Conversations in Connectivity
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In-flight connectivity is still one of the hottest topics in the aerospace industry. We assembled ViaSat, Inmarsat, SITA OnAir and Global Eagle Entertainment to talk bandwidth, streaming, ancillary revenue and more.
WHAT ARE TODAY’S CHALLENGES?
“Airlines’ number one concern when it comes to connectivity is flexibility amongst solutions,” explains François Rodriguez, chief strategy and marketing officer, SITA OnAir. “How do they make sure they have the technology that best suits their own specific needs?”
Flexibility, when it comes to technology, is a challenge for suppliers too. “Here in the aviation industry we have different aircraft types, different regions, different communications restrictions, etc.,” says Walé Adepoju, chief commercial officer, Global Eagle Entertainment. “So the challenges are rolling it out.”
On aircraft equipped with Wi-Fi, the challenge quickly becomes the size of the pipe and how to determine who gets to use it. From a sat-com perspective, Don Buchman, vice-president Exede Mobility, at ViaSat explains, “The biggest challenge … is providing the capacity … to enable big data processing of aircraft operational data while providing passengers with bandwidth to access … websites, apps and video streaming. And providing all of that cost effectively.”
“Just having Wi-Fi is no longer a differentiator. In the future, it will be about the quality of the service.” €” Inmarsat
SITA OnAir’s Rodriguez agrees: “Now that digitization is comprehensive across every aircraft audience … airlines must consider how best to connect passengers, cabin crew, cockpit crew, aircraft data and maintenance, flight operations and air traffic control – and how those connected audiences can complement each other.”
THE CONNECTED AIRCRAFT
Finding ways to generate revenue from the connected aircraft – whether it be fuel efficiencies saved by the connected cockpit, or more in-flight purchasing facilitated through a connected crew – will likely be key to determining the allotment of bandwidth use.
“Just like when the Internet started, nobody knew what it could be used for outside of e-mail. But once real, fast connections were available, the market found a multitude of applications to make it useful,” explains Buchman. “We expect the airlines and their suppliers to find time saving and money saving applications by streaming real-time data off the aircraft. It is only a matter of time.”
“The most rapid developments at the moment are on the operations side,” adds Rodriguez. “A B787 has 1,500 software parts and an A350 has 400,000 data points for aircraft health monitoring. There is a lot of data that can be transmitted during the flight.”
“Safety is clearly paramount for all passengers and airlines,” Rodriguez continues. “SITA OnAir’s FlightTracker allows airlines to track their aircraft in real time, and its automated alerting systems allow airlines to manage their fleets safely and efficiently. A number of airlines around the world have already announced they are using FlightTracker, including Air Costa, AirAsia India, Azul, Malaysia Airlines, Norwegian Air Shuttle, Oman Air, Singapore Airlines and Royal Brunei Airlines.”
THE VALUE PROPOSITION
Perhaps the only thing trickier than providing connectivity for a fleet of aircraft traveling around the world at 900 kilometers (560 miles) per hour, is figuring out how to monetize it. “It’s an economic puzzle,” remarks Adepoju.
But, as he notes, connectivity brings an inherent value proposition: “I’m more likely to fly on an airline with connectivity. That’s a return on investment.” And that proposition can be extended outside the market. If an airline offers a traveler connectivity on his or her flight, says Adepoju, “that person is more likely to fly with that airline again; that person is more likely to fly than to do a telecom meeting; and that person is more likely to fly than to take the train, which is a major issue in Europe.”
But pricing models add layers of complexity. “Airlines often feel connectivity pricing models are outdated,” says Leo Mondale, president, Aviation, Inmarsat. “It’s a complex marketplace that is no longer served by the straight dollars-per-megabyte model.”
In-flight connectivity services are expected to grow from $440 million USD generated in passenger revenue in 2013 to $2.1 billion USD in the next seven years, but chances are, airlines will have found ways to do this without directly charging passengers for Wi-Fi. “Passengers increasingly expect Wi-Fi to be free, as it is in many hotels or coffee shops,” notes Rodriguez.
Passenger take-up rates still hover between five and 10 percent industry-wide, but research from SITA OnAir finds that 85 percent of passengers would use Wi-Fi on their next flight if it was free.
SPONSORSHIP REVENUE STREAMS
But as Don Buchman, vice-president Exede Mobility, at ViaSat adds, in order to generate revenue through sponsorships, quality of service is key to the value proposition. “We believe offering a quality experience opens new opportunities for high-demand content to be provided through sponsorships, and we’re already seeing this play out today with the JetBlue-Amazon deal in May, and JetBlue’s deal with Major League Baseball.”
Modale agrees: “Just having Wi-Fi is no longer a differentiator. In the future, it will be about the quality of the service.”
GO WITH THE FLOW
Just as connectivity has revolutionized the way we consume entertainment on the ground, many forecast that the same revolution is set to take place in the cabin.
“The future is about in-flight connectivity and carry-on personal devices. In-flight entertainment is the old model that will quickly become outdated,” explains Mondale. “Passengers don’t want to be dictated to by airlines – they want to be able to choose their source of entertainment… [and] the increasing use of personal devices, instead of seatback IFE systems, presents to both the airline and the passenger more choice.”
Buchman concurs: “Passengers want a service where they can reliably access content beyond what is stored in the aircraft, and to fully stream online video content to any of their mobile devices over the Internet and live TV to the seatback… In a way, we are enabling a sort of ‘cord cutting in the sky’ from cached content.”
GLOBAL DOMINATION
The number of connected aircraft are expected to triple within the next 10 years, with Asia Pacific, Europe and North America marked as the regions that will see the biggest growth.
“Specific to the US market, we are targeting carriers that are focusing on intercontinental flights,” says ViaSat’s Buchman. “We are also targeting Central American, Caribbean and Pan-European carriers, which will naturally be able to benefit from the power, bandwidth, and extended coverage of ViaSat-2, once it launched in 2016.”
For Inmarsat, having just successfully launched the final piece of its three-satellite GlobalXpress high-speed broadband network, “demand hasn’t been centered on any particular region,” Mondale says. “A number of major announcements are expected before the close of the year, and the first carriers are likely to adopt our new service in early 2016.”
“It’s an exciting industry to be in,” concludes Adepoju. “I’m really proud of what we’ve done so far and excited about the opportunities going forward.”