CHAIR'S STATEMENT

The air transport industry: gaining strength

I am delighted to say that 2022 saw the air transport industry gaining strength and momentum after the disruptions caused by the pandemic. Despite the economic and humanitarian shocks inflicted by the Russia-Ukraine crisis – and the dampening effects of rising energy costs, inflation, interest rates, and high airfares – our industry’s resilience has proved to be remarkable. It became very clear as the year progressed that people all over the world wanted a swift return to the skies, as reflected in the significant rise in passenger demand.

By the end of last year, global air passenger traffic stood at over 75% of 2019 levels, according to IATA, who report that once again “consumers are thoroughly enjoying the freedom to travel” across most regions of the world. IATA cite expected 2022 airline net losses of US$6.9 billion, “significantly better than the losses of US$42.0 billion and US$137.7 billion in 2021 and 2020 respectively,” along with an anticipated net profit of US$4.7 billion in 2023, the first profit since 2019.

Risks still exist, of course, particularly relating to the global economy, fuel prices, and disruptions caused by staff shortages, industrial relations and supply chain issues. On top of that is the prevailing uncertainty caused by the Russia-Ukraine crisis, which has seen SITA, like so many organizations, suspending services in Russia. But judging from all indicators at the time of writing, I am extremely optimistic about the resumption of a healthy, vibrant and profitable global travel industry.

Enabling travel industry growth

Two of the standout trends over the last three years are the accelerated digitalization of travel and operational processes, as well the industry’s journey to carbon net-zero by 2050, which is itself helped by greater efficiencies delivered by the digital shift. SITA’s Board and Management fully recognize the criticality of these trends as a new era of digital travel emerges, and as the industry returns to growth and explores the opportunities ahead.

SITA is enabling this digital transformation for the air transport industry – as well as for the wider travel industry on which SITA is now also focused, including major sporting and religious events, cruise, and rail. The Board worked closely with SITA Management on the strategic planning that shaped SITA’s 4-Year Plan (2023-2026), which sets out an ambitious growth path, with a sharp focus on the needs of SITA customers and the industry at large, in order to succeed in the years ahead.

Organizations across the industry see digital transformation as the way to gain operational efficiencies, enhance the passenger experience, create more opportunities for monetization, and reduce costs, while also addressing capacity constraints as the industry ramps-up. SITA’s business plan centers on the fact that whatever the form of travel, the need for safe and seamless automated journeys is of paramount importance, with smarter more efficient borders, better on-time performance, and greater capacity – all thanks to digital processes. SITA’s latest Air Transport Industry Insights research, conducted in 2022 and released in 2023, reveals that airports and airlines are ramping up their investments in technology to digitalize operations and speed up the passenger journey by offering more self-service options. See the ‘CEO Report’ for more.

The entire travel industry faces similar requirements as growth returns, and there is a clear need to address this together through common and shared approaches. This is a great opportunity for SITA to continue to make digital travel a reality, as the go-to air transport industry IT provider with a portfolio to digitally transform travel, while meeting common needs for improved passenger flow, efficiently managed disruptions, the integration of operational and passenger data, and more.

Community role and responsibilities

SITA’s business plan and strategy will benefit all SITA customers and the travel industry at large, reinforcing the organization’s community role and responsibilities, while meeting industry trends head-on with smart data-driven digital and cloud technologies as the path forward, and as a way to tackle sustainability and intermodality. Let me recount four examples that have caught the eye of SITA Board Directors over the last year or so.

First, digitalization is seen as a key contributor to our community’s sustainability targets. The SITA Board is well aware of the importance of this trend, from the experiences of our own organizations. SITA focuses strongly on collaborating with the industry on sustainable aviation initiatives driven by digitalization. One example is SITA OptiFlight® – developed with customer feedback and using machine learning to reduce fuel consumption and limit aircraft CO₂ emissions at key flight stages. We were encouraged to see many successes in this area in 2022, including the deployment of SITA OptiClimb® by Singapore Airlines, to reduce up to 15,000 tons of aircraft carbon emissions a year. The CEO Report explains more.

Second, we are seeing the rise of SITA Smart Path and SITA Flex, both of which help to reimagine the travel experience, making travel digital, mobile, and biometrically-enabled – whether on or off airport. The Board regards SITA Smart Path as an excellent community asset, offering a whole-journey identity management solution where ‘your face is your boarding pass and passport’. It means that SITA is able to provide low-touch, self-service and agent-assisted passenger processing solutions at airports worldwide. SITA is also moving beyond traditional common-use for our community, with the introduction of SITA Flex. This harnesses Application Programming Interfaces (APIs) and cloud technologies to provide a mobile, self-service, and automated passenger experience, both on and off-site.

Third, we are witnessing the continued strength and importance of SITA’s border management portfolio, for the travel industry’s land and sea borders. The portfolio leads the world, accounting for around 2.2 billion journeys a year, and used by over 70 governments and all G20 nations. Ever since the 2000 Olympic Games in Sydney, it has supported major events, the latest being the 2022 World Cup, where it played a pivotal role in facilitating the flow of thousands of players, team support, officials, VIPs, media and, of course, spectators – both on and off the airport at stadiums and other venues.

And fourth, SITA’s sights remain firmly set on enabling intermodal travel, another major industry trend which aims to deliver an interconnected travel experience on a single ticket – through the integration of travel by road, air, sea and rail. As part of its community role, SITA is experienced in bringing together multiple stakeholders to adopt integrated digital ways of working. SITA’s approach to delivering intermodal travel is to support unifying digital systems to simplify the journey and operations. One such example is French rail operator SNCF Voyageurs, which in 2022 became one of SITA’s first intermodal customers, enabled by SITA’s APIs and other capabilities for its ‘Train + Air’ service.

Collaborative innovation

The Board firmly believes that by meeting current and future community requirements, SITA continuously reinforces its relevance to the air transport industry, providing its members, customers and the community with the technology solutions to advance travel and prepare for the future.

Of vital importance to SITA’s community role and responsibility is keeping a constant eye on emerging trends and technologies that will benefit the air transport community. That is why, in 2022, the Board was keen to approve further funds for SITA to pursue collaborative innovation initiatives, which include bolder approaches to identifying and pursuing opportunities, a strong partnership program called SITA Launchpad, and a program among employees to accelerate the capture of innovative ideas and their exploration.

SITA has always innovated collaboratively with airline, airport and border customers – as well as with other industry organizations – to explore opportunities to reduce costs, gain operational efficiencies, and enhance the passenger experience. So the Board welcomes this bold approach in areas such as digital identities, advanced analytics and data management, security and safety at airports, and sustainable alternative energy.

The SITA Board’s focus through the year

It was a busy year for the SITA Board. In February 2022, we felt it necessary to convene a Special General Assembly to update SITA shareholders on the cyber security incident which took place in early 2021 (as outlined in my Chair Statement in the 2021 SITA Activity Report). One of the outcomes of work done by the Board and Management in the aftermath of the incident was to enhance SITA’s Enterprise Security Improvement Plan in line with recommendations coming from external assessments by industry experts.

The Cyber Security Committee, formed by the SITA Board to oversee the incident investigation – and consisting of IT experts from the SITA Board – is now a Standing Committee of the Board. Now called the ‘Cyber and Privacy Committee’, its mandate is to continue to monitor all enhancements of the Enterprise Security Improvement Plan and Privacy Program.

Also in February, the Board announced the appointment of David Lavorel as SITA’s new CEO. Making the final recommendation was the Board’s CEO Selection Committee, which reports to the SITA Board and includes the SITA Council President and a subset of Board Directors. We are delighted David is at the helm and we have complete confidence in his leadership and vision, as SITA maintains its focus on leading a strategic change for the air transport industry through digital and smart solutions.

The Board meeting in March, at which we approved the SITA NV Group Financial Statements, was the first formal meeting for David as our new CEO. It was important for us to gain a clear understanding of SITA’s plans for future growth, including investments in new growth areas, along with the focus on accelerated product development and innovation. The Board considered the direction of SITA’s Communications & Data Exchange business and its proposal to deliver an SD-WAN solution tailor-made for the air transport industry, which was announced later in the year in partnership with Versa Networks, a new generation of SDN provider. At the same time, the Board considered the considerable growth opportunities for SITA’s now fully-owned cargo software subsidiary CHAMP Cargosystems. We regard CHAMP as a strong player in the market with significant potential and a promising future. See the ‘Business Review' for more. 

In the second quarter of the year, we saw changes to the SITA Board in line with the evolution of SITA’s structure and governance, which was approved by Shareholders at the Extended General Assembly in October 2021. In the first use of our new process for nominating directors under SITA’s new governance, we saw seven new Directors join the Board in 2022. I am delighted that our new Directors bring fresh new skills and insights to help concentrate minds on SITA’s growth trajectory.

The changes in the SITA Board’s composition continue to ensure that SITA represents industry concerns and developments, while also remaining representative of the extraordinary geographic diversity of our industry and SITA’s Membership base. (See the SITA Board for the Directors who joined and left the Board during the year.) At the Board strategy session held in September, we worked closely with SITA Management to provide input and feedback on SITA’s 4-Year Plan, which sets out SITA’s strategy and objectives to be a US$2 billion company by 2026, while positioning SITA as the leading trusted digital advisor for our industry.

SITA’s evolved governance also conferred on the SITA Council an advisory role through which it contributes and advises on SITA’s portfolio of products and solutions for the benefit of the community. The Council continues to be a Member-representative body addressing the interests of SITA’s Member community. The Board is keen to maintain a strong relationship with the SITA Council, and I am invited, as Board Chair, by the Council President to attend the Council’s bi-annual meetings. This provides an opportunity to share updates from the Board with the Council Representatives.

Throughout the year, the Board also continued to monitor the progress of the implementation of SimplySITA, effective as of January 2022. As a reminder, SimplySITA is a crucial strategic evolution for SITA, as part of its Long-Term Business Strategy to help build a sustainable SITA that remains relevant to the future of aviation. The program has involved migrating SITA entities in around 200 countries into a single business structure, to simplify SITA’s legal structure and provide greater efficiencies and flexibility for the organization. The Board has been pleased with the progress of this demanding global program.

Likewise, we were pleased to receive business updates throughout 2022 on the introduction and progress of SITA’s ‘all-in’ transformation program called RISE. The program aims to accelerate transformational change and significantly enhance performance for SITA, underpinning the organization’s objectives to grow organically and inorganically. It involves driving a shift in the mindset and culture of SITA people all around the world, supported by a partnership with IMD. SITA’s people are critical to the growth and success of SITA, and RISE gives everyone a chance to shape the future of the company. That is why it is important to see a cornerstone of the SITA People Team’s strategy being to attract, retain, and build top and diverse talents, as SITA shifts to a high-performance culture.

Thank you

Before closing, let me express my gratitude to SITA’s Board Directors, Council Representatives and SITA Management for their expertise, experience, commitment and guidance in 2022. The year brought us greater optimism about the future of travel, and shone a clear light on SITA’s responsibility to continue to digitalize the industry and to drive for growth. The Board has full confidence in SITA’s performance, focus and plans for the future. We invite all SITA Members to leverage SITA, the asset you own, as you plan and execute your continued digital transformations.

Let me also thank SITA’s teams right across the organization for their dedication, and their efforts to evolve an excellent portfolio of solutions and services. We fully recognize their work in helping our industry to recover and embark on a more operationally efficient industry of the future, with the seamless and digital passenger journey at its heart. I am sure we can rely on their commitment and drive to steer SITA through another successful year as a growing organization that is simpler, stronger, and sustainable.

BOARD CHANGES IN 2022

I would like to warmly welcome those Directors who joined the SITA Board in 2022, as well as thank all those Directors who left the Board for their service and contribution.

SITA Board composition as of 31 December 2022.