7 Lucrative Benefits of Offering Free In-Flight WiFi
Different passengers may have different priorities when it comes to booking their flights but virtually every one of them regard instant, reliable internet as a given. Most airline operators are uncertain as to how exactly in-flight WiFi should be implemented. The question is not so much about whether or not in-flight WiFi is a good idea but whether the improvement in passenger experience justifies retrofitting a fleet.
As it turns out, operators are increasingly deciding that this is indeed the case. Research conducted by LSE also makes a strong business case for in-flight connectivity. The study predicts the in-flight connectivity (IFC) market to reach $130 billion by 2035, resulting in an increase of $30 billion in airline revenue. Interestingly, the report also points out that airlines can benefit from broadband connections by incorporating advertising, e-commerce and premium content into the mix.
1. Rebooting the Duty-Free Income Stream
One of the ways in which free WiFi can pay for itself is by enhancing the onboard shopping experience. The main business of an airline is, of course, transporting people and goods safely and comfortably, but offering a selection of duty-free products can be a valuable source of ancillary revenue. What’s more, passengers are conditioned to expect shopping opportunities.
The main drawbacks to traditional, un-digitized duty-free shopping is that it tends to be inconvenient for passengers and pulls cabin staff away from their main functions. Offering customers a digital channel allows them to browse at their leisure while allowing more responsive service.
The previously mentioned study by LSE predicts that the average shopping revenue per passenger will increase from $0.23 in 2018 to $4.00 by 2035. This might not seem like an earth-shattering amount, but it’s worthwhile remembering that IATA has recently reported an industry average net profit of $7.69. LSE values the ancillary revenue per passenger, including in-flight retail and beverage sales, at $17.
2. Capitalizing on WiFi Connectivity
Finnair is one example of an airline which has embraced technology. Business class passengers are offered free WiFi through a captive portal. This is not only used for communication and entertainment, though: users can access the company’s website, research conditions at their destination, order duty-free items and get in touch with customer representatives. In this way, their WiFi is not only provided as a perk, but comprises a very useful customer care and marketing channel.
3. Cross-Selling and Up-Selling
Having an in-flight WiFi portal is a great way to advertise to a captive audience, as it offers the opportunity to advertise your own and partner companies’ services in a way that’s difficult to miss. For example, if an airline partners with restaurants and cab services at the destination, passengers can make dinner reservations or book a taxi while still in the air. If one wants to go the extra mile, they can even consider expanding their offering to include the ability to order everything from clothes to groceries.
4. Serving Customers Better
One of the benefits of providing free WiFi is, of course, simply providing a better passenger experience. This includes being able to contact people at their destination, accessing news and weather in real time, as well as convenient access to customer service. As more carriers start embracing in-flight connectivity, this will increasingly form part of customer expectations and late adopters might struggle to catch up.
5. Understanding Your Market Better
The biggest benefit of offering free WiFi relates indirectly to customer service: browsing habits can be monitored and combined with other sources of data to create a surprisingly comprehensive picture of customer preferences and behaviour.
Once you get access to enough data, you can create well rounded customer personas for each passenger – for example, a certain passenger could be labelled as a “business class traveller, who is a wine drinker and an avid duty free shopper” or “a frequent coach flier, who is likely to upgrade” or “a coach flier and an airport bar visitor.”
Done properly, this allows you to get to know your market at a far more comprehensive level than is possible by relying only on loyalty programs, customer satisfaction surveys and the like. The end result is the ability to customize your marketing at an individual level.
6. Expanding Your Corporate Network
Once the infrastructure is in place, numerous partnership opportunities are likely to emerge. As one example, Netflix may assist airlines in providing free or cheap broadband service with savings of up to 75% in order to capture the airline market and provide passengers to their own entertainment. JetBlue and Amazon have partnered to provide Amazon Prime videos over a WiFi connection that Amazon sponsors.
7. Digital Services as Part of Brand Differentiation
Again taking Finnair as an example of how owning a digital portal can be done right, they have taken pains to incorporating their identity in their online presence and digital strategy. As part of positioning themselves as a preferred airline between Asia and Europe, they promote Finnish retailers and designers on their WiFi portal, including Makia Clothing, Ivana Helsinki and Marimekko.
To Charge or not to Charge?
There are differing views on whether it is acceptable to charge passengers for In-flight WiFi when many businesses make it available free of charge. As it happens, a majority of passengers are, in fact, willing to pay: 69% in Europe, 67% in the Asia Pacific region and 64% in Latin America. At present, the “freemium” model seems popular, where a basic level of service is available at least to business class passengers, but certain add-ons are charged for.
Guaranteed Return on Space
It’s a good idea to provide free Wifi to business class passengers and have a pricing strategy in place for coach fliers. Coach fliers just want to get from point A to point B by buying the cheapest ticket. Business class passengers on the other hand, expect to be comfortable, entertained and productive and in-flight connectivity ties up with all their requirements.
Even though these premium passengers occupy only one third of the total real estate of an aircraft, they do pay 5 to 8 times the price of an economy ticket, thereby guaranteeing a better return on space.
What To Expect in the Near Future
One of the main differentiation between budget airlines and those able to charge a premium is the level of passenger experience, and as many of half of survey respondents consider in-flight connectivity to be a factor which makes a major difference. Clearly, an airline that provides WiFi to their customers will automatically have a leg up on one that doesn’t.
On another level, numerous efficiencies become possible with WiFi. Crew can use tablets and communicate instantly from wherever they are, loyalty programs can be administered much more effectively, and even flight operations can benefit from improved communications links. The most exciting aspect of installing wireless internet in airports and aircraft, however, is the amount of customer data this can generate. Delays and gate changes can be effectively communicated, brands can be reinforced and shopping opportunities advertised in a way that reaches customers.
In short, airline connectivity is not a question of ‘if’ but ‘how soon’. The business intelligence advantages, consumer expectations and revenue opportunities are simply too clear to deny.
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Proximity MX, a Location Analytics software that uses existing WiFi infrastructure to provide actionable insights into customer behavior and helps you engage with them real-time.
To learn how Proximity MX can help you with in-flight WiFi analytics and passenger engagement: