As the take-up for IFC continues to rise, we reveal the regions where demand is growing fast
Our journey through life is a rich and multi-faceted one – and everyone walks their own path. It’s a point worth bearing in mind when one considers the trajectory of inflight connectivity (IFC) around the world. Some regions – Latin America and Africa for example – are taking their first steps on this transformative digital journey, whereas others (North America, Europe, the Middle East and to a lesser extent, Asia Pacific [APAC]) are far more mature.
The connectivity revolution
APAC is a particularly interesting market to examine. In the first chapter of the London School of Economics’ Sky High Economics report, author Dr Alexander Grous found a market at the tipping point of transformation.
Thanks to the implementation of next-generation inflight broadband, the report demonstrated the potential to unlock a $52bn market within the Asia Pacific region by 2035. This would mean airlines in APAC could benefit from a $10.3bn boost in ancillary revenues, making it the largest single market for Wi-Fi enabled revenues.
Chris Rogerson, Inmarsat Regional Director, Aviation in APAC, believes passenger demand and expectation for connectivity is a primary factor in propelling these rapid changes. In short, much like on the ground, passengers expect to be connected wherever they are. He says: “The desire to get online is particularly strong in Asia Pacific, where three quarters of passengers (72%) who had access to inflight Wi-Fi in the past year chose to use it – the highest of any region globally.”
For Isabelle Bachelier-Journel, Inmarsat Vice President, Aviation in Europe, the message is clear: “Whereas the average flight duration is shorter compared to other regions, the connectivity revolution in Europe is also on its way. Inflight connectivity is no longer perceived as something that’s an added bonus on a flight – it’s now essential. The figures back this up: 68% of passengers would use Wi-fi if it was available, raising to 72% for business travellers, and 61% of passengers would be likely to recommend inflight broadband having tried it previously. Connectivity is essential to daily life on the ground, and European airline passengers see no reason why their time on a flight should be restricted or spent any differently.”
They demand the best experience
Raymundo Villar, Inmarsat Regional Director, Aviation in the Americas, concurs. Looking at both North and Latin America he believes that after a decade of using smartphones, consumers now demand a quality service every time.
“Whether it’s on a cellular network or in a Wi-Fi environment, they demand the best experience,” he says. “I’m not saying they’re always enjoying the best experience. But they demand the best experience.”
This emphasis upon quality is backed up by the conclusions of Inmarsat’s 2018 global Inflight Connectivity Survey. One of its most illuminating findings was that 54% of respondents said they’d rather not have inflight Wi-Fi if the service on offer was poor.
Changing passenger demand
Neale Faulkner, Market Development Director for the Africa, Middle East and South Asia agrees, he says of the Middle East: “People expect their flights to be connected – and we see a higher propensity to pay for a quality service.”
In Africa, demand is shifting from ‘slight’ to ‘significant’. Faulkner says this is also reflected in the aggressive expansion from some of the carriers in the region who are starting to compete in other markets.
Faulkner notes: “For example Ethiopian and Kenya Airways are challenging the big Gulf carriers in the China market, bringing passenger traffic into Africa, with new fleets and high levels of IFEC services.”
“Similarly, in India passenger demand has been there for some time – and soon we should start to see this realised in terms of actual passenger adoption.”
These different levels of IFC maturity across the globe are reflected in Inmarsat’s strategies in these regions. In the Americas, the opportunities IFC offers – in particular the operational savings and broadband-enabled ancillaries– means that airlines find a report like Sky High Economics an incredibly useful tool.
“In North America, the LSE report is being used to validate what they have already been capturing from the market. In Latin America, those reports are being used to drive decisions, to convince decision makers that there is data which backs up why airlines should invest in IFC.”
In the Middle East and Africa, Faulkner notes that Inmarsat already enjoys long-term credibility thanks to its L-band services (both operational and passenger), while in Europe, carriers are looking to discover the possibilities that come with the launch of Inmarsat’s European Aviation Network (EAN).
Says Bachelier-Journel: “With regard to the quality of EAN, when airlines return from flight demos they are amazed by the service. Their feedback speaks volumes. They quickly understand the benefits they can derive from EAN's low latency to offer passengers a fully satisfactory connectivity experience on board. They know that passengers are using social media more and more to report on their experience.
“If they are satisfied they will become advocates for new passengers. But airlines are looking for more than the product. They are also looking for integrated services. They rely on our expertise to offer a complete set of customised solutions, from which they can pick and choose according to their strategy.”
Passengers calling the shots
Here the notion that a consistent and quality IFC service will not only drive passenger experience, but also customer loyalty, really becomes compelling. As Villar points out, it’s “passengers that are calling the shots.”
He says: “They will be the ones saying, ‘This doesn’t work, I’m switching airline next time.’ But if it works they’ll become more loyal and they’ll tell everybody about their great experience.”
Subsequently, capacity is also significant. In today’s streaming-dominated age, Villar believes there will be more demand for bandwidth.
“We’ll have to allocate more capacity per passenger than we’re doing now because the trend is more content, more content. And that content is video-rich, which uses more capacity.”
Over in APAC, Rogerson also acknowledges this move towards increased capacity.
He explains: “With confirmed investment in future satellite launches, including three further satellites with Ka-band payloads planned from 2019, we can expand capacity where and when it is needed. Our fifth GX Aviation satellite is scheduled to be launched in 2019 by Arianespace.”
In Europe, Bachelier points that the EAN is quickly scalable to meet increasing capacity trends. She says: “It is very easy for our partner Deutsch Telecom to add additional CGC antennas wherever more capacity is needed, and with our satellite coverage we can even switch on new markets instantly.”
One trend that is replicated across the globe is the belief that demand for IFC is only going to increase. Griffin notes there’s plenty of room for growth in Africa and India (two of the less developed markets). In Latin America, Villar believes the region will soon begin to approach a level of penetration comparable to other regions of the world.
He suggests this brings new opportunities for third party companies. Both he and Bachelier-Journel agree that passengers will be increasingly unwilling to pay for connectivity (“They will assume,” Villar says, “that just as happens on the ground – at hotels, for example – the Wi-Fi should be free”). But these passengers expect connectivity, and viewing them as a captive audience, third party companies will look to connect with them.
“So what we could see in the next five years,” explains Villar, “is a series of sponsors being brought into this connectivity ecosystem and those sponsors – in exchange for having their brand displayed or to provide an offering to that consumer sitting on the plane – are going to cover some of the costs of supplying IFC to the passenger.”
New technology brings new opportunities
The adoption of IFC brings a wealth of opportunities for airlines. Enhanced passenger satisfaction, increased customer loyalty, new revenue opportunities –from ancillary revenue – and operational savings. As we approach the third decade of the 21st century, connectivity’s position as aviation’s great enabler is established.
And so around the world each region faces its own set of opportunities. In North America due to its early adoption of IFC, Villar notes that current contracts are coming up for renewal. A chance for airlines to evaluate new technologies and suppliers, perhaps?
In Latin America and Africa, however, it’s still very much early days for IFC.
Faulkner explains that in Africa many of the larger carriers in the region are ready to embrace IFC and are making positive moves to integrate.
“The terrestrial trends in Africa based upon smartphone connectivity (albeit not entirely across the continent) are starting to drive higher demand in passenger connectivity in some areas,” he says.
The International Air Transport Association (IATA) notes that Africa currently has approximately 77m air travellers every year. By 2035, it predicts that this will rise dramatically to reach a total market of 303m annual passengers. IATA also estimates that the top 10 fastest-growing markets in terms of additional passengers by percentage will also be in Africa.
So although it’s lagged behind other areas of the globe when it comes to IFC, this brings a number of opportunities. Chapter one of the London School of Economics’ Sky High Economics survey forecasts that the adoption of IFC could lead to a potential $587m in revenue for airlines in the region by 2035.
It’s clear then that IFC’s cycle of adoption is currently playing itself out at different stages around the world. The trends may differ from continent to continent, but there are plenty of opportunities to embrace aviation’s latest transformative moment.