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Inflight Connectivity Modifications Are Slowing Down

New business models, operational and maintenance benefits needed to spur growth.

2018 has seen fewer new inflight connectivity announcements than previous years, and 2019 is expected to be another quiet year for new IFC announcements, notes Valour Consultancy Researcher Daniel Welch. “The majority of early adopters and . . . low hanging fruit are already offering, or are in the process of rolling out IFC services,” Welch says.

According to Valour, 91 airlines offered passenger Wi-Fi at the end of June 2018, with many more under contract. But there is a significant pool of unconnected aircraft whose operators are not convinced by the business case for IFC or cannot afford the capital or operating expense of installation. Of course, rising fuel and other costs, plus some uncertainty about the trade environment, may be leading to a bit more financial caution.

But Welch says continuing challenges in service consistency and passenger uptake may also deter adoption. Only 5% to 8% of passengers are willing to pay for connectivity, and most airlines charge for it. Usage jumps to about 40% when connectivity is free, but then how do carriers recoup costs or maintain service under heavier demand?

Welch sees several approaches: offering free Wi-Fi to top-tier passengers to retain them; capturing more market share with free Wi-Fi; offering basic Wi-Fi free and charging for faster service; finding sponsors and advertisers; or using connectivity to improve operations and maintenance.

“Despite much commentary around the large operational savings that can be made through IFC, few airlines are advanced in their approach to the connected aircraft,” the Valour researcher says. “But that will change over time, and we expect the nose-to-tail story to increasingly resonate, especially amongst notoriously cost-conscious LCCs. Any IFC system that can promise significant savings, or pay for itself will almost certainly be of interest.”

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