Airlines are stepping up to modern digital media for ancillary revenue – and your flight experience may get better

August 15th, 2011

A few weeks ago, Aircell, the company responsible for most airlines’ in-flight WiFi service, announced a fairly comprehensive transformation of its consumer experience and custom branding partnership model with airlines, as the pay-for-access model has not gained as much traction as anticipated.

Hopefully, all the better for both travelers and industry economics. After all, a better consumer experience and higher-margin airline revenue models, unlike most baggage fee policies, do not have to be mutually exclusive, correct?

To quote Aircell’s CMO, Ash ElDifrawi, “Historically, we thought of ourselves as a connectivity company…and now we’re…going to provide a much broader set of in-air experiences and become everybody’s favorite part of flying.” Here’s the video of Gogo’s press conference on Mary Kirby’s RunwayGirl blog.

From a business strategy perspective, we are interested to see this play out. As travelers, we applaud it, as we feared our in-flight WiFi experience might consist of having to pay $10 for WiFi while enduring SkyMall commercials on the overhead monitors blaring “Shopping while you fly – it’s the fun way to buy” jingles, something we actually experienced on a trans-continental United flight – at 1am.

We referenced that (and corresponding lack of sleep) in Part II of our thoughts on how this evolution could transpire, following our initial “What can Digital Entertainment, WiFi, and Mobile Mean for Airlines?” analysis in late 2009 (see both parts here) – just as airlines launched their baggage fee barrage. What we hoped to see would be an ancillary merchandising model beneficial to consumers and airlines alike.

With a potential market of 50-60 Million passengers monthly among the top 10 or so US airlines, it could be significant. How well Gogo (the newly-monikered Aircell) and airlines execute their new model outside of their core competencies is a risk. How consumers adopt the experience remains to be seen. In the ultra-competitive video/movie streaming space, we also wonder if Gogo’s movie streaming product will be sourced from Google’s new YouTube Movies service rather than Hollywood’s cloud-based Ultraviolet Media service, given that Mr. ElDifrawi used to run a portion of YouTube’s business for Google.

Regardless, it’s a welcome test development, and suffice to say, we look forward to potentially streaming Spotify or “Harry Potter and the Deathly Hallows, Part II” in the near future rather than being pitched electric gizmos on SkyMall as the reward for our $10.

Posted by Jonathan Alford, Senior Consultant, Retail Practice

Entry Filed under: Customer Experience