InFlight Connectivity Comes of Age
In-flight connectivity is finally taking off after years of false starts. Emma Kelly examines today’s technology and its prospects for success this time around.
‘Connectivity’ is the current buzzword in the in-flight entertainment (IFE) and communication industry. But then, it has been for almost 10 years.
Way back in the late 1990s, IFE, in-flight communication and satellite manufacturers and service providers jostled to form partnerships to deliver the next big thing in airline passenger services, but only now is in-flight connectivity finally coming of age.
A number of major players, not least Boeing and its (now-defunct) Connexion broadband business, have tried their hand in connectivity, and a number of new partnerships have been formed along the way, including Rockwell Collins and media giant News Corp with their failed In-Flight Network venture. However, few have survived – or even made it off the ground, in many cases.
Today there is a host of players – including Aircell, Panasonic Avionics, Row 44, AeroMobile and OnAir – offering in-flight connectivity. In many cases, they are succeeding where the early pioneers failed.
The biggest casualty in the business to date is Connexion. Boeing launched the business in April 2000, promising full internet connectivity, e-mail, live television and audio for airline passengers at mobile-phone prices, with services delivered via passengers’ laptops.
The venture intended to make use of Boeing’s phased-array antenna, developed for the military, and to capitalise on the space and communications expertise within its organisation. The manufacturer brought together a team of suppliers, including: satellite operator Loral Skynet, which was to provide the space segment via leased transponders on its geostationary satellites; IFE platform provider Matsushita Avionics Systems (now Panasonic Avionics) providing onboard avionics, cabin distribution networks and IFE system interfaces; Mitsubishi Electronics, supplying electronics; content providers CNN Inflight Services and CNBC; and Alenia Spazio, which was lined up to provide aircraft modifications.
Boeing had high expectations for Connexion, predicting revenue of US$2-3 billion a year by 2009. The plan was to start rolling out the services in North America in 2001, with Europe following a year later, then the North Atlantic and Pacific in 2003, and Asia and the rest of the world from 2003/4. But the venture failed to go according to plan and cost the manufacturer far more than it ever imagined – US$800 million-plus.
Boeing made slow progress in securing airline customers, but by June 2001 it had Memoranda of Understanding (MoUs) in place with American Airlines, Delta Air Lines and United Airlines to be launch customers, each agreeing to equip 500 aircraft within five years, in return for a stake in the broadband provider. In addition, Germany’s Lufthansa had signed an MoU on a non-equity, standard-service deal.
But then came the terrorist attacks of 11 September 2001 and the subsequent downturn in the airline business. In November 2001, the three US carriers withdrew from Connexion to focus on their core business.
In 2003, Lufthansa launched a Connexion trial and the following year started rolling out the service across its long-haul fleet, eventually equipping 60-plus aircraft. Eventually, Boeing signed up 11 airlines for Connexion, with the Asia-Pacific region proving its most fruitful market, with All Nippon Airways, Asiana Airlines, China Airlines, Japan Airlines, Korean Air and Singapore Airlines as customers.
Even so, in August 2006, the manufacturer announced plans to close Connexion after failing to turn it into a viable business. “Regrettably, the market for this service has not materialised as had been expected,” Boeing Chief Executive Jim McNerney said at the time.
Boeing wasn’t alone. Rockwell Collins also tried and failed in its entry to in-flight connectivity. In 2000 the avionics manufacturer, which, at the time, was a leading supplier of IFE systems for widebody aircraft, formed the In Flight Network (IFN) joint venture with News Corp to provide airline passengers with in-flight internet, email and global live television.
Flight trials were scheduled to start in 2001 and full-scale service in 2002, with services to be delivered via the Globalstar low-Earth orbit satellite system. Digital wireless communications company Qualcomm was also part of the team. However, following slower-than-anticipated market development and a failure to secure a launch customer, Rockwell Collins pulled the plug in 2001.
Many other companies and partnerships fell down along the way, including Inflightonline and AirTV. But today’s players seem to have learned the costly lessons of the past, and airlines and their passengers now appear to be ready for in-flight connectivity.
To date, Aircell has focused its attention on the North American market, where it is having considerable success with its Gogo in-flight internet service. In August, the service celebrated its first birthday, with Gogo now available on more than 520 aircraft and eight airlines – American Airlines, Air Canada, AirTran Airways, Delta Air Lines, Northwest, United Airlines, US Airways and Virgin America – already offering Gogo or signed up for it. AirTran and Virgin America have Gogo available on every flight.
“The growth of Gogo Inflight Internet, coupled with the phenomenal customer feedback we’ve received, have been a testament to passengers’ desire for in-flight connectivity and the staying power this technology is poised to have,” says Ron LeMay, Aircell’s president and chief executive officer.
“As envisioned, in-flight internet is quickly becoming ubiquitous and a ‘must have’ for passengers,” he adds. “Nearly 2,000 Gogo-equipped flights take off each day, with that number continually climbing.”
Aircell says it is in various stages of negotiation with most of the other major carriers, and talking to all of them.
Gogo works via Aircell’s air-to-ground (ATG) network, which has been developed since the early 1990s to provide in-flight communications. Gogo turns an aircraft into an internet hotspot, allowing passengers to surf the web, check e-mails, send and receive instant messages and log into corporate VPNs.
The system comprises three, small, external air-to-ground antennas, wireless access points, an ATG communications unit and a control processor unit. The kit weighs just 125lbs and can be installed overnight, according to Aircell.
Passengers connect via their own, familiar Wi-Fi enabled devices, with Aircell noting that more than 65 percent of business travellers and one-third of leisure travellers in the US carry laptops, while 30 percent carry Wi-Fi-enabled phones and PDAs when they fly. Once the aircraft reaches 10,000ft, passengers can turn on their Wi-Fi devices, open their browsers and are directed to the Gogo portal page where they sign up and can start using the service.
Standard pricing ranges from US$5.95 to US$12.95, depending on the length of the flight and the type of Wi-Fi-enabled device used. Aircell also has a Gogo 30-day pass, which at US$49.95 allows unlimited use of Gogo over a 30-day period on a single airline.
Aircell is now working with Air Canada to secure approval from the Canadian authorities to allow the carrier to offer Gogo on two aircraft operating cross-border flights, while the aircraft are in US airspace. Air Canada plans to offer Gogo towards the end of this year, the service provider says.
“We plan to negotiate a business arrangement with SkySurf, the Canadian ATG licensee, to expand our service footprint and enable airline passengers to enjoy in-flight internet service seamlessly and consistently in Canada and across the border. We have not announced a specific timeline for the development of this service,” says Aircell.
“At this time, Aircell is focused on successfully completing its roll-out on our clients’ domestic fleets,” it adds. “In the future, Aircell will be expanding its network and presence throughout the remainder of North America to include Canada, Mexico and the Caribbean.”
Following its success in North America, Aircell is looking at ways to extend its services beyond the continent, with a number of the company’s airline customers believed to be interested in an international offering.
“Beyond North America, we are drawing upon our ATG and satellite backgrounds to explore the most cost-effective connectivity solutions globally,” Aircell says. “We have not yet announced specific plans, timelines or any planned partnerships.”
After a number of delays, particularly relating to antenna development, Panasonic Avionics is working towards the first customer launch of its eXConnect broadband offering next year.
The IFE system manufacturer has been working on its connectivity offering for a number of years. The eXConnect broadband internet and data services are part of Panasonic’s Global Communications Suite, which also includes the eXPhone in-flight GSM smartphone services, Panasonic Airborne Television Network and eXCell GSM/3G cellular modem ground connectivity.
The service will operate through Intelsat’s Ku-band satellites, delivering Wi-Fi connectivity supporting internet and e-mail, along with mobile telephony through AeroMobile. EMS Technologies and Starling are supplying the antenna for the service. Installation takes a couple of days, but can be carried out in segments to reduce the amount of time the aircraft stays on the ground, Panasonic says.
“Several airlines have already signed up for eXConnect, but the exact [launch] plans are quite flexible and dynamic as we launch new services like this. Exact details will be finalised as we near the actual launch date,” Panasonic says.
The company has five customers signed up for eXConnect – two in Asia, two in Europe and one in Africa, with one of the European customers believed to be Lufthansa.
“We have had extensive discussions with many of our airline customers, but we’re not able to disclose specific airlines at this time,” says the company. “The coverage rollout plan will be announced soon with the launch airlines. It will be a phased rollout of service, based on customer preference and regulatory approvals.”
Geographic coverage will gradually be expanded in line with regulatory approvals, while capacity will be increased in accordance with demand, says Panasonic.
Prior to the service’s launch, the company plans to conduct a trial later this year, using a Boeing Business Jet. “In order to provide the best product possible to our customers and because of the complexity of this system, we must make sure everything works effectively,” Panasonic says.
According to the company, pricing will range from US$11.95 per hour to US$21.95 for 24 hours, with the full pricing structure to be revealed with airline customers once the service is ready for rollout.
Services will be available via passengers’ Wi-Fi-enabled devices, but will also be integrated with Panasonic IFE systems as an available data channel from the start, says the company.
“The development and implementation of integrated, connectivity-enabled passenger and crew applications will follow. eXConnect can be accessed via any IFE system or as a standalone option. However, most people will likely access via a Wi-Fi device, like a laptop or phone,” says Panasonic.
“The airlines are very interested in this service and see the many benefits of eXConnect,” the company says. “Offering this to their passengers not only will strengthen the loyalty to the airline brand, but differentiates them from their competitors. In addition, overall operational savings and new revenue-generating services are top priorities for airlines and eXConnect helps provide these tools and opportunities.”
Like many of its competitors, Panasonic is also looking at eXConnect as an airline operational tool, for the low-cost, two-way transmission of services and operational data that are not safety-related.
A few steps ahead of Panasonic is Row 44, which has recently completed technical and commercial trials with Southwest Airlines and Alaska Airlines and is working towards its first launch with an airline outside of North America later this year.
Row 44’s onboard kit comprises an externally mounted antenna system and five internally mounted line-replaceable units – an antenna control unit, modem data unit, high-power transceiver, server management unit and cabin wireless local-area network (LAN) units. It offers two options – a picocell system allowing the use of mobile phones, and a media server which provides additional onboard storage for content, applications and e-commerce capabilities. Services are delivered via Hughes Network Systems Ku-band satellites.
The system weighs 150lbs and can be installed in two overnight stops. It supports full internet access, voice over internet protocol (VoIP) services, mobile-phone roaming (although this is not allowed in the US) and live television. The system’s datalink speed averages more than 30Mb/sec, allowing true broadband services to be offered, according to Row 44.
Row 44 has full regulatory approval to operate in the US, Canada and Mexico, having recently won a permanent operating licence from the US Federal Communications Commission.
In the US, Southwest and Alaska have conducted trials of the service, with both airlines saying they are “extremely pleased with the system’s performance and potential”, according to Row 44 vice-president of business development, Frederick St Amour.
Southwest is so pleased that it announced in late August that it will equip its fleet of 540-plus aircraft with Row 44 systems, starting in the first quarter of 2010. The low-cost carrier has been testing Row 44 on four aircraft since February, allowing passengers to access the internet, use e-mail and stream video via their own Wi-Fi-enabled devices.
“We have concluded our testing for in-flight Wi-Fi and are very happy with both the technical performance of the system and the response of customers who have used it,” says Dave Ridley, Southwest Airlines’ senior vice-president of marketing and revenue management.
Alaska Airlines also plans to equip its fleet of 100-plus aircraft with Row 44 systems, having tested the service on one of its aircraft this year. The service provider’s first international test will come at the end of this year, when Norwegian Air Shuttle launches a trial on two Boeing 737-800s.
Beyond that, Row 44 is reluctant to talk about additional customers.
“Row 44 allows our customer airlines to make such announcements as they see fit,” St Amour says. “We don’t want to steal their thunder. We anticipate several announcements in the near future. We are working with a number of airlines to prioritise our activation of their services in the Pacific, trans-Atlantic, Africa and Asia in 2010, all of which are supported by requisite regulatory approvals.”
Row 44 claims its connectivity solution allows customers to do everything in the air that they now do on their terrestrial internet connections.
“Just as on the ground, higher bandwidth in the air translates directly into greater variety, flexibility, productivity and profitability. Row 44 delivers the highest bandwidth available to commercial passenger aircraft,” says St Amour. Services include true high-speed internet browsing, web and VPN e-mail, live television and sports, downloadable movies, games and other video content, plus mobile phone and SMS services where authorised.
The company is also working with a number of entertainment content providers on additional packages to offer airlines.
“We believe a host of new entertainment and connectivity services will begin to appear as in-flight broadband becomes more prevalent and demanded by commercial passengers,” St Amour says. The cost of a service will depend on flight duration and the device used, with more charged for a laptop than a smartphone, for example.
“We envision Wi-Fi access costing between US$5 and US$8 for short- to medium-range flights, and possibly a couple of dollars more for longer and international routes,” says St Amour. The executive believes Row 44’s solution offers an edge over competing systems for a number of reasons, starting with the fact that it offers a profitable, flexible business model that puts the airline in greater control of its brand, services and revenues.
“It is clear that in-flight connectivity will be a critical profit contributor to airlines,” St Amour says. “Does an airline really want to surrender that power to a supplier?”
Secondly, Row 44 says it offers the highest bandwidth available to commercial passenger aircraft.
“Low bandwidth and phone/SMS/GPRS solutions may be good enough for the near term, but do not and will not deliver the high-value services most sought – and paid for – by passengers,” St Amour says. “Nor do they offer the airline the opportunity to reduce its own operational expenses and complexities by employing the high-bandwidth channel for airline-specific data requirements.”
Furthermore, Row 44’s solution is global, allowing an airline to offer a common service on its domestic and international fleets, rather than mixing solutions, St Amour says. In addition, Row 44 can either operate separately, side-by-side with any IFE system, or be integrated with it to deliver greater value.
Other players in the sector include in-flight television provider LiveTV, which, following its purchase of the Verizon Airfone business, is offering its Kiteline and Oasis connectivity services in the US (although they are not broadband). LiveTV’s parent company JetBlue has introduced the services on its BetaBlue aircraft, offering passengers complimentary email, shopping and instant messaging via their own Wi-Fi-enabled devices.
ViaSat, which is already active in the business jet market through the SkyLink broadband service with ARINC and Rockwell Collins, is also keen to claim a slice of the airline market with its Ku-band network which is also being developed for other modes of transport, including boats and trains. The company is believed to have been in discussions with Lufthansa as part of a team involving VT Miltope, T-Mobile and TriaGnoSys, before the German carrier turned its attentions elsewhere.
VT Miltope and TriaGnoSys formed a partnership last year to develop a cabin network capable of supporting broadband internet access for crew and passengers, voice services, the transmission of non-critical crew information and management of IFE systems.
ARINC also has its own connectivity solution for airlines in the form of Oi (Onboard Internet). The communications specialist demonstrated the service at the Aircraft Interiors Expo-Asia in Hong Kong in early September. The service operates via Inmarsat’s SwiftBroadband, with passengers accessing it via laptops or the airline’s IFE system. ARINC has yet to announce airline customers for Oi.
Then there are the in-flight phone providers that are also fighting for market share. ARINC-Telenor joint venture AeroMobile has Emirates, Malaysia Airlines, Qantas and V Australia among its signed-up customers, with Emirates and Malaysia currently offering services on more than 40 aircraft.
AeroMobile operates via the Inmarsat satellite system, allowing passengers to use their mobile phones and PDAs in-flight. The service supports GSM voice, SMS text messaging and general packet radio service mobile data, with higher bandwidth services, for devices such as Blackberrys, supported by Inmarsat’s faster Swift64 and SwiftBroadband, as the latter becomes available.
Airbus-SITA joint venture OnAir lists AirAsia, AirAsia X, Air Blue, bmi, British Airways, Egyptair, Hong Kong Airlines, Jazeera Airways, Kingfisher Airlines, Libyan Airlines, Oman Air, Qatar Airways, Royal Jordanian, Ryanair, Shenzhen Airlines, TAM Airlines, TAP Air Portugal and Wataniya Airways among its airline customers. The service provider expects to exceed 100,000 flights before the end of this year.
OnAir uses Inmarsat’s SwiftBroadband service, which can support as many as 24 simultaneous voice calls and 432kbit/sec per data channel.
The company recently conducted a demonstration of the full range of its cabin and cockpit connectivity services during a 10-hour flight on an Airbus A340-600, which included travelling far north over Greenland to demonstrate the robustness of the system. Passenger services on the flight included internet access via laptops – both wireless and cable – along with calls, messaging, e-mail and internet access via mobile phones and smartphones.
“This milestone underlines OnAir’s leadership as the only service provider today capable of offering the full set of aircraft connectivity services for cabin and cockpit – GSM/GPRS and Wi-Fi internet with global coverage,” says Benoit Debains, the company’s chief executive officer.
OnAir believes IFE services will be delivered in future via mobile devices.
“With their larger screens, enhanced audio-visual capabilities and user-friendly navigation technology, today’s mobile phones are well equipped to serve not only as communications devices, but also as entertainment platforms,” says Debains. “Over the next two to three years, airlines will be able to migrate from current IFE systems to passengers’ mobile phones as the primary platform for IFE. Passengers will be able to access on-demand movies and games – even interact with other passengers via gaming networks onboard – using their own mobile phone or Blackberry-type device.”
The rush to grab a piece of the in-flight connectivity market comes as players in the industry believe now is the time for connectivity to take hold.
Connectivity pioneer Lufthansa believes broadband connectivity will be successful this time round. The German carrier has been in discussions with service providers since the demise of Connexion and is believed to be close to an announcement – possibly as soon as this year’s World Airline Entertainment Association annual show to be held in Palm Springs, California, from 5-8 October.
The airline is believed to have selected Panasonic and its eXConnect service for its long-haul fleet, although it has not confirmed this.
“It is correct that we are continuing our efforts to offer broadband connectivity on board in the future,” the airline says. “We also look forward to offering Wi-Fi plus GSM connectivity for smartphone [such as Blackberry or iPhone] users, while phone calls will be blocked. At this stage, timeline or information on possible partners are not available.”
Peter Lewalter, head of the airline’s cabin interior and IFE centre of excellence, says much has changed since the late 1990s, when Connexion was trying to get off the ground.
In 1999, when Connexion began, there was no guidance available, no precedent, no international laws to support the service and no hardware available, Lewalter told a recent WAEA workshop on connectivity. At that time, the business world was swamped with ‘.com’ hype, which was envisioned a web-based future and a belief that only the first in the market would survive. As a result, burning as much money as necessary seemed justified.
Connexion paved the way, securing approval from the IEEE to use Ku-band satellites for mobile services, sending out hundreds of lawyers around the world to get country licences, developing modems, antennas and ground facilities with industrial partners; setting up and operating a worldwide satellite network; and securing international standards.
But the venture was bound to fail – primarily due to the high costs involved. A full transponder was always required at the cost of US$2-2.5 million each. Furthermore, all items in the set-up were developed by or exclusively for Connexion, resulting in a huge research and development (R&D) organisation, a large customer-support organisation with more than 600 employees and the company being structured like an original equipment manufacturer.
Today’s broadband connectivity picture is very different, both in terms of technology and set-up, Lewalter says.
With the latest modem technology, for example, fractional transponder use is possible, with the network sized to meet regional demand and only 8 to 12 transponders required for worldwide coverage – compared with 36 for Connexion. In addition, today’s providers are using pre-existing R&D and customer-care organisations, allowing them to employ a small core team of not more than 100 people.
There has also been a dramatic change in customer behaviour. Demand for connectivity is increasing due to changes in the work environment, different private-life requirements for information, entertainment and social contacts, and next-generation users, Lewalter says.
As a result, the Lufthansa official believes today’s broadband companies should have only 20 percent of Connexion’s non-recurring costs; one-third of Connexion’s recurring costs; and 100-200 percent more revenue. “Broadband in the future will be successful and profitable,” Lewalter concludes.
Rich Salter, co-chair of the WAEA’s Technical Committee agrees. “Connectivity systems have now matured to the point that it is feasible to install them for a reasonable price, especially for an air-to-ground system such as Aircell’s in the US. Adding to this, the lower price of operation, due to the small size and lower weight of the new systems, makes this the time for connectivity to take hold,” Salter suggests.
Research by a number of companies also points to a promising future for in-flight broadband connectivity. US market research and consultancy firm, MultiMedia Intelligence (MMI), for example, predicted last year in its report, titled The Changing Face of IFE: The Re-launch of In-Flight Broadband, that the market for in-flight broadband services will rise to US$936 million in 2012 from initial revenues of US$6.6 million in 2008.
MMI believes that changes in passenger, airline and technology impetus are driving the evolution of in IFE and broadband connectivity. Among the passenger trends influencing IFE evolution are: decreasing usage of traditional IFE; increasing usage of personal devices during flights, such as laptops, DVD players and gaming devices; and changing passenger expectations.
Coupled with this, technology has changed, with the latest solutions typically weighing around 150lbs, compared with 1,000lbs previously. The systems are also cheaper at around US$150,000 per aircraft – previous systems cost several times more – and quicker to install, taking just a couple of days instead of weeks.
Much has changed in the market since the collapse of Connexion, MMI points out. “From a technology perspective, the difference between Connexion and second-generation solutions is night and day,” the report says.
The bottom line is that today’s solutions are priced at a fraction of what Connexion cost, it says. Boeing had invested about US$1.5 billion in Connexion, so by the time it came to market “the price tag was exorbitant” and few airlines could consider installing it, MMI says. The price, coupled with the effect of 9/11 on the airline industry meant that Connexion was impractical.
The second-generation systems cost less than half the US$500,000 per aircraft cost for Connexion, with Row 44, for example, quoting an installation cost of US$200,000 per aircraft, with this figure expected to fall to US$100,000 over several years with increased volumes, the report says.
In addition, the new systems can be installed in two overnight stops, compared with one week plus for Connexion, resulting in no disruption to airline schedules.
The pricing for services offered by second-generation systems is also much lower than Connexion. The Boeing-owned system would have charged US$25-39 per flight for access, while airlines with today’s systems can offer passengers access for US$10-13, or as low as US$8 on some flights, says MMI.
“Thus, the offering becomes appealing to both consumer and business travellers, greatly increasing the potential market,” it says.
Questions still remain over the future success of in-flight connectivity, however, particularly concerning what passengers will be prepared to pay for – the ever-present crunch question when it comes to the latest must-have IFE and communication services. Industry suppliers, service providers and airline IFE executives and marketers have often got excited about the latest service offering only to find that passengers aren’t prepared to fork out for it.
“There are obviously patterns of usage and marketing issues that the airline still needs to work out – validate the route and time-of-day usage and non-usage, how to best promote and market the service, and what to charge for access,” Salter adds.
MMI points out a number of hurdles that must be overcome. Among these are the large initial investment required when the service provider owns the access link, as well as the large amount of red tape that could impede time-to-market and hinder the ability to keep pace with fast-changing technology. There is also the potential for passenger disappointment if the service fails to meet expectations, uncontrolled hidden costs, and a possible negative impact on aircraft operating economics.
Still, the strength of demand and potential for profit justifies taking on these risks. In our networked society, the prospect of being forced to remain offline, even for a few hours while flying, is no longer something the public is willing to accept.