2019 has seen a rapid acceleration in the field of IFEC, with more airlines offering inflight WiFi on more of their routes than ever before. However, there are still many carriers yet to make the leap into the world of inflight WiFi; will they lose out by being last to the party?
Inmarsat certainly believes there could be a downside to not being a leader in IFEC technology. Get Connected caught up with Dominic Walters, Vice President at Inmarsat Aviation to find out more.
The followers could miss out
Inmarsat has its finger in many connectivity pies. From the inimitable Global Xpress (GX) network to the up and coming EAN, this is one provider determined to lead the way in IFEC for the future. Despite all the advances we’ve seen this year, there are still some airlines who are waiting to take the plunge. Dominic explained why,
“I think we’re in a bit of a holding pattern right now on the entire tipping point. People know connectivity has to be done. I don’t think they realize the extent of that opportunity and what it can be. I think we’re in this ‘wait and see’ moment because there may not be all the proof points that everyone wants. I think everyone is expecting to have a massive proof point.
“The problem with that is the leaders out there will win and those who trail will, of course, get there in the end, but to what extent and what will be their loss? There will be a disproportionate number of passengers who will be won over by the leaders and the followers, if you like, will have missed out a bit.”
There are certainly some airlines who are pioneering the connectivity field, while others seem afraid to dip their toes in the water. It does, however, seem that, eventually, all airlines will need to embrace the customer expectation of connectivity on board. Dominic continued,
“I think they’ll get there in the end. But I think what we’re seeing is that there is a generation of travelers who are probably being slightly underestimated at the moment. When we look at the numbers of those travelers who have said they are not loyal to a current airline, that 6%, those 450 million, could be nabbed and become loyal if an airline offers it.”
That’s a whole lot of passengers ripe for the persuading, but where did Inmarsat get the idea from that so many pax are just floating, unengaged and without any loyalty to a particular airline?
The homework has been done
Of course, what Dominic is referring to here is the in-depth research that Inmarsat have conducted with the London School of Economics (LSE). The research series, called Sky High Economics, looks at the financial opportunities available to airlines through in flight connectivity.
Chapter three, which was released in September this year, identified a massive market of passengers who are disconnected from any particular airline. Many of these are younger travelers, dubbed Millennials, who were born between 1981 and 1996. Not only is this demographic not engaged with any particular airline, but they are also the largest group of air travelers today. Dominic explained,
“What Sky High Economics has identified is that there are 450 million passengers out there who do not show allegiance to a single airline. That equates to around 6% of the traveling public. However, these people have also said that they would select an airline based on getting good, reliable inflight connectivity on board.
“450 million passengers will equate to 33 billion dollars. That is on the table today, and that is on the table to be won or to be lost today by the airlines that offer that. You’re looking at an industry that is desperately looking for margins. Ancillary revenues are a challenging environment, costs are going up and actually that’s a really important audience. Airlines need to be saying ‘okay, that’s something we need to be going after’.”
Millennials are used to being connected. On the ground, they are always in touch with their social groups, news feeds and entertainment. In the sky, they expect the same, and it can be something of a disappointment to find out this is not the case.
Moreover, this trend is set to continue and even to magnify. Generation Z (born from 1997 to 2012) and Next Gen (2010 to 2025) are predicted to outnumber Millennials within a decade and become the biggest group of air travelers, each accounting for around 1.2bn passengers per year. These demographic groups, Inmarsat says, can be won over by airlines willing to invest in connectivity now.
Time to take the leap?
It seems like some airlines are waiting for technology to be proven, for strategies to be demonstrated, almost for a cast iron guarantee that this is the way to go. But the signals could not be stronger than they are now. Passengers demand and expect connectivity on the aircraft, and airlines will be in a powerful position by ensuring they can meet that demand. So, what’s stopping them? Dominic told us,
“Sometimes you’ve got to admit there’s a leap of faith that we need to take. What’s happening on the ground is very clear; the ground is showing us what will happen in the air. All the possibilities that are available on the ground will eventually be available in the sky.
“Inmarsat is committed to delivering and is absolutely demonstrating that we will deliver the best global network in the world; one that is built for an aviation industry that is growing rapidly. We’re also demonstrating that we understand how demand is going to go up and there is a generation of passengers who are getting on board today who have an expectation. Their loyalty will be determined by meeting those expectations.”
The question of inflight WiFi today is no longer ‘if’ but more a case of ‘when’. Clearly, those airlines who are prepared to take an early leap will be rewarded with the opportuinty to secure the loyalty of the fliers of the future.