Inflight broadband has the potential to unlock a $5.2 billion market within the Middle East region by 2035, according to a new report.

Airlines in the region will take a $1.3 billion share of the boost in ancillary revenues, said the study titled “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, the world’s leading provider of global mobile satellite communications.

Market potential

Based on current Iata data and industry sources, Sky High Economics shows that airlines around the world will benefit from four new 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

Quantifying growth opportunities

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 $239 million vs FSC at $511 million. The research confirms the very strong position many global FSCs have that are based there.

Dr Alexander Grous, 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, said: “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,” he added. – TradeArabia News Service