FSCs Set to Take Lion’s Share of Middle East IFC Revenue by 2035
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Inmarsat’s “Sky High Economics” report shows that the revenue opportunities created by in-flight connectivity could prove particularly fruitful for full-service carriers in the Middle East, compared to the rest of the globe.
Neale Faulkner, Inmarsat Aviation’s director of Market Development, MEASA, gave a presentation on building the business case for IFC at APEX Middle East and Africa (APEX MEA) 2018 this week. He referenced Inmarsat’s “Sky High Economics” report, which suggests that in-flight connectivity (IFC) has the potential to unlock a $5.2-billion market within the Middle East by 2035, $1.3 billion of which could go directly to airlines.
According to “Sky High Economics”, future revenue related to IFC will come from four main streams: Broadband access, e-commerce, advertising and premium content. In the Middle East specifically, Inmarsat estimates that of the $1.3 billion airlines could achieve by 2035, approximately $725 million will be generated by broadband access compared to $290 million from e-commerce, $260 million from advertising and $50 million from premium content.
IFC appears to represent a higher revenue opportunity for full-service carriers (FSCs) in the Middle East than in other regions. “Sky High Economics predicts that full-service carriers will account for 63% of the market, generating $19 billion by 2035. Low cost carriers are predicted to generate $11 billion,” Faulkner said, referring to airlines across the globe. However, due to their strong position in the region, Inmarsat predicts Middle East-based FSCs could earn $511m from in-flight connectivity versus just $239m for low cost carriers, which is closer to a 70/30 split.
“There are some qualitative reasons why this is the case,” explained Faulkner. “FSCs tend to run longer-haul routes, resulting in more opportunities for connectivity to benefit a passenger’s journey. Therefore, FSCs will potentially have more time to sell goods, entertainment and present advertising to passengers during a flight.”
Faulkner said, “Inmarsat is heavily invested in the Middle East, which is further emphasized by our recent office opening in Dubai in October this year. Our fifth GX satellite is on schedule for launch in the second half of 2019, the design and build for which was initiated following a long-term commitment from key airline operators in the Middle East region. It will provide capacity across the Middle East, Europe and parts of Asia.”
In April 2018, Inmarsat announced that Kuwait Airways will introduce GX Aviation on its single-aisle aircraft. Faulkner continued, “GX installs are progressing well with Middle Eastern mega-carrier Qatar Airways with some exciting announcements in the pipeline.”
Follow these links for a more in-depth look at part one and part two of the Sky High Economics report.