APEX April 2012 - The pay-for-service model for inflight wi-fi is under press. Shashank Nigam, CEO of SimpliFlying makes a case for why the service should be free.

1. @jwrichte09
flying is so much more
enjoyable with internet access,
love the @Gogo flight tracker.
Thanks @Delta
34
DESTINED
TO BE FREE?
The pay-for-service model for inflight Wi-Fi is under pressure. Social media guru Shashank
The pay-for-service model for inflight Wi-Fi is under pressure. Social media guru Shashank
Nigam of consultancy SimpliFlying makes a case for why the service should be free
Nigam of consultancy SimpliFlying makes a case for why the service should be free
WORDS BY SHASHANK NIGAM ILLUSTRATION BY CALLUM LEWIS
APRIL 2012
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2. IFEC
35
@hharteveldt
Feeling very 21st century: I just
pre-ordered Steve Jobs’
autobiography for my Mom’s
Kindle using @Gogo in-flight
Wi-Fi on @Delta
LATE LAST year, well-known aviation industry shared over 10 photos of her travels,
analyst Henry Harteveldt boarded a Wi- showcasing everything from the Swiss
Fi-equipped Delta Air Lines fl ight from San Air lounge she visited at JFK to the ANA
Francisco. Being the early adopter of technology Boeing 787 she saw in Frankfurt. Her social
that he is, Harteveldt continued his connected activity wasn’t just a one-way broadcast – she being
lifestyle at 35,000ft just as he would from his received 89 reply tweets during her journey. online in
living room. After paying for his Gogo Wi-Fi While Yeo might seem over-active on fl ight, Yeo said
connection, he went on to pre-order Steve Jobs’ social media during her travels, she’s not she’s “happy to disconnect
biography for his mother’s Amazon Kindle. an exception. A recent study we conducted while flying”. Interestingly, for
Then came a tweet exalting the feat. at SimpliFlying showed that frequent fl iers a large majority of travellers who are on Wi-Fi
Across the continent in Washington, DC, in are twice as likely to use social media as the equipped fl ights, the experience is similar. They
early January, aviation journalist Ghim-Lay average US adult. simply do not get online while in fl ight. But
Yeo was travelling to Singapore. During her 28- Despite the surge in activity while she was there’s more to the story than just their need for
hour journey from the US capital via New York travelling, the reality is that Yeo only tweeted solitude at 35,000ft.
and Frankfurt, Yeo sent out 71 tweets, updated from the ground. That’s because the Singapore In the USA, infl ight connectivity provider
her Facebook status 12 times and checked in on Airlines Airbus A380 she flew on is not yet Gogo’s air-to-ground (ATG)-based system
Foursquare eight times. While she was at it, she equipped with Wi-Fi. When asked if she missed is installed and flying on some 1,166 aircraft
APEX | AIRLINE PASSENGER EXPERIENCE
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3. IFEC
that operate principally over the contiguous
THE FREQUENT FLYER PARTICIPATION LADDER
domestic states. But papers fi led by the
company for an IPO of shares reveal an abysmal
paid-usage rate of less than five per cent. FREQUENT FLIERS
Typically, Wi-Fi costs USD12.95 for a 24-hour
period on Gogo and a little less for connecting
mobile devices only. 27%
Despite the low percentage of travellers using
Wi-Fi, the number is likely to rise as more
satellite-based Wi-Fi systems are installed
on international aircraft. Across the Atlantic,
Lufthansa – the largest customer of Connexion
38%
by Boeing’s now defunct infl ight connectivity
US ADULT ONLINE
service – has reignited its so-called FlyNet
Wi-Fi service in partnership with Panasonic CONSUMERS
Avionics, and is fitting the rest of its long-haul CREATOR
13% (publish content)
fleet with Panasonic’s system. Middle East
carriers like Emirates, Oman Air and Gulf
18%
Air are also aggressively fitting their fleets
with connectivity.
19% CRITIC
(comment and post)
The tipping point for infl ight Wi-Fi 28%
availability (as opposed to usage) is near. Yet, as
15%
revealed by Gogo, the percentage of travellers
COLLECTOR
connecting in flight – at least on US domestic (use RSS or feed readers)
routes – isn’t nearly the same.
A few factors can explain this conundrum.
19%
First is the issue of pricing. Travellers today JOINERS
already feel nickel-and-dimed to the max by (publish, comment, share) 54%
airlines charging for everything from bags to
food. So paying extra for Wi-Fi seems like yet 33%
36 another expense that most travellers may not SPECTATOR
be willing to incur unless absolutely necessary. (read, watch but don’t interact)
Moreover, since the technology is new, there
are also connectivity issues. The speed can
be slow if a lot of people are logged in at the
same time – during free Wi-Fi promos, for LESSONS FROM AIRPORTS defi nitely be open to [free Wi-Fi] if there are
instance. As one traveller commented on the To make inflight Wi-Fi commercially viable, sufficient alternative revenue sources.”
APEX Editor’s blog, “The Gogo stuff just doesn’t perhaps airlines need not look farther than
work well in the air. Too many dead spots and airports. Since Toronto Pearson International GET THEM HOOKED!
connectivity issues.” If people pay for it, they Airport made Wi-Fi available free of charge, One of the potential reasons for the low Wi-Fi
expect reliability, which is something the usage has jumped ten-fold. Las Vegas Airport adoption rate in fl ight is that most travellers,
suppliers are working on. officials carry around badges at conferences like Ghim-Lay, don’t miss it enough. They don’t
Unfortunately, at the current usage rate, it that tout the benefits of free Wi-Fi, a testament appear to see the need for it yet, since most of
may take decades before airlines are able to to the fact that giving free Wi-Fi has worked them have never been exposed to the benefits.
recoup their investment of equipping their well for them. Airlines could consider following the
aircraft with Wi-Fi (though several airline An increase in the number of users in fl ight business model of WhatsApp, which is like a
customers of Gogo enjoy revenue-share would give rise to the walled-garden effect. Blackberry Messenger for all smart phones – it
agreements with the provider). The captive customer, connected to the internet allows people to text one another for free. The
The inflight Wi-Fi business model needs while in the air for seven to 20 hours, is a mobile app is free for the fi rst year and charges
to be commercially sustainable to prevent it treasure trove for marketers. There are multiple a minimal fee from the second year onwards.
becoming a huge liability for airlines. revenue opportunities here, from advertising The crux is that the free model upfront is
Azran Osman-Rani, the CEO of AirAsia X on the landing page to getting a commission driving membership and then earning huge
on purchases the revenues simply by dint of the volumes gained.
customers make Once airlines make infl ight Wi-Fi
@Craig Elimeliah while in fl ight.
In this regard,
indispensable for most travellers, surely a larger
number would eventually be willing to pay a
the @Gogo Wifi on this flight is airlines need reasonable amount to keep their “habit”.
to learn from To drive further adoption, airlines should also
spotty and keeps losing signal Starbucks, a brand look into making it easier to pay for infl ight Wi-
that has done a Fi. They could make Wi-Fi an ancillary add-on
wonderful job that could be acquired by customers at the point
says, “As a low-cost carrier, we have to ensure of getting customers hooked to its largely free of ticket purchase. Infl ight GSM/GPRS services
that any additional costs incurred have to be internet service and now cross-sell and up-sell are charged to passengers’ monthly phone bills,
supported with revenue generation [before a variety of products and services. and many businesses cover the cost of employee
installing infl ight Wi-Fi].” Osman-Rani of AirAsia X notes, “We would cell phone usage. Once 3G mobile services
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4. w
IFEC
WI-FI SNAPSHOT
are available and mobile connectivity prices mentioning his flight. These responses can be
come down, we might see further adoption by collated over time and analysed. The airline
airlines of internet via mobile connectivity. may even do away with focus groups due to the HOW WI-FI AFFECTS TICKET BUYING
A Lufthansa spokesperson says about their real-time feedback it can get. DECISION, BROKEN DOWN BY AGE
infl ight Wi-Fi offering, “FlyNet, like satellite Now, imagine every plane in the air being
phones, is an add-on service to customers” and an individual marketing node in the airline’s
they expect customers to pay for it. network. Travellers to Dubai can be offered a
visit to the top of
Burj Khalifa and
those going to Paris
@Andrew Grinalds
Impact
may be offered
basic French
Awful @Gogo inflight wifi lessons and city
service. Not even enough walking tours, all
through partners.
bandwidth to stream music on And the airline Age
can take a cut. The
flight from JFK to SFO. $15 ripoff. opportunities to
$399 a year?! # monopoly drive customer
service for IMPACT ON SELECTING AN AIRLINE
the connected Inflight internet has little impact on
CUSTOMER ENGAGEMENT PLATFORM traveller are endless, ultimately improving passengers choosing an airline. In fact, the
Did you know that if you are about to miss your the flying experience dramatically. Increased availability of Wi-Fi was the second lowest
Virgin America connection, the airline often usage brings with it some downfalls too. At factor of those tested.
re-books you while you’re on your previous present, some connectivity speeds are not
flight and tweets or emails you the details so flattering. And as more people log on to inflight IMPACT BY AGE
that you have those even before stepping into Wi-Fi, there will be a need to ensure that The availability of inflight internet has the
the terminal? When a majority of travellers are speeds remain comparable to what travellers strongest impact on passengers age 26
connected on a fl ight, there are a multitude of experience on the ground. to 30 (shown by the green line). Starting
opportunities for the airline to better engage Airlines can play their part by regulating with age 31, the impact of Wi-Fi steadily
38 them. Someone who uploads photos of their usage possibly through a “freemium” model declines. The rate at which it declines
meal can be rewarded instantly for advocacy. – where free Wi-Fi users may get limited (shown by the orange line) is the fastest of
If a passenger tweets about bad service, the bandwidth or only have access to emails. all factors.
infl ight supervisor can immediately address Th is will ensure a better service for those
this, since he’d be monitoring online updates who’ve paid. COMPARISON TO TICKET PRICE
To put this in perspective, the red line in the
graph shows the impact of ticket price.
WHAT INFLUENCES YOU WHEN BUYING AN AIRLINE TICKET? © 2011 digEcor, Inc.
RESULTS ARE BASED ON A STUDY OF 542 PASSENGERS, OF
WHICH 47 PER CENT FLY ONCE A YEAR AND 26 PER CENT FLY
EVERY SIX MONTHS. SIXTY-ONE PER CENT OF RESPONDENTS
RESIDE IN THE UNITED STATES
0 *Based on a scale
1 of 0 to 5 (0 being No
2 influence and 5 being
# of Responses
3 Very influenced)
4
5
© 2011 digEcor, Inc.
Ticket Price # of Stops IFE System Type Meal Service Movie & TV Inflight Internet Frequent Flyer
Most Important 2nd Most Show Selection Least Important Programme
Important Least Important
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