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Salı, 21 Mayıs 2024

Inflight broadband can bring regional airlines $1.3b

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Dubai: Airlines in the Middle East have the potential to make $1.3 billion in extra revenues by 2035 by offering high quality and reliable inflight internet connectivity, capitalizing on passenger demand for constant connectivity.
 
According to research from the London School of Economics (LSE) in association with Inmarsat, a satellite provider, inflight broadband has the potential to generate $30 billion in additional revenue for airlines around the world by 2035.
 
Of those $30 billion, airlines in the Asia Pacific would benefit the most, with an expected $10.3 billion of additional revenues. They are followed by European airlines (with $8.2 billion in revenues), and North American carriers (with $7.6 billion).
 
Dr Alexander Grous from the department of media and communications at the LSE and author of the report said there is “enormous” opportunity available to airlines.
 
“The Sky High Economics Study predicts the creation of a $130 billion market within the next two decades. Globally, if airlines can provide a reliable broadband connection, it will be the catalyst for rolling out more creative advertising, content, and e-commerce packages. Broadband-enabled ancillary revenue has the potential to shape a whole new market, and it’s something airlines need to be planning for right now,” he said.
 
So, what’s driving those revenues?
 
“We are all connected by applications in some form and to varying degrees. The translation of this demand for constant connectivity to aircraft makes perfect sense. The passenger demand will only increase in director correlation with terrestrial trends,” said Ben Griffin, regional vice president for the Middle East and Africa at Inmarsat Aviation.
 
He added that internet access onboard is now viewed by passengers as an expectation rather than a luxury.
 
But those very trends could change the current structure of aircrafts. More airlines will have to make a decision on whether or not they want to continue providing seatback entertainment systems or whether they’ll have a ‘bring your own device’ policy.
 
Griffin said that there is a clear proliferation of bring-your-own-device policies, with some carriers such as American Airlines having already decided not to equip their new planes with seatback entertainment.
 
According to the research, by 2018, airlines are expected to be making $1 billion in ancillary revenue from inflight broadband, with the figure jumping to $15 billion by 2028.
 
The research pointed that the additional revenue from inflight connectivity will come from four streams; internet access charges, onboard e-commerce, deals with advertisers, and premium content.
 
So far, however, airlines don’t seem to have perfected the formula for speed or price of inflight internet connectivity. And currently, only some 53 of an estimated 5,000 airlines worldwide offer inflight broadband connectivity.
 
“Until this point, airlines have had to make do with technology that has been available; this has not been fit for the purpose of providing [inflight connectivity] experience. Indeed, some providers have been repurposing bandwidth that was designed for alternative applications (notably home satellite TV services) which results in a less-than-optimal solution,” Griffin told Gulf News via email.
 
He pointed, however, that technology has finally caught up with passenger expectations. Griffin said that “consistent, high quality, high bandwidth” service is a key precondition for airlines to realise the full revenue opportunity.
 
The report from the LSE and Inmarsat expects inflight internet to be ubiquitous on commercial aircraft by 2035, with full service carriers expected to claim the lion’s share of airline revenues (63 per cent), generating $19 billion by 2035.
 

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