Technology | Media | Telecommunications

Wednesday, October 12, 2011

In-flight Wi-Fi Service Revenue to Surpass $1.5 Billion

During the past year there has been significant growth in both the usage rates of in-flight broadband internet access and number of planes deployed with the capability. As new providers enter the emerging global market, growth is sure to continue in the coming year.

Additionally, what has to date been predominantly a U.S.-centric market began to see an expansion of borders -- with deployments in Europe growing over the past year and new activity in the Middle East.

According to the latest market study by In-Stat, they now forecast that in-flight Wi-Fi revenues will surpass the $1.5 billion mark in 2015.

“While airlines initially viewed in-flight broadband as a competitive differentiator, it is now simply viewed in the U.S. market as a competitive requirement,” says Amy Cravens, Senior Analyst at In-Stat.

The future of in-flight Wi-Fi will be less about convincing airlines of the merit and more about leveraging the network to provide a broader breadth of services.

As in the terrestrial hotspot market, Wi-Fi access is likely to become a commodity within the in-flight market, with the revenue opportunity resting on the services and value-added features, not the basic connectivity.

Findings from the latest In-stat's market study include:
  • Take rates have increased significantly, moving from an average of 4 percent in 2010 up to 7 percent in 2011.
  • While in international markets in-flight broadband is just entering the competitive differentiator stage, In-Stat believes it will rapidly transition to a competitive requirement in these markets as it did in the U.S. market.
  • Combined, smartphones and tablets are now the predominant devices, in terms of percent of connects.
  • In-flight broadband providers are beginning to introduce new revenue opportunities, including additional passenger services (video and voice) and operational services.