U.S. Airlines Face Global Competition Challenge to Delivering In-Flight Communications, Entertainment to Passengers, Say Industry Leaders
/PRNewswire-FirstCall/ -- U.S. airlines may be at a competitive disadvantage as European carriers move forward on plans for in-flight Internet connectivity and communication services on-board passenger aircraft, concluded a panel of industry experts today at a National Press Club briefing sponsored by satellite communications leader EMS Technologies, Inc. and Aviation Week & Space Technology magazine.
The Open Skies Agreement, signed by U.S. and European airlines last year, goes into effect this March, allowing U.S. and European carriers to compete in each other's market for transatlantic routes. But some industry observers foresee a potential competitive imbalance favoring non-U.S. carriers that could result if U.S. regulatory restrictions are not lifted. The panel, including representatives from AeroMobile, EMS SATCOM, JetBlue Airways, Inmarsat, OnAir and the World Airline Entertainment Association (WAEA) discussed the impact of this agreement and other technology and business drivers on the choice-of-carriers decisions of more than 600 million passengers expected to travel internationally this year.
Said Paul Domorski, president and CEO of EMS Technologies, "In order for U.S. carriers to remain competitive, any in-flight connectivity service must support a global reach. It is not really a question of 'if' airlines are going to make mobile communications available to the flying public but 'when' and 'how.' In-flight connectivity is inevitable. The world is going mobile."
While the Federal Communications Commission (FCC) and Federal Aviation Administration (FAA) currently restrict airlines from using cell phones, innovative airlines like JetBlue are moving forward on trials with introductions of in-flight WiFi this year. In December, JetBlue, in partnership with LiveTV, Research in Motion and Yahoo!, became the first U.S. domestic carrier to provide free in-flight e-mail and text messaging on "Betablue," an Airbus A320 aircraft equipped with an onboard wireless network.
According to a recent USAToday/CNN/Gallup poll, nearly 70 percent of frequent or occasional air passengers want the U.S. airline cell phone ban lifted. In addition, nearly 65 percent of BlackBerry and Treo users would use their devices in-flight if they could, according to a survey of European passengers sponsored by OnAir.
Gary Hebb, VP and general manager of EMS SATCOM, noted, "Voice and Blackberries are the killer apps. Real Blackberries, not the one's that works on WiFi. But other lightweight applications are going to become very important. Ultimately, the system and the business model need to be scalable, so that airlines are making money from day one."
Said Michael Butler, President and COO of Inmarsat, "Our aeronautical business has been the fastest-growing segment of Inmarsat's revenues for the last three years, driven by early adoption of our Swift services among government and corporate users." Butler pointed to the advanced capability of the company's Inmarsat-4 satellites to meet the predicted growth in demand worldwide. "With the commercial launch of SwiftBroadband at the end of 2007, our manufacturing partners now well advanced with the avionics, and the launch of the third Inmarsat-4 later this year, we will be able to offer a new level of connectivity for airlines, wherever they fly."
Both Butler and David Coiley, director, marketing and strategic relationships for AeroMobile Ltd., said voice is a big application that their customers want to see.
"Our research and experience around the world point to hugely significant pent-up demand for use of personal cell phones, not just for text and data but for voice calls, too. Passengers want the choice to be able to use their cell phones in the air in the same way that they use them on the ground," Coiley said, predicting that thousands aircraft will be installed with cell-phone connectivity capability in future years.
He said AeroMobile's service has been "fully flight-proven" with real passengers for nine months. "We have solved the challenges of safely delivering cellular services on aircraft in an appropriate and responsible way, to the benefit of all passengers."
Benoit Debains, president of OnAir, reported on Air France's GSM in-flight connectivity trial. In December it became the first airline to use Mobile OnAir on international flights.
Said Debains, "Following the Air France trial, three other airlines in Europe are expected to launch trials this quarter to be followed in China, the Middle East, Southeast Asia and India. Airlines from every continent show that passengers are eager to use the handsets for in-flight communication and this will become a worldwide requirement."
Said Brett Muney, general manager of product development at JetBlue Airways, "The majority of frequent business and leisure travelers want some type of connectivity, but it becomes a question of the business model and whether airlines offer this for free or whether they charge a fee. The real question is 'what type of services are customers going to want?' Our customers have told us they will support silent options like email and instant messaging, but the ability to talk on cell phones will interfere with their core JetBlue Experience."
Said Domorski, "Passengers want connectivity to be simple, cost-effective, seamless and available -- from the airport lounge to the airliner cabin. We should demand that our regulatory agencies recognize the power of the market and support innovation in both technology and business models aimed at making the passenger experience a richer one."
According to the World Airline Entertainment Association, the market for in-flight communication and entertainment is forecast to increase from $50 million in 2005 to $950 million by 2016.