Airlines should not expect their inflight connectivity solutions to be profitable. At least not directly so.
That was the message delivered by Norman Haughton, Air Canada‘s Director of IFEC Product and Analytics, at the World Aviation Festival last week in Amsterdam. But he is not worried about the service disappearing from the fleet. Rather, he sees the maturing inflight connectivity platform as delivering so much indirect value that it drives revenue, loyalty, and customer satisfaction.
The break-even point would require extremely high take rates. We’re not seeing take rates at a price that would cover the costs.
– Norman Haughton, Air Canada‘s Director of IFEC Product and Analytics
So, what is the critical use case that allows Haughton to convince management the service is worth paying for? Ultimately it is the desire to deliver a high quality passenger experience, not just an internet connection. But that manifests itself in many ways.
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Around 2004, Continental Airlines was one of the few major US airlines that provided free meals in economy class. It was half a submarine sandwich and a small bag of chips. I few CO for several flights because of that. I had to take a connecting flight no matter what airline I flew so schedule was not a big factor.
SHOULD it ever be profitable? We are way past IFC as a differentiating perk. Excellent reporting as always!
I’d still argue the answer varies wildly by market.
And I appreciate the argument that airlines invest in all sorts of cost centers to attract passengers. Snacks/sodas and IFE content are two that come with plenty of overhead, even beyond the direct costs. Maybe IFC will fall into that same bucket at more airlines soon.