Research by the London School of Economics in association with Inmarsat shows inflight broadband has the potential to generate a $130 billion global market within the next 20 years.
A study entitled Sky High Economics: Quantifying the commercial opportunities of passenger connectivity for the global airline industry used current IATA data and information from industry sources to develop a forecasting model. It predicts that broadband ancillary revenues will come from four main streams – access charges, e-commerce and inflight shopping, advertising and premium content.
LSE says 53 of an estimated 5,000 airlines worldwide offer broadband connectivity on board, however, it predicts that access will become ubiquitous by 2035 due to customer demand. Long-haul flights will lead the way in generating more revenue through e-commerce and premium content, according to the forecast, while low-cost carriers have an opportunity simply by selling access to broadband.
Dr Alexander Grous from LSE and author of Sky High Economics said: “Globally, if airlines can provide a reliable broadband connection, it will be the catalyst for rolling out more creative advertising, content and e-commerce packages. We will see innovative deals struck, partnerships formed and business models fundamentally changed for new players to lay claim to the $100 billion opportunity away from airlines. Broadband-enabled ancillary revenue has the potential to shape a whole new market and it’s something airlines need to be planning for right now.”
Frederik van Essen, senior VP of strategy and business development at Inmarsat, commented: “As airlines start to act more like retailers, they will realise the benefits of closing the inflight connectivity gap. Doing so will lead to unlocking one of the biggest sources of growth. The key to this potential and getting to the eventual $30 billion revenues, is fast, high-quality inflight internet that can be relied upon without drop-outs.”
inmarsat.com