Rebecca Lewis n8689521 Laura Martin n8878854 Tyra Sigley n8866902 Alexander Watzinger n9060341 Tutor
This report was constructed to build upon the strategic analysis of Brisbane Airport Corporation’s (BAC) current digital business model and the issues directly affecting their progression. The aim of this report is to critically advise BAC on a future strategy specifically tailored to their current limitations and strategic issues, whilst adhering to their organisational objectives. It was identified that BAC’s current smart-phone digital strategy was poorly implemented and faced a myriad of opportunity costs when taking into consideration BAC’s organisational goal of increasing passenger volume, reducing dwell time and appealing to the increasing trend of the Asian Pacific demographic. The strategy set out to solve BAC’s stuck in the middle issue of differentiation and low cost, improve their alliance capability, and create greater customer value consistent with a Blue Ocean strategy through augmented reality (AR) technology, location-based services (LBS) and a multilingual approach. In 2013, Chinese passengers saw a 10.7% increase and India with 7.7%, which will serve as the starting point for multilingual services. A tripartite alliance tactic was suggested to include critical factors of infrastructure and potential customers, leading edge research facilities for airport development (QUT, FTE Think Tank) and a company in the technology industry (Marxent, Appshaker, GravityJack). Additionally, AR technology will complement a number of services including easing the orientation of air passengers, providing multilingual translations and increase the validity and reliability of airport data through tracking crowd-movement. Another benefit is the app will create revenue through tailored location-based advertisements and USB charging spots with advertising and promotional screens at the same location in the airport. Research showed that cooperative advertising arrangements (i.e. with airport retailers) can improve revenue streams by approximately 18% from native ads. LBS will also improve the levels of foot traffic, their profit margins, and customer loyalty and consequently, their overall profit as innovative apps for companies have seen a 60% increase in underlying pre-tax profits. By utilising the above techniques to improve the airport and reducing costs through the app and differentiating themselves, BAC can expect to see a rapid growth to their annual profits. BAC currently has a retail revenue (comprising of concessionaire rent and advertising revenue) of $62 million, which represents 12% of all revenue. As Facebook has seen an increase in mobile ad spends of 16.3% from 2012 to 2014, a similar increase of BAC’s mobile advertising can be expected. BAC should expect to see an increase to approximately $72.5 million to their retail revenue, thus $5 million per year.
Brisbane Airport had more than 21 million passengers passing through the terminals in 2014, digital infrastructure upgrades are needed to maintain a competitive advantage, add value, deliver the best possible customer experience and support continuing growth (BAC, 2013). The following report was critically constructed to advise Brisbane Airport Corporation (BAC) on a future strategy specifically tailored to their current limitations and strategic issues, whilst adhering to their organisational objectives.
2. Current Strategic Issues & Limitations
BAC is currently seen as an airport and transportation hub, however, aims to redefine itself and create an ‘airport city’ (Dreiling, 2014). BAC is limited with a fixed location therefore the proposed digital strategy needs to surpass the location boundary and exceed the identity of a transportation hub. One of BAC’s major strategic issues is that they’re currently focusing on both generic strategies of