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Navigating the Skies: Daniel Welch of Valour Consultancy on the Emerging Trends Defining IFC

As co-founder of Valour Consultancy, a market intelligence and consultancy firm specializing in mobility, Daniel Welch brings a wealth of expertise to the table. Established in 2012, Valour’s core focus lies in the aviation, maritime and land mobility sectors. With a passion for storytelling and a commitment to member-centric approaches, Welch said they excel in providing impartial insights, leveraging their independence to offer unbiased perspectives. Recently, Welch chatted with Satellite World from his residence in Melbourne, Australia, delving into the intricate dynamics and emerging trends defining inflight connectivity (IFC).

SW: Let’s start by looking at inflight connectivity from the consumers’ perspective. What are you seeing in terms of consumer demand for IFC?

DW: Today, if you look at all the surveys that are published by airlines and vendors, and when you ask around the general population, being connected is something that people expect. Historically, the (aircraft)cabin has always been an environment where that wasn’t possible. But there’s a growing proportion of people who want to be connected and expect to have Wi-Fi, even in some of the most remote parts of the world. Given that there’s almost 11,000 aircraft connected across hundreds of airlines (according to our quarterly IFC tracker data), it’s something that passengers, whether they travel frequently or infrequently, are now exposed to. 

SW: How do these trends differ across global markets? 

DW: We’re seeing the demand for connectivity ramp up across the board. In Asia, for example, it’s an expectation because the region is so mobile-centric. 

In India, telecom companies offer low-cost devices with access to loads of data to build market share. This has led to the expectation that data is cheap, and Wi-Fi is accessible. However, airlines are yet to benefit from these habits because of the associated complexity and cost that comes with deploying IFC. We in the industry know what a feat of engineering IFC is, but bridging the gap between expectation and reality for passengers that view Wi-Fi as a commodity is a challenge. The outcome is that demand exists in Asia, but adoption remains relatively low. 

Meanwhile, in the US, the value placed on connectivity by passengers, combined with immense domestic competition has seen local airlines consistently featured amongst the early adopters of every generation of service. This is a trend we can trace back to the success of Gogo’s air-to-ground network, to roll out of broadband quality service, and most recently the introduction of multi-orbit connectivity. 

SW: How do you see demand vary between business travelers and leisure travelers?

DW: This is an interesting question because there are definite differences. From a business traveler’s point of view, connectivity is more critical. Leisure passengers will want to talk to their friends and stream content. Whereas for a business passenger, it’s more work-related. Although it’s more critical to these passengers, they’re also generally pulling down less bandwidth from the network, in the sense that they’re doing tasks like email, chatting on Teams, and accessing work VPNs. There is also a likelihood that they’ll want to stay connected across the flight to carry on work. From an airline’s point of view, there’s a need to demonstrate differentiation from the rest of the cabin for business passengers too. They want to have access to privileges like lounges, inflight meals, and comfier seats to differentiate themselves from less frequent travelers. What we’re seeing is that Wi-Fi offers a point of differentiation. Offering free Wi-Fi and streaming services is a business differentiator for airlines, and a good one.

SW: How do you see airlines responding to the demands from passengers for inflight connectivity?

DW: At the start, airlines were offering Wi-Fi to stand out from the competition. As expectations grew, airlines had to refine their offerings, from the pricing structure to how it’s presented to passengers, and of course the usability of the Wi-Fi. Airlines have had time to learn the unique preferences and demands of their target market, which could differ significantly from those of their competitors. Now, we’re seeing that airlines are looking at IFC as a great driver of loyalty, as opposed to something that drives a new revenue stream. IFC helps to keep people flying with their airline, and this helps attract advertisers and partners that they want to be associated with. IFC is a key service among the drivers of passenger loyalty.

SW: How exactly are airlines differing in their approach to IFC offerings? 

DW: We’re seeing some airlines move away from a paid model into a model whereby they’re now offering free Wi-Fi. We’re seeing new connectivity disruptors where there’s no portal to log into so passengers can connect immediately like they would at home. 

Then you’ve got airlines linking it to passenger loyalty, where you must be part of their frequent flyer program to access free Wi-Fi. Data shows that frequent fliers will more than return the cost of inflight connectivity through their continued loyalty to the airline. 

And finally, you’ve got airlines that offer a pay model because it makes sense for them commercially. 

The key for airlines is learning how to position this to their passengers in a way that helps differentiate from their competitors.

SW: A topic that I don’t think is discussed enough is the importance of service level agreements. How do you see those changing over time, and how important do you think those SLAs are for the airlines? 

DW: Right now, they’re extremely important. There are carriers that might not see that as high on the agenda, but I think in the majority of cases, airlines still want that commitment to protect this quality of service. Wrapping that in a committed information rate is important. Over time, as capacity increases, the quality of service will reach a level of consistency that airlines start to trust the level of service that vendors are providing, and SLAs will become less important. The capacity will just be there.  For now though, SLAs remain a stalwart for many carriers.

SW: Why do you think some airlines have been slower to invest in IFC than others?

DW: There has been slower adoption in certain markets like Korea and Japan, for example, where you’ve got super high-speed broadband on the ground. This created a hesitancy for airlines that recognized it would be hard to match the experience passengers had at home or work and didn’t want to disappoint as they couldn’t offer that same quality in the air. As quality of service improves, these airlines are now willing to commit to offering Wi Fi. The majority of premium carriers, like Emirates, Singapore, Qatar, are pretty much all connected in terms of their fleets. The majority of flag carriers and full-service carriers have adopted Wi-Fi and are now moving towards satellite connectivity on regional jets and on smaller aircraft. In wide bodies, it’s pretty much saturated, and narrow bodies are the talking point now, along with regional jets. Those are the hardest to justify the amount of money required for inflight Wi-Fi without there being an obvious payback or return on investment (ROI). That’s where connectivity historically has fallen short – proving the business case. Connectivity providers need to demonstrate that airlines will get the return on their investment.

SW: From an operational perspective, how can airlines benefit from increased inflight connectivity?

DW: Connectivity has lots of benefits on the operation side, like real-time weather, informing pilots of the optimum profile, and all that is happening in real-time as opposed to during the pre-flight briefing. Particularly for long haul, a lot can change while in the air. There are also many things that Wi-Fi can support in the cabin. Giving crews devices that they can access in real time, like passenger information, and likewise, the ability to share information back to the ground, like maintenance issues that occurred during the flight to allow for a quicker turnaround. 

SW: What are the biggest challenges airlines face when it comes to offering IFC and what is some advice that you could give them?

DW: I would say justifying the business case is one of the biggest challenges. If you’re going to offer inflight connectivity, it must be at the forefront of a digital strategy that is focused on linking the passenger experience from start to finish. A lot of carriers are already knitting together the pre-departure and the arrival experience from a digital point of view. They are the best at staying in touch with passengers and encouraging ancillary spending. There are more case studies emerging, and vendors are better equipped to talk about how offering IFC can add to the 360-degree view of the passenger experience. 

Seek out support from other airlines within the alliances or at trade shows and speak to them to gather their thoughts. There are really good things happening on the investment side in the loyalty space, as well as very good people who are producing total cost of ownership (TCO) models to establish the value equivalent of keeping passengers loyal and gaining market share. 

The other element that’s critical is choosing the right technology and the right vendor. As a provider of connectivity services, you must be really close to the customer in order to understand this quality of experience issue. It’s more than just providing the bandwidth; it’s understanding exactly how airlines and passengers are using it. My advice is to work with partners who are really focused on the end user experience and have them prove that to you. Do your best to get a vendor who can provide local support, as opposed to someone who provides the RFP and then disappears into the sunset. 

Check back for more from Daniel Welch as he examines the top five IFC topics he expects to hear about at the upcoming Aircraft Interior Expo in Hamburg, Germany. 

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