Page 3

By CIOinsight  |  Posted 07-01-2004

Seize the Gate

Stepping into the new Terminal 1 at Toronto's Pearson International Airport can be disorienting. Much of what travelers have come to expect from a busy airport is absent: There are no endless check-in lines; no throngs of stressed-out passengers out-maneuvering one another; no surly ticketing agents scolding those out of line. Even the security guards don't appear particularly overwhelmed. In fact, Terminal 1 looks so empty and new that you might think it was not yet open for business.

The reality, however, is that Toronto's Terminal 1 is operational; it's just so massive that it's hard to tell. Terminal 1 handles passengers from up to 800 daily flights from 57 airlines—that's ten million passengers a year who all but vanish down its long, modern corridors. And they are long, too—leading to some of the longest hikes you'll ever take from gate to curb.

The terminal's floor plan covers 4.2 million square feet, its superstructure contains enough steel to build three and a half Eiffel Towers, and it has Canada's largest indoor parking garage (12,600 spaces). Renovation of the entire airport—three terminals in all—is scheduled for completion in 2008, and, by the time it's finished, the project will have taken more than 10 years, will encompass 4,464 acres, and will have cost $4.4 billion Canadian ($3.2 billion U.S.).

But it is not just the vastness of the airport, or of Terminal 1, that contributes to the uncrowded halls. Toronto Pearson International is also one of the first "common-use" airport facilities in North America, which means that it features a shared networking system that speeds up turnover of aircraft at the gates, thus increasing the flow of foot traffic inside the new terminal, while also opening up new opportunities for Toronto's airport authority. It's an approach that's having ripple effects throughout the beleaguered airline industry, and it's analogous to the shared-services organizations that IT consultants often recommend for their clients at large, multidivisional companies.

To see a comparison of airports utilizing common-use IT infrastructures, click here.

At the center of the common-use revolution in North America is an unlikely pioneer: Jim Burke. British-born Burke, soft- spoken and unassuming, is vice president of information technology and telecommunications, or IT&T, at the Greater Toronto Airports Authority (GTAA), the not-for-profit organization that owns and operates Toronto Pearson. Before coming to Toronto, Burke spent 12 years politely turning the British airline system on its head by switching London's Heathrow Airport to common use. He then advised San Francisco International Airport on how to do the same, before starting, in 2000, to shake things up in Toronto.

What's so radical about common-use airports? At most North American airports, individual airlines lease gates for as long as 30 years at a stretch, install their own networks, run their own telephone systems, set up proprietary terminals and generally mark their territory. Dominant carriers, especially in hub airports, have been known to sew up entire terminals, squatting on their gates and squeezing out upstarts. Under this system, whenever a dominant carrier is not using one of its gates, no other airline can, either. Instead, the gate sits idle while competitors' planes are stuck on the tarmac, or are forced to dock at gates leased from a smaller, less convenient airport nearby. It's capitalism at its worst.

When the GTAA decided, back in 1994, to rebuild Toronto Pearson's Terminal 1, it also decided to put an end to this inefficiency by stealing a page from Burke's playbook. A few years later, the GTAA stole Burke himself, and placed him in charge of a budget of several hundred million with a clear mandate to make Pearson common use.

The idea behind common-use airports is that the airport—not the airlines—manages the network, telecommunications, video feeds, check-in counters, gates, security and baggage systems. The hardware and software is standardized throughout the airport, the check-in counters and gates can be switched around seamlessly, and passengers and planes move more fluidly in and around the facility. For instance, if an international flight is running late, it can be parked at a gate adjoining a less- frequent connecting flight so that passengers won't miss it.

When done right, the common-use model saves money for both the airlines and the airport. Airlines save the costs and hassles of managing their own networks in every city they serve, while the airport becomes a full-service IT outsourcer, creating for itself an entirely new source of revenue. It's hard to argue with that logic, but some still do.

Page 2

The Hard Sell

"It was an interesting few months when I first arrived," says Burke, who was hired by Lou Turpen, CEO of GTAA. "In an IT sense, the airport wasn't in the mainstream, and Air Canada felt they needed to be self-sufficient." Montreal-based Air Canada, Canada's largest commercial jet carrier, accounts for 60 percent of air traffic at Toronto Pearson, making it the GTAA's largest customer by far. Airlines that dominate their hubs can be fiercely resistant to switching to common-use facilities, fearing the loss of their competitive advantage. Air Canada was no different. Because the airline felt that its existing network was superior to those of its competitors, they saw no incentive to level the playing field.

"It was a hard sell," recalls John Segaert, general manager of hub development in Toronto for Air Canada. "There were a number of concerns at different levels. Some people didn't really understand the technology, and when they heard 'common use' they thought it meant 'lowest common denominator,' a somehow lesser technology to what we were already using."

It's hard to blame Air Canada for its trepidation. After all, the GTAA was essentially asking the airline to ditch its existing technology investment at its biggest hub, allow competitors to access its gates and ticket counters, and relinquish control of a large chunk of its ground operations to a seven-year-old, unproven airport authority.

The selling process began the moment Turpen brought Burke over from Heathrow. "We wanted to minimize infrastructure, and introduce some new ideas and synergies," recalls Turpen. "So I started asking around in Asia, where most of the airports are common use, 'Who is the best person to talk to?' and they all said Jim Burke." Given that he'd had success selling British Airways on the concept at Heathrow, Turpen felt confident that Burke could convince Air Canada to do the same.

Burke began by working with Air Canada's John Segaert to painstakingly present the concept, detail the technology and prove the cost savings. "You have to have certain selling skills, but really it is a process of explaining it over and over again to the airport tenants, because in this model, they are going to become our customers," Burke says. After some time, Burke's calm reassurance and earnest yet dogged pursuit sold Segaert, who then became the common-use advocate within Air Canada, pushing the idea relentlessly to upper management. Segaert says that Burke's patience and experience ultimately convinced him.

"Jim is a guy with a lot of experience in the industry. He understood Air Canada's needs and concerns, and addressed each one," says Segaert. "He was sincere and trustworthy, and he knew how to speak our language." What Burke did, essentially, was allow the model to speak for itself. Working for a not-for-profit agency, Burke didn't need to prove that he wasn't out to gouge the airlines by going to common use. In fact, most of the numbers involved in the transition, including what airlines would be billed to help cover the costs of building and maintaining the network, were shared with the airlines. "Our costs for moving into the new Terminal 1 would have been very similar had we done it ourselves," says Segaert.

Segaert's effort to sway his own upper management did not go as smoothly. It took him several months, he says, to convince the C-level executives at Air Canada to approve the plan. Though the financial and logistical advantages for Air Canada were plain, it still wasn't enough. Ultimately, though, the GTAA didn't have to get Air Canada's buy-in. The new Terminal 1 was going to be a state-of-the-art facility, far bigger and more efficient than the aging, sclerotic original. Turpen made it clear to Air Canada that if they wanted to use the facility, then they would have to accept the common-use platform. Says Turpen, "It turns out that we had the authority and really didn't need to ask anyone." Even so, Burke and Segaert's efforts to sell Air Canada on the idea were not wasted. If the carrier didn't save money on Pearson's opening day, it would in the months ahead.

Page 3

Wired for Speed

The network Burke eventually installed in Terminal 1 was by far the most ambitious project he has ever worked on. To see a chart of GTAA's Network, click here. He and his team installed 50 express check-in kiosks, 40 passenger information phones on four different levels, 250 passenger check-in counters, 450 flight and baggage displays (all flat-panel monitors), 300 electronic message boards, and approximately 9,700 directional signs. The goal is for the airport to process 50 million passengers a year by 2020, more than double the 24.7 million it currently handles.

The single, most important aspect of the project was the decision to go with IP across the board, for telephony, ticketing terminals (which actually use a slick Web-based graphical user interface, rather than the arcane proprietary technologies of old), and self-service passenger kiosks. Burke opted for an IP-based campus-area network as the backbone, and connected more than 7,000 devices to it. Cisco Systems Inc. teamed up with the leading software and kiosk provider in the airport field (Atlanta-based SITA Airport and Desktop Services) to provide the backbone and front-end technology, known as CUTE (for Common Use Terminal Equipment).

The network (see chart page 40) consists of two independent, dense wavelength-division multiplexing (DWDM) rings with Multiprotocol Label Switching and SONET services for scalability. The ticketing terminals use Compaq PCs and flat-panel displays. Asked why he splurged for flat panels rather than the less-expensive CRTs, Burke says, "When you're buying as much technology as we have, you'd be amazed at the type of deals you can get." SITA took the lead on software for the entire project.

Also integrated onto the network are several video feeds. Security cameras, which Burke estimates number in the thousands, transmit over the IP network, as do the television broadcasts to monitors in the waiting areas, baggage claims, and many bars and restaurants. Even the baggage claim system and the security management company at the airport use the network. All of the airport tenants pay the same flat rate for their use of the network, though Burke won't say how much.

Even though the hundreds of flat-panel displays, Cisco IP phones and SITA kiosks are all cutting edge by airport standards, Burke downplays the role of technology. "This is a business decision, and technology is simply an enabler," he says. "There's nothing fancy about what we've done here with the technology."

Unlike some IT execs, Burke likes to make it sound straightforward and uncomplicated. His biggest challenge in implementing the common-use network at Toronto, he maintains, was battling the architects who designed the terminal. "Some of my ideas offended their aesthetic sensibilities," he says, tongue firmly in cheek.

Which is not to say that there haven't been a few glitches along the way. The call volume into the network operations center ran very close to the maximum level for a month after the terminal opened. (Most of the questions came from tenants and end-users unfamiliar with the new system.) Also, the kiosks that provide flight information were so packed with data that some users found it difficult to find their flights. Burke even fumbled with it a few times himself before deciding to tweak the Web-browser interface.

Page 4

Sharing the Wealth

Though Terminal 1 has only been open since April, the GTAA already reports a 15 percent increase in passenger throughput, and it has reason to expect greater bottom-line results, too. At McCarran International Airport in Las Vegas, for example, Airline Systems Manager Dave Bourgon has likewise seen a 10 to 15 percent increase in passenger throughput, to the point where, he says, it's as if his airport had gained nine extra gates. Moreover, he adds, the common-use approach has saved the airport more than $3 million per gate since 1999.

Still, it remains difficult for airports with dominant airlines to make the move, and that's where Pearson—and its success in bringing along Air Canada—provides hope. At Miami International Airport, Maurice Jenkins has been the manager of information systems and telecommunications for 16 years. For most of his tenure, Jenkins has eyed common use as both a solution for the inefficiencies of accommodating disparate and proprietary systems for multiple airlines, and also as a way to alleviate the stress caused by computer crashes and failed weather adjustments that can clog the halls with swarms of hot, unhappy passengers.

"Initially, when I first started thinking about this, there was no one out there to back me up," he says. "But when I found out that there are other people doing this, it validated my ideas. It was the light at the end of the tunnel." Jenkins has studied what Burke has implemented at Toronto, and tweaked it for his unique needs. Jenkins has yet to convince his biggest customer, American Airlines, to sign on, but he's optimistic.

"It's been a slow but steady move to common use," says Dick Marchi, senior vice president for technical and environmental affairs at the Airports Council International-North America, the largest division of the airport trade group that represents more than 550 airports around the world. Marchi notes that major hub airports like Dallas- Ft. Worth (American) and Chicago O'Hare (United) will likely be the last ones to make the switch, because the hub airlines often control entire terminals, and they're in no hurry to share with their upstart competitors. Plain old inertia can prove a formidable obstacle, too. "It's starting to happen faster now," says Marchi. "I would say that Jim has moved the shared-infrastructure model ahead half a football field length."

Burke's impact on the airline industry may be more far-reaching than he could ever imagine. When the federal government deregulated the airline industry in 1978, a move that met with decidedly mixed results, a common complaint from would-be competitors was that the skies had been deregulated, but not the ground. By opening to the free market a business that had been managed by the government, deregulation brought lower prices and higher productivity throughout the airline industry. But deregulation also left the airports with a few major airlines that could dominate their hubs with near-monopoly status. With the advent of common-use airports, however, the long-awaited arrival of a truly competitive airline industry could be upon us. This could give discount upstarts such as Southwest and JetBlue even greater odds against the struggling incumbents, but either way it should improve the experience for travelers.

At the end of the day, Jim Burke isn't comfortable taking credit for such sweeping change. The common-use system at Terminal 1 is only three months old, and there is still much to be done. Burke is still noodling with an effective way to offer Wi-Fi service in the airport without causing too much wireless interference, and he wants to integrate RFID into the baggage system—something he hopes to accomplish within five years.

Aside from emerging technologies, Burke is also concerned with the viability of Air Canada. In bankruptcy protection since April 2003, Air Canada narrowly escaped liquidation this May when it concluded acrimonious negotiations with the Canadian Auto Workers Union (which represents about 6,000 of the carrier's customer-service personnel), and received an extension from the courts—to Sept. 30—for its re-emergence. (On August 15, Air Canada's creditors—owed $9.5 billion dollars U.S. when the carrier filed for bankruptcy—will vote whether to proceed with the plan or not.)

Air Canada's Segaert remains convinced that the new system will help the airline recover. "I only pay for what I consume," Segaert notes, "and normally when you shrink, you have to pay to remove yourself . . . this way, we just pick up and leave." Meanwhile, if Air Canada were to liquidate, the GTAA could have dozens of other airlines filling its gates and ticket counters in short order.

All of this uncertainty plays on Burke's mind as he stands in the main hall of Terminal 1 and watches passengers catch an Air Canada flight to the west coast. His voice grows quiet as he slips into problem-solving mode. "Now if I can just get the customs, air-traffic control and other government agencies tied in together on the network, we'd really see some progress."

Dan Briody is a former senior writer for Red Herring magazine and author of The Halliburton Agenda: The Politics of Oil and Money.