The line-up of sessions and speakers on Day Two of APEX Asia demonstrated that the recipe for success in this region calls for commitment to people and culture, loads of patience, a heap of persistence, and often a local partnership or two… Not to mention, a healthy dash of broadband and the promise of ROI.
PAL’s Journey Towards Becoming a Five-Star Airline
Kicking off day two of APEX Asia with a resounding Mabuhay! (meaning welcome, hello, long live and cheers in Filipino) was Philippine Airlines president and COO, Jaime Bautista.
As the airline celebrates 78 years in private operations, Bautista took delegates through its journey to becoming a four-star airline (Skytrax) and its goal to become a 5-star airline by 2020, after fighting back from financial ruin in the late 1990s.
No part of the business has been neglected as progress continues toward this goal, and a service culture of Buong-Pusong Alaga (Whole-hearted Service in English) is at the nucleus of every new measure. People come first for this airline and it’s paying off.
“We invest in our people and nothing speaks for the world-famous warmth and hospitality that comes from the hearts of Filipinos more than our word-class cabin crew,” said Bautista. “We will not rest on our laurels or be complacent. We still have our eyes on our 2020 mission.”
Advertising Is the Crux of IFC Revenue, Says AirAsia Group’s Rokki
“Unlike most of the industry, we believe the main revenue driver for connectivity is going to be advertising,” says Sargunan Seenivasan, AirAsia Group’s Rokki chief commercial officer. The airline offers free Wi-Fi – even though its LCC roots might lead passengers to assume otherwise. “It’s free because the most important thing to us is to increase the number of eyeballs to our portal.”
The airline’s e-commerce platform, launched earlier this year, is indeed bearing fruit via a content- and data-driven approach featuring visuals, reviews and more. “It’s like having Amazon in the airplane. We do away with the headache of cash management, and with the right price and quality at the right time, there is huge demand,” Seenivasan said. The products with the highest demand? Local specialty goods, like traditional Malay desserts.
Seenivasan was followed by Henri Ploom, CEO and co-founder of RebelRoam, whose Wi-Fi optimization solution yielded 25 percent cost savings for the airline. In his talk, Ploom thanked APEX for helping RebelRoam break into the aerospace vertical, after having worked in rail and maritime sectors. “We joined APEX one year ago, and this is the second time we get to speak on stage. We are grateful to APEX for helping us connect with airlines like AirAsia,” he said.
What Should Airlines Do With Big Data?
“It’s not just about big data, but what you do with it,” began Jon Norris, VP Marketing, FlightPath3D, referring to how airlines can harness passenger dwell time and context in flight. Citing figures from CarTrawler that project ancillary revenue to reach $67 billion in the next 10 years, he pointed to the business value of the the moving map to offer contextual recommendations for ancillaries, such as ground transportation and tourist activities, powered by socially ranked IFE. “Ranking what people with similar interests watch can make the recommendations a lot more relevant,” Norris explained.
Air China, China Eastern Airlines, Juneyao Airlines and Xiamen Airlines are among the China-based airlines that already use the company’s moving map. Learn more about FlightPath3D’s significant customer increase in mainland China here.
The Convergence of Content and E-Commerce
Outlining revenue generation opportunities from both embedded and wireless IFE systems, as well as through pre- and post-flight journey stages was Victor Brault, Global Eagle’s director of Marketing for Asia Pacific and India.
Content, connectivity and advertising are all converging, Brault said, and cultural habits are changing. People are literally hooked on their personal devices and advertising in the airline digital ecosystem should be treated like any other multimedia offering an airline provides. The lines between entertainment and brand marketing are blurring worldwide, and this creates an opportunity for airlines to implement new ad campaigns that will offset the costs of IFE and connectivity, while enabling them to better understand what makes passengers tick.
Why not feature a brand in a boarding video? Why not create a landing video that promotes hotels, restaurants, attractions or ground transport at the destination? Why not partner with a retailer to create custom IFE content that instantly pays for itself?
When an airline uses its deep knowledge of the passenger to target a high-value consumer through Global Eagle’s portfolio of connectivity, content and media sales solutions (in a way that adds value to the passenger) and data collection and analytics, everybody wins.
Alipay Keen to Help the Aviation Industry Improve PaxEx
What do Delta, United, KLM, Finnair and Ethiopian Airlines have in common? They all accept Alipay as a method of payment. The platform is prolific amongst Chinese consumers – it’s the preferred payment method for more than 50 percent of Chinese inhabitants and over one billion active users worldwide.
In his presentation, George Li, Alipay director of Business Development, outlined how he thinks Alipay and its strategic partners can further support the aviation industry at every point along the passenger journey – from initial booking, to last minute service upgrades on the ground, to in-flight retail (either using low-bandwidth connectivity for real-time verification, or offline as well) and beyond.
Consumers No Longer Loyal to Travel Brands
Following Li, Amber Zhong, manager of Payment Partner Development at Google Pay, took the stage and shared some intriguing insights into consumer behavior linked to travel search and booking – based on analysis of the kind of big data that only a web giant like Google has.
And what does the data say? Travel brand loyalty is all but dead, especially in the research stage. Therefore, she insisted, airlines had better complete the sale quickly and painlessly, or the fish will wiggle right off the line.
“A quarter of consumers shop for personal travel on a daily basis,” says Zhong. “But just nine percent of travelers have a brand in mind before they start searching.”
For this reason, Google is tempting airlines with free APIs, which facilitate quick and secure payments that feel easier for consumers thanks to instant recall of the credit card information and personal data Google already has for over 1 billion consumers worldwide.
Valour Consultancy Reports a Global Lull in IFC Installations
Research conducted by Valour Consultancy shows that only 278 aircraft have been equipped with in-flight connectivity across mainland China fleets as of Q4 2018, with another 300 aircraft in backlog expected to come online. “But that number should be even larger when we consider the size of the domestic fleet here,” says Daniel Welch, co-founder of Valour Consultancy.
Among the barriers to IFC adoption in China are a competitive environment rendering the country’s supply chain difficult to navigate and a business model that needs to move from session passes to sponsorships, freemium setups and partnerships with Telcos. “I am very confident that once that happens, in the next couple years, we will see growth come in quite quickly and significantly,” Welch says.
China isn’t alone in seeing a lull in IFC uptake this year, Welch says: “It is a quiet period all around, but it is a necessary one. First-generation adopters got connectivity for the sake of having it, but now airlines are making sure they have a more reliable service and make the right choice. And I welcome that.”
The Next Decade Will See a Continuation in the Diversification of IFC Revenue
Chapter three of Dr. Alexander Grous’s London School of Economics in-flight connectivity study, which will focus on brand loyalty and passenger behavior, is expected to launch at (or around) the time of APEX EXPO later this year. In the meantime, David Coiley, Inmarsat vice-president of Aviation, provided APEX Asia conference delegates an overview of the already published findings from parts one and two.
Citing findings from the study, Coiley says that while the primary source of IFC revenue in the Asia-Pacific region at the moment is broadband access, that’s poised to change significantly in the next 10 years: “Right now what we see is broadband access dominating as a source of revenue, but expect revenue streams to diversify with advertising, premium content and e-commerce, especially in a place like China where WeChat and Alibaba are so popular.”
In addition to the $30-billion broadband-enabled ancillary revenue forecasted for 2035, Coiley said, airlines stand to also benefit from an additional $15 billion in annual savings through connectivity on the operational side, in areas such as real-time diagnostics, optimized route management and maintenance efficiencies.
The Importance of Local Partnerships, and Robust Firewalls
APEX Asia’s last talk of the day included experts from FTS Technologies, Inmarsat, Gogo, Panasonic Avionics, SITAONAIR and COMAC, who all agreed that bringing in-flight connectivity on board in China largely hinges on the ability to solidify a local partnership. “It is definitely a hot topic right now. We all need to have a local partner and, in fact, [SITAONAIR] will be making an announcement about that very soon,” hinted Paul Ng, SITAONAIR’s senior business development manager. Inmarsat’s Coiley added that the process is a bit of a balancing act “between recognizing the need for a local player, but arriving at a solution that works on a global scale.”
Picking up on a theme from Coiley’s earlier session, COMAC’s team leader of Cabin Systems, Lu Xi, said the aerospace manufacturer is no longer thinking of connectivity in purely passenger-centric terms. “Before,we would only focus on connectivity as entertainment for passengers, but now that we have the broadband pipeline, we are seeing that the aircraft has become a huge database. Every second, thousands of kilobits of data are being generated and that isn’t being efficiently processed or analyzed.”
But panelists agreed that venturing into the passenger connectivity pipeline for the cockpit domain would requires strong attention to security and cooperation with local authorities. As Panasonic Avionics’ director Todd Hill puts it, “You need a very robust firewall to bring those two links together … And that’s why operational connectivity is still lagging. The reality is passengers in the cabin still have better access to the pipeline than the pilots.”
To see takeaways from Day One of APEX Asia, click here.