Sky-high Wi-fi club prepares for liftoff
On-board Wi-fi plus a captive audience equals advertising revenue. It's a formula that airlines hope will turn what has always been a cost centre - their in-flight entertainment systems - into a profit generator.
More airlines in Asia plan to install wireless systems on aircraft that will be able to broadcast commercials in addition to entertainment such as music and movies.
'In the next 10 years, around half, if not more, of the new aircraft in [the] Asia-Pacific will be equipped with Wi-fi connection,' said Michael Reilly, chief operating officer at Stellar Entertainment, a Sydney-based provider of content and technical solutions for in-flight entertainment, which is outfitting the wireless platform for Virgin Atlantic.
An estimated 20,000 new aircraft will be delivered in the region in the next 20 years, according to projections by aircraft makers Boeing and Airbus. And an aircraft cabin is considered to be a near-perfect avenue for advertisers because lots of affluent passengers are locked up for several hours during a flight.
But the exisiting on-board technology doesn't allow for timely in-flight advertisements. It is a lengthy process to convert a commercial that can run on the current back-of-the-chair monitors, so most of the ads available on-board now are limited to brand advertising for such international names as camera maker Nikon, jeweller Cartier, cosmetics producer Lancome and Shangri-La Hotels.
Marketing content had to be ready 30 days in advance so there was time 'to format it and make it compatible with the system', Reilly said. Given the time needed to produce the ad in the first place, it translated into 60 to 90 days' lead time, he said.
But with Wi-fi technology, Reilly said the turnaround time would be cut to about two to three days, enabling ad hoc promotions, and widening the scope of on-board marketing.
Whether it's a good alternative for potential advertisers 'depends on the type of Wi-fi provided by the airline,' said Lum Kit Wuan, a representative in Singapore for Redhot Media Group, a London-based media consultant and buyer. If it were controlled Wi-fi access, which means passengers could only download content from the on-board server, then it would provide a new platform for advertisers, giving them the advantage of broadcasting more targeted ads, she said.
But if an aircraft's Wi-fi system allowed passengers to surf the internet, then the concept of on-board advertising would lose its edge, Lum added.
For budget airlines, the general idea of on-board Wi-fi is particularly appealing because the set-up cost for wireless-supported in-flight entertainment is a fraction of the traditional screen-and-cable system, which can be as much as US$1 million for a single aircraft. Moreover, lightening the load by taking away the monitors and cables connected to the airplane's server, translates into millions of US dollars in potential fuel-cost savings.
An added bonus: the carriers can charge passengers for renting the gadget, such as an iPad, and thus recoup some of their outlay. For instance, Scoot, a fledgling long-haul budget carrier owned by Singapore Airlines, charges economy passengers S$22 (HK$131) a trip to rent a tablet, which is pre-loaded with movies, music, games and television shows. Business travellers, however, can use the gadgets for free. For now, the iPads offered by Scoot as well as Jetstar, a budget carrier associated with Australia's Qantas, are Wi-fi disabled.
Air Asia X, a Malaysia-based long-haul low-cost carrier is also looking to offer on-board Wi-fi later this year, but that service will be enabled. Unlike the newer budget carriers, longer-established, full-service airlines consider in-flight entertainment as a service rather than a revenue source.
But the new technology is likely to overturn that traditional thinking, Stellar Entertainment's Reilly contended.
Already Virgin Australia, the country's second-biggest carrier, plans to introduce Wi-fi later this year, and Hong Kong's Cathay Pacific as well as Guangzhou-based China Southern Airlines have said they will consider such a move in future.
Panasonic Avionics, the major provider of wired in-flight entertainment, including the monitors embedded on the seat backs and on-board cables, sees wireless as complementary to traditional systems rather than as a threat to replace the existing entertainment network.
'The fundamental issue with wireless as a stand-alone in-flight entertainment system is its performance,' Panasonic Avionics spokesman Brian Bardwell said.
'The technology today cannot support a lot of passengers using their own devices at the same time without issues that would affect the perceived quality of entertainment services.'
Stellar Entertainment's Reilly added that his company conducted a successful experiment by streaming a piece of content to 100 devices, including tablets, smartphones and laptops.
But, due to the limited bandwidth available on an aircraft, the quality of the video content was compromised so as to reduce so-called buffering.
The projected percentage of new aircraft in the Asia-Pacific that will be equipped with Wi-fi connection in the next 10 years