DEVELOPING THE FUTURE LEADERS OF AVIATION

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2 DEVELOPING THE FUTURE LEADERS OF AVIATION

3 Developing the Future Aviation Workforce Dorothy Reimold Deputy Associate Administrator, Commercial Space Transportation FAA

4 The IT Generation John Bailey Global Travel and Transportation Industry Leader, Center of Competence (CoC) IBM

5 Global Industry Perspective for Future Travel Leaders IATA Safety and Flight Ops Conference April Montreal Canada John Bailey Global Industry Leader of IBM s Travel and Transportation Center of Competence

6 There has never been a tougher time to be in business An app is disintermediating me My systems are not keeping up I don t know who my customers are We are drowning in data I am too costly to be competitive New business models are challenging us My industry and business are under disruption

7 More than half of the names of companies on the Fortune 500 have disappeared since the year 2000 Source: IBM Institute for Business Value analysis April 2018 / 2018 IBM Corporation 7

8 72% of businesses believe they are susceptible to digital disruption in the next 3 years, though only 14% believe they can act quickly enough to compete against it Source: IBM sponsored Harvard Business Review Analytic Services study 2016 April 2018 / 2018 IBM Corporation 8

9 Future Travel Leaders must understand and harness current trends to drive success Disruptive forces Emerging consequences Pressing challenges Provocative opportunities The travel industry is ripe for transformation Industry profits have reached an all time high Traveler expectations are changing rapidly Technology is enabling new business models A new wave of industry disruptions is inevitable but unpredictable Executives must grapple with changes that diversify customer preferences, reshape enterprises and transform the markets in which they compete These parallel changes are likely to manifest in new forms of competition and even new travel market competitors Traveler and employee interactions must become personal and digital Personalization must be real time and within context of every situation We must be liberated from legacy system constraints and enabled by emerging technologies Deeper ecosystem collaboration will drive travel differentiation Blockchain, Cloud, IoT, Mobile, and AI will determine the future of transportation The trajectory of travel disruption will be shaped by market innovators, not fast followers 9 IBM Industry Academy IBM Institute for Business Value IBM Research

10 Industry forces are driving fundamental disruption and change Globalization of low cost providers Substitution (TaaS, Virtual Reality, etc.) Artificial Intelligence Coordination Travel safety and security disruptions Multi-modal travel enablement Customer Data Control Commoditization Experience-driven travel Legacy distribution displacement Mobile Ecosystems New Competitors April 2018 / 2018 IBM Corporation 10

11 Disruptive forces Industry forces shaping Future of travel Globalization of low-cost providers Low-cost airlines accounted for 28% of all air passenger traffic in 2016, exceeding a billion passengers for the first time 7 Travel safety and security disruptions 45% of outbound travelers are worried about terror threats and nearly two-thirds say they will switch to a destination they perceive as safe 8 Experience-driven travel TripAdvisor s non-hotel segment vacation rentals, restaurants and attractions grew 35% in the third quarter of 2016 to $101M 9 Substitution Between 2017 and 2021 shipments of VR devices are expected to grow by over 400%, with some of them finding their way into the hands of travelers 10 Multi-modal travel enablement In July 2017, Waynaut and Octraves Technology announced a partnership to launch multimodal search and booking 11 Legacy systems being displaced by next generation Platforms Winding Tree is building a public blockchain for the travel industry; it would make no profit on transactions and distribution on its platform IBM Industry Academy IBM Institute for Business Value IBM Research

12 Disruptive forces Industry forces shaping Future of travel Artificial Intelligenceenabled 46% of companies using AI say they are using it for functions such as processing bookings and credit-card transactions 1 Customer data control 82% of consumers want at least moderate control of the data they share with providers 2 Mobile Ecosystems Collaboration Commoditization New competitors In 2016, 82% of UK consumers used mobile to access travel content, an increase of 15% from In July 2017, Expedia invested $350M in Indonesia online travel agency, Traveloka to collaborate on hotel supply and share expertise 5 7% of consumers rank on-time performance, customer loyalty programs and star rating as their top airline selection criteria 4 Amazon is opening its own cargo air hub, which will be home to 40 Amazon Prime airplanes 6 Uber is taking parking revenue from airports and even some high yield business travelers from short haul flights 12 IBM Industry Academy IBM Institute for Business Value IBM Research

13 emerging digital business models and capabilities are driving convergence and industry-based platforms. World s largest transportation company owns no vehicles Impact Low Medium High Sharing Economy & Customer Empowerment World s largest accommodations provider owns no real estate Industry Convergence World s most valuable retailer has no inventory Platform Model Implications T&T companies are feeling shift of power to customers with sharing economy and ecommerce Industry convergence has high risk of disruption yet significant opportunities The specific-form of a platform model is unclear, but its eventual emergence is certain Low Medium High Uncertainty April 2018 / 2018 IBM Corporation 13

14 Master Emerging level consequences grid Traveler impacts Enterprise impacts Market impacts Future travel leaders will drive positive impacts 1. Further differentiation of segment preferences 2. Increased demand for physical and digital security and privacy 4. Companies with most data hold keys to the personalization kingdom 5. Operational and informational silos limit essential innovation 7. Emergence of next generation travel platforms 8. Integrated coordination across travel ecosystems will differentiate 3. Digital excellence eclipses the importance of operational performance 6. Intermediaries that master digital integration engender loyalty 9. Digital giants and private operators displace existing supply chains 14 IBM Industry Academy IBM Institute for Business Value IBM Research 2017 IBM Corporation 19 April 2018

15 Travel technology forces Digital technology is redefining possibilities in the travel industry Artificial Intelligence Serves as the engine for travel personalization Identifies business-critical operational improvements Cloud Mobile Becomes the primary interaction channel Empowers front line staff with insights Blockchain Augmented and Virtual Reality Aids in standardization and optimization of operations Improves efficiency by merging physical and digital realities Internet of Things Enables travel companies to move beyond legacy Promises to improve identity management and distribution Equips physical assets with digital data Delivers cost-effective innovation quickly Enables transformational business model collaboration Optimizes existing operational processes April 2018 / 2018 IBM Corporation 15

16 Future Travel Leader Actions Reimagine possibilities by taking action on industry opportunities. Invest to profit from Artificial Intelligence Leverage technology to radically reshape your company s operational results Get Big Data, become data driven, respect and protect data Collaborate well beyond your company s established comfort zone Embrace mobile apps across employees and vendors to create repeatable success Disrupt, instead of being disrupted! April 2018 / 2018 IBM Corporation 20

17 Learn more about our perspective John Bailey Global Industry Leader of IBM s Travel & Transportation Center of Competence John.Bailey@ibm.com Linked In: linkedin.com/in/johndbailey 21 IBM Industry Academy IBM Institute for Business Value IBM Research

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19 Please note IBM s statements regarding its plans, directions, and intent are subject to change or withdrawal without notice and at IBM s sole discretion. Information regarding potential future products is intended to outline our general product direction and it should not be relied on in making a purchasing decision. The information mentioned regarding potential future products is not a commitment, promise, or legal obligation to deliver any material, code or functionality. Information about potential future products may not be incorporated into any contract. The development, release, and timing of any future features or functionality described for our products remains at our sole discretion. Performance is based on measurements and projections using standard IBM benchmarks in a controlled environment. The actual throughput or performance that any user will experience will vary depending upon many factors, including considerations such as the amount of multiprogramming in the user s job stream, the I/O configuration, the storage configuration, and the workload processed. Therefore, no assurance can be given that an individual user will achieve results similar to those stated here. 23

20 Notices and disclaimers 2018 International Business Machines Corporation. No part of this document may be reproduced or transmitted in any form without written permission from IBM. U.S. Government Users Restricted Rights use, duplication or disclosure restricted by GSA ADP Schedule Contract with IBM. Information in these presentations (including information relating to products that have not yet been announced by IBM) has been reviewed for accuracy as of the date of initial publication and could include unintentional technical or typographical errors. IBM shall have no responsibility to update this information. This document is distributed as is without any warranty, either express or implied. In no event, shall IBM be liable for any damage arising from the use of this information, including but not limited to, loss of data, business interruption, loss of profit or loss of opportunity. IBM products and services are warranted per the terms and conditions of the agreements under which they are provided. IBM products are manufactured from new parts or new and used parts. In some cases, a product may not be new and may have been previously installed. Regardless, our warranty terms apply. Any statements regarding IBM's future direction, intent or product plans are subject to change or withdrawal without notice. Think 2018 / January 12, 2018 / 2018 IBM Corporation Performance data contained herein was generally obtained in a controlled, isolated environments. Customer examples are presented as illustrations of how those customers have used IBM products and the results they may have achieved. Actual performance, cost, savings or other results in other operating environments may vary. References in this document to IBM products, programs, or services does not imply that IBM intends to make such products, programs or services available in all countries in which IBM operates or does business. Workshops, sessions and associated materials may have been prepared by independent session speakers, and do not necessarily reflect the views of IBM. All materials and discussions are provided for informational purposes only, and are neither intended to, nor shall constitute legal or other guidance or advice to any individual participant or their specific situation. It is the customer s responsibility to insure its own compliance with legal requirements and to obtain advice of competent legal counsel as to the identification and interpretation of any relevant laws and regulatory requirements that may affect the customer s business and any actions the customer may need to take to comply with such laws. IBM does not provide legal advice or represent or warrant that its services or products will ensure that the customer follows any law. 24

21 Notices and disclaimers continued Information concerning non-ibm products was obtained from the suppliers of those products, their published announcements or other publicly available sources. IBM has not tested those products about this publication and cannot confirm the accuracy of performance, compatibility or any other claims related to non-ibm products. Questions on the capabilities of non-ibm products should be addressed to the suppliers of those products. IBM does not warrant the quality of any third-party products, or the ability of any such thirdparty products to interoperate with IBM s products. IBM expressly disclaims all warranties, expressed or implied, including but not limited to, the implied warranties of merchantability and fitness for a purpose. The provision of the information contained herein is not intended to, and does not, grant any right or license under any IBM patents, copyrights, trademarks or other intellectual property right. IBM, the IBM logo, ibm.com and [names of other referenced IBM products and services used in the presentation] are trademarks of International Business Machines Corporation, registered in many jurisdictions worldwide. Other product and service names might be trademarks of IBM or other companies. A current list of IBM trademarks is available on the Web at "Copyright and trademark information" at: Think 2018 / DOC ID / Month XX, 2018 / 2018 IBM Corporation 25

22 Aviation in the Digital Age Houman Goudarzi Manager Innovation IATA

23 AVIATION IN THE DIGITAL ERA IMPACT OF DIGITAL TECHNOLOGY ACROSS AVIATION Houman Goudarzi, Innovation, IATA 19 April 2018

24 AVIATION TECHNOLOGY RADAR SOCIETY ARTIFICIAL INTELLIGENCE BLOCKCHAIN TECHNOLOGY DRONE & UAV TECHNOLOGY AUGMENTED & VIRTUAL REALITY TECHNOLOGY ENVIRONMENT ECONOMY CRYPTO CURRENCIES BIOMETRICS & DIGITAL IDENTITY AUTONOMOUS VEHICLES RENEWABLE ENERGY POLITICS

25 AIRLINE BUSINESS & TECHNOLOGY MAPPING CUSTOMER BLOCKCHAIN TECHNOLOGY ARTIFICIAL INTELLIGENCE SHOP ORDER PAY EXPERIENCE OPERATIONS STRATEGIZE PLAN EXECUT REPORT E SUPPORT HR IT FINANC LEGAL E

26 WHAT IS AI? Field of study that gives computers the ability to learn without being explicitly programmed. Samuel, Arthur L. (1959) o Computer + human-like intelligence o Logical reasoning o Problem solving o Learning o Embodied (e.g. Robots) o Disembodied (e.g. Siri, Google Now) Computer Science Artificial Intelligence Machine Learning Deep Learning

27 WHAT IS INTELLIGENCE? To understand and analyze the evolution of AI; one requires to define it across some simplified dimensions. The 4 dimensions below are inspired by DARPA s perspective on AI. Analysis & Conclusion Perceiving Outside World Abstraction of Knowledge Learning from Experiences

28 EVOLUTION OF AI Logical reasoning within a defined and limited space Learning through big data Analytical awareness Applying knowledge to different problem 1st Gen AI 2nd Gen AI 3rd Gen AI 4th Gen AI ????

29 AI 1st GEN: RULE DRIVEN REASONING Analysis & Conclusion 1st Gen AI Logical reasoning within a defined and limited space Perceiving Outside World Abstraction of Knowledge Learning from Experiences o Flight management computer systems used in some aircraft to assist the pilot. o Autopilot: To steer the aircraft along a predefined trajectory without pilot intervention. o Auto cabin pressurization to ensure the environment is safe and comfortable.

30 AI 2nd GEN: LEARNING THROUGH BIG DATA Analysis & Conclusion 2nd Gen AI Learning through big data Perceiving Outside World Abstraction of Knowledge Learning from Experiences o Analysis and prediction of passenger behavior/demand. o Seamless airport security processes, through facial recognition and biometrics. o Optimization of revenue management, route network, fleet management.

31 AI 3rd GEN: ANALYTICAL AWARENESS Analysis & Conclusion 3rd Gen AI Analytical awareness Perceiving Outside World Abstraction of Knowledge Learning from Experiences o 3rd Gen AI doesn't need to see thousand example images of different aircraft damage, to be able to detect one on an aircraft. o Why? "because the data says so

32 AI 4th GEN: CONTEXTUAL AWARENESS Human Intelligence Analysis & Conclusion 4th Gen AI Applying knowledge to different problem Perceiving Outside World Abstraction of Knowledge Learning from Experiences o Self-flying planes. o AI driving optimization of revenue management, route network, fleet management. o Autonomous in-flight services.

33 AI IMPACT ON AVIATION JOBS AT RISK: o o PHYSICAL & REPETITIVE JOBS. DATA PROCESSING JOBS. LESS AT RISK: o o PHYSICAL UNPREDICTABLE JOBS. JOBS THAT REQUIRE EXPERTISE. DIFFICULT TO REPLACE: o JOBS THAT INVOLVE EMOTIONAL INTERACTION WITH PEOPLE.

34 OPPORTUNITIES & THREATS OPPORTUNITIES THREATS LOWER RESOURCE REQUIREMENT INCREASED EFFICIENCY PRODUCT DISRUPTION CANNIBALIZATION THREAT TO ROUTINE & REPETITIVE JOBS

35 THANK YOU! linkedin.com/in/houmang

36 Developing the Future Leaders of Aviation Panelists ä Khalid Al Humaidan, Senior Specialist, Safety Policy, Regulation and Planning, GCAA, UAE ä Mark DeNicuolo, Director, Policy and Performance, FAA ä Julie Mailhot, Chief Operating Officer, Air Georgian ä Daniel Stecher, Vice President Airline Operations, IBS Software Services Moderator ä Dorothy Reimold, Deputy Associate Administrator, Commercial Space Transportation, FAA

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