Connected aircraft show potential gains in market share worth US$33 billion

Technicians installing Satcom hardware. PHOTO: Jet Aviation

Satellite communications provider Inmarsat is touting the latest instalment of the Sky High Economics report it sponsors with the London School of Economics, which Inmarsat says shows airlines that have successfully installed “connected cabins” with Wi-Fi “have an immediate opportunity to win US$33 billion in market share from competitors”. (See AAV’s recent coverage of aircraft connectivity here.)

Sky High Economics – Chapter Three: Capitalising on Changing Passenger Behaviour in a Connected World, examines what it calls a “global shift” in passenger demographics, behaviours and attitudes to loyalty. The report says airlines face an “immediate need” to innovate and said the US$33 billion in of market share shift is “up for grabs” for those developing the digital inflight experience that passengers are seeking. This opportunity equates to 6 percent of the total annual commercial passenger aviation market, Inmarsat said when releasing the report.

“Within the next decade, Asia-Pacific will see the first truly digitally native generation, Generation Z (born between 1997-2012) become the largest group of air passengers of over 450 million, surpassing the Millennials by 41 percent,” the report said. “Paired with this demographic shift, digital disruption on the ground is driving expectations of inflight experience, and redefining attitudes to airline loyalty.”

According to the LSE research, Millennials (the largest passenger group today, born between 1981-1996) value loyalty less than any previous generation – a trend set to continue with younger generations. The report utilises current IATA data and primary research including data from frequent flyer schemes, interviews with regulatory agencies, airlines and passengers.

The report claims that a market exists of 450 million passengers who currently are uncommitted to any airline loyalty programme but who would switch their allegiance in favour of an airline offering high-quality inflight Wi-Fi.

This forecast is modelled using data from frequent flyer schemes, which reveal a market split into active, engaged frequent flyers (13 percent) and less engaged, brand-agnostic passengers (87 percent). Less-engaged travellers – many of whom are younger flyers with new expectations of travel – present the largest opportunity for airlines to take market share. Today, 12 percent of less-engaged passengers are willing to switch allegiance to an airline that offers reliable Wi-Fi, worth US$33 billion in share shift for airlines already offering the service to take from competitors. This sum is predicted to grow to US$45 billion in the next decade, by which time Generation Z is expected to be the airline industry’s largest customer base.

Philip Balaam, president, Inmarsat Aviation, said: “Within the next two decades, Asia-Pacific will be driving most of global air passenger traffic. In a region where Internet connectivity is increasingly becoming commonplace, we anticipate passengers will expect their on-the-ground habits and preferences to be replicated even when they are in the air.”

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Matthew Driskill is the Editor of Asian Aviation and is based in Cambodia. He has been an Asia-based journalist and content producer since 1990 for outlets including Reuters and the International Herald Tribune/New York Times and is a former president of the Foreign Correspondents Club of Hong Kong. He frequently appears on international broadcast outlets like CNN, Al Jazeera and the BBC and has taught journalism at Hong Kong University and the American University of Paris. Driskill has received awards from the Associated Press for Investigative Reporting and Business Writing and in 1989 was named the John J. McCloy Fellow by the Graduate School of Journalism at Columbia University in New York where he earned his Master's Degree.


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