This blog was written by Technavio Industry Analyst Avimanyu Basu. Avi has been working as an analyst/consultant for more than 6 years and has been involved in several projects pertaining to the aerospace, defense and renewable energy domain. He has worked with top-notch private and public sector clients across Asia Pacific and Europe.
Poland is undergoing a significant reformation in its aviation sector, fueled mostly by high investments. The country has been making its mark as a tourist destination in Eastern Europe, evident from the high passenger numbers through its airports. The Warsaw Chopin Airport has been experiencing a passenger flow of almost 10.6 million every year, with numbers reaching 12.84 million in 2016, reflecting an increase of 14.5% from that of 2015. The airport handled 980,000 passengers in December 2016, which marks a 35.4% increase from numbers in December 2015.
With a significant rise in the flow of overseas travelers, the Warsaw Chopin Airport authorities are focusing on deploying a more passenger-friendly infrastructure. As most passengers are equipped with handheld smart devices and are considerably dependent on their effectual operation, it makes sense to provide supporting infrastructure relevant to this platform. The airport, consequently, has installed 3,000 operational power sockets and USB access points across the airport, along with 20 specialized USB phone charging stations. This puts the Warsaw Chopin ahead of the London Luton Airport (UK), Marseille Provence Airport (France), and Bologna Guglielmo Marconi Airport (Italy), which have fewer numbers of power points and thus, in a way, affects passenger experience.
The Polish aviation infrastructure dates back to the interwar period, dedicated to the production of parts for the industrial and engineering network of the Soviet bloc’s Warsaw Pact military alliance. However, the state-owned facilities in Rzeszów had to undergo a series of complicated privatization processes in the beginning of the 1990s, i.e., after the communist era. The nation experienced a relatively slow flow of funds from foreign investors who were attracted by the comparatively cost-effective supply of labor with respect to other European countries and budding aviation small and medium enterprises (SMEs). US engine manufacturer Pratt & Whitney engineered the reformation of the aviation industry by initiating an association of aviation factories in Rzeszów, naming it the Aviation Valley. The association was initially constituted of 18 Polish manufacturers from nearby towns in 2003 which eventually grew to 128 by 2016, of which 100 are OEMs. Some of the renowned manufacturers in the valley include Pratt & Whitney, MTU Aero Engines (Germany), and Safran (France). Safran has revealed plans to set up an aviation engine parts manufacturing facility in collaboration with Rolls-Royce (UK) in 2017, in addition to its existing facility. Aviation Valley is expected to evolve not only as an aerospace manufacturing hub but also a design hub. Strategies are being directed toward clustering SMEs and driving a collective effort to streamline global aerospace trends such as 3D printing. The global stakeholders in the Valley are investing in R&D and a few of the projects are also co-financed by Poland’s National Research and Development Centre. Promising SMEs can receive up to 80% of R&D funding under the 500 million zloty (115 million euros or $121 million) InnoLot funding program.
In spite of the significant public sector support, the industrial infrastructure in the aviation sector will be driven largely by initiatives funded by foreign companies. For example, Lufthansa Technik (Germany) and General Electric (US) will collaborate to establish a facility at Środa Śląska for servicing aircraft engines (2018 onward); this joint investment is worth 250 million euros ($270 million). The initiative, which has also received government backing, can be identified as a strategy by the country to generate lucrative jobs that will reduce the emigration of locals to other countries.
The Polish commercial aviation sector has promising capabilities to merge with the global trend of digital makeover. Some relevant developments are discussed below.
Assistance for passengers with visual impairment
While airports worldwide have been progressing toward achieving a digital facelift, the Warsaw Chopin Airport has gone the extra mile to help people with visual impairment. In late 2016, the airport launched four typhlographic terminals; these are interactive maps that aid visually impaired travelers in wayfinding through the airport. The maps are fixed at key points at the airport to enhance ease of access to people. The integration of these interactive maps with the existing airport infrastructure was conducted in collaboration with the Chance for the Blind Foundation. The typhlographic maps consist of convex lines depicting walls, paths, symbols, and objects, and relevant descriptions in Braille along with buttons that can be pressed to emit voice messages in Polish or English. Care has also been taken in the selection of the colors used in the map to make the illustrations clear for people with weak eyesight and color blindness. Passengers can download the dedicated airport app, Your Way, to access the maps and voice messages on their own devices with the help of Bluetooth-enabled low-energy beacons. In order to make the process viable for passengers with time constraints, the QR codes on each terminal provide a shortcut link to the app for passengers who do not have it installed in their handheld device.
Secure monetary transactions
The ATMs installed in the Warsaw Chopin Airport are equipped with finger vein readers. This is of significance as Poland was the first nation to leverage this technology. In 2010, the Polish BPS Bank became the first to install finger vein reader-enabled ATMs in Europe. Following this, in 2014, ITCARD, which accounts for the second-largest ATM network in Poland, collaborated with Hitachi Europe for the implementation of an array of ATMs with finger vein readers at Wincor Nixdorf and Diebold ATMs across the nation.
Next-generation retail
Lagardère Travel Retail (a subsidiary of the French Lagardère Group) operates across a considerable area of over 53,819 square feet across Terminals 1 and 2 at the Warsaw Chopin. The retailer has signed a 10-year contract to operate duty-free, food service, and travel essentials stores in Terminal 1. The airport has also adopted next-generation duty-free retail trends, evident from the Aelia Duty Free store’s retail strategy. These stores offer innovative digital options including a business-to-consumer (B2C) website that allows shoppers to pre-order online and collect in-store. In order to make the retail process swift and versatile, store staff are equipped with tablets.
Effective traffic management
One of the main reasons behind the traffic congestion in airports worldwide is the unforeseen vehicle parking in the arrival zone by visitors. The Warsaw Chopin Airport has addressed this issue with the introduction of the Kiss & Fly zone. From early 2017, drivers will require to get a ticket to open the gates to enter the first and second lanes closest to the terminal. The ticket will also open the gates while exiting the zone. For the first seven minutes the access is free; from 7 to 15 minutes the driver will be charged 30 zlotys (equivalent to 6.87 euros); and for more than 15 minutes, the driver will be charged at 1 zloty per minute. If the vehicle enters the zone for the second time within half an hour after departure, the charge will consider the time period starting from the time of collection of the ticket. In order to enhance the security measure, vehicles are not allowed to be left unattended and to ensure smooth traffic flow, the authorities have restricted drivers from accompanying the passenger to the departure lounge. Drivers who wish to accompany passengers should do so after parking the vehicle in the designated area. In the airport’s Kiss & Fly zone, 89 parking spaces have been assigned, which includes five places for individuals with physical disabilities.
Contribution of the flagship carrier
LOT Polish Airlines is the state-owned national carrier of Poland, and one of the leading carriers in Central and Eastern Europe. LOT already operates around 200 flights every day to 60 destinations worldwide and the company projects an upper hand over competitors with its 87 years of operational experience, young aircraft fleet (around 16 Boeing 787 Dreamliner and others), and low prices when compared with other European carriers. This gives LOT significant competitive edge in the growing air services industry in Poland and the rest of Central and Eastern Europe, which projects a higher growth rate than the rest of Europe. Though the company has lost some market share in the region due to competition from low-cost carriers (LCCs) such as the Hungarian Wizz Air and the Irish Ryanair, LOT is considering deeper penetration of the market (by up to 25%) with its intercontinental flights to New York, Chicago, Toronto, Tokyo, Beijing, and Seoul. This will allow LOT to effectively cater to the growing number of air passengers in Poland, which is expected to grow at about 5% per year from 2016. LOT has also announced plans to extend its services to Los Angeles and Newark (US) as well as New Delhi (India) in the near future. A direct connection to the Indian subcontinent will be a significant advantage to the growing Indian population in Poland, which currently needs to pay significant amounts to premium Middle-Eastern carriers to avail the fastest route or take time-consuming routes through Austria and Germany involving multiple halts. Also, the geographical position of Poland is highly appropriate for connections to Middle-Eastern countries such as Kazakhstan and Iran. LOT has revealed its plans to connect these locations along with higher benefits to passengers as compared to competitors (particularly LCCs), such as complementary on-board meals and checked-in baggage.
LOT Polish Airlines has been collaborating with Estonia-based Nordica (state-owned Nordic Aviation Group) to establish a joint commercial platform and ticket sales system, along with airline code shares. LOT is already an active member in Star Alliance and collaborates closely with Germany-based Lufthansa. The partnership with Nordica will enable LOT to connect locations in Scandinavia as well as the Baltic states more effectively. Nordica will be operating regular flights between Warsaw and Stockholm for a start and LOT will acquire a 49% share hold in Regional Jet, a Nordica subsidiary. This collaboration indicates the growing export of flight services within Europe and can be expected to generate more jobs across Eastern Europe and the Nordic region in the near future. Nordica has already declared the addition of three new aircraft to its fleet and announced the generation of at least 70 jobs as a result of the collaboration.
LOT operates in Warsaw through the Warsaw Chopin Airport, which offers convenient connections to any point in the city. On the other hand, the Modlin Airport, which focuses primarily on LCCs, specifically Ryanair, faces challenges with respect to connections to the main city. The Modlin Airport coaches are often cost-intensive if not pre-booked and train services from the airport to the city are neither frequent nor direct. Therefore, if LOT can balance out the cost factor for the tickets (in comparison with LCCs), more passengers will prefer flying with LOT in order to avail the convenience offered by the Warsaw Chopin Airport.
Conclusion
Poland is ideally positioned to contribute to a stable European economy and is undergoing significant reforms to increase political and industrial collaborations with the more economically stable Western Europe. The nation has a strong home-grown heavy industry sector that once supplied to Soviet countries. Its industrial sector continues to be strong and is of particular significance in the region because of the cost advantages it gives scope for. However, there are underlying challenges such as the cease of production of a few jetliners. The new Lufthansa-General Electric facility at Środa Śląska will be dedicated to the servicing of such jets and is equipped to test and repair engines for the Boeing 747-8 jumbo jets flying for Lufthansa and several other carriers. The Central and the Eastern European stakeholders are directing efforts toward the expansion of their product lines and service offerings, and initiating close partnerships between each other. This denotes a strategic move to take up the responsibility of the economic growth of the country instead of depending on Western European countries that have better financial prowess.
