Payment technology specialist looks to monetize IFE to the tune of billions of dollars

Ancillary revenue. These two words are on the tips of the tongues of virtually every airline manager in the world.

US carriers alone collected more than $1.7 billion in baggage fees for the first half of the year. It has been suggested that many would not have survived the recession had they not unbundled their products.

Now airlines are looking at other ways to generate fresh ancillary revenue streams. Enter inflight entertainment.

According to recent figures revealed by GuestLogix, there are 901,456 screens in the world fleet (forward looking into year 2013), and some 470,644 of these have a swipe feature/credit card reader. GuestLogix bases this assessment on a combination of industry intelligence as well as its own proprietary aggregated data (from its onboard retail technology platform).

Significantly, GuestLogix estimates the revenue opportunity for a comprehensive and fully integrated self-service retail program across all carriers with an existing embedded solution is ~$8.6 billion. This figure does not take into the account the revenue potential of other IFE solutions, such as streaming video and portable solutions.

GuestLogix recently inked an agreement to enable certified credit card payment processing across Panasonic Avionics’ X Series suite of IFE solutions.

Whilst many airlines are currently generating revenue with their IFE systems (Virgin America and flydubai, for instance), GuestLogix says its agreement with Panasonic will give international airlines the opportunity to monetize IFE systems – and exploit the walled garden model – on a broad scale.

“Previously airlines didn’t really have the capability to process transactions globally. And that has been the significant hold up of monetization – the ability or lack thereof to end-to-end transact. For those carriers that did put the energy and resources into processing transactions, it wasn’t – and isn’t – elegant,” says GuestLogix’s newly appointed CEO Brett Proud.

Because GuestLogix has a global gateway underneath it, Panasonic can either send the transaction to GuestLogix “or we pull those from their ground servers. It’s up to us to process the transactions within certain guidelines so Panasonic doesn’t have to worry about processing the transaction – they only have to worry about dealing with a single provider and that’s us,” says Proud.

With respect to receipts, he says, there is no reason for airlines to simply use handheld devices to print receipts because there are other ways to get receipts to passengers. “A receipt can be issued electronically, either delivered through email or SMS. We also have the ability to print receipts on demand. For instance, a passenger can go to the carrier’s web site – hosted by GuestLogix – and he or she can print a receipt at their convenience.”

Keep in mind that IFE is not only going to be monetized with the sale of content, but the sale of food, beverages, hotels, car rentals, events, loyalty, and ultimately travel, travel, and more travel. And don’t forget Duty Free.

“Airlines have been talking about self-service Duty Free shopping for a long time as it means ‘the store’ is open for the duration of the flight, whether it is for two, five or eight hours. By enabling transactions and supporting payment capabilities for seatback IFE, a passenger’s exposure to a product is no longer limited to the 20 minutes that the cart is going down the aisle, if that,” says Proud.

GuestLogix is already engaged with a carrier that is bringing its new Boeing 787s on line with Panasonic IFE equipment. “They already have an active fleet with IFE equipment supplied by Thales.  The carrier wants to have an integrated ‘same’ passenger experience in terms of onboard retail. You can do that with the GUI, the offerings, merchandising, and destination-based services onboard, but you need a consistent payment experience to support all of these – seamlessly,” Proud tells the APEX editor’s blog.

“So, for instance, as a passenger I might have bought items from more than one merchant via the IFE, but in the end, I won’t have three different line items on my credit card, I’ll have one. This will avoid having lots of different charge backs,” says Proud.

Could GuestLogix’s solution convince airlines to hold on to legacy IFE systems for a while longer in lieu of simply supporting passengers’ own devices?

“It is a divisive argument to be sure, but short-term actions like stripping fleets of fitted IFE will actually cost these carriers far more in the long term, and relying on PEDs solely for IFE (and the ability to monetize that experience) just adds another layer to an already disparate connection of ancillary service,” according to GuestLogix.

“Finally, when it comes to passenger experience and delivering a consistent brand experience, the reliance on PEDs removes all control from the airline. Even though passengers ‘control’ their devices, they will still blame airlines for any issues in connecting to IFE on board regardless of whether it’s a device issue or not.”