Spending on in-flight entertainment (IFE) and communications is expected to fall this year for the first time in 10 years as airlines defer and cancel aircraft deliveries.
The end of the IFE boom is also expected to hit the take-up of new technologies, particularly broadband connectivity. Broad-band services will need to be justified on the basis of operational requirements and not just passenger entertainment, according to IFE specialist training and consultancy company Inflight Management Development Centre (IMDC).
Before 11 September, airline spending on IFE this year was expected to top $2.2 billion, up from $2.02 billion last year. In its Inflight Entertainment and Communications Outlook 2001, IMDC now predicts it will fall to $1.95 billion. It is the first time since the early 1990s that IFE spending has failed to rise as airlines moved towards seatback systems, says IMDC's Wale Adepoju.
IMDC says that due to the downturn the main IFE system suppliers - Matsushita Avionics Systems, Rockwell Collins Passenger Systems and Thales Avionics - will experience near-term cash-flow problems, with revenue reductions of up to 25%.
IMDCexpects airlines to spend more on IFE when the slowdown ends - IFE was used as a "fight-back tool" after previous crises such as the Gulf War and Asian slump.
New technologies, includinge-mail/internet, are most likely to be put on hold, says IMDC. Broadband connectivity could be delayed by up to two years.
IMDC believes that broadband services will only be economically feasible when operational benefits justify the investment.
Source: Flight International