Unless you’ve been hiding under a rock for the last few months you’ll know that the subject of inflight connectivity is gaining increasing attention from airlines around the world. The inflight connectivity market continues to grow as we move through 2011 with recent announcements from, amongst others, OnAir (TAM), ViaSat (JetBlue, United-Continental) and Panasonic (Gulf Air).
At the end of 2010, IMS Research estimated that the total installed base of Wi-Fi and/or cellular connected aircraft stood at around 1,200 – with this number predicted to double over the course of the year.
Matthew Towers (Senior Research Director at IMS Research) says that, “Despite this jump in connected aircraft, overall penetration of the world’s active airline fleet will still not be very high at year-end (less than 15%), leaving plenty of scope for further growth in the coming years. 2012 is projected to see a further sharp jump in the installed base, and by 2020 around half of the world’s fleet is forecast to be Wi-Fi connected.”
There are plenty of risks still associated with these forecasts, but airline sentiment seems to have finally swung behind equipping their fleets with connectivity solutions. In a recent survey of leading airlines, conducted by IMS Research, only 9% of interviewees indicated that they would not offer connectivity across at least part of their fleet in the future. The main reasons for installing connectivity were to offer additional services to passengers and to differentiate their offering from competitors.
Interestingly, says Towers “raising extra revenue was cited to be of much lower importance to the airlines interviewed.”
There has been much heated debate within the industry over the last few years about whether airlines can raise extra revenue by charging passengers for connectivity and how much they can charge. Airlines appear to have changed the rules of the game by effectively saying this is not the main consideration for us! If we can raise extra revenue then great, but there are other benefits which make connectivity compelling.
Airlines currently see email, social media, and Internet browsing as the main uses of inflight Wi-Fi for passengers, but displayed less enthusiasm for bandwidth-heavy services such as video/music on demand and live TV.
According to Towers, “Delivery of bandwidth heavy services is obviously dependent on the rollout of Ka-band solutions. Most airlines see Ka-band as the long-term future for connectivity and any delays in Ka rollout would negatively impact connectivity installations and take-rates. IMS Research forecasts that Ka will account for a majority of annual connectivity installations by 2017.”
“The position for cellular is quite different from that for Wi-Fi and the two markets must be studied separately. The rollout of cellular solutions has been much slower to date, but appears to be finally gathering pace. Whereas the US had led the way on Wi-Fi, due to Aircell’s ATG system, Western Europe and the Middle East are currently dominating for cellular, followed closely by Asia Pacific”, says Towers.
In summary, the complex and dynamic in-flight connectivity market continues to evolve quickly, and plenty can happen between now and 2020 to either accelerate uptake ahead of existing projections or, conversely, lead to a big undershoot. Despite the upturn in sentiment seen in the last 12-18 months, risks still exist and market players would do well to keep closely in touch with the latest market developments.
At the upcoming APEX 2011 EXPO, during the Education Session being held on the 12th September, there will be a discussion panel looking at Ka-band satellite connectivity. Learn more about what Ka-band offers and how it compares to Ku-band and L-band technologies from the players launching satellites and planning systems for the aviation marketplace. This stuff really is rocket-science!
Confirmed panelists: Neal Meehan, Director Aeronautical Global Xpress Program Inmarsat; David Bruner, Panasonic Avionics, John Guidon, Row44 and Bill Sullivan, ViaSat. Moderator: Michael Planey, Inflight Product and Technology Consultant.