in air cargo connectivity, it

provides the most comprehensive range of integrated IT solutions and distribution services for the air logistics community. Its portfolio spans Cargo Management Systems, messaging and integration services through the Community Integration Platform and a comprehensive suite of eCargo solutions.

In 2016, the company continued with consistent growth, successfully implementing major customer projects, securing important new business with carriers of all sizes across the world, as well as major renewals with Lufthansa, Ethiopian Airlines, and Air France-KLM. Further achievements in the year included 10 Cargospot new wins, a dozen new Traxon Global Customs customers (and many existing customers subscribed to new countries), three new airline connections to CargoHUB, and 6.1 million Traxon Global Customs declarations.

TRANSFORMATIONCHAMP is at the heart of global air freight, evolving as a virtual integrator for the air cargo industry. The company’s goal is to move all stakeholders into using 21st century technologies to help facilitate collaboration. CHAMP’s breadth includes 150-plus Cargospot

customers and major ground handling agents using Cargospot worldwide, millions of cargo messages sent through CHAMP’s distribution services Traxon cargoHUB, and millions of customs declarations processed by CHAMP's Traxon Global Customs solution.

As the air cargo industry faces the need to transform, CHAMP is uniquely positioned to bring this about. The trends that show the need for transformation are in clear evidence. For the air cargo sector, time has become an increasingly crucial differentiating factor, driving the need for technology and seamless processes across supply chain stakeholders.

Shippers today are also demanding greater transparency, which is generally provided by integrators such as DHL, UPS, Fedex, and TNT. But other industry stakeholders lag behind. Transformation and effective collaboration will only be achieved through the right IT being in place for efficient and secure sharing of critical information at the right time. This is a core area of focus for CHAMP and thanks in particular to the availability of cloud-based software solutions, the industry’s transformation to newer technologies can be made faster and no longer means high-risk, high expense, and low return on investment.

CHAMPCARGOSYSTEMS



Another driver for transformation is the impact of e-commerce on what is flown and where. The sector lags behind passenger evolution, but freight forwarders and ground handling agents are increasingly looking to automate processes to increase efficiencies in the supply chain. Again, CHAMP is positioned to enable this. It requires tools and services that will enable the exchange of electronic information, at the same time reducing manual or paper driven processes, and delivering real-time monitoring of shipments via the introduction of new technologies, or the integration of existing services to generate new services.

CUSTOMER PROJECTSThe completion of major projects for JAL Cargo and Cathay Pacific has been a key milestone. For Japan Airlines (JAL), this included implementation across 35 airports worldwide, while for Cathay Pacific this covered their worldwide cargo operations to more than 100 destinations worldwide. The final rollout of revenue accounting is due to be completed mid 2017. These projects affirmed CHAMP’s complex project management and consultancy capabilities in helping customers deliver change management.

Other business highlights in 2016 were major project implementations and cutovers for Alitalia, CargoExpress, Egypt Air, Quantem Airport Services, Asam Mali, Inversiones Albri, Total Airport Services and Airbridge International Agencies.

Also completed at the end of the year was Weight & Balance implementation for one of the leading cargo carriers in the US, Kalitta Air, with a fleet of 16 Boeing 747 freighters. Customization included the planning and reporting to be in lbs or kg, support for military flights, and some enhancements to the desktop version. Kalitta Air have obtained Forward Freight Agreements (FFA) approval for Weight & Balance for their fleet of aircraft in October and went live in November 2016.

EXPANDING PORTFOLIOAt a portfolio level, 2016 saw the 25th anniversary of electronic data communication under the Traxon brand, originally launched in 1991 by Air France, Cathay Pacific, Japan Airlines and Lufthansa. The company became part of CHAMP Cargosystems in 2011.

Traxon Global Customs continues to make the provision of Advance Customs Information quick, efficient and easy, regardless of format, communications protocols or processing rules – serving close to 50 countries. In 2016, nine more countries were added: Canada, Republic of Congo, Jamaica, Egypt, Nicaragua, Mexico, Paraguay, Philippines, and Senegal. Planned for 2017 are Jordan, Lebanon, Eurasian Economic Union, ACE export, and Saudi Customs. Further work is being progressed in 2017 to facilitate customs reporting for export.

“We are very pleased with the cutover of CHAMP’s Cargospot software, customized to meet our exacting needs. The team has successfully implemented a solution which will benefit Cathay Pacific’s worldwide cargo business both in the short and long term. CHAMP’s technology and ongoing support will keep us at the forefront of an ever-changing air cargo industry.” Simon Large, Director, Cargo Cathay Pacific Airways Ltd


“CHAMP provided us with extensive support and knowledge helping us implement Advance Electronic Information in Senegal. The expertise and client coverage of their customs solution was crucial in our decision making process in selecting CHAMP.”Colonel Alioune Dione, Director of Customs IT Systems, Senegal Customs

CHAMP continues to develop its Hybrid Cloud Strategy, aimed at providing the optimal solution to customers, independently of size, location, distribution or other specific requirements. Next to its own private cloud, the company integrated into its service portfolio the SITA ATI Cloud, Amazon Web Services and Microsoft Azure cloud services – aiming to improve geographical presence and increased capability of tailoring its solutions for each customer.

Finally, with the emergence and increased popularity of cloud services, CHAMP has seen growing interest among Cargospot customers for Software-as-a-Service (SaaS), and in particular the avoidance of upfront capital expenditure in data centers and IT operations, as well as the advantages of a ‘pay-as-you-go’ commercial model.

The launch of a new online customer self-service portal, ServiceNOW, underscored a fresh approach towards engagement with customers and prospects.

COLLABORATIONCHAMP’s approach to service development consists not only of continuing to design and build the key strategic services, but also of partnering with service providers who can enhance the company’s service capability and offering.

The year began with the announcement of a partnership with Dutch company CLIVE bv. This company’s allocation management tool, when integrated with CHAMP’s Cargospot suite, further streamlines the airline’s cargo allocation process.

In September, CHAMP announced a partnership with another Dutch company – CargoXS – to provide its Cargo Quality Center service to CHAMP’s clients. This state-of-the-art real-time warehouse work progress monitoring product offers airlines and ground handling services tools to enhance quality of work and improve client satisfaction. CHAMP also partnered with freight forwarder associations – including Pangea and Penta Solutions – to accelerate the participation of network members in IATA’s e-AWB and e-freight initiatives.

Partnership and collaboration are essential components of the community approach. CHAMP’s collaboration efforts involved the setup of a CHAMP Advisory Board, a renewed African Airlines Association (AFRAA) membership and Cargo Task Force member to demonstrate its focus on the African air cargo community, and partnering with other service providers that can help enhance CHAMP’s service capability and offering.

The e-learning portal, The CHAMP Academy, ensures CHAMP staff and clients are fully trained to maximize

the benefits of its solutions. CHAMP also launched its social media presence in 2016 and will continue using LinkedIn and Twitter to regularly share information and engage with the air cargo community.

In September CHAMP was endorsed as IT Industry Partner of the newly created African Airlines Association Cargo Task Force (AFRAA CTF). CHAMP will be represented at all CTF sessions and have the opportunity to be part of the recommendation and decision-making process. Endorsement also came in the shape of the Stat Times International Award for Excellence in Air Cargo in the category International IT Systems Provider of the Year.

With e-Commerce being both a major opportunity and risk to the air cargo community driving – together with the time sensitivity of air cargo – the need for more efficiency and automation, IT will continue to play a crucial part to maximize the cost effectiveness of air cargo stakeholders. With the increased use of SaaS technology, which makes IT investments more affordable due to the lack of upfront costs, CHAMP is well positioned for a strong 2017 and beyond.



THEWORLD’SBIGGESTCARGOCOMMUNITY

6,800+ individual partnerships within the community.

450+CHAMP

professionals focused on air cargo IT.

Collaborating with more than

20 key industry

stakeholders and partners.

20mshipments

a year.

Cargospot AWB

+17%year-on-year

growth of Air Waybills processed. 1,500+

stations in

100+countries around

the world.

Traxon cargoHUB

+17% distinct shipments handled vs 2015.

15,000+ USERS

Airlines and ground handlers by year-end deploying CHAMP’s

customs solution for electronic filing with customs authorities in

45+ countries – in compliance with the EU-ICS (Import Control System)

and other national customs requirements.

110+

Air cargo carriers, general sales agents and handlers,

and 3,000+ freight forwarders – as part of the world’s

biggest cargo community with connectivity all along the

supply chain.

200

Traxon Global Customs

+20% year-on-year

growth.

Traxon Global Customs

is available in more than

45+ countries.

300mmessages

a year.

Traxon cargoHUB

+35% net messages

vs 2015.

170081 Activity Report - CHAMP


TOGETHER, THE COMMUNITY HAS DRIVEN FINANCE RISKS OUT AND COSTS DOWN, BRINGING GREATER EFFICIENCY FOR ALL.

REDUCING THE COST OF AIRCRAFT FOR AIRLINES GLOBALLYWhen an airline adds an aircraft to its fleet, a key decision is how to finance this expensive asset. In financing aircraft, airlines carefully manage the balance between leasing, balance sheet funding, secured mortgages, unsecured loans and capital markets. Getting these decisions right can mean the difference between the investment being a success and a failure. In the aviation industry, it is sometimes easy to forget the critical role our aviation finance colleagues play in making aviation available to the public at reasonable cost.

A legal regime was introduced in 2006 which has proven successful in driving down aircraft finance costs and which has made more funds available, particularly from the capital markets, for the world’s airlines. One North American Carrier claims to have saved over US$ 100 million in the last five years due to this regime. Part of that regime is the International Registry where loans, leases and sales are registered online, and SITA is playing its part in this vital community initiative.

Aviareto Limited, jointly owned by the Irish Government and SITA, is a not-for-profit company based in Dublin, Ireland, with the sole remit of operating the International Registry, as required by the Cape Town Convention and Aircraft Protocol.

CRITICAL ROLE Due to its critical role in the industry, the International Registry is regulated by ICAO in Montreal. In 2016, Aviareto was reappointed by the Council of ICAO to operate the registry until 2021, a measure of the general acceptance of the system and its popularity with the industry.

The International Registry is a highly secure, cryptographically enabled website, developed by a team of software and security experts based in Letterkenny, Ireland, part of SITA’s development center of excellence. The website itself is highly resilient, operating across three data centers to ensure valuable data can never be lost.

The figures speak for themselves. There were over 118,000 registrations in 2016 and over 60 countries have ratified the legal regime, with more in the pipeline. As an international trade



treaty, the Cape Town Convention and Aircraft Protocol is considered to be one of the most successful ever in terms of acceptance and its ability to deliver the benefits that had been anticipated.

As a community service supported by SITA, this must be considered an exemplar. It is something that no airline could do on its own, but together, the community has driven finance risks out and costs down, bringing greater efficiency for all. Other industries, such as rail and satellites, are eyeing this success closely.



INNOVATION FOR THE COMMUNITYStep changes in technologies are driving radical innovation across the air transport community. IT-as-a-Service, cloud computing and software defined networks (SDN) feature highly among these technological breakthroughs, as do innovations around the Internet of Things, which through the use of sensors are enabling greater control over the journey.

Combined with the capabilities of big data, we are seeing fresh opportunities in business intelligence, data and predictive analytics, and both cognitive and artificial intelligence. Prominent in the rapidly evolving mix are mobile solutions and Application Programming Interfaces (APIs) which are tied in with new payment technologies and on-board connectivity options. Meanwhile blockchain is one of the technologies promising new levels of cybersecurity – a critical capability that underpins everything digital.

This is the landscape in which the SITA Lab – the company’s strategic technology research arm – works closely with the air transport community to stimulate innovation for the community’s benefit. At the same time, its remit is to help introduce emerging technologies into SITA’s portfolio of products and services, and onto the air transport community’s agenda. Through collaboration with

airlines, airports and technology specialists, the Lab encourages and participates in a broad range of cutting edge pilots and trials within a secure environment, across the industry and in all parts of the world.

SITA Lab’s work has resulted in eight patent applications to date, including SITA’s first ever US patent. In 2016, the Lab maintained its drive to resolve challenges and opportunities faced by the community. Pilots, trials, launches and investigations took place across a wide range of technologies and work streams, which include:

• APIs

• Resolution 753

• Name Matching

• Smart Identity

• iTravel©

• Robotics.

API ADVANCESSITA Lab works with highly experienced and dynamic developers who are tightly focused on researching and developing solely for the air transport community. These developers pioneered the API platform approach to unlocking vast amounts of operational and other data to meet the industry’s expectation for up-to-the-minute information at various steps of the journey. This has resulted in a number of air transport world firsts – from the first mobile

in-flight applications to the first iPad-based kiosks for plane tickets. APIs are made easily available from the developer.aero site – where a growing range of APIs enable developers to simply tap into a rich store of aviation data that will open up an area of enormous potential for thousands of innovators, start-ups and small technology companies worldwide, resulting in game-changing innovations for passenger experience, airport management, flight operations, and the connected aircraft.

The beauty of having simple API access to a wealth of data is that this data can be reused over and over again across multiple applications and customer touchpoints. Nowhere is this more clearly demonstrated than in the diverse utilization of the BagJourney and WorldTracer APIs that put baggage management and tracking firmly back into the hands of the passenger from the start of their trip to their arrival at their destination.

The challenge of big data is magnified when confronted by terabytes of data produced in-flight. The answer relies on a combination of rapid and robust connectivity, flexible platforms, APIs and the creative drive of the app community.



COMMUNITY INNOVATIONMuch of SITA Lab’s time in 2016 was directed at leading three of the five initiatives set out in SITA’s Community Innovation Programs: Baggage Tracking, Identity Management and Disruption Warning Systems.

The Baggage Tracking initiative is strongly linked to the adoption of IATA’s Resolution 753, which requires that by June 2018 airlines keep track of every item of baggage from departure to arrival. It will boost bag tracking and enable airlines to provide better information to passengers about the status of their bag. It implies that bags will be scanned at additional reading points. This is where RFID can help with lower marginal costs of implementation and very high reading performances. The SITA IATA business case published in 2016 shows that industry adoption of RFID could lead to a US$ 3 billion saving over seven years.

Collaborating with colleagues in the Airport Solution Line and with third party companies, SITA Lab has been researching and developing solutions that will allow airlines to track bags every step of the way. The objective is to propose a Resolution 753 kit airlines and airports can use according to their specific needs. This is achieved by leveraging the existing baggage portfolio to make it fully 753 compliant (see also ‘RFID for Baggage Tracking’, page 38).

One of the first proofs of concept being developed is the WorldTracer® Baggage Delivery Service. Using SITA’s WorldTracer®, the Lab is developing an API and a mobile application that will allow airlines to track delayed bags once they arrive at the destination airport and are handed over to couriers to be delivered to their owner.

Identity Management is another item on the SITA Lab’s Community Innovation agenda – the challenge faced by airlines in manually carrying out name checks, particularly what happens when the names don’t match exactly between the reservation and the passport or other identification document. This can be the case for as many as 25-50% of Asian and Middle Eastern names, for example, due not least to the finite limits of the machine readable zone on passports or boarding passes.

Many airlines will accommodate a near-enough match, subject to government and/or law enforcement requirements. Some airlines require an exact match or otherwise impose an administrative charge. In a proof-of-concept exercise in mid-2016, SITA Lab proposed an automated solution to address the issue. It was found that algorithm-based name matching is very fast, far exceeding the performance of eye-ball comparison of names, and eliminating errors due to human fatigue from repetitive data comparison.

The NameMatching solution has been implemented as a RESTful API to enable developers to integrate a name match into any booking, check-in or other security check application. The API was made available for testing from developer.aero and comes with a default ruleset that can be tuned according to local requirements.

The third Community Innovation initiative - Disruption Warning Systems - has dealt with one of the industry’s most pressing challenges, which costs the air transport industry around US$ 25 billion a year. The objectives were to report as quickly as possible any major issue affecting airline and airport operations (‘disruption detection’) and to predict disruptions based on historical data (‘disruption prediction’). The main goal is to be able to predict the vast majority of delays well in advance, which will be a first for the industry. The work began with the search, acquisition and validation of various historical and live data which can be used to detect and predict disruptions.

“MIA Airport Official 2.0 is the latest example of how we are leveraging new technology to make travel through our airport easier than ever … Thanks to the installation of data beacons, our mobile app can now guide you from your driveway to the runway with personalized, user-friendly instructions.”Emilio T. González, Director, Miami-Dade Aviation



For data decoding, the Lab tested various Natural Language Processing (NLP) techniques, with two proof-of-concepts running in parallel: one with IBM to test the capabilities of Watson services to understand and classify NOTAMs (Notice To AirMen); and another one with an Irish startup called Aylien, to collect, filter and categorize publicly available news. For flight delay predictions, various machine learning and data mining techniques were tried to predict aircraft departure, taxi in-out and arrival times.

As part of a six-month trial starting in late 2016, delay predictions were validated with operational data provided by a leading Asia Pacific

carrier, with promising early results, especially on short delay predictions. The priorities in 2017 are to focus on long delays and begin creating a model for airports. The year will also see work underway to launch the first version of an innovative disruption detection/prediction and management solution for airline Hub and Operational Control Centers – based on flight schedules, airline rules, aircraft tail assignments and external events.

SMART IDENTITYSITA Lab has been exploring single token travel as well – an innovation that will allow travelers to pass through borders with a single, digitally verified identity. The first stage in the

process is SITA’s Smart Path™ solution, which captures a passenger’s biometric details with a facial scan during an enrolment process at a kiosk or bag-drop, whichever is the first touchpoint in the journey.

Once checked against the passenger’s travel documents, a secure single token is created and stored in a secure biometric database within the airport – for use at every interaction through the airport, for the duration of the passenger’s journey, after which all biometric information is deleted. Successful trials were completed at a major Middle Eastern airport.

This project is part of SITA’s Identity Management Community Innovation Program (see Chair’s Statement, page 8), led by a team of six SITA Lab architects and developers. Further work was undertaken during the year to create a reusable mobile token that can be stored securely on the passenger’s mobile device – instead of in an airport database – and then used in every airport. This would leave passengers in control of their data.

Records of transactions in relation to the capture, encryption and storage


of biometric data for the passenger – and all gate and border transactions – would be stored on the blockchain, allowing independent verification and further guaranteeing data integrity without compromising data privacy.

Once the work is successfully completed, APIs and Software Development Kits (SDKs) will be made available on developer.aero to manage all functionality regarding the registration of the user identity, storage and encryption of biometric data.

Eventually it will include interaction between the mobile device and airport equipment (kiosk, gate and security, for instance) as the concept of the token is accepted globally as the verified identity and ticket of the passenger. Additional information may later be added to the token for subsequent releases, including visas, landing cards or ETAs (Electronic Travel Authorization).

iTRAVEL MAKES PROGRESSiTravel® saw important progress in 2016 with the relaunch of the Malaysia Airlines iTravel native apps which included a brand new user interface to streamline both the booking and

check-in flows. The apps added innovative features such as passport scanning and credit card scanning, check-in notifications and integration into Apple Wallet.

In October of the year, the apps were launched for Air India too, both Android and iOS. They were well received, with a four-star rating for both Android and iOS versions. Important elements of Air India’s digital strategy, the apps enable a passenger to book and pay for a flight by securely scanning both passport and credit card. They can then fully manage their booking from their mobile device, including seat selection, itinerary changes, additional services, meal selection and check-in. The app has also been integrated with Air India’s Flying Returns loyalty program. SITA Lab will continue to innovate with Air India and add new features to the native apps.

The iTravel® API was also adopted to be used as the mid-tier service layer for Horizon® Consumer, the Horizon portfolio’s next generation e-commerce platform. This enabled the successful 2016 launch of Horizon® Consumer with RwandAir (see page 50).

LEO GOES TRAVELINGIt was a major year for robotics at the SITA Lab. In May, passengers arriving at Geneva Airport – including delegates to SITA’s Air Transport IT Summit and Annual General Assembly – were offered help with their baggage from Leo, a baggage robot developed by SITA Lab. Leo is a fully autonomous, self-propelling baggage robot with the capacity to check in, print bag tags and transport up to two suitcases with a maximum weight of 32kg. It has an obstacle avoidance capability and can navigate in a high-traffic environment such as an airport.

Leo is the first step to automating the baggage process from the moment passengers drop their bags to when they collect them. Using robotics and artificial intelligence, bags can be collected, checked in, transported and loaded onto the correct flight without ever having to enter the terminal

“The smart use of new technologies is undoubtedly the key to improving the passenger experience while helping airlines better manage a growing number of travelers in a more sustainable way. This requires out-of-the-box thinking and Leo is exactly the sort of innovative exploration that will help airlines and airports manage the new challenges we as an industry will face in the next decade.” Abdelhamid Addou, Chairman & CEO, Royal Air Maroc (Commenting on ‘Leo’, SITA Lab’s fully autonomous, self-propelling baggage robot.)



building or be directly handled by anyone other than the passengers themselves. Leo went on its own travels later in the year, visiting industry events in Hong Kong and Singapore during October, before being hosted by Air Maroc in Marrakech, Morocco for the COP22 climate talks in November.

SHARING INNOVATIONCollaboration is the essence of success in innovation. This was demonstrated in a number of ways during the year. In October, the second SIA App Challenge – organized by Singapore Airlines and sponsored by SITA Lab – saw 280 participants compete in a week of intensive brainstorming, coding and prototyping. SITA Application Programming Interfaces (APIs) and beacon technology were integrated into a range of solutions to improve travelers’ experiences, whether in the airport, inflight or at the destination.

SITA APIs that were available and used by the teams and other finalists included BagJourney, Boarding Pass, FlightInfo, WaitTime and Weather APIs, in addition to a Bluetooth Beacon infrastructure supported by the SITA Beacon API and Common Use Beacon Registry.

Meanwhile work continued in 2016 to explore the potential use cases for unmanned aerial vehicles (UAVs) or drones. In April, SITA hosted the first European Unmanned Traffic Management (UTM) conference, in Geneva, with participants from NASA, EUROCONTROL, skyguide (the provider of civil and military air navigation services in Switzerland) and other bodies concerned with agreement over regulations for the interoperability of drones and aircraft. Following the conference, the Global UTM Association was founded (based in Lausanne, Switzerland and including SITA as a Founder Member) and was due to publish results from its first working group in March 2017. Additional working groups and initiatives were scheduled to be announced in 2017.

In November, SITA Lab hosted its Annual Innovation Day, when 10 companies, working at the cutting edge of IT, showcased technologies and development ideas, from innovations in space to those anchored firmly on Earth. Members of the SITA Board and SITA Council were also invited to the event. The demonstrations varied from a project to harness the sun's energy for electrically powered aircraft and solar-powered stratospheric

drones providing communications infrastructure for governments, to augmented reality platforms for aircraft mechanics, and chatbots – intelligent conversational interfaces providing concierge style services to passengers through a mobile app.

For the future, SITA Lab will continue evaluating new technologies with the potential of enhancing and contributing to SITA’s portfolio of products and solutions, and adding value to the air transport community. This will include emerging ideas from the Internet of Things, mobile and APIs, business intelligence infrastructure, wearable technologies, and biometrics – solving real problems and building solutions that can translate into improved passenger experiences, and better, more efficient ways of working.

“Increasingly passengers are demanding more control over their airport experience. They want to personalize the services they receive from the airport to their own requirements or needs. SITA’s beacon technology allows us to deliver on this expectation and offer a highly tailored experience to our passengers, in particular our frequent flyers. Indeed this technology will facilitate access to Fast Track Security for Airport Premier Gold members, allowing them to use their frequent flyer card automatically.”Jean-Pierre Torres, Head of IT, Nice Côte d’Azur Airport



170081 Activity Report - SITA LAB

3of SITA’s five Community Innovation programs involve the SITA Lab: Baggage Tracking, Identity Management and Disruption Warning Systems.

US$ 25bn is the estimated cost caused to the air transport industry by disruption every year. The SITA Lab’s work is leading the way, aiming to predict the vast majority of delays well in advance, which will be another first for the industry.

1travel token. The SITA Lab is making blockchain the basis for virtual or digital passports in the form of a single secure travel token on mobile and wearable devices.

US$ 3bn estimated savings for the air transport industry over seven years through use of RFID technology – SITA / IATA research.

1st-plus The SITA Lab has achieved many world firsts – from the first mobile in-flight applications to the first iPad-based kiosks for plane tickets, and more.

8 patent applications to date owing to the SITA Lab’s work, including SITA’s first ever US patent.

10companies at the cutting edge of IT showcased ideas and technologies at SITA’s annual Innovation Day in 2016. From technologies in space to those anchored firmly on Earth, they all offer huge promise for air travel in the future.

NameMatching SITA Lab developed an algorithm-based name matching solution to address the issue of matching names between passports and boarding passes.

1stautonomous self-propelling baggage robot, ‘Leo’, with the capacity to check in, print bag tags and transport up to two suitcases with a maximum weight of 32kg. Leo has already traveled the world appearing at several major events.

BAGSTATUS



A KEY ASSET FOR AIR TRANSPORT In 2016 SITA Global Services (SGS) made significant strides towards its vision as a world class service organization dedicated to the air transport industry, driven by a strategy focused on four dimensions: customer centricity, operational excellence, commercial performance and high performing people.

As a key SITA asset, SGS staff deliver advanced services to customers around the world, as experts with unparalleled air transport industry-dedicated experience across more than 125 countries. SGS provides the service capabilities, the reach, and the understanding that are essential to keep IT and communications up and running to ensure a secure and successful air transport technology environment.

The SGS service model combines global 24/7 Command Centers, with technical experts and smart technology supported by people on the ground to continually monitor and optimize service performance. They aim to pre-empt and proactively resolve problems before these problems have a chance to impact service.

For example, in the past three years, SITA has successfully reduced downtime hours by 80%. In terms of dealing with incidents when they do occur, 89% of major incidents are resolved in less than two hours.

OPERATIONAL EXCELLENCESGS continued to deliver strong results in 2016 for the critical strategic dimension of operational excellence, notably in three areas. First, availability targets were increased in 2016 compared to 2015 – and were met for 23 out of 24 SITA core applications supported by SGS. Across those core applications, 99.98% overall availability was achieved. Second, performance was boosted with a year-on-year reduction of 29% in the rate of incidents per asset. And third, there was a 30% reduction in the number of major incidents, resulting in a year-on-year reduction of 40% in major outages duration.

These results were driven by continued investment in lifecycle management of hardware and software in SITA’s Data Centers, which further improved stability and supportability, integration of data center environment support into the SITA Command Center and a focus on best practice processes.

In 2017, the infastructure will benefit from an investment program designed to refresh the compute, storage and network architecture to cement world

class operational quality. In addition, ISO20K certification will be sought for ITIL-based central operations.

CUSTOMER CENTRICHardening customer environments to protect and secure information from cyber threats is a primary focus area. In 2016 the Airport Security Project was established to drive this at airports. The project will continue in 2017 and beyond to assess vulnerabilities, protect against malware, harden infrastructure, upgrade locations that still run end-of-life Windows operating systems and more, leading to additional sites achieving ISO27K certification. Singapore’s Changi airport was the first to achieve this certification in October 2016.

SGS also worked with a pilot group of customers and SITA’s Customer Advisory Board to gain a deeper understanding of how SITA’s services contribute to customer business outcomes. This will enable SITA to jointly identify with customers’ areas to further improve value and quality, and to provide differentiated services.

SITA GLOBAL SERVICES



“The SITA team's responsiveness makes it great to do business with. I especially appreciate the work the team does when the problem is not theirs, but they still assist. The follow-up and support of our SITA team makes the difference.”Wayne Moss, Director - IT Global Field Operations, Delta Air Lines, Inc


An essential means of measuring the extent to which SITA delivers on its promises to customers, particularly in the service area, is the mix of key performance indicators. The Customer Satisfaction Index score is based on individual and in-depth Voice of the Customer surveys. In 2016, 482 surveys were completed – yielding a score of 4.17 and 97.7% customers satisfied with SITA service. This compares favorably with the score of 4.15 in 2015 and 4.10 in 2014.

The Net Promoter Score, which matches SITA against best-in-class averages for a business-to-business organization, was 67.2% against a target of 64% and 63.3% recorded in 2015. This metric is being recalibrated in 2017 to provide an external anonymized benchmark against peer companies.

TRANSFORMATIONIn recent years, SGS has been undergoing its own transformation program. This has now firmly established an innovative Service Model, leveraging automation and the support provided by specialist

teams in SITA’s Command Centers. This incorporates pre-emptive and preventative intervention to avoid service interruption, as demonstrated by the reduction in incidents per asset in recent years.

In 2016, as part of the plan, SGS initiated a company-wide review of its IT Service Management System, completed the first phases of a proof-of-concept for a potential replacement system with selected customers, and implemented a new configuration management solution in the Data Centers.

As SITA’s markets begin to embrace new consumption models and SITA’s product portfolio evolves towards infrastructure and location-agnostic platforms, SGS will continue with initiatives through the definition of and migration to a common range of architecture, together with a converged Service Catalog for Data Center, cloud and distributed (on premise) environments.

Looking forward, three elements in particular should be noted. First, during 2017 and 2018, the reach of

the Service Model at airports will be further extended and the central component further evolved, spanning all core services and markets. This will include a review of how and where SGS works with partners and suppliers.

Second, as part of its Cloud 2.0 initiative, SITA’s ATI Cloud will be migrated to the latest standard architecture. And third, SGS will conclude the selection process for a new Information Technology Service Management System and then embark on migration to the chosen system.

These initiatives will facilitate a modular approach offering standardized service where it makes commercial sense, with the flexibility to offer customized service where customers have specific requirements.

AS A KEY SITA ASSET, SITA GLOBAL SERVICES STAFF DELIVER ADVANCED SERVICES TO CUSTOMERS AROUND THE WORLD, AS EXPERTS WITH UNPARALLELED AIR TRANSPORT INDUSTRY DEDICATED EXPERIENCE ACROSS MORE THAN 125 COUNTRIES.



35,000 workstations and

2,000 kiosks supported at 413 CUTE airports.

2 state-of-the-art Command Centers (Montreal and Singapore)

450,000Customer calls

110,000Proactive incidents detected

4next generation Data Centers

4Service Desks

SITA GLOBAL

SERVICES TEAM

Global Customer Service Team servicing

2,800 customers worldwide.

2,000+ dedicated aviation IT specialists and engineers available on-site and remotely.

>40% of SITA's staff work in customer service and support (SITA Global Services).

89% of Major Incidents resolved in 2 hours.

67% drop in Major Incidents in the last 3 years.

Reduced downtime hours by

80%in the last 3 years.

96% of calls answered in <20 secs.

Leader in Service Excellence:

99.98% availability achieved across core applications.

97.7% of customers absolutely satisfied, very satisfied or satisfied with SITA's service.

4.17 / 5 Customer Satisfactionscore

SERVICEEXCELLENCE

CUSTOMERSERVICE



BUILDING SKILLS FOR TRANSFORMATIONAs a global organization, SITA employs more than 4,700 people in over 125 countries and almost 360 sites worldwide. Together its staff represent 140 nationalities and speak over 60 languages.

As an organization with mission critical responsibilities for most of the world’s airlines and airports, over half of SITA’s people are in customer-facing roles. A further third are directly involved in the design, development and deployment of solutions and services for customers and the air transport community at large.

They represent a massive reservoir of talent, skills and experience of both the air transport sector and the constantly shifting landscape of information and communications technologies. Their expertise and commitment offers an incomparable and invaluable asset for the global air transport community.

ATTRACTING TALENTSITA is a leader in a specialist sector and the company’s human resource mission remains to attract, develop and engage the best talent who can bring value and innovation to the air transport industry.

Over 450 positions were filled in 2016 with more than a quarter of these filled

by internal candidates and employee referrals making up the next largest group. This trend reflects SITA’s commitment to career progression and development.

Internal capabilities to attract and identify high quality candidates continue to be strengthened. In 2016 this included investment in new third party assessment methodology to support executive and sales hiring efforts. These assessment tools have helped build a map of skills and competencies within certain groups, enabling more constructive employee conversations on the topic of career development and support for internal mobility.

A new careers website and increased investment in social networking platforms, such as Glassdoor and LinkedIn, has resulted in an increase in the number of followers engaging across these platforms as well as improved employer ratings.

LEADERS & SKILLS As part of SITA’s transformation, HR is helping to develop leaders and skills for the future. In 2016 the Management & Leadership Excellence (MLX) program was delivered to those senior leaders who form part of the Executive Team succession pool. The program is designed to build an enterprise-wide leadership mindset and skillset. Two impactful MLX programs were

also delivered to more than 80% of managers with the aim of enhancing capabilities to set meaningful objectives and to drive ongoing performance throughout the year.

CUSTOMER CENTRICITYA new Service Charter launched in the year will broaden and strengthen the skills and behaviors of employees focused on customer success. The ITIL-based SITA Global Services training focused on best business practice when in consultation with customers. In addition, 127 Sales professionals completed Sales Excellence programs certification in 2016, enabling improvement of sales performance across the Geographies.

TECHNOLOGY MANAGEMENT PROFESSIONALSTechnology Management professionals undertook a competency assessment and validation program with 87% completing the assessment. They also took part in ‘The Open Group Architecture Framework’ training and certification for Architects as well as a ‘Design Thinking’ proof-of-concept initiative. SITA’s Technology Management professionals also saw the launch of an Active Learning Portal, which provides access to targeted learning developed against the profession’s competency-based job role requirements.



Across the whole of SITA curriculums were created for the SITA Learning Portal, a self-service online and mobile -enabled learning management system for all SITA employees. Collectively these online catalogs provide easily accessible and tailored learning solutions covering competencies, technologies and certifications. The system was also used to supplement targeted learning programs for professions and business divisions.

PERFORMANCE AND REWARDThe 2016 employee engagement survey registered a record level of

participation, with a response rate of 84%. The key measure of engagement, Sustainable Engagement, remained at the same level as 2015 and above the benchmark for the sector – indicating a strong level of personal engagement. Although many scores did decrease, as expected in a year of significant change, overall the company remains ahead of its sector benchmark.

Meanwhile, performance management was simplified by changing from a bi-annual process to an ongoing conversation about performance and development. Managers received training to enhance their ability to

facilitate these conversations, giving effective feedback and coaching for performance. Future focus will be on aligning objectives to SITA’s four transformation areas of customer, growth, people and efficiency.

In 2017 a new short-term incentives plan is being launched to drive a stronger emphasis on company performance and the behaviors that will drive collective success, increased accountability for both divisional results and reward decisions, and simpler individual objectives that are more strongly aligned to the transformation agenda.

170081 Activity Report - HR

140NATIONALITIES REPRESENTED, WITH SITA STAFF SPEAKING OVER 60 LANGUAGES

OVER

4,700PEOPLE EMPLOYED BY SITA IN MORE THAN 125 COUNTRIES AND 360 SITES WORLDWIDE

>40% OF SITA'S STAFF WORK IN CUSTOMER SERVICE

AND SUPPORT (SITA GLOBAL SERVICES)

127 SALES EXCELLENCE

PARTICIPANTS WERE CERTIFIED

OVER 80%

OF SITA MANAGERS RECEIVED MANAGEMENT

AND LEADERSHIP EXCELLENCE TRAINING

87% OF SITA'S TECHNOLOGY MANAGEMENT PROFESSIONALS UNDERTOOK A COMPETENCY ASSESSMENT AND VALIDATION PROGRAM IN 2016

JOB FUNCTIONS:

42% OF STAFF IN SERVICE MANAGEMENT

18% TECHNOLOGY MANAGEMENT

8%PROJECTMANAGEMENT

8%CUSTOMER SOLUTIONS

STAFF LOCATIONS:

14% ASIA PACIFIC

37% EUROPE

31%THE AMERICAS

18%MIDDLE EAST,

INDIA AND AFRICA



A CONTINUED COMMITMENTSITA’s commitment to corporate social responsibility continued in 2016, with programs that focused on social and educational activities, as well as environmental management, across the globe.

BETTER, TOGETHERVolunteering among employees increased through the year, with over 223 VIVA (Value in Volunteer Action) days recorded. A broad range of activities were undertaken for both local and global causes, such as International Women’s Day. Among them were events that supported health and wellness projects, support for veterans, aid for children’s and elders’ causes and sporting activities. There remained a strong theme around providing for those in difficult circumstances, with food drives taking place across all regions, and collections of essential staples for those most in need.

EDUCATIONSITA’s education programs continued to support young students across the world, including in South Africa and Ireland. At SITA’s Letterkenny offices in Ireland, eight undergraduates and 12 graduates participated in the internship scheme, gaining valuable business experience.

The BBBEE (Broad-based black economic empowerment) program saw a further 10 students graduate from the ‘Another Level’ initiative. Working in partnership with Torque IT, a major training provider in South Africa, SITA provides a context for the young adult learners to practice and develop their IT-related skills both at the office and in the local airport so they may move on to employment in the IT world.

A new ICT lab was funded and equipped by SITA in the Soweto township, giving secondary school students the opportunity to learn essential computing skills and gain experience in common software applications. This is the fifth project in the last five years.

FOUNDATIONThe SITA Air Transport Community Foundation continued to deliver results, with around 15,000 students benefitting from the support of the Foundation since it began operations in 2015. In 2016, 21 students received financial support at the University of Witwatersrand across aeronautical, information and business studies, along with engineering faculties. A further 16 young people received memberships to the Tchimologong Innovation Hub, giving them access to resources to help develop technology skills.

In Ethiopia, the 25 schools supported by the Foundation received additional

IT equipment, including an innovative Raspberry Pi-based e-learning resource that gives students access to open source learning content. In Uganda a further four ICT labs were funded and equipped, with continued ongoing support for students and teachers. And in Zimbabwe, a new project for the year, 100 women students were able to undertake the International Computer Driving Licence (ICDL) certificate, increasing their ICT skills and computing experience. In addition, the seven women’s halls of residence were equipped with 24 hour dedicated computer labs. The work of the Foundation continues into 2017, with projects continuing in Uganda, South Africa, Zimbabwe and Ethiopia, and in addition to the current locations, a new project will begin in Zambia.

ENVIRONMENTDuring 2016 SITA continued its program of office renovation and moves. These changes to workspaces helped to generate a reduction in energy consumption of 10.5% to office-based operations. This represents around 70% of our workforce. In addition, the energy intensity of these operations was reduced by 5.3% from the previous year, while emissions intensity saw a reduction of 4.9%. Water consumption is measured in three large sites (Singapore, Atlanta and Prague), and during the year it fell by 4.4% against the baseline set in the prior 12 months.



Emissions from travel are captured through the corporate travel providers’ systems, and an increase of 2.1% was recorded (noting also that SITA extended the reporting reach). SITA has seen a positive take-up in the use of the online web-conferencing system implemented at the start of 2016.

SITA retained ISO 14001 (Environmental Management Systems) certification in six key locations: Atlanta, Montreal, London, Geneva, Singapore and Rome.

Further information on SITA’s environmental and social activity can be found in our annual CSR Reports, which can be accessed at www.sita.aero/CSR

16024 Activity Report - CSR

15,000 Students positively

impacted(Ethiopia, Uganda,

Zimbabwe and South Africa)

200+ Teachers trained

(Ethiopia, Uganda and Zimbabwe)

25 Rasberry Pi Connect

devices delivered(Ethiopia)

46 University and technology hub students funded

(South Africa)

11 New computer

labs built at schools

(Uganda)

700 PCs installed

(Ethiopia, Uganda and Zimbabwe)

SINCE THE SITA AIR TRANSPORT

COMMUNITY FOUNDATION

STARTED...

43 Computer labs

equipped(Ethiopia, Uganda

and Zimbabwe)

“SITA really helped this year, otherwise I wouldn’t have been able to complete my studies. With the funding I have been able to complete my research report. Thank you so much to SITA, it’s really appreciated.” Lizalise Myataza, MSc Business Information Systems



SITA AT A GLANCE

Easy air travel every step of the way.

Transforming air travel through technology for Airlines, at Airports, on Aircraft and at Borders.

Our aim is to be the chosen technology partner of the industry, a position we will attain through flawless customer service and a unique portfolio of IT and communications solutions that covers the industry’s every need 24/7.

We are the innovators of the industry. Our experts and developers keep it fuelled with a constant stream of ground-breaking products and solutions. We are the ones who see the potential in the latest technology and put it to work.

Our customers include airlines, airports, GDSs and governments. We work with about 400 air transport industry members and 2,400 customers in over 200 countries and territories.

We are open, energetic and committed. We work in collaboration with our partners and customers to ensure we are always delivering the most effective, most efficient solutions.

We own and operate the world’s most extensive communications network. It’s the vital asset that keeps the global air transport industry connected.

We are 100% owned by the air transport industry – a unique status that enables us to understand and respond to its needs better than anyone.

Our annual IT surveys for airlines, airports and passenger self-service are industry-renowned and the only ones of their kind.

In 2016, we had consolidated revenues of US$ 1.5 billion.

For further information, please visit www.sita.aero

Follow us on www.sita.aero/socialhub



© SITA 2017

All trademarks acknowledged. Specifications subject to change without prior notice. This literature provides outline information only and (unless specifically agreed to the contrary by SITA in writing) is not part of any order or contract.

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Registered OfficeSITA SC 2 Avenue des Olympiades 2 B-1140 Brussels Belgium Tel: +32 (0)2 745 0510 Fax: +32 (0)2 745 0517

Geographic OfficesAmericas3100 Cumberland Boulevard Suite 900 Atlanta, GA 30339 United States of America Tel: +1 770 850 4500

Asia Pacific11 Loyang Way Singapore 508723 Republic of Singapore Tel: +65 6545 3711

Europe26 Chemin de Joinville B.P. 31, 1216 Cointrin Geneva Switzerland Tel: +41 22 747 6000

Middle East, India & AfricaDaoud Ammoun Street Bachoura Area PO Box 11-6524 Beirut Lebanon Tel: +961 1637 300

www.sita.aero