#PEC16, CCH, Hamburg, AIX Week, 4 April, 2016
The Passenger Experience Conference was held in the Congress Center Hamburg on Monday 04 April, the beginning of AIX week. It’s an opportunity for AIX attendees to get together in a more relaxed environment, to learn about new ideas in the passenger experience space, to network, and to get primed for the three-day-hard-sell to come.
Virgin America and Alaska Airlines
Breaking news about the Alaska Airlines purchase of Virgin America dominated the pre-event chatter, before the day kicked off with a keynote speech from Airbus A3’s Jason Chua, who spoke about how Airbus is working hard to reinvent the flying environment so that we can regain our sense of wonder around flight. It’s true. We do take the miracles of technology for granted, too much of the time.
The opportunities around the passenger experience were discussed throughout the day. Airlines often have to choose between a higher NPS (Net Promoter Score = passenger satisfaction) or new ancillary revenue streams. This can be encapsulated by the difference between the luxury of the legacy carrier experience and the LCC experience where the passenger is bombarded with opportunities to buy. Takeaway message: Why not have both? Enhancing the marketing, delivery and value of the ancillary sales opportunity can deliver more cashflow, more passenger data and new marketing tools to the airline. The challenges include working to understand passenger behaviour and how time is needed to build up trust. Airlines also need time to build relationships with the external suppliers of paxex software, such as Arconics (we’re very easy to work with, by the way!). Finally, trust around payment methods and security, including the move to contactless payments, needs to be built.
Lufthansa and Inmarsat Connectivity Case Study
In-flight connectivity was the hot topic at PEC16. All sorts of stats were bandied about (read the findings from the Arconics survey into connectivity and IFE here!), including how 20 – 50% of airline passengers connect to a wireless IFE service, spending an average of over 40 minutes connected. Lufthansa and Inmarsat presented a very interesting case study about the decisionmaking process around the choice of high speed broadband for Lufthansa’s fleet. Alexander Feuersaenger, Director of Product Management, Cabin Interiors and IFEC at Lufthansa, stated that “stable, reliable internet connection is a must-have,” and “don’t just offer a service, offer an experience.” Alexander was joined by Leo Mondale, President, Inmarsat Aviation and David Coiley, Vice President, Inmarsat Aviation.
This practical session provided valuable insights into the challenges of selecting an in-flight connectivity solution and the commercial opportunities available for airlines. Passengers want to surf the internet, stream video, download files and more using their smartphones, tablets, laptops and other wifi-enabled devices. It’s not just about the connectivity speed experienced. Research shows the key to satisfying passenger demand is reliability; essentially that the service works when it is wanted. Airlines must ensure their connectivity provider not only has the right solution today, but also has a long-term commitment to keep pace with future technology developments. 100% route coverage was also critical for Lufthansa, so Inmarsat’s idea to add ground connectivity coverage on the European Aviation Network, in partnership with Deutsche Telekom, sounded like a winning play. As bandwidth demand keeps rising, with no saturation point in sight, Inmarsat stated that the long-term roadmap of the connectivity vendor is increasingly important to airlines. The telecommunications network needs to look like the airline’s network and it’s very hard to offer a narrowband service to consumers in today’s broadband market.
In trying to analyse where the new value is coming from, it was agreed that connectivity offers multiple benefits. For example, Lufthansa is integrating other services around its connected aircraft, such as electronic flight bag, which helps to reduce the weight being carried by the aircraft, driving down operating costs. The business model needs to be constantly adjusted and connectivity brings a whole new value proposition to the passenger experience. These are exciting times!
Contactless Payments Technology
APEX told the conference about the Payment Technology Working Group, which aims to unify the airline industry’s approach to new payment technologies. You can find out more about the group’s activities by emailing Lauren Beneri at email@example.com. There’s been a 400% increase in ancillary revenues since 2008 with onboard purchases worth $1.8Bn in 2014, showing an 11% growth rate. Contactless payments are a big story, with NFC on mobile devices presenting interesting technology challenges. Thankfully, onboard fraud is negligible, because airline passengers must pass through multiple identity checks before getting onto the aircraft.
IFEC and LCCs
A conference highlight for Arconics was our VP Entertainment, Michael Reilly’s appearance on the discussion panel around IFEC Solutions and Business Models for Low Cost and Regional Airlines. Michael talked about the recent deployment of Arconics CloudStore Wireless IFE to Tigerair Australia’s B737-800 aircraft, with the project going from contract to flight in less than three months – surely an industry record!
‘There’s no one-size-fits-all solution,’ said Michael, ‘in an industry still hamstrung by legacy IFE systems. Luckily, our software runs perfectly on any suitable hardware. While the content licensing models need to change to reflect the new IFE landscape, CloudStore W-IFE is completely flexible in terms of pre-and-post-flight content access and mixing free and paid content. Airlines are keen to have a single mobile app that covers the entire journey experience and Arconics has deployed this.’
ViaSat and Aer Lingus
The conference closed with an interesting discussion, Leaders in Innovation, chaired by Andrew Doyle from Flightglobal. Andrew was in conversation with passenger experience and engagement leaders from ViaSat, Aer Lingus and SITAONAIR offering their insights on how to drive innovation.
ViaSat, a global internet service provider, delivers affordable, high-speed, high-quality internet and video streaming services to nearly 700,000 US residential subscribers and more than one million air passenger devices per month. Since launching its commercial airline IFE service in 2013, ViaSat has been disrupting the industry with innovative thinking and new business models that enable streaming of movies, TV shows, music and live events, at speeds no other service provider can offer. ViaSat’s growing list of airline customers includes JetBlue, United, El Al, Virgin America and Qantas.
The primary mission of Aer Lingus (now part of IAG and an Arconics customer) is to ‘Connect Ireland to The World’ by providing customers with convenience, choice, comfort, value and seamless transfer options. Its strategy is to offer leisure and business travellers a quality core product that can be augmented through benefit-driven a la carte paid options. Most recently Aer Lingus has launched both a new mobile app and website, with a new loyalty programme, AerClub, unveiling this summer. Michelle Lee, Director of Marketing and Guest Experience at Aer Lingus, told the audience how the airline’s “big focus is on maintaining a consistently excellent guest experience.”
Don Buchman, Vice President and General Manager, Commercial Mobility at ViaSat Inc., announced ViaSat’s planned 1 Terabit-per-second satellite broadband connection. This game changing technological leap generated a discernible gasp. And when he claimed that this would also sound the death knell for embedded seatback IFE systems, some old school jaws banged off the floor. “ViaSat-3 is really going to usher in the age of no seatback,” said Buchman. “It will enable airlines to ditch seatback altogether.”
Is Seatback Really Finished?
Niall O’Sullivan, CEO of aviation software company Arconics, joined the great debate at PEC/AIX 2016. Is seatback finished?
“We believe that the future of in-flight entertainment is very much about the delivery of content, choice and connectivity to airline passengers. With the deployment of enormous satellite connectivity, such as ViaSat’s planned 1 Terabit-per-second capacity, passengers will soon be able to enjoy a connected experience as good as, or better than, what they’re used to at home. Combine this level of connectivity with the high rate of smartphone and tablet usage by airline passengers – up to 100%, according to our research – and you have a future of bring-your-own-device access to the content that people want, from live TV and HD movies, to web browsing, email and social media. In a couple of years, we will look back on the age of installed seatback IFE, with its weight, complexity and cost, and wonder how we got by without the ability to access the content we want, from our own devices. Many airlines have shown strong interest in CloudStore and wireless IFE is certainly seen as the future of in-flight entertainment. We’re committed to delivering the best possible passenger experience through software and I’m confident that 2016 will be seen as the tipping point for BYOD and W-IFE. Software delivers the magic to metal and our solutions help airlines to take back the power. Our software is flexible, adaptable and delivers freedom of choice. What a great message to take from PEC 2016.”
Finally, after a day of competitors agreeing with each other about pretty much everything, some controversy, but not just for controversy’s sake. For the legacy seatback IFE makers and walled garden content providers, cocktail time couldn’t come soon enough…
We look forward to #PEC17 in Hamburg next April, to see how far these developments will travel in 12 months. This is truly a time of fundamental change in the aviation industry and the Arconics software ecosystem is just getting started!
Read the results of the Arconics online survey into in-flight entertainment and connectivity here.
Hamburg Conference Centre. Arconics studio.
Alexander Feuersaenger, Director of Product Management, Cabin Interiors and IFEC, at Lufthansa. http://www.passengerexperienceconference.com/
From left to right: Peter Sharples, Piksel; Joan Tan, Transavia; Michael Reilly, Arconics; and Niels Steenstrup, Gogo. Image credit: Maxim Sergienko. See more at: http://apex.aero/2016/04/04/flexible-solutions-make-IFEC-viable-low-cost-carriers#sthash.10iBeZL7.dpuf
Don Buchman, Vice President and General Manager, Commercial Mobility at ViaSat Inc. http://www.passengerexperienceconference.com/
Niall O’Sullivan, CEO Arconics. Arconics studio.
aircraft, airline, data, flight, connected, connectivity, big data, connected aircraft, business development, wirelesss ife, in-flight entertainment, cloudstore, arconics