Online, Anywhere, Everywhere: In-Flight Connectivity Expectations and Opportunities David Coiley Inmarsat Aviation AeroConnect 2017 1
INMARSAT: SERVING AVIATION 30 years Experience Purpose-built for Aviation Financial Muscle Ongoing Investment Future-proofed partner Over 30 years experience and operating on 95% of transoceanic aircraft Built to serve the needs of the aviation industry - built for routes and hubs, not gaps and with technology that can provide capacity where and when it is needed FTSE 250 company with a market capitalisation of over $3bn demonstrating the kind of financial stability required to compete in this market We ve spent over $2bn in the last 5 years alone, and have similar ongoing investment plans for the next 5 We are not just a satellite company. We are your connectivity partner. We exist to help you make the most of the opportunities associated with inflight connectivity
Inmarsat is aviation safety today Aircraft Position Reports 100 35 thousand million Per day Per year Onboard 95 percent Of oceanic aircraft 11,500 Planes fly with Inmarsat
Between 2001 and 2016, in oceanic regions, satcom generated a $3 billion benefit for airlines *2017 Helios study
OUR GROWING LIST OF IFC CUSTOMERS 5 Commercial in confidence
THIS SUPERIOR OFFERING STARTS WITH COVERAGE Global Ka-band underlay from four identical HTS Inmarsat-5s Engineered for mobility Delivering consistency of service across flight routes
MORE IMPORTANTLY COVERAGE STEERABLE GX WHERE AND WHEN YOU NEED IT OVERLAY BEAMS TO ADD EXTRA CAPACITY Overlay beams add capacity in high traffic routes and hubs at peak times TRAFFIC
MORE IMPORTANTLY COVERAGE WHERE WITH HIGH POWER AND WHEN YOU NEED IT INCREMENTAL BANDWIDTH ALREADY PROVISIONED Three V-HTS satellites on schedule for launch from 2019 TRAFFIC
ADVANCED SOLUTIONS FOR SPECIFIC OPPORTUNITIES Global underlay Engineered for mobility For Europe, Inmarsat s unique Delivering S-band European consistency of service across flight Aviation Network routes integrated satellite and ground network TRAFFIC
10 IT S ALL ABOUT THE PASSENGER
The IFC market is changing Third year of the Inflight Connectivity Survey 9000 passengers, 18 countries Every responder had completed one flight in previous 12 months GfK are a global organisation presence in over 100 countries Renowned and respected industry leaders in their field Sky High Economics First chapter of study into Connectivity-dependent ancillary revenue opportunities Forecast data that can inform business model development Comprehensive, independent study by Dr. Alexander Grous (B. Ec, MBA, M.Com,MA, PhD) Specialist in Demand-Based Economic Modelling, Innovation, Communication Technology and Transport Economics Subsequent chapters to identify Operational savings and efficiencies, and passenger behaviour and loyalty 11 For the full report follow: inmarsataviation.com/skyhigheconomics
IFC IS NO LONGER A NICE TO HAVE, AND PASSENGERS WILL PAY 77% of all passengers would pay for IFC even on short haul leisure flights 60% believe that inflight Wi-Fi is a necessity NOT a luxury 52% of all passengers would take advantage of the ability to purchase items from the plane and collect them on arrival at the airport vs 16% only buy from duty free carts each time they fly Source: GfK Passenger Survey 2017
NOT JUST BUSINESS TRAVELLERS THE DESIRE IS UBIQUTIOUS 68% of families said inflight Wi-Fi is a life saver when helping to keep children occupied during flights 47% of business travellers agree: I feel like I am wasting my time because I don t have Wi-Fi inflight 42% of IFC users on business flights use it to browse the internet, 38% visited social networks, 30% use email, 22% transfer files via email and 16% use corporate business tools Passenger s no. 1 need: Reliable, consistent broadband access Ensure that your IFC can meet your PAX needs Prepare appropriate access payment models for your passenger mix 13 Sources: GfK Passenger Survey 2017 & LSE Sky High Economics Chapter 1
THE OPPORTUNITY FOR MONETISATION ISN T LIMITED TO ACCESS 45% would prefer paid IFC to free IFE 28% of inflight connectivity users already stream short clips and 13% download large files like movies 71% of inflight connectivity users travelling with children connected more than one device Get the right content partners Supply the right mix of content Understand your Customers to keep the content fresh and appropriate 14 Sources: GfK Passenger Survey 2017 & LSE Sky High Economics Chapter 1
CONNECTIVITY: HUGE NEW ANCILLARY REVENUE POTENTIAL $30bn revenue opportunity for airlines from connected services $130bn global market for IFC services 47% will come from new connectivity applications and players, not from wifi access revenues 1,639% increase in revenue from connected ancillary revenues by 2035 Source: LSE Sky High Economics Chapter 1
AIRLINES IFC REVENUES WILL COME FROM A VARIETY OF SOURCES 2018 2028 2036 Broadband Access Revenue Tiered access Data or time Freemium models (nb with Premium) $822m $9bn $15.9bn E-commerce & Destination Shopping Enhanced retail Travel ancillaries Late inventory $36m $3bn $6.8bn Premium Content & Entertainment Premium live content On demand video Bundled W-IFEC $26m $2.9bn $6bn Targeted Advertising PPC/Impressions Interrupted model Sponsorship $39m $0.7bn $1.4bn 16
IFC REVENUE STREAMS ARE DIVERSE AND SHIFT OVER TIME 2018 2028 2035 89% 57% 53% Broadband Access Advertising Premium Content E-Commerce 17
THE THREE KEYS TO START UNLOCKING THIS OPPORTUNITY Reliable high quality broadband Coverage across all key flight routes Guaranteed speed to the aircraft 18
FULL REVENUE POTENTIAL COMES FROM BROADER ENGAGEMENT Effective utilisation of passenger data Bookings Existing ancillary revenue Frequent flyer programmes/crm Applications Any other preference data Change to a retailer mind set Think of customers Develop services and partnerships that will appeal to them as they fly Find your ambassadors through innovators within your customer base Liquidity of Supply Ensure late inventory in-flight purchases are valued and trusted by passengers Close partner relationships, business models Personalise to appeal to enhance customer experiences, context 19 Source: LSE Sky High Economics Chapter 1
WHILST WE CAN HELP ENABLE THE OPPORTUNITY, AIRLINES ARE THE GATEKEEPERS FOR THE WIDER ECOSYSTEM 20
So, what do passengers want form connectivity? They really do want connectivity! But it must be reliable, consistent and packaged the way they need it Passengers will pay for a quality service, but business models and processes must be flexible, context-sensitive and convenient Airlines are the gatekeepers to a $130 Billion market for Connected ancillaries It s more than just wifi access 21 Commercial in confidence
Thank you! david.coiley@inmarsat.com 22