Roland Berger predicts in-flight Wi-Fi revolution is imminent

06 June 2017 4 min. read
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In a 24/7 digital culture, which tends to be ‘always on’, especially for business travellers, the expectation for airlines to accommodate digital technologies in-flight is growing. In a new report from Roland Berger titled ‘Spread your wings’, the strategy consulting firm explores key current trends in the changing aerospace.

Airlines are increasingly expected to offer in-flight connectivity options, with consumers dependent on using a variety of digital tools - even in the air. Utilising data gathered by a Gesellschaft für Konsumforschung study of 9,000 consumers across 30 countries, researchers at Roland Berger considered current trends in the market, while with the consulting firm drawing up steps the commercial aviation industry can take to open up a new digital revenue stream in the air.

Changes in customer expectation

The use of electronic and transmitting device has, for the longest time, not been permitted on aeroplanes. The reasons for the blanket ban were technical, with possible interference of sensitive on-board electronic systems potentially jeopardising the lives of hundreds of people. In recent years debate surrounding the effect of devices on key systems has occurred however, particularly in light of technical advances, which have made certain in-flight connectivity options more practical.

The debate has given way to some airlines permitting the use of electronic devices in some circumstances, while new communications technologies have allowed them to offer new in-flight communications services – although still at a considerable premium to similar ground-based propositions.

Meanwhile the global prediction traveller numbers is projected to grow at CAGR 4.8% between 2015 and 2035, which undoubtedly will couple with changing consumer expectations to pressure airlines to introduce more connectivity options. According to Roland Berger, 90% of short-haul passengers in Europe want to use their own smart-phone, 80% their tablet and 46% their laptop in-flight.

Yesterday - today-tomorrow

According to the study, consumer preferences on short-haul increasingly favour the option for internet related connectivity, more passengers (54%) would prefer in-flight Internet to in-flight meals (19%) or entertainment (16%).

Airlines themselves are increasingly hard-pressed to derive additional revenue streams from customers – customers are already increasingly less likely to pay for a variety of added value services, such as in-flight meals. The study notes however, that they are willing to pay for Wi-Fi connectivity, at 69% of European customers, 67% of Asian-Pacific region customers and 64% of Latin American customers.

The economics of in-flight connectivity is changing

The also firm notes that new technologies for setting up in-flight connectivity are advancing, with an additional benefit to the cost/bit price of services. New technologies, such as hybrid satellite-ground networks, metamaterial flat panel antennas and traffic optimised capacity mean that for customers the quality of service is set to improve while for airlines, the cost of running the service is set to decrease.

The benefit for airlines from selling in-fight connectivity access is estimated at between €1-4 per passenger, with revenue derived from the sale of connectivity itself as well as additional benefits occurring through services sold through the connectivity offering more widely.

Kai-Marcus Peschl from Roland Berger explained: "More important than charging for Internet access is the possibility that airlines will have to offer their passengers personalised shopping or other services. This is what will generate additional business for the airlines."

Scope and examples of digital transformation

According to the study the addition of in-flight connectivity to the wider package ‘completes’ the digital transformation in aviation triangle, by offering high-speed internet, targeted retail and personal shopping and more efficient flight operations. The other part of the triangle includes digital operations, from the tracking of equipment to passenger service system, and multi-channel shopping, including loyalty programmes and personal shipping.

Commenting on in-flight connectivity as part of a wider trend in digital in the aviation ecosystem, Peschl added, "Internet on board is not the only step but it is an important step en route to the digital transformation of the airline industry. With the right partners and product offerings in place, airlines have great opportunities to improve their efficiency and generate ancillary revenue.”