Broadband in the sky seen as $52-B market
As airline passengers connect while they travel, inflight broadband can unlock a $52billion market in Asia Pacific by 2035.
Airlines can haul in $10.3 billion more in ancillary revenues, an over fortyfold increase, making the region the world’s largest single market for broadband-enabled services in 20 years.
This was according to new data from the ‘Sky High Economics” report of the London School of Economics and Political Science (LSE) in association with Inmarsat (ISAT.L), a leading provider of global, mobile satellite communications.
Passenger growth in APAC to be higher than anywhere else, with China due to displace the US as the largest market by 2024, and India becoming the third largest global market around 2025.
As a result, broadband-enabled ancillary revenues can add $3.33 extra per passenger in Asia Pacific – a 20% increase in global average earned in ancillary revenues by airlines to date.
As passenger numbers grow globally so too will passenger expectations for access to high-quality inflight connectivity, according to the study.
As such, access charges are expected to be the main driver of revenue initially in 2018 and will stay on an upward trajectory for the subsequent 20 years thereafter.
Overall, airlines around the world are expected to benefit from broadband access charges, e-commerce and destination shopping, advertising and premium content in the coming years:
The full service carriers are expected to benefit marginally more from broadband connectivity across all streams in comparison with low cost carriers; earning 53% of the total revenues available in the region in 20 years’ time.
This is as a result of the average duration of time spent flying and quantity of passengers flown, coupled with an analysis of passenger demographics in the region.
Indeed, “This is an exciting time for airlines in the region – not only are Internet technologies already transforming the travel experience for passengers, there is $10bn in new revenue streams on the cards for airlines to play for,” says Dr. Alexander Grous of the Department of Media and Communications, LSE and author of Sky High Economics.
“Interestingly, and reflective of International Air Transport Association (IATA) passenger growth forecasts, this figure outstrips those predicted for Europe and North America, at $8.2 billion and $7.6 billion respectively,” he added.
“Technology has finally caught up with passenger demand for seamless internet access in the cabin, meaning airline decision-makers can now move quickly to ensure they have the right capabilities in place to fully capitalize on the new business opportunities available to them,” concludes David Coiley, Vice President, Aviation, Inmarsat Aviation.