CEO report to the board

Helping the industry’s come-back

In my first full year as CEO of SITA, I am excited to see the air transport industry swiftly returning to growth faster than we initially anticipated. SITA has always helped to drive the industry’s growth, and will continue to do so, with IT solutions that enable smoother journeys and efficient, agile operations. We are growing ourselves, too, as an organization of experts dedicated to and passionate about aviation, as well as the wider travel and transportation industry.

The air traffic numbers are encouraging for both industry and travelers alike. Globally, passenger traffic for 2022 reached 68.5% of pre-pandemic levels, according to IATA. International traffic rose more than 150% above 2021 levels, climbing to 62% of 2019 levels. Domestic traffic in 2022 reached nearly 80% of 2019’s traffic, a rise of almost 11% versus prior year. ACI World estimates have been just as encouraging, having predicted the uptick in the second half of 2022. ICAO forecasts, in the meantime, show air passenger demand in 2023 recovering rapidly to pre-pandemic levels on most routes by the first quarter, with growth of around 3% on 2019 figures achieved by year end.

This is a crucial trend, with all signs pointing to more growth. While it clearly placed airlines, airports, ground handlers and other industry players on the back foot, it has also concentrated minds on the opportunities presented by aviation’s accelerated digital transformation. SITA’s role as a community provider is to be the industry’s first port of call to enable this transformation, as advisors, and as a ‘digital house’ of expertise to help build the travel industry’s digital future.

The return to growth

As we help our customers to grow and evolve with the return of travel demand, I am pleased to report that on the back of a positive year for SITA, we resumed our own growth trajectory in 2022. SITA’s total revenue reached US$1,394 million, up by 3.8% on the previous year and representing growth of 6.8% for our ongoing business activities*. At the same time, we maintained a robust EBITDA performance, at around US$180 million, some 13% of revenue**. 

Leading our industry’s profound digital transformation

The air transport industry is experiencing a profound transformation, at the heart of which is the accelerated digitalization of travel and operational processes. SITA is a leading player, with a vision to reinvent travel and transport. Our latest Air Transport IT Insights survey underlines the trends as industry CIOs strive to ensure operations are as agile and resilient as they are efficient, with IT solutions seen as central to their success. This has spurred airlines and airports to deploy IT to fortify their operations against disruption while automating the passenger experience.

We see a huge emphasis on agility, adaptability to disruption, and prompt communication with customers and stakeholders. More than 9 out of 10 airlines over the next three years will invest in IT service management enhancement and disruption warning systems, as well as business intelligence initiatives for aircraft turnaround management, passenger processing, and baggage processing. Business intelligence is at the forefront of airport IT investment priorities, as well, with 93% planning initiatives for asset management and flight operations by 2025.

SITA’s own experiences with customers across the travel industry show us that needs have evolved in line with the market conditions and trends they now face. There is clearly pent-up demand; but there are higher costs as well, high energy prices, higher consumer prices, and an uncertain macroeconomic outlook. As a result, we see a drive for greater return on investment, for improved operational excellence, and for flexibility in adapting quickly to changing demand with minimum cost and effort. At the same time, governments around the world are continuing to invest in travel infrastructure.

Sustainability is another major focus, with the industry committing to net-zero targets. From our conversations with customers everywhere, we know that this will impact how the whole travel industry operates in the future, and the IT that it chooses to help reduce the carbon impact of its operations and meet carbon neutral goals. Airlines, for instance, are continuing to deploy technologies to become more sustainable, such as flight path optimization to reduce fuel burn: 55% of airlines have implemented these technologies. A further 29% plan to do so by 2025, according to our latest Air Transport IT Insights research.

As a critical player in the industry’s profound transformation, SITA has been digitalizing travel ever since we were founded! Our solutions automate key processes, at the airport, at the border and around the aircraft. They result in greater efficiencies and savings in costs and time, happier passengers, the ability to rapidly reallocate staff and resources, optimized flights, and streamlined turnarounds. They offer agility to scale operations up and down quickly. And they deliver operational efficiencies by using data for insights for informed decision-making to help achieve economic and environmental sustainability.

We now provide our digital solutions and expertise to the wider travel industry – including cruise, rail and major sporting and cultural events – to meet the same requirements for safe and seamless automated journeys, smarter more efficient borders, better on-time performance, disruption management, and greater capacity. As travel becomes more connected and intermodal, digital systems to simplify the passenger journey across land, sea and air, are vital. We are excited to be using our experience in bringing together industry players to adopt the necessary integrated digital ways of working across the world’s travel industry.

Putting the needs of our customers first

Our mission is to empower our customers to deliver the ultimate travel and transport experience, with the most advanced, efficient, and sustainable technologies.

Our 4-Year Plan, which continues to drive our growth, puts at its center the new and evolving requirements of our customers and the air transport community. Developed with the collaboration of SITA’s Board and Council, it encompasses an insightful analysis of customer needs across all of SITA’s geographies around the world, interlocked with portfolio solutions and developments throughout our business units. In doing this, we are able to pinpoint industry-wide customer requirements for solutions to deliver more sustainability, automation and self-service, biometric and mobile-enabled travel, digital aircraft and borders, and more.

To continuously satisfy evolving requirements, we are speeding up portfolio developments, introducing leading technologies for Cloud, Software as a Service (SaaS), for instance. We are committed to delivering products that provide an exceptional customer experience, backed by a relentless focus on quality of service and our 24x7 global customer operations. I am convinced we will succeed in driving the success of our customers while meeting our own growth ambitions. Dedicated to the industry for over seven decades, we are unique in being made up of teams of experts in every corner of the globe with in-depth aviation and IT know-how, and the skills to explore opportunities and overcome the challenges that the industry faces.

Aircraft
Let me highlight each of our businesses in turn. One exciting opportunity lies in the area of sustainability for aircraft and flight operations. Our Aircraft business leads the way in providing efficient and sustainable digital operations for over 400 airlines, Air Navigation Service Providers (ANSPs) and aircraft lifecycle partners. SITA’s aircraft solutions help to achieve flight efficiency, reduce environmental footprint, make better real-time decisions, streamline operations, and reduce operational costs.

As the Chair Statement says, we are seeing ever-rising interest in SITA’s OptiClimb, our digital inflight predictive analytics tool for fuel optimization. This is deployed on Singapore Airlines’ Airbus A350 fleet since August 2022, for instance, helping it to cut aircraft carbon emissions by thousands of tons annually, as part of the airline’s goal to achieve net-zero carbon emissions by 2050. The growth of our applications, data and platforms capabilities will enable us to meet the high demand among our customers for accessible sustainability and operational efficiency solutions for aircraft communications and operations.

Airports
Our Airports business is another contributor to industry sustainability goals. SITA Airport Management, for example, helps airlines, airports and ground handlers to run operations collaboratively and efficiently, from landing to turnaround and take-off. Joining us in the year were Athens, Luton and Bahrain airports, who are now among 190 or so users able to get real-time data insights to anticipate events, while planning and controlling operations, and assigning fixed and mobile resources effectively.

Critically, we are now meeting our airport customers’ demands for solutions to develop infrastructure to build capacity, expand the digital boundaries of the airport, and push the processing of passengers and bags outside the airport. In addition to efficient and sustainable intelligent airport operations, our solutions offer a new, streamlined digital passenger experience.

A perfect example here is SITA Smart Path, our industry-leading biometrics, self-service and mobile-enabled platform, in use at Beijing Capital, Hamad, Istanbul, Miami and many other airports throughout the world. We worked closely throughout 2022 on a seminal project to deliver Smart Path across all terminals and airlines at Frankfurt Airport, including integration with Star Alliance, which wants half its airline members to use biometrics by 2025. SITA Smart Path also has a significant role to play in helping US airports to meet the US Customs & Border Protection objective of screening 97% of exiting passengers at all commercial airports.

Complementing this is our SITA Flex platform. It offers a mobile, self-service digital travel experience both on and off the airport, for touchless bag tagging, digital boarding pass stamps at security screening, and more. Now available ‘as a service’, SITA Flex allows our customers to reimagine the journey, while enabling them to scale operations up and down rapidly to meet fluctuating passenger demand. As the industry embraces SITA Flex, we saw a number of new contracts signed in the year to help airports cope with the surge in travel, among them Brazil’s São Paulo-Guarulhos and RIOgaleão, and Australia’s Newcastle airport.

Borders
We lead the way in digital transformation at the border too. Borders must be agile, dynamic, and digitally-enabled, allowing for decisions to be made well in advance of the border, for both air and intermodal travel. Our mission is ‘to deliver the digital and integrated border of the future, protecting from security and health threats, improving national prosperity and providing safe and seamless travel’.

As the leading global provider of Advance Passenger Processing (APP), we enable governments around the world to approve a traveler’s border security status and boarding in real-time, in advance of travel, to minimize hassle and queuing.

To spur growth as the travel industry began to emerge from the pandemic, we launched SITA Travel Authorization and eVisa. Integrating with our APP solution, they offer the ability to join up the eVisa process with border control, to enable a real-time visa check at the point of check-in. This delivers the digital transformation from traditional paper-based processes to a more simple, secure, and efficient digital process.

On top of that we introduced SITA Health Protect – a package of SITA’s Digital Travel Declaration (DTD) and APP – to automate and digitally manage health credentials. DTD was adopted in Jamaica during the year to allow travelers to submit all travel and health documentation needed for entry into the country through a single platform. Post-pandemic, the use of SITA Health Protect is good due diligence in readiness for any other emerging global or regional/local health epidemics and crises.

Throughout the year, we continued to pioneer biometric passenger processing and border solutions, including trials and Proofs-of-Concept (PoCs), to evolve to a universal digital identity for a future of digital travel, where travelers will have no need to show their physical travel documents. SITA stands together with industry bodies such as IATA and Airports Council International (ACI), advocating for the adoption of global standards and initiatives such as the Digital Travel Credential (DTC), led by ICAO.

We are seeing inspiring results. In an ongoing innovative pilot with the Government of Aruba and Indicio.tech, SITA enabled the pre-clearance of travelers using a mobile app and a secure SITA Trust Network. With a privacy-preserving digital identity on their mobile devices, travelers could enjoy fast-tracking entry, and access to many of the island’s participating venues, such as restaurants, shops and clubs. The collaboration continues with some exciting developments and innovations, including use of ICAO’s DTC, that I look forward to reporting in due course.

Equally impressive was SITA’s involvement in the 2022 World Cup in Qatar, as referred to in the Chair’s statement. Let me add to that: the use of SITA’s APP, passenger and airport operations technologies was bolstered by our expertise in integrating digital identity and authorization into the Hayya fan digital id card, for local and international ticket holders. This critical implementation contributed to a smooth and secure flow of fans throughout the country, and is further testament to SITA’s ability to keep in motion the wheels of major events.

Communications & Data Exchange
Turning to our Communications & Data Exchange business, given the criticality of digitalization and the increasing value of data, it is vital that we help our customers as, in the wake of Covid-19, they move faster than ever to transform their IT environments.

As applications for operational efficiency and passenger experience move to the cloud, we know our customers want to maximize their cloud investments. Not only that, their workforces are becoming more distributed between remote and on-site, bringing additional security challenges. For these reasons, SITA is easing their path to software-defined wide area networking (SD-WAN), multi-cloud, and Secure Access Service Edge (SASE).

In 2022, we partnered with Versa Networks to introduce the only software-defined network service designed specifically for the air transport industry. Called SITA Connect Go, it helps to address the limitations of older global networks and the challenges posed by new industry trends, entailing strong future-proof design with cybersecurity embedded and access to air transport industry applications on hybrid or multi-clouds. Our new generation solution is built to offer the agility, flexibility, security and cloud integrations needed to operate smoothly on and off-airport locations, and to address user needs wherever they are located.

I am delighted to see the introduction of flexible communications options on and off the airport to support industry growth. For nearly 75 years, SITA has been a communications leader and partner for the air transport industry, and this move takes us into a new era of communications for our industry.

CHAMP Cargosystems
The last area of the business I will report on here is CHAMP Cargosystems. Becoming a fully-owned SITA subsidiary at the end of 2021, CHAMP leads the world in digitalizing and advancing the air cargo industry, with solutions to optimize efficiencies in the global air cargo supply chain. Its impressive customer tally ranges from Air France/KLM, American Airlines and JAL Cargo, to Lufthansa Cargo, Saudia Cargo and Vietnam Airlines Cargo.

As the market for air cargo grows, we are committed to significant investment during the year to enable CHAMP to leverage new technologies. CHAMP leads the market, as the cargo management systems provider with the most open platform on the market, with an advanced set of Application Programming Interfaces (APIs) to interconnect with many other systems. In another key development, CHAMP is now pioneering an innovation program with customers and partners to co-develop capabilities in artificial intelligence to improve cargo processes and predictability.

Driving collaborative innovation and industry partnerships

SITA is renowned for its collaborative approach to innovation. We partner and co-innovate with our airline, airport, and border customers, as well as proven innovative companies, early-stage ventures, universities, and other science, academic and management institutions. Our rationale is simple: to test innovations with customers directly through Proofs-of-Concepts and trials, and to work with partners to complement our strengths, skills and technologies. By doing this, we encourage growth, while exploring real needs and use cases, and bringing ideas to fruition as quickly as possible.

Our ongoing innovation projects include Artificial Intelligence (AI) and machine learning use cases for on-time-performance to predict and avoid delays, and to manage disruption; research into reducing baggage mishandling using Computer Vision technology; reliable, secure communication in the area of Urban Air Mobility; a commitment to developing a permanent digital identity for travel as a Premium Donor of the Sovrin Foundation; and much more. In 2022, we spent over US$ 78 million on research and development cost, while reaching a total of 351 patents, with nearly 250 more patent applications in the pipeline.

We are now taking an even bolder approach to innovation, encouraging an innovation mindset throughout our entire organization and boosting the mechanisms by which we will meet our innovation ambitions. On top of that, 2022 saw the introduction of our major SITA Launchpad initiative. This is driving more SITA partnerships with customers and industry players in the innovation ecosystem in four focus areas where we see strong market demand for new and efficient solutions: digital identities, advanced analytics and data management, security and safety at airports, and sustainable alternative energy.

Our ‘Meet the megatrends’ report issued in 2022 reflects some of the areas where our innovation initiatives are focused, drawing on insights from our work across the transport industry, combined with the latest cutting-edge Proofs-of-Concept from our SITA Lab innovation team to identify the most powerful shifts that will drive the transport industry’s evolution by 2033.

Let me just highlight four very different current partnerships for SITA. First, as I said before, with Versa Networks we launched our SD-WAN service tailor-made for the air transport industry in 2022. Versa represent a new era of SDN vendors, with multi-tenant capability (a model SITA uses at airports), and with software for that environment, giving SITA a future-proofing strategy. Versa has emerged rapidly as a market leader in its field, with Gartner rating the company among the top three providers globally.

Second is our industry-leading biometrics global partnership with NEC, which delivered a number of successes in the year, among them the Frankfurt Airport and Star Alliance project I referred to. The partnership’s focus is on next-generation biometric, mobile-enabled and touchless ‘walk-through’ passenger processing. Using NEC’s fast, accurate automation, SITA Smart Path can quickly validate a passenger’s digital identity and credentials for paperless check-in, bag drop, security, immigration, and boarding. As the ‘Business Review’ in this report shows, SITA Smart Path currently accounts for over 4,000 biometric touchpoints around the world.

Third, in September 2022 we announced our partnership with Skyports to explore technology for Advance Air Mobility (AAM) and Urban Air Mobility (UAM), bringing our excellence in biometric technology to shape the passenger journey through Skyports’ vertiports. Our technology is implemented at the Skyports Cergy-Pontoise vertiport testbed in Paris, inaugurated as a showcase towards the end of the year by Groupe ADP, Skyports and Volocopter. It shows the passenger journey through the terminal, including security and check-in processes, biometric technologies, passenger dwell time, and aircraft boarding.

Fourth, we continued to work with Envision Digital during the year, which is the world leader in AI and Internet of Things technologies to help organizations accelerate and scale their journeys to net-zero. The aim is to decarbonize airports, which are among the biggest energy consumers, by offering a carbon reduction solution that connects and facilitates real-time data flows in an airport to monitor its carbon footprint, gain data-driven insights, and manage emissions.

Driving our own transformation – to better serve the industry

As we prepare SITA for the years ahead, we are accelerating our own transformation. Over the years, SITA has successfully and continuously adapted to meet evolving industry and customer needs, exploit emerging technologies, increase efficiencies and spur growth. In 2022, we further ramped up our efforts.

We introduced our RISE acceleration program in May. This comprehensive program, with multiple workstreams across the organization – each with an Executive Sponsor and Directly Responsible Individual – will accelerate SITA’s organic and inorganic growth, leading to higher revenues and enhanced EBITDA performance. It is a catalyst for SITA’s transformation, helping us tackle the most critical transformation projects. RISE puts the spotlight on, and additional resources behind, projects that matter most and will make a difference for our customers. It focuses strongly on outcomes. At the end of 2022, we closed the program’s first seven months with an encouraging 80% achievement rate for the initial projects, which included initiatives to grow our business units, introduce community-specific services, build customer and industry partnerships, and enhance innovation.

As a technology leader and industry innovator, we continue to invest significantly in the profound transformation of our Technology Engine. This key RISE project involves a multi-year portfolio evolution towards Cloud, Edge Computing, Software as a Service (SaaS), and Platform Engineering – speeding up our ability to create new products at a lower cost for our customers. Our comprehensive RISE program also looks at increasing cost efficiency in other areas. We are accelerating the plans of our customer service organization, SITA Global Services, to implement service automation and advanced monitoring capabilities. The result will be a step-change in customer experience and operational efficiency.

Our most extensive transformation project, however, involves our people. They are fundamental to everything we do. RISE helps develop and attract talent and expertise, for which we are renowned, and establish a high-performance culture across the organization. The skills of SITA’s people will allow us to transform and achieve our growth ambitions over the next four years.

Thank you

In closing, let me thank SITA’s management and all SITA staff for their drive and commitment in 2022, and for the unique passion, expertise and experience that they have for the air transport industry in every corner of the globe. They are a true differentiator for SITA in our industry, and their hard work has helped to put us on the course to continued growth. Let me also thank the SITA Board and Council for their stewardship and industry insights throughout the year. With their support, I remain optimistic and confident about the future for SITA, with customer and industry needs firmly remaining at the top of our agenda. I look forward to continuing to work together as we transform travel and transport, moving towards a sustainable future, and seizing the many opportunities that lie ahead of us.

I look forward to continuing to work together as we strive towards our vision to reinvent travel and transport, by leveraging our passion for the industry, our forward-looking expertise, and our commitment to positively impact our customers’ business.

*As covered in our consolidated financials, available on request only as a complementary publication to this Activity Report. Excluding the wind down of the SITA Passenger Service System business, finalized in the first half of 2022 (see SITA Activity Report 2021).

**For ongoing SITA business activities, as reported in SITA’s management books.