FLUG REVUE February 2006: Internet access on board is future business

February 2006

IN-FLIGHT INTERNET ACCESS COULD BOOST AIRLINES' REVENUES

By Volker K. Thomalla

The internet is everywhere. It accompanies us as we go about our daily activities, playing an ever more important role in our working lives. The range of applications that it offers is enormous and is growing all the time. The next big expansion step for the global data network will be Voice Over IP (VOIP), which will become ever more popular thanks to its simplicity and low costs.

In an era of sophisticated in-flight entertainment systems, it should be obvious to the airlines that every passengers on a long-haul flight needs to be offered this medium, if for no other reason then because it represents an opportunity for the airlines to earn additional revenue which the beleaguered industry could certainly use.

Yet the reality suggests otherwise. “Connexion by Boeing”, the world's leading provider of broadband internet access above the clouds, has so far only attracted only 13 airline customers. These include Lufthansa, Singapore Airlines, SAS, ANA, JAL, China Airlines, El Al, Korean Air, Asiana, Austrian Airlines and Etihad – many of them airlines of world renown. Yet so far only SAS has equipped its entire long-haul fleet with the new facilities. As the first airline in the world to have offered in-flight internet access, Lufthansa has shown once again how innovative it can be. Yet its intercontinental fleet is not yet fully upgraded, so that passengers cannot be certain when they make their bookings whether they will be able to go online or not during the flight.

Not a single American airline yet appears in the Connexion customer list. This lack of initiative caused by the financial plight of the carriers is something which the US airlines will soon come to regret, as passengers on the lucrative long-haul markets are bound to come to view on-board internet access as a necessity they cannot do without and will adjust their booking behaviour accordingly.

Once the message has got round in companies whose staff make regular business trips that they could be in e-mail contact with the office in real-time during their long-haul flights, the true sales potential of this technology will become apparent. Corporate travel departments will then make their reservations according to whether on-board internet access is available or not. The boost to productivity that a company can enjoy as a result should not be underestimated. It is here that the true potential for the airlines lies. We are not talking just about the few extra euros or dollars generated from selling passengers a wireless laptop connection to the internet; but the very fact that the facilities are available will attract extra business, causing passengers to become less price-sensitive. Along with the ticket price, the availability of in-flight internet access will become a critical factor in determining which airline gets the reservation. The trend towards more non-stop flights and towards ever longer flights will increase the pressure on the airlines to offer on-board internet services. Airlines which neglect to provide their passengers with in-flight web access will be the losers in a few years' time.

From page 4 of FLUG REVUE 2/2006

Last updated 12 January 2006

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