Pay-per-view and pay-per-flight business models for in-flight entertainment and connectivity (IFE&C) have "come of age" in the USA as airlines and consumers warm to the idea of charging and paying for such services, respectively, says long-time industry veteran Rich Salter.
"This is something that has been bantered about over for years - should airlines charge for entertainment or connectivity and it seems like the economy has forced some carriers into charging," says Salter, who co-founded moving map display maker Airshow and now works as chief technical officer for IFE firm Lumexis.
He adds: "The pay-per-view mentality has really hit and people seem to be more willing to swipe their cards now versus ten years ago. I think the take-up rates are a lot better now."
Several US carriers now charge passengers for in-flight entertainment and/or connectivity. Virgin America does both. It offers some live television for free, but charges for premium programmes and movies. Under a partnership with Aircell, the carrier's passengers can access the Internet for a fee via their own Wi-Fi enabled devices. Connectivity services will also be integrated into the IFE system.
These sorts of offerings create fresh ancillary revenue streams that may eventually offset a large portion of the costs associated with installing such systems.
"In the past, I was the old grey-haired guy around here, saying that pay-per-view was never going to pay for IFE. The IFE systems were too expensive but now with systems coming out that are half the cost of the legacy systems, it has a real shot that if [the ancillary revenue] is not going to be able to pay for it [installation, maintenance, etc], it certainly puts a big dent in it," says the Lumexis executive.
US Airways recently trialled Lumexis' fibre-to-the-screen IFE system on a single Airbus A320. The carrier offered passengers free usage of the seat-back system for the first month of the trial. Thereafter, it began testing pricing models such as $7 and $9 per-flight sessions and pay-per-view options for movies.
US Airways "got a lot of data on the pricing scheme and the take-up models each week. They are looking at that," says Salter, adding that the trial "went super for us and for US Airways".
While the US major has not opted to equip its domestic fleet with the Lumexis system, and has returned some equipment to Lumexis, Salter says California-based Lumexis is "very, very close" to securing a launch customer for its system.
"Since the last World Airline Entertainment Association (WAEA) exhibition [last year in Long Beach], we have been negotiating with airlines. We've had a tremendous response since the last show. We whittled it down to a short list of airlines who could be our launch customer."
Not all US carriers will opt to charge a fee for IFE&C, however. "In the United States, I think you'll see a carrier prepared to break that model, so there will be the rule and there will be the exception to the rule," says Inmarsat aeronautical business director David Coiley, noting that "what works in North America doesn't necessarily mean it will translate to the international environments".
Source: Air Transport Intelligence news