This story is produced in partnership with PaxEx.Areo - The Business of Passenger Experience
The tease of inflight wifi connectivity from Spirit Airlines finally is fulfilled. The carrier announced today it will fit its entire fleet with Ka-band satellite-based connectivity in partnership with Thales FlytLIVE. The first aircraft installs are slated for later in 2018 with the full deployment complete by Summer 2019.
— Spirit Airlines (@SpiritAirlines) May 11, 2018
The new offering is also the first confirmed customer for the new FlytLIVE offering. It takes advantage of a partnership between Thales, Hughes and SES to deliver Ka-band connectivity across North America and the Caribbean, with broader coverage arriving in 2021 with the SES-17 launch. Even without SES-17 in service the company can deliver coverage to 97% of Spirit’s routes. The two companies intend to offer gate-to-gate service.
We’re thrilled to enhance the inflight Guest experience with the addition of Thales FlytLIVE Wi-Fi. By Summer 2019, every plane in our fleet should be fully equipped with Thales’ state-of-the-art connectivity service to keep our Guests connected in the skies. It’s just one of the many investments we’ve made, and will continue to make, for our Guests. – Ted Christie, President Spirit Airlines
Controlling Connectivity Costs
Spirit Airlines suggests that the average connectivity cost will run $6.50 per session, putting it towards the lower end of the spectrum for US carriers. It also hints at multiple options available on board. A “streaming package” is explicitly called out; presumably other tiered services will be available as well. The carrier also states, “We’ve worked hard to make sure fares will not be impacted as a result of the addition of Wi-Fi,” implying that the carrier may not carry much liability for the overall costs of delivering the service. This raises interesting questions for Thales.
Spirit President Ted Christie suggests that the connectivity service will, “run as an independent business. Wi-Fi is not going to attack our cost structure. It’s going to add more revenue.” Early connectivity deals from Gogo involved the airlines assuming very little risk. Gogo carried the capital costs for deploying the hardware and kept the bulk of the revenue, “paying off” the on board kit costs from that income. The Thales LiveTV installation on Continental Airlines operated under a similar structure: the airline got the hardware at minimal costs but also realized only a small portion of the revenues.
Pushing the financial risk to Thales makes sense within the Spirit business model. The company’s search for a connectivity partner has meandered over the past few years but every executive quoted on the topic suggested that the key to securing a deal is removing capital expenses and other financial risks to the airline. Fewer and fewer vendors are willing to consider such deals these days. Gogo’s new CEO, for example, recently suggested that the company would shy away from additional capital expense to finance connectivity deals.
As a new player seeking to secure customers Thales is less conservative on this front.
Just the pipe, Ma’am
One surprising choice in the system architecture is that the service will only deliver a connectivity pipe to the ground. There will be no on-board kit for streaming content or other potentially revenue-generating services
Will there be any free content, or a media center with preloaded movies or TV shows?
Unfortunately, not at this time, however, with our streaming package, you can access all of your content through Netflix, Hulu, or other popular sites.
While the “Bring Your Own Rights” idea is not new – Viasat pushed it strongly when it introduced its inflight connectivity offering in partnership with LiveTV, now a part of Thales Group – the market has shifted since that time. Yes, there are content management and licensing challenges with such systems but they are also good for revenue generation. And an inflight connectivity system already requires an onboard server anyways, so the incremental hardware is minimal. That it is being excluded here comes across as a missed opportunity rather than an astute, cost-savings measure.
On the plus side, Thales’ VP Global Sales William Huot-Marchand believes that the legacy model of metered connections will not satisfy customer demands and so the new FlytLive offering was born. At that time he suggested free to passengers was also a key factor.
The market is just beginning in the sense that what we are offering to passengers reflects the limitations of the technology. When we offer 20 MB for a flight it is not what you or I want; we want to just get connected and do whatever I do at home. More and more passengers want to get connected, they want an unlimited experience and they want it free.
This offering will not be free but could eventually trend that way if the two companies can develop the advertising and sponsorship partnerships other inflight connectivity vendors now possess.
Other Thales Connections
Spirit is the first confirmed customer for the new FlytLIVE offering but not the first with hardware flying. An Air Canada 737 MAX continues to test the service while both the airline and Thales decline to confirm that relationship. Thales also currently manages the connectivity on JetBlue‘s fleet and United Airlines‘ 737s; that service is provided in partnership with Viasat. JetBlue confirmed that it will remove Thales from the connectivity deal as it upgrades its onboard hardware to support the newer ViaSat-2 satellite now in service, even as it upgrades the inflight entertainment system to Thales’s top-end AVANT platform on some A320s starting in 2019.
Header image courtesy of Spirit Airlines
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