Virgin Atlantic reiterated its expectation that in-flight WiFi connectivity will eventually be free to passengers. But don’t expect that in the immediate future. The company is much more focused today on improving the paid take rates than transitioning to a free model. That was just one of the details shared by Mark S Cheyney, the carrier’s IFEC manager, during a recent Connected Aviation Intelligence webinar.
Cheyney noted that the offering is a “revenue driver” today for the airline, based on passengers paying for access on board. But he followed up on that, noting, “We don’t see it being a revenue driver forever. There will come a time where WiFi does become free. We’re edging ever closer to it. But we’re not there yet.”
A company spokesperson added additional color to Cheyney’s comments, noting “we don’t currently have plans to make wifi free.” Needless to say, that horizon is not close.
A key challenge to delivering that complimentary connection on board is the economics of the service from suppliers. Cheyney says the ability to offer streaming video connection speeds on board the company’s A350 fleet is driven more by the economics of its contract with Inmarsat than the underlying technology or system capacity. The commercial agreements with Panasonic Avionics and Gogo/Intelsat on the other fleet types make that option “a bit more of a grey area.”
Read More: La Compagnie to deliver fast, free wifi on A321 fleet
Beyond just the economics of streaming – and the significant bandwidth it consumes – the overall commercial terms will dictate whether and when the company pivots to free. Presumably the carrier will take guidance from Delta Air Lines and its efforts on that front. Delta, similarly, still believes it is coming but appears to be measuring that horizon in years, not weeks or months.
Shifting the connectivity economics
Efforts are underway to shift the economics of the connection beyond just negotiating better pricing from vendors. The company is moving to digitize its in-flight magazine and possibly the duty-free shopping catalog as well. The goal is to capture passenger interest on the in-flight portal and “keep engagement in the portal high,” with associated advertising and sales commissions boosting the system revenue.
Those digital transitions might prove temporary and tied to COVID rather than a permanent shift. A company spokesperson tells PaxEx.Aero that “[P]eople love browsing it and picking their films and tv to watch… [I]t might not be gone just yet.”
Read More: United Airlines (also) wants WiFi to be free
There are also financial reasons to not retire the publications permanently. Despite big promises from ad networks and IFEC suppliers neither the precision targeted marketing nor the associated revenues have materialized yet.
It remains to be seen if airlines will hold out for that revenue before shifting to a free solution for passengers.
Another option airlines are keen on is bundling the cost of connectivity on board into a mobile phone bill on the ground. Virgin Atlantic is keen on the framework the Seamless Air Alliance offers on that front. Cheyney was particularly bullish around the ability to offer different connectivity packages and pricing to consumers depending on their provider.
New opportunities to sell WiFi
While waiting for the right time to make it free, Cheyney is also keen to boost take rates and subscription revenue for the in-flight connectivity services. Today the airline has just one sales opportunity and it comes only after the passenger is on board. Cheyney wants to extend that window, pitching the on-board connection to passengers in the lounge or at the gate.
Read More: Deutsche Telekom expands free GX Aviation wifi offering on Lufthansa Group flights
Integrating that connectivity with the Virgin Atlantic App could allow a seamless transition to the in-flight connection, though it also comes with some challenges. Cheyney admits that the company focuses more on developing offerings for web interfaces rather than the app. “We have to focus on the web site first because that’s the thing everyone has. Much as we might not like it, not everyone has the app.” Focusing on app-first development would limit the company’s reach in terms of passenger engagement, and that’s not the smart choice today.
Still, there is potential for improved passenger experiences with that integration. Cheyney cites the PED-based control of the entertainment system on the A350s, currently web-based, as an option where app integration would improve the on-board experience and passenger satisfaction.
It is possible to deliver a complimentary connection to customers today, of course. Some airlines are already there. Generally they’ve made the decision that the cost is worthwhile from a passenger satisfaction or marketing perspective.
But most carriers, including Virgin Atlantic, are reluctant to incur those costs. At least for now.
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