Economics of Inflight Connectivity
EXECUTIVE SUMMARY
The state of inflight connectivity is set for a significant upgrade. Passengers have long suffered from high prices, spotty performance, and difficulty connecting. Airlines have struggled with the high cost of equipping planes, poor performance, and lower net promoter scores. Current inflight connectivity can be a brand-damaging event. However, the tides are turning. The next wave of performance enhancements from better antennas, modems, and satellite systems is just around the corner. Multi-Tbps capacity is coming online from new and existing connectivity providers. The wireless market has enjoyed the advantages of standardization through the efforts of 3GPP, GSMA, Wireless Broadband Alliance, Wi-Fi Alliance, and IEEE. Standardization enables interoperability, reduces cost, and simplifies roaming between networks. The Seamless Air Alliance is a non-profit, standards-based organization that aims to align the inflight industry and usher in a new era of innovation, to make inflight connectivity fast, reliable, and easy to access.
This paper begins with a review of the current challenges with inflight connectivity and the passenger experience. Next, the technology behind Seamless initiatives are described. Finally, the paper concludes with an independent study of the financial impact of these initiatives.
The four areas of impact that have been studied include:
- Take Rates
- Cost per Session
- Recurring Operating Expenses
- Capital Costs
The research shows that even a small step toward these objectives could create $11.4 billion of value across the industry, with an upside of $36.7 billion. Inflight connectivity investments achieve positive cash flow sooner, swinging NPV from negative to positive, and compounding benefits from other revenue sources.
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