In-flight Entertainment and Connectivity (IFEC), In-flight Wi-Fi, In-flight Internet, Internet OnBoard...whatever you call it, however you use it, if you're an airline you need to figure out how to generate revenue from it.
So says The Travel Strategist Steven Frischling, who agreed to author a guest blog for RWG in advance of the World Airline Entertainment Association (WAEA) conference and exhibition, which gets kicked off next week (yahoo!).
Frischling's insight is particularly interesting as we await details from Row 44 about its new revenue model for in-flight Wi-Fi. I've bolded some bits that I find particularly timely. Thanks Fish!
Over the past few years as in-flight Internet emerged, disappeared and emerged again, airlines have been caught between the challenges of generating a lucrative return on investment and creating a pricing model that is attractive to passengers.
There have been multiple models explored and a seemingly unending expanse of revenue model theories considered by industry observers. However in the end, only one true revenue model really make sense.
What is this revenue model? The airlines must charge the end users, ie: the passengers.
While ancillary revenue streams may be generated through a variety of other avenues, the fact is that in-flight Wi-Fi is a premium service and it is one that passengers are willing to pay for.
Creating a pricing model is not as straight forward as determining who should pay for the service however. While some industry observers seem to indicate there should be a straightforward pricing plan, there are multiple factors in play for determining what a passenger will pay to be online.
Some of these factors include
- Length of flight
- Ability to purchase a la Carte service, such as 30-min or 1-hour blocks
- Ability to purchase monthly subscriber services
...and the often over-looked factor, the cost factor for passengers flying on flights over two hours in length on aircraft with no in-seat power.
With the average laptop sustaining just over two hours of battery life, will passengers pay for full-flight Wi-Fi service on a five hour flight knowing their laptop power will only last roughly two hours?
The pricing models will obviously be decided by each airline based on their service and their needs, but regardless of the airline the primary revenue must be passenger generated.
Ancillary revenue streams can be opened up to passengers paying for 'open Wi-Fi' service as well as those not paying for the Wi-Fi service.
This is possible by creating web sites that are accessible to all devices.
The creation of an ancillary revenue base for in-flight Wi-Fi usage can come from an airline teaming up with a service such as WorldMate (www.worldmate.com), Hotels.com (hotels.com), a variety of rental car providers, allowing passengers the option to apply for a frequent flyer program or the airline credit card.
As airline social media initiatives evolve, allowing passengers to view the airlines web site and social media portal and click through to revenue generating advertisements or sponsor sites will open the ability for airlines to generate further ancillary revenue, while remaining connected to the passenger throughout their flight experience.
Additional marketing data gathered through in-flight Wi-Fi can further drive revenue and loyalty potential by using the airline's 'captive audience' to complete passenger satisfaction and marketing surveys.
An airline can offer an incentive, such as 100 frequent flyer miles, while gathering vital information from qualified passengers rather than website visitors who may or may not be passengers.
Overall the potential full monetize in-flight wifi is clearly available, viable and passengers are willing to pay for it. In addition to direct revenue the model for secondary revenue should also be fully explored, without removing the primary revenue source...the passengers who use the service.
Frischling, who is also creator of the popular Flying With Fish blog over on Boarding Area (and tweets as @flyingwithfish on Twitter) recently co-authored the "The Airline Industry & Social Media - A Must-Have Strategic Guide For Airlines Marketing and Sales" in conjunction with the Innovation Analysis Group. You can find a sample of the report here, and buy it here.