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Broadband in the sky to create a $52bn market in Asia Pacific by 2035

November 10, 2017 Technology No Comments Email Email

Inflight broadband has the potential to unlock a $52 billion market within the Asia Pacific 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 benefit from a $10.3 billion boost in ancillary revenues – making it the largest single market for broadband enabled services globally in 20 years’ time.

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

Using the independent forecasting model, specially developed for the research, the quantified revenue opportunities for the countries in the APAC region are as follows:

Quantifying growth opportunities

The research argues that as passenger numbers grow globally so too will passenger expectations for access to high-quality inflight connectivity. As such, access charges are expected to be the main driver of revenue initially in 2018 and will stay on an upward trajectory for the subsequent 20 years thereafter.

Passenger growth across the APAC region is forecast by IATA to be higher than anywhere else, with China due to displace the US as the largest market by 2024 and India becoming the third largest global market around 2025.i Reflective of this growth forecast, broadband enabled ancillary revenues are expected to add $3.33 extra per passenger in the Asia Pacific market (representing a 20% increase in the global average earned in ancillary revenues by airlines currently).

The full service carriers are expected to benefit marginally more from broadband connectivity across all streams in comparison with low cost carriers; earning 53% of the total revenues available in the region in 20 years’ time. This is as a result of the average duration of time spent flying and quantity of passengers flown, coupled with an analysis of passenger demographics in the region.

Dr Alexander Grous (B. Ec, MBA, M.Com, MA, PhD.), Department of Media and Communications, LSE and author of Sky High Economics , said: “This is an exciting time for airlines in the region – not only are internet technologies already transforming the travel experience for passengers, there is $10bn in new revenue streams on the cards for airlines to play for. Interestingly, and reflective of IATA passenger growth forecasts, this figure outstrips those predicted for Europe and North America, at $8.2 billion and $7.6 billion respectively.”

David Coiley, Vice President, Aviation, Inmarsat Aviation, commented: “Technology has finally caught up with passenger demand for seamless internet access in the cabin, meaning airline decision-makers can now move quickly to ensure they have the right capabilities in place to fully capitalise on the new business opportunities available to them.”

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.

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