INTEGRATED REPORT 2019

Improving the lives of our people

As part of the broader retention strategy, our aim is to improve the lives of our people through various interventions. This is to ensure a holistic employee experience beyond the workplace, into the homes and lives of our employees.

Housing scheme

The Group housing assistance scheme was implemented in July 2016 and its intent is to increase home ownership, decrease indebtedness and ensure dignified living conditions for our employees. Since its implementation, we have been able to achieve the following:

  • Enabled 280 employees to buy their first homes and access the housing subsidy.
  • Assisted 226 employees with debt consolidation and management, putting them in a better position to buy property.
  • Granted 228 of employees the rental subsidy benefit to enable them to have improved living conditions.

We have contributed R108.7 million through this scheme to date, and currently assist 734 employees through this scheme.

Transport scheme

We have launched a transport scheme which aims to provide safe, reliable and affordable transport to our employees during periods when there is limited access to public transport. As reported in the previous Integrated Annual Report, the procurement process was completed in 2017. We appointed 22 transport service providers and integrated them into our Enterprise Supplier Development (ESD) programme, which will empower them to sustain and grow their transport business beyond the life cycle of the contract. Through the ESD programme, Airports Company South Africa entered into a memorandum of agreement with Mercedes Benz Financial Services (Mercedes). The Group and Mercedes each contributed 5% and 15% respectively of their ESD budgets towards the capital outlay of vehicles purchased by the service providers.

We have an average of 1 348 employees who have shown interest in using the staff transport programme. Staff transport was launched in a phased approach from December 2018 at some of our business operations. Since the launch, we have had an uptake of 766 employees, which equates to a 57% utilisation rate.

Supporting learning for employees and their children

We have supported employees who were highly impacted by the operating model changes by ensuring that they have focused individual development plans to ensure a smooth transition. Airports Company South Africa spent R2.5 million on international aviation programmes focused on deepening functional capability. We strengthened our commitment to elevating education levels within the organisation by providing bursaries to 305 of our employees.

We currently have 379 active employee bursaries worth R7.7 million, and in FY2018/19 we initiated 20 bursaries for children of employees, at a value of R1 million, which brings the total number of active bursaries for employees’ children to 68 (R4.5 million).

The Group offers skills development programmes that are focused on building capability required to meet our strategic objectives as well as contribute positively towards the availability of critical skills in South Africa. We invested R48 million (FY2017/18: R40 million) in employee skills development programmes across the board.

Trade union relations

The labour relations environment at Airports Company South Africa continues to be fluid in that there are two trade unions with certain (Section 12 and 13 as per Labour Relations Act) organisational rights:

  • National Health, Education and Allied Workers Union, with 28% representation across the workplace.
  • National Transport Movement, with 10% representation. This union has recently been notified of our intention to terminate its organisational rights.

The National Union of Metalworkers of South Africa has grown its presence in the Group from 9% to 19% largely at the expense of the National Transport Movement. We continue to monitor shifts in trade union representation closely and engage with the various stakeholders to ensure the maintenance of a stable employee relations environment.

  Material matter: Technology and digitisation

Description

Rapid advances in technology represent a competitive threat and opportunity. Technology heightens the threat of business disruption and cyber-crime. However, it enables our airports to improve operational efficiency and management of safety and security. Furthermore, it allows us to respond to increasing demand by our customers and commercial partners for automated services and digital enablement, including data analysis.

Strategic response

The Group is implementing a comprehensive digital strategy to ensure that we adopt and leverage appropriate digital technology to enhance operational efficiency and customer experience, while protecting our information and systems. We have strengthened IT skills and governance to ensure IT enables the Group’s strategic objectives. The results of an IT maturity assessment conducted in 2017 reflected a significant improvement from 1/5 in 2015 to 3.5/5.

Impact of the acquisition and retention of skills material matter on our business

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Strategic pillar

Run airports

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Our response to risks and opportunities in FY2018/19

  • Digital strategy implemented to improve operational efficiency and customer service.
  • External expertise appointed.

Impact of our response on stakeholders in FY2018/19 and beyond

  • Use of innovative technology enables us to respond to customer needs for efficiency and safety and defend our competitive position.

Strategic pillar

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Our desired outcome

  • Achieve return on equity target.
  • Improved Reputation Index.

Trade-offs to achieve our desired outcome

  • Investment in digital strategy enabled improvement in IT maturity assessment.

IT and digitisation

During the year in review, we introduced a new Board committee, the Information and Communication Technology Governance Committee (ICTGC), to strengthen governance, procurement and management of IT infrastructure, networks and systems. The formation of the ICTGC has allowed our IT needs and concerns to receive appropriate Board consideration.

There were no significant changes to IT policy during FY2018/19, although our information management and classification policy is in review.

A total of R287 million was spent on data centre and network upgrades, a significant investment for the Group. Our IT architecture council ensures that all technology acquisitions align with strategic imperatives, avoid duplication and are mapped out in terms of functionality required by the Group in terms of the corporate plan.

The Group is currently rated at level 2 in terms of IT security maturity, and is aiming to achieve level 3 in FY2019/20. Airports Company South Africa follows COBIT 5 standards in managing its IT infrastructure.

Performance

We have embarked on a five-year IT upgrade programme. The Board approved R1.2 billion in capital expenditure as we set about laying down the IT infrastructure necessary to transform into a truly digital airports business. In all, R301 million will be spent on IT network optimisation, R142 million will go towards IT backup and storage solutions and R240 million will be spent on improving and upgrading our IT physical infrastructure. This programme will lay the necessary groundwork for catering for future growth and the replacement of legacy equipment which no longer meets infrastructure standards.

Passenger processing

Cape Town International Airport is the location of our trial implementation of passenger self-service, with electronic immigration facilities to be installed in FY2019/20.

These services will radically reduce delays and time taken for passengers to pass through check-in and immigration, allowing for more dwell time beyond security checks. Faster passenger processing will allow the retail component of the airport to generate more non-aeronautical revenue, while also improving the passenger experience and associated airport ratings.

Cyber-security

Paperless travel will require Airports Company South Africa to tightly integrate its passenger processing systems with databases residing with the Department of Home Affairs and the Department of Transport, as well as with airlines, to share information which will allow us to seamlessly verify the identity of the passenger and motor vehicles moving within airport precincts.

Responding to passenger demands, we have also rolled out free, unlimited wi-fi access throughout our airports, which has improved our airport passenger experience ratings. However, this brings with it greater security risks which must be constantly managed.

In January 2019, we suffered a security incident where 50 email accounts were compromised. Remedial action taken was to bring in external security specialists to contain the threat and increase proactive response capability, which was successfully implemented by February 2019.

Business intelligence and analytics

While the Group stores various types of data in the course of operations and passenger processing, we believe our competitive advantage in creating value will come from “owning the passenger”, which could double IT’s direct contribution to revenue (R17 million in FY2018/19) within two years. In future, Airports Company South Africa will be able to engage with passengers before and after they enter the airport, while on-selling products and services according to individual behaviour patterns and preferences.

To this end, we are exploring options to install a retail transaction management system which will provide real-time information on point-of-sale data from airport tenants in order to appropriately determine rental charges and stem revenue leakages, as well as options to take ownership of all infrastructure at the airport, including mobile network antennae.

We are engaging with ICASA to create a common network that can be leveraged to increase airport revenue through a fee-based rental system for mobile network operators. A challenge we face in adapting to this new strategy, is attracting and retaining data science talent. We are actively engaging with universities to try move more young people into these roles.

Social media and mobile technology

Airports Company South Africa is working on a mobile application (app) which will allow customers and passengers to interact with our airports remotely. Passengers have indicated that they want seamless integration of the social and business spaces. By the end of the 2020 calendar year, we intend to launch an app to drive the passenger self-service experience.

Staff enablement

IT systems and infrastructure have played a significant role in improving our employee satisfaction ratings. We have embraced cloud computing, moving HR and end user device management functions into the cloud to provide for remote employee productivity and efficiency. Accessibility to information from remote locations has improved.

Recognising that not every employee has access to a computer terminal, electronic kiosks have been installed across all airports to facilitate employee HR self-service such as viewing and printing payslips, and viewing leave balances and applying for leave.

Transformation

We have sourced 23 service providers to share work packages with major contractors. Airports Company South Africa’s supplier development programme is based on a 60:40 split, ensuring that 40% of all contracted work must be fulfilled by small and medium black-owned service providers.

Engagement, workshops and advocacy with large contractors has enabled the Group to fulfil its transformation mandate in the IT space in a mutually beneficial arrangement.

Outlook

Our main objective remains to implement our strategy, and addressing delays in the rollout of services. Two data centres were installed at O.R. Tambo International Airport in the 2019 calendar year, as well as a data recovery centre at Cape Town International Airport. We have ensured that key tier 1 systems have appropriate disaster recovery capabilities and high availability. The remaining 25% of our disaster recovery systems will be implemented in the 2020 calendar year.

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