Standards played a powerful role in the development of computer technology, and airlines and airframe manufacturers should demand standards for IFE hardware systems, Scott Klososky, a pioneer in webcasted media, said during his keynote address Tuesday morning.

Standardized hardware and software lets information flow freely, which “turns that information into useful knowledge and wisdom” for the airline and helps identify customer demands.

Plug-and-play standardization across all aircraft types and all devices would help solve the “retrofit riddle.”

Identifying Pax Needs/Generational Differences

Klososky said emerging technologies let airlines accumulate a huge amount of data, but the airlines lack the analytics to use that data to help define who their customers are, what their customers want, and what they will pay to access what they want.

Some passengers want to be a part of the “aircraft community,” to chat with their seatmates or watch a shared screen, while others want to create a private space for themselves and watch their own monitor or have a personal device that keeps them separate, Klososky said.

Airlines must also be aware of generational differences. A “Baby Boomer” might choose an airline based on price or schedule, while younger “Echo Boomers” are more inclined to choose an airline based on the onboard technology that is available.

“Price doesn't matter as much to an Echo Boomer as how good the technology and services are,” Klososky said. “The younger generation is attuned to technology, and they are becoming a greater percentage of travelers.”

Predictions

Klososky said “there's a 50-50 chance” that all carry-on devices will be banned on US carriers for security reasons, and airlines must be prepared to meet passengers' needs by providing devices to them inflight. “They should be cutting deals now” and looking at the new wireless noise-canceling goggles with full immersion viewing, he said.

“We, the passengers, will get what we want, it is just a matter of time,” Klososky said.

REVENUE GENERATION – REVENUE SHARING AND ANCILLARY SALES

Jeffrey O'Rourke (Ink Publishing), Marc Musicus (Airborne Entertainment Ltd.), and Raymond Girard (Spafax Airline Network) believe that airlines can, and should, use non-traditional revenue streams to generate additional income.

Research conducted by Ink Publishing predicts global inflight advertising revenue to exceed US$1 billion in 2006, up from US$832 million in 2005.

However, O'Rourke said, “someone at the airline must be charged with driving ancillary revenues ... and why not the IFE manager!”

Ancillary revenue can be generated from product placement, corporate sponsorships, installed interactive systems, co-branding, cross promotions, direct sales, and “ambient media” such as tray tables, ticket jackets, and in-cabin amenities.

“We're not just selling a 30-second spot,” Girard said, “we're selling the entire media environment, which is a far less cluttered environment than that of terrestrial media.” Coordination and collaboration between the airline and IFE supplier can improve profitability, reduce costs, increase pax usage, and open new revenue streams, the panel agreed.

Interest High Among Ad Agencies
“The emergence of passenger interactive digital IFE can impact advertising dollars spent on IFE and can bring inflight advertising into the forefront of ad agencies,” Musicus said.

“It's the new media that advertisers are most interested in.”

Girard said research shows that airline passengers are “as smart and affluent as readers of The Economist ,” and interest among ad agencies is extremely high. The challenge is delivering inflight media in the same timely and coordinated fashion advertisers are accustomed to with terrestrial media.

“With every step you put in the advertiser's way, they spend less money with you ... or nothing at all,” Girard said.

“As long as the delivery mechanisms are there, the advertising dollars will be there.”

CELL & WIRELESS INFLIGHT – PAX DEMAND, ROLLOUT, MARKETING

John Guidon (Row 44), Jack Blumenstein (AirCell), David Coiley (AeroMobile), and George Cooper (OnAir) agree that passengers, especially business travelers, want inflight connectivity and expect the same capabilities they enjoy on the ground.

“Social issues,” they agree, must be addressed, but do not pose a threat to the introduction of cell-phone use inflight.

Rising Demand
C ooper said demand for inflight connectivity is changing, with approximately 40% of pax carrying Blackberry and Treo devices, a “dramatic increase” since 2003.

OnAir believes most passengers will want to use these devices and cell-phones rather than their laptop computers.

“The demand for data is quite small in terms of overall numbers,” he said.

Coiley said 2.1 billion mobile-phones currently are in use, and 18 new GSM phones are sold each second. Pico-cells support the safe use of cell-phones on aircraft by managing transmission power levels, and the regulatory framework is in place.

“Challenges have been solved, and AeroMobile is ready to go,” Coiley said.

Dependability is Key
Blumenstein said the key is to focus on the passenger experience, to make the system work every time, and to make it easy to use.

“E-mail and Internet access for US domestic airline passengers is just over a year away,” he said.

AirCell initially will provide a “robust broadband network” providing a Wi-Fi cabin for Internet, e-mail, and virtual private network (VPN) access. Airlines can allow VoIP (voice-over Internet protocol) if they wish.

Blumenstein said the company is going to observe results of inflight revenue trials of other cell-phone systems before implementing the service. AirCell plans to provide a path to other services including cellular data, content delivery, and airline applications.

Guidon said Row 44 is a service provider, not a hardware provider. He stressed the importance of having a viable business case based on the minimum installed fleet. This can be accomplished by building on the existing infrastructure, which removes the need for excessive investment.

“Demand is strong, at a reasonable adoption rate, at a reasonable price,” he said.

Pricing
Explaining that passengers' individual cell-phone service providers will determine the final cost of service, the companies shared their pricing:

• OnAir will charge US$2.30-2.50/minute for voice calls made, less for calls received. Sending text messages will cost US$0.50, and receiving texts will be free. Anticipating a decrease in costs, the company has a “built-in price deflation rate.”

• AeroMobile will charge US$3.50/minute for voice calls made, less for received calls. Sending text messages will cost US$1.00, and receiving texts will be free.

• AirCell will charge customers “ground pricing plus a small premium,” about US$10.00 per session.

REVENUE GENERATION – ‘MAINSTREAMING' INFLIGHT ADVERTISING

By 2010 traditional TV advertising will be one-third as effective as it was in 1990, as the consumer's attention is drawn away by competing media, according to Craig Waller (Pace Communications).

Advertisers are seeking ways to bring today's “fragmented” audience together, to “engage” this audience—with fewer distractions—and to build a relationship with them.

High Engagement/Recall
According to a recent Arbitron study (U.S. only), 98% of frequent flyers pick up the inflight magazine, 71% of those said they read it more closely than they read consumer magazines (because there are no distractions or media clutter), and 91% said they trust the information they read.

Sixty-eight percent acted upon advertisements. Unaided recall of ads in inflight magazines was 59%—compared to 15-20% recall for traditional TV ads.

The revenue potential is huge, with 2.2 million brands advertised on US television, and only 1,668 brands currently advertised in IFE , Waller said.

Same Challenges as Internet Advertising
Cherie Song (Panasonic Avionics Corporation) said IFE faces the same challenges initially faced by Internet advertising, including hard-to-access demographics, unfamiliar pricing, slow rate of exposure to a small audience, and an audience that is “hard to segment.”

Advertisers are willing to spend on inflight “if we can simplify the buying process, aggregate the airline audience, and provide rapid reporting.”


TRENDS IN SINGLE-AISLE IFE

Panasonic
Single-aisle IFE solutions must meet faster aircraft production cycles and faster content loading schedules (because of shorter turnaround), provide region-specific content, and be very economical, said Chris Lundquist (Panasonic Avionics Corporation).

Marketing will continue to find ways to provide entertainment and productivity solutions that have no seat-impact (such as GSM, laptop computer connectivity, and portable entertainment). Media evolution will drive market growth. As the consumer media consumption model evolves so shall IFE systems and solutions, Lundquist said.

Lundquist shared Panasonic's prototype all-in-one display featuring a very light-touch-screen and headset. “If you can get all the controls including audio in the seat-back, then it is truly simple and sleek.”

Thales
Dan Reed (Thales Avionics, Inc.) presented a case study of Air Canada 's “Extreme Makeover” fleet renewal, including cabinwide AVOD and 110V AC power in every seat bank.

The new Thales i-4500 system had to weigh less than 400 pounds (compared to 600 pounds for traditional IFE systems). This required a “drastic reconfiguration.”

To eliminate seat-boxes, Thales added “a couple of transformer rectifier units” to distribute DC voltage without the need to convert from AC power. A small five-port switch inside each video display unit (attached to the head-end) replaced the “switched Ethernet function.”

CELL & WIRELESS – TECHNICAL ISSUES

Micha Lawrence (Starling Advanced Communications) said inflight connectivity is “back to ‘square one' while technology on the ground keeps progressing.”

The Pipe
Airborne broadband requires a unique satcom system (antenna and modem) to deliver the current platforms: UHF, L-band, and Ku-band. The industry must look at other solutions that are used on the ground, Lawrence added.

The key is the physical layer—the “pipe” (the antenna, modem, and type of satellite), Lawrence said, and equipment and satcom systems must be smaller and cheaper.

Lawrence stressed that as much as possible the IFE industry should adopt equipment and servers that have been developed for terrestrial use “or we will fail.”

“Don't get an aircraft manufacturer to provide you a communication system. You should use the pros in business on the ground to provide a solution,” Lawrence said.

Regulation
Frank Whetten (Boeing Commercial Airplanes) said wireless regulatory processes are converging and increasingly mature.

Letting passengers use their personal wireless devices inflight, he said, is still “extremely complex.”

Spectrum is not harmonized worldwide, and many countries have unique test, registration, and labeling requirements for radio-type certification, which is needed to use frequency while flying over each country.

Cabin Networks
Axel Jahn (TriaGnoSys) said there is a need to re-assess bandwidth and quality requirements for passengers.

Managed networks, which provide a controlled delay and performance, are of acceptable quality to pax. The airline must then define the bit rate needed to provide this capability.

Airlines should explore techniques for traffic optimization and performance enhancements, including compression techniques to save resources.

Jahn strongly suggested using consumer off-the-shelf (COTS) components and software. “The use of COTS software will revolutionize the cabin.”

DIGITAL CONTENT: DATA LOADING & DISTRIBUTION

“Wireless data loading is here now,” said Michael Childers (IMS).

Onboard data loaders eliminate expensive tech time, increase content security, and facilitate new applications such as refreshing content daily without using a satellite.

Embedded data loading offers two options: “insert-and-go” data loading where data loading takes place onboard the aircraft, and wireless loading at the gate for time-sensitive, incremental loads.

An embedded loader places media directly on the IFE fileserver and decrypts content in real time as it comes off the removable media. It is never transported “in the clear,” Childers emphasized.

Walé Adepoju ( IMDC ) said “forget the technology and look at the economics. The critical commercial factor for data loading by any form is the cheapest cost per kilobit without compromising the relevant level of security.”

Adepoju forecasts a greater volume of content will be loaded for longer-term storage onboard using various update methods depending on the level of time-sensitivity of content.

Gatelink—wireless communications to aircraft in an airport terminal area—potentially has greater data rates and lower overall costs than other radio or satcom systems, Adepoju said. “It is cheap, easy, and high-speed.”