This story is produced in partnership with PaxEx.Areo - The Business of Passenger Experience
“Inflight connectivity doesn’t just create revenue, it could save the airline industry US$15bn a year.”
That’s a bold claim from Inmarsat and the research it commissioned from the London School of Economics (LSE). Much of the savings comes from better weather forecasting and the associated effects: reducing delays and fuel burn. Part of the forecast savings comes from predictive maintenance opportunities, allowing the plane to track its own performance and use on-board connectivity solutions to report back to headquarters when operations are less than nominal. The so-called Internet of Things for Aviation (IoT/A) has long been held up as the financial savior of the connectivity platforms, delivering the necessary financial support to justify installations. What will it take to realize the $3-46bn in annual savings the research revealed? A lot of work, and it is unclear which connectivity vendors are truly committed to that effort.
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Airlines today feel compelled to “keep up with the Joneses” in delivering connectivity for passengers, but are often unable to make the business case on that alone. Inflight connectivity is a cost center for the airlines. And, despite estimates from similar Inmarsat/LSE research suggesting that passengers will be willing to pay once on board, data from connected aircraft today tells a different story. Take rates are woefully low where passengers must pay and the revenue is insufficient to justify the airlines’ costs. Or, as Inmarsat Aviation’s SVP Market & Business Development Fredrerik van Essen recently summed it up:
A lot of airlines have bought in to the idea of inflight connectivity from a high-level perspective or competitive pressures. They have been sucked into this and figured they could make the business case internally based on selling sessions to users. They’ve run into the problem of not being able to close the business case on that. They need a wider scope, bringing in the operational aspects. They’re still struggling to quantify what that would exactly mean.
That struggle includes figuring out how to realize the promised operational cost savings on the fleet. Just talking about it at high levels does not actually deliver the goods.
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