Inmarsat identifies $33bn market share available to connected airlines

Inmarsat Aviation will use the launchpad of day one of the APEX EXPO 2019 to reveal details of its latest addition to the Sky High Economics series, produced in collaboration with LSE. Part three, which looks at the opportunities to win passengers through better inflight connectivity, brings with it some interesting insight, including an immediate $33bn market share up for grabs.

Inmarsat connected airlines
Study identifies $33bn in passenger revenue available to connected airlines. Photo: Inmarsat

Philip Balaam, President of Inmarsat Aviation commented in a press release,

“The widespread and growing appetite for connectivity, coupled with the vastly changing demographic of passengers, has shown that demand for connected, personalised and value-added services in the cabin is accelerating at pace.

“To stay relevant in a competitive industry landscape, airlines must adapt to the behaviours and expectations of today’s and tomorrow’s passengers now.

“High-bandwidth Wi-Fi with consistent coverage is essential to meet the demands of data-hungry passengers – but adopting the technology is just the start. The real opportunity exists in making inflight Wi-Fi an enabler for tailored passenger experiences, enhancing loyalty while accessing new revenue streams.”

Sky High Economics part three

With the doors to APEX EXPO 2019 yet to open, Inmarsat, together with the London School of Economics (LSE), has wasted no time in revealing its latest industry-leading publication to the world. In its third and final instalment of Sky High Economics, Inmarsat and LSE explore the opportunities available to connected airlines in terms of competitive advantage.

The three-part research study has already revealed the $130bn market value of inflight WiFi in Chapter One, Quantifying the Commercial Opportunities of Passenger Connectivity for the Global Airline Industry. Chapter Two, Evaluating the Economic Benefits of Connected Airline Operations, showed how connectivity could deliver $15bn of annual savings for airlines by 2035.

Inmarsat LSE study
Image: Inmarsat

This third and final part of the study, produced in collaboration with the London School of Economics (LSE) examines the opportunity available to airlines to adapt to changing behaviours and expectations of consumers in the future. In addition to the previously explored opportunities for ancillary revenue and cost savings, Chapter Three, Capitalising on Changing Passenger Behaviour in a Connected World identifies a potential $33bn market share ripe for the taking in terms of luring passengers away from rival airlines.

$33bn immediately available

One of the key findings of the report was that as much as $33bn of revenue a year is available to airlines who invest in top-notch connectivity. This has been identified by looking at which fliers are actively engaged in airline loyalty schemes, and which are not. According to the report, 450m passengers worldwide are uncommitted to any particular airline and would be willing to switch allegiance in order to secure top quality WiFi.

Image: Inmarsat

To get to this figure, the study looked at the details of frequent flier schemes, which showed a market split between those who were actively engaged in the schemes, and those who were signed up but not particularly engaged. This split was 13% to 87% respectively. According to the press release, 12% of these passengers are willing to switch airlines if a rival was to offer reliable WiFi. This, they say, brings with it a revenue benefit of $33bn.

Inmarsat points out that this figure is expected to increase in future years. Generation Z (those born between 1997 and 2012) are set to become the largest group of passengers in the coming years. They, along with today’s largest passenger group – Millennials – are the least engaged in brand loyalty out of all the demographics currently flying.

millennials
Image: Inmarsat

As such, the LSE modelling predicts this sum to grow to $45bn in the next decade.

A driver for loyalty

In today’s increasingly competitive world of aviation, passenger loyalty is crucial for carriers. The Sky High Economics report identifies a number of drivers of airline loyalty, related to the connected world in which we live. Dr Alexander Grous (B. Ec, MBA, M.Com, MA, PhD.), Department of Media and Communications (LSE) and author of Sky High Economics, said,

“The next decade presents both a huge opportunity and challenge for the global aviation industry. The technology and infrastructure are ready to meet the expectations of always-on travellers and it is up to airlines to seize this opportunity now, or risk falling behind their peers – to the tune of $33 billion today, and $45 billion by the end of the next decade.”

The full report is available for download here.

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