in Aerospace

LSE sees inflight broadband becoming a $130bn market by 2035

Posted 26 September 2017 · Add Comment

A first-of-its-kind research study, 'Sky High Economics: Quantifying the commercial opportunities of passenger connectivity for the global airline industry', carried out by the London School of Economics and Political Science (LSE) in association with Inmarsat, sees inflight broadband having the potential to create a $130 billion global market within the next 20 years, resulting in $30 billion of additional revenue for airlines by 2035.



Based on current IATA data and industry sources, Sky High Economics has developed an independent forecasting model. It predicts broadband enabled ancillary revenues for airlines will come from four main revenue streams:
•    Broadband access charges – providing connectivity to passengers inflight
•    E-commerce and destination shopping – making purchases on-board aircraft with expanded product ranges and real-time offers
•    Advertising – pay-per-click, impressions, sponsorship deals with advertisers
•    Premium content – providing live content, on demand video and bundled W-IFEC access



At present, only some 53 out of an estimated 5,000 airlines worldwide offer inflight broadband connectivity.   On the back of strong passenger demand, inflight internet will be ubiquitous on commercial aircraft by 2035. Currently, airlines receive an additional $17 per passenger from ‘traditional’ ancillary services such as duty free purchases and inflight retail, food and drink sales. Broadband enabled connected ancillary revenues will add an extra $4 by 2035.

Full service carriers look set to claim the lion’s share of airline revenues (63%), generating $19 billion by 2035. Capitalising on longer flight times, additional revenue will come from the ability to maximise e-commerce platforms and striking deals with content providers to offer premium packages. The Sky High Economics study predicts low cost carriers will generate $11 billion by 2035, the bulk of which will come from selling connectivity to passengers.

The research also identified that regionally, the greatest opportunity for broadband-enabled ancillary services is in Asia Pacific. Driven by passenger growth and availability of services, airlines in Asia Pacific will benefit from $10.3 billion of ancillary revenues by 2035, followed by Europe ($8.2 billion) and North America ($7.6 billion).

Dr Alexander Grous (B. Ec, MBA, M.Com, MA, PhD.), Department of Media and Communications, LSE and author of Sky High Economics said: “The opportunity available to airlines is enormous. The Sky High Economics study predicts the creation of a $130 billion market within the next two decades. Globally, if airlines can provide a reliable broadband connection, it will be the catalyst for rolling out more creative advertising, content and e-commerce packages.

"We will see innovative deals struck, partnerships formed and business models fundamentally changed for new players to lay claim to the $100 billion opportunity away from airlines. Broadband-enabled ancillary revenue has the potential to shape a whole new market and it’s something airlines need to be planning for right now.”

Frederik van Essen, Senior Vice President Strategy & Business Development, Inmarsat Aviation, commented: “As airlines start to act more like retailers, they will realise the benefits of closing the inflight connectivity gap. Doing so will lead to unlocking $15 billion per year in additional ancillary revenues within the next decade, one of the biggest sources of growth. The key to this potential and getting to the eventual $30 billion revenues, is fast, high quality inflight internet that can be relied upon without drop-outs.”

 

* required field

Post a comment

Other Stories
Advertisement
Latest News

Smiths Detection to enhnce security at Japan's Narita Airport

Smiths Detection has been selected to supply innovative solutions for people screening and search functions in Tokyo's Narita International Airport.

Air Mauritius takes delivery of its first A350 XWB

Air Mauritius has taken delivery of its first Airbus A350-900 aircraft, opening a new chapter for the Indian Ocean carrier. The aircraft, leased from AerCap, was delivered during a ceremony held in Mauritius today.

Maycast-Nokes wins National Apprenticeship Award

Maycast-Nokes has won the Medium Employer Of The Year 2017 (East of England) at the regional final of the National Apprenticeship Awards 2017.

Global airport industry climate action surpasses 200 airports

At this year's ACI World & Africa Annual General Assembly (WAGA) hosted by Airports of Mauritius Co, the global airport industry issued an update on the progress it has been making in addressing its CO2 emissions, through the

Rolls-Royce Trent 7000 powers A330neo first test flight

The Rolls-Royce Trent 7000 has successfully powered the new Airbus A330neo into the skies for its first test flight today.

Crawley Borough Council approves Boeing Gatwick hangar

Boeing's proposed plan with Gatwick Airport to build a new aircraft hangar has been granted permission to go ahead by Crawley Borough Council, with full works scheduled to commence later this year.

Aviation Africa SK18418
See us at
Advanced Engineering BT1007021117SMI FAV BT1007161117SMI AirMissBT0305251017SMI MilSat BT2907101117FIL18 BT111017220718Aviation Africa BT18418