Airlines to benefit from significant growth in broadband enabled e-commerce, advertising and premium content
23 January 2018: Inflight broadband has the potential to unlock a $5.2 billion market within the Middle East region by 2035, finds new data released today from the ‘Sky High Economics: Quantifying the commercial opportunities of passenger connectivity for the global airline industry’ report. Carried out by the London School of Economics and Political Science (LSE) in association with Inmarsat (LSE: ISAT.L), the world’s leading provider of global mobile satellite communications, the study forecasts that airlines in the region will take a $1.3 billion share of the boost in ancillary revenues.
Based on current IATA data and industry sources, Sky High Economics shows that airlines around the world will benefit from four new revenue streams:
Using the independent forecasting model, specially developed for the research, the quantified revenue opportunities for the airlines in the region are as follows:
Predicted airline profit of broadband enabled ancillary revenue opportunity in the Middle East
|Broadband access||E-commerce||Advertising||Premium content||Total|
The research argues that as passenger numbers grow globally, so too will passenger expectations for access to high-quality inflight connectivity. The data shows that when it comes to passenger value brought about by new, Wi-Fi enabled ancillary revenue streams, airlines will benefit from an extra $3.21 per passenger. At present, airlines around the world average an additional $17 per passenger from ‘traditional’ ancillary services like duty free purchases and inflight retail, food and drink sales.
Also, despite the gradual blurring that has occurred in the airline type selected by many business passengers, the Middle East region continues to represent one of the higher revenue opportunities for both domestic and international FSCs (Full Service Carriers) – in 2035, the split is LCC (Low Cost Carriers) at $239m vs FSC at $511m. The research confirms the very strong position many global FSCs have that are based there.
Dr Alexander Grous (B. Ec, MBA, M.Com, MA, PhD.), Department of Media and Communications, LSE and author of Sky High Economics, said: “The airline industry is rapidly evolving across the world, including the Middle East. This research shows that airlines have a clear strategic opportunity to become distinctly more retail-focused and reap the benefits of this.”
Ben Griffin, Vice President, Middle East, Africa and South Asia at Inmarsat Aviation, commented: “The latest advancements in satellite technology have unlocked exciting new opportunities for airlines to enhance their passenger experience, increase their operational efficiencies and grow important new revenue streams. Having the right capabilities in place – from the cabin to the cockpit – is the key to benefitting from everything that a connected aircraft can offer, today and in the future. As the Sky High Economics report has identified, airlines in the Middle East are extremely well positioned to take a lead with the game-changing new trend.”
Inmarsat is transforming the global aviation industry by bringing complete connectivity to every aircraft and flight path in the world. It is the first and only provider with a complete next-generation High-Throughput Satellite (HTS) network spanning the world. Inmarsat is also the only aviation broadband provider capable of connecting the complete aircraft from cabin to cockpit. Inmarsat’s world-leading passenger solutions are complemented by its industry-standard certified safety and operations services. GX Aviation is the world’s first global, high-speed inflight broadband service from a single operator. It allows airline passengers to browse the internet, stream videos, check social media and more during flights, with an on-board connectivity experience on par with mobile broadband services available on the ground.
NOTE TO EDITORS:
About Sky High Economics
Sky High Economics is the first research project to comprehensively model the socio-economic impact that the connectivity revolution in the air is set to have.
A copy of global Sky High Economics paper can be found here.
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Inmarsat plc is the leading provider of global mobile satellite communications services. Since 1979, Inmarsat has been providing reliable voice and high-speed data communications to governments, enterprises and other organizations, with a range of services that can be used on land, at sea or in the air. Inmarsat operates around the world, with a presence in the major ports and centres of commerce on every continent. Inmarsat is listed on the London Stock Exchange (ISAT.L). For more information, please visit www.inmarsat.com.
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The London School of Economics and Political Science (LSE) is one of the foremost social science universities in the world. LSE is a specialist university with an international intake and a global reach. Its research and teaching span the full breadth of the social sciences, from economics, politics and law to sociology, anthropology, accounting and finance. Founded in 1895, the School has an outstanding reputation for academic excellence. 16 Nobel Prize winners have been LSE staff or alumni. The School has a cosmopolitan student body, with around 9,500 full time students from 140 countries. LSE has a staff of over 3,000, with about 46 per cent drawn from countries outside the UK.