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.
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.]
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%.]
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: