Inflight connectivity has the potential to unlock a $5.2 billion market within the Middle East region by 2035, according to new data released today from the “Sky High Economics: Quantifying the commercial opportunities of passenger connectivity for the global airline industry” report.
Carried out by the London School of Economics and Political Science (LSE) in association with Inmarsat, the study forecasts that airlines in the region will take a $1.3 billion share of the boost in ancillary revenues.
Based on current IATA data and industry sources, “Sky High Economics” shows that airlines around the world will benefit from four new revenue streams:
- Broadband access charges – providing inflight connectivity to passengers
- E-commerce and destination shopping – making purchases on-board aircraft with expanded product ranges and real-time offers
- Advertising – pay-per-click, impressions, sponsorship deals with advertisers
- Premium content – providing live content, on demand video and bundled W-IFEC access
Using an independent forecasting model, specially developed for the research, it says the quantified revenue opportunities for the airlines in the region are as follows:
Quantifying growth opportunities
The research argues that as passenger numbers grow globally, so too will passenger expectations for access to high-quality inflight connectivity.
The data show that when it comes to passenger value brought about by new, Wi-Fi-enabled ancillary revenue streams, airlines will benefit from an extra $3.21 per passenger.
At present, the report says airlines around the world average an additional $17 per passenger from “traditional” ancillary services like duty free purchases and inflight retail, food and drink sales.
Also, despite the gradual blurring that has occurred in the airline type selected by many business passengers, the Middle East region continues to represent one of the higher revenue opportunities for both domestic and international FSCs (Full Service Carriers) – in 2035, the split is LCC (Low Cost Carriers) at $239m vs FSC at $511m.
The research confirms the very strong position many global FSCs have that are based there.
Dr Alexander Grous (B. Ec, MBA, M.Com, MA, PhD.), Department of Media and Communications, LSE and author of “Sky High Economics”, said: “The airline industry is rapidly evolving across the world, including the Middle East. This research shows that airlines have a clear strategic opportunity to become distinctly more retail-focused and reap the benefits of this.”
Ben Griffin, Vice President, Middle East, Africa and South Asia at Inmarsat Aviation, added: “The latest advancements in satellite technology have unlocked exciting new opportunities for airlines to enhance their passenger experience, increase their operational efficiencies and grow important new revenue streams.
“Having the right capabilities in place – from the cabin to the cockpit – is the key to benefitting from everything that a connected aircraft can offer, today and in the future. As the ‘Sky High Economics’ report has identified, airlines in the Middle East are extremely well positioned to take a lead with the game-changing new trend.”
About Sky High Economics
“Sky High Economics” is the first research project to comprehensively model the socio-economic impact that the connectivity revolution in the air is set to have.
A copy of global “Sky High Economics” paper can be found at https://www.inmarsat.com/news/34067/
The research model created for “Sky High Economics” by the LSE, will be used to deliver a series of events hosted by Inmarsat around the world outlining the economic benefits to each region.
Airlines are being invited to use the model to receive bespoke consultancy around what broadband connectivity can do for them.