Report: Airlines Seek Broadband Revenue9 Jun, 2008 By: Erik Gruenwedel
Seeking incremental revenue has become a mandatory focus for a fiscally challenged airline industry beset by skyrocketing fuel costs and a depressed U.S. economy.
Airlines are banking that in-flight broadband video and Internet-enabled services will generate $936 million in global revenue by 2012, according to a new report.
Multimedia Intelligence, a Scottsdale, Ariz.-based technology data tracking company, said broadband-enabled test flights incorporating either satellite or air-to-ground live television broadcasts and movies would generate $6.6 million in revenue this year.
The industry, which already charges additionally for in-flight food and even some basic snacks and beverages, recently targeted baggage when American Airlines said beginning June 15 it would charge a $15 fee for each checked bag.
The carrier also upped from $5 to $50 supplemental service charges for handling pets and oversized baggage, including bicycles.
In-flight broadband connectivity appeared dead several years ago after Boeing ended attempts to incorporate the technology in its aircraft. Now, new lighter-weight systems (sans non-aerodynamic external antennas) have been developed that could save a typical airline nearly $15 million annually in related fuel costs, according to MMI.
Additionally, the in-flight broadband market has a strong correlation to the on-ground Wi-Fi hotspot market, a segment MMI said would account for 50% of access sessions in 2008.
"In-flight broadband is entering a new era," said Amy Cravens, contributing analyst with MultiMedia.
She said advances in broadband-enabled content would have an impact on portable DVD usage on airlines in the long term. Increased variety of in-flight broadband entertainment could be a boon to traveling parents currently subjected to carrying DVDs and players as additional, costly baggage, she said.
“We see a lot diversity of entertainment options,” Cravens said. “Opportunities for in-flight live TV will replace some DVD use.”
Regardless, revenues from in-flight broadcast video are still anticipated to nearly double in 2009, according to the report.