In the face of last year’s reports that inflight Wi-Fi was attracting take rates of roughly 5% in the United States, Simpliflying CEO Shashank Nigam vocally advocated for airlines to provide the service for free to passengers in order to achieve sustainably high levels of adoption. But it seems that South African carrier Mango has been able to get there despite charging for Wi-Fi. In an interview with Nigam, Mango CEO Nico Bezuidenhout reveals that up to 15% of passengers sign up and pay for Wi-Fi sessions on-board the carrier’s fleet of five aircraft equipped with Row 44′s Ku-band connectivity hardware (South African Airways Technical - SAAT – is doing the Mango installations). So what’s driving the high adoption levels? Nigam breaks down his findings after speaking exclusively with Bezuidenhout about the carrier’s model.
AFFORDABILITY
First and foremost, the cost of purchasing Wi-Fi is affordable by South African standards. At 50 Rands for a 24 hours connection, it is less than half of what I paid at my hotel for just five hours of connectivity, when I spoke at the Aviation Outlook Summit Africa last month. Not only is buying Wi-Fi in-flight cheaper than most places on the ground, according to Bezuidenhout, “the service provides end-to-end Wi-Fi coverage in the air and on the ground”. It can be used in the plane, at the airport or even in a hotel or shopping mall, within 24 hours of the purchase. This makes the service very useful for business travellers who need not restrict their Wi-Fi usage to only within the aircraft.
By September 2012, Mango’s six-strong aircraft fleet will be equipped with the system, making Mango the first airline in Africa to offer fleet-wide connectivity. The relative low cost of Wi-Fi, combined with the accessibility of the service, are certainly major factors in the high adoption levels Mango is experiencing. [Note: Mango says it is marking the final home stretch of the beta phase of inflight Wi-Fi by discounting access by 50% during the month of August between Johannesburg and Cape Town, while all social media functionality on Facebook and Twitter is free to travellers, bar video uploads.]
RELIABILITY
Another reason for Mango’s strong inflight Wi-Fi take rates is the system’s reliability. In the United States we often hear complaints about how Gogo’s service keeps dropping. A quick scan of Gogo’s mentions on Twitter shows that up to 50% of tweets mentioning them are rants from passengers disappointed by the service (a symptom, perhaps, of its success in attracting users on high-traffic transcontinental routes). In contrast, the Wi-Fi system installed on Mango has boasted average reliability of 98% since the service was launched in May, according to Bezuidenhout, who attributes this achievement to the fact that the current system has been designed to handle up to 100 concurrent sessions. [Note: Whilst Row 44 customer Southwest Airlines reported reliability issues in the past, Row 44 can confirm that reliability for the US low-cost giant is now at 97%.]
CLEVER PARTNERSHIPS
One of the key reasons Mango’s Wi-Fi offering is so attractive to consumers is due to the clever partnerships Bezuidenhout and his team have put in place. Mango has partnered with Vodacom, a major cellular service provider in South Africa. The other critical partnership Mango holds is with South African wireless access provider, WirelessG. Almost anywhere I went in Johannesburg – be it the Nelson Mandela Square, Intercontinental Hotel in Sandton or the international airport terminal – I was able to locate at least one WirelessG hotspot. It is this partnership that prevents rendering the Wi-Fi session useless once the passenger steps out the plane. He or she can carry on using the same login at other places as well. These partnerships have allowed Mango to install Wi-Fi at very low cost and offer connectivity as an ancillary service.
WI-FI IMPROVES INTERNAL BUSINESS PROCESSES TOO
The value proposition of providing inflight connectivity to the passenger is clear. Though, in our conversation, what Bezuidenhout was more excited about was how Wi-Fi availability would ultimately help him improve internal processes in the airline. One example he shared was real-time inventory control. If a certain packet of chips was to run out on a flight, an email or message could be sent to someone on the ground by a member of the crew, so that a re-filled trolley would be waiting when the plane landed. This would improve turnaround time and the process might even be automated in the future. Through Wi-Fi, something else Mango would be able to introduce is real-time credit card transacting. This would improve accountability and reduce inflight theft.
LOOKING AHEAD – A NEW DIMENSION TO ANCILLARY SERVICES
The biggest benefit that inflight Wi-Fi will bring to Mango, says Bezuidenhout, is the enhancement of its brand value proposition over time. Mango is already the first African airline to offer Wi-Fi. In the future, more ancillary items will be tied to Wi-Fi to enhance the passenger experience. Given that each connected aircraft would be able to provide real-time feed of destination information and other destination services, there will be a unique opportunity to cross-sell and up-sell to passengers. For example, local pre-paid SIM cards or city tours can be bought online, or even duty-free items, which can then be delivered to the passenger upon landing, possibly while waiting at the baggage belt. In the next 12 months, Mango also plans to introduce an on-board media server on its flights so that passengers can stream the latest programming wireless to their PEDs. This can further broaden the net of ancillary revenues through the system. Thus far, Mango has made a splash by making inflight Wi-Fi attractive to passengers and the future continues to look bright. Airlines around the world can learn from Bezuidenhout’s efforts in the space.
See Nigam’s full videotaped interview with Bezuidenhout below:
August 21, 2012 at 1:15 pm
Congratulations to all involved. At a fair price and with ~15% takers, both sides should be making a profit – if modest. I’ve tried U.S. domestic WiFi a couple of times and always found it seeriously lacking. In most cases, one spends more time logging-on – repeatedly, than actually using the service. In short, it just ‘plane’ does NOT friggin’ work! $20 or $25 w on’t break my bank, but I DO expect some usable service for the bucks. I’ve yet to have a functional experience with in-flight WiFi, so I no longer bother trying. Even with a guarentee, who has the time to hassle with a refund – and they make refunds VERY dificult to obtain. With those imoral words from Nancy, Just Say NO! If the service does not work, even at $5, it is NOT worth the trouble. I simply sign-off for the duration of my flight.
August 27, 2012 at 11:16 am
Cook – you make a good point. What’s the point of providing a service at a level much lower than what you’re used to on the ground? In fact, the situation seems similar outside the US too.
OnAir spokesman Aurelie Branchereau-Giles recently told Australian Business Traveller that “the bandwidth available will typically support 12 simultaneous users (and) our experience with in-service customers suggests that this is more than sufficient even for an A380.”
I wonder how that is possible…
That’s why Mango has done a good job, installing capacity right away for 100 simultaneous users on their narrowbody planes. And that’s why the speed is good, and dropped sessions few.
August 27, 2012 at 1:03 pm
Hi Shashank – you say “What’s the point of providing a service at a level much lower than what you’re used to on the ground?”.
Bear in mind that no matter how good inflight wi-fi gets it will always be circa 10 times slower than the wi-fi service that can be provided on the ground – regardless of the technology being used – there’s just a whole bunch of constraints caused by being in an aluminium (or CFRP) tube 35,000 feet in the air moving at Mach 0.85!
I think there’s two major items to be resolved before we see a sensible balance between the cost the passenger pays for wi-fi and the wi-fi performance they receive:
1. Clarity of expectations – are airlines being clear with the passengers about what level of wi-fi service they can expect whilst aboard? Advertising a service that is equivalent to that experienced on the ground automatically leads to complaints. This is where the frustration that Cook describes comes from – as well as the overall technical reliability of the service.
2. Providing Internet access inflight is not FREE – someone, somewhere has to pay for it.
There are a range of connectivity service providers: ARINC, Gogo, Iridium, LiveTV, OnAir, Panasonic/AeroMobile, Thales, TriaGnoSys etc. offering a range of technologies: Air-To-Ground, L-Band, LEO, Ku-Band and Ka-Band providing a broad range of functionality including GSM, GPRS, SMS, IP, Email, VPN and Video-Streaming.
But they all have something in common: No demonstrated business case from passenger revenues alone.
All these services have to evolve to provide operational cost benefits to the airlines. They will never pay for themselves by passenger revenues alone.