In-flight connectivity: the leaders and the laggards
Speaking about the operating environment for IFC providers and how airlines are perceiving the need for on-board connectivity, the former VP at Global Eagle Entertainment Inc said IFC has become a fundamental KPI for many of the major airlines. Indeed, for those that are striving for superior customer service, IFC is increasingly seen as a necessity rather than a cost.
The former VP said growth in the value of IFC has been consistent over the last two years — a “major trend” set to continue as other airlines “try to fill the gaps they don’t have”. However, many of the major players “have not figured out how to make money in the space,” he added. “This is a space where the growth potential is great, and the loss potential is great.”
On the service provider side, there will — inevitably — be winners and losers as they vie to win contracts. Among their challenges is monetisation due to the high costs involved in bringing slow-to-mature technology to the market.
Similarly, low take rates has led to high debt levels for businesses where revenue depends on flyers being willing to pay for wifi onboard, compounded by high installation costs. Meanwhile, cognisant of falling satellite costs, savvier airlines are negotiating lower-price deals or pushing back on price increases, according to our expert.
In such a dynamic sector with so many forces at play, our expert revealed who he sees as the leaders and the laggards — and why. All providers are going to be much more heavily scrutinised than ever before. “Now, these contracts are being presented to the CFOs and sometimes even the CEOs of airlines,” he said.
To access all the human insights from the In-flight Connectivity 2020 Outlook – Gogo, Global Eagle & ViaSat Interview, click below to view the full transcript.
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
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