Monday, June 09, 2008

Airlines - revenues from in-flight broadband

Airline Industry Seeks New Revenue: In-Flight Broadband Service Revenue to Approach $1 Billion by 2012, According to MultiMedia Intelligence
see also MultiMedia Intelligence

The market for in-flight broadband services is poised to grow to $936 million in 2012, according to recent research by MultiMedia Intelligence. Despite industry plight, airlines are continuing to invest in new entertainment services due to their potential for additional revenue generation. MultiMedia Intelligence (MMI) anticipates that given a projected 2H 2008 launch of revenue service (initially trials, with full launches ensuing), the in-flight broadband market will debut and generate $6.6 million worldwide in passenger revenues in 2008.

"In-flight broadband is entering a new era," according to Amy Cravens, contributing analyst with MultiMedia Intelligence. "Since Boeing ended Connexion several years ago, in-flight broadband has seemingly been void of activity. However, during this lull, several initiatives to re-launch in-flight broadband have been under way, as industry players prepare to launch in-flight service."

There are two camps of in-flight broadband solution providers, those employing air-to-ground (ATG) technologies and those using satellite-based technologies. There is extensive debate during this initial trial period about what will be the winning technology for in-flight broadband connectivity. There is also division in the in-flight entertainment (IFE) market of whether to offer a less costly narrowband solution (such as LiveTV's Internet solutions), or whether to deliver a more costly, but more robust and future-proof broadband solution.

MultiMedia Intelligence’s new research also found:

* Today’s lighter weight systems provide airlines significant fuel savings over previous generation solutions. On a fleet wide basis, MMI estimates the annual savings for a typical airline is nearly $15 million. Additionally, air-to-ground (ATG) solutions, which do not create aerodynamic drag from an exterior antenna, can provide additional savings as well.
* IFE services are targeted to be available to passengers in all cabins (first, business, and coach) on deployed airplanes. Initial marketing efforts focus on business travelers; however, providers must not discount leisure travelers. The in-flight broadband market has a strong correlation to the on-ground Wi-Fi hotspot market, a market in which leisure users will account for 50% of access sessions in 2008.
* Roaming aggregators such as Boingo and iPass are crucial to driving usage. Providers are in talks with roaming aggregators, an initiative which, in addition to driving usage, will also improve consistency in passenger experience and support in identifying broadband-enabled flights.
* Live in-flight broadcast video is also poised for significant growth in 2009. While this service is more established than in-flight broadband, usage revenues are still anticipated to nearly double in 2009.

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